What changed in this filing

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Item 1. Financial Statements

2023-05-09 compared with 2022-11-07 · 435 added, 318 removed, 452 unchanged (62% of the section changed)

4 unchanged sentences

(In millions, except share and per share data)

September 29, 2022 December 30, 2021

March 30, 2023 December 29, 2022

CURRENT ASSETS:

Cash and cash equivalents $ 69.0 $ 61.7

Restricted Cash 2.1 2.1

Short-term marketable securities 0.7 0.7

5 unchanged sentences

Intangible assets, net of accumulated amortization of $ 276.4 and $ 270.2 , respectively

Deferred tax assets, net of valuation allowance of $ 227.5 and $ 223.8 , respectively

Other investments 1.0 0.9

6 unchanged sentences

CURRENT LIABILITIES:

Amounts due to founding members, net $ 14.1 $ 11.8

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

parties of $ 0.3 and $ 0.0 , respectively)

Amounts due to founding members, net (related party payables of $ 13.8 and $ 15.2 , respectively)

$ 15.3 $ 18.2

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

of $ 0.2 and $ 0.2 , respectively)

Accrued expenses 26.8 17.8

2 unchanged sentences

Deferred revenue 9.2 10.2

Short-term debt 220.2 3.2

Short-term debt, net of debt issuance costs of $ 7.3 and $ 7.9 , respectively

1,120.9 1,121.1

Other current liabilities 2.3 2.2

1 unchanged sentence

NON-CURRENT LIABILITIES:

Long-term debt, net of debt issuance costs of $ 8.6 and $ 10.5 , respectively

901.0 1,094.3

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

parties of $ 14.1 and $ 11.9 , respectively)

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

of $ 36.0 and $ 25.5 , respectively)

Other liabilities 17.4 18.0

19 unchanged sentences

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)

Three Months Ended Nine Months Ended

September 29, 2022 September 30, 2021 September 29, 2022 September 30, 2021

REVENUE (including revenue from related parties of $ 3.9 , $ 2.7 , $ 11.3 and $ 4.7 ,

respectively)

Three Months Ended

March 30, 2023 March 31, 2022

REVENUE (including revenue from related parties of $ 3.3 , and $ 2.8 , respectively)

$ 34.9 $ 35.9

2 unchanged sentences

Network costs 2.4 2.0

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

related parties of $ 15.4 , $ 11.4 , $ 45.2 , and $ 19.8 , respectively)

21.3 16.7 62.4 31.0

Theater access fees and revenue share to founding members (including fees to related parties of $ 13.9 , and

$ 12.8 , respectively)

Selling and marketing costs 9.5 10.2

7 unchanged sentences

Interest on borrowings 24.0 17.2

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

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

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

tax receivable agreement ( 2.2 ) ( 1.8 ) 4.0 ( 3.2 )

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

Loss on modification of debt 0.4 —

(Gain) loss on re-measurement of the payable to founding members under the tax receivable agreement ( 0.6 ) 6.4

Gain on sale of asset ( 0.3 ) —

Other non-operating income ( 0.1 ) ( 0.1 )

Total 23.4 23.5

19 unchanged sentences

(In millions) (UNAUDITED)

Nine Months Ended

September 29, 2022 September 30, 2021

Three Months Ended

March 30, 2023 March 31, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Consolidated net loss $ ( 54.0 ) $ ( 46.0 )

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

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

operating activities:

Depreciation expense 1.3 2.0

3 unchanged sentences

Amortization of debt issuance costs 2.7 2.2

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

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

Loss on modification of debt 0.4 —

Gain on sale of assets ( 0.3 ) —

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

the tax receivable agreement ( 0.6 ) 6.4

1 unchanged sentence

Founding member integration and other encumbered theater payments 3.9 1.2

Payment to the founding members under tax receivable agreement (including

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

Other cash flows from operating activities ( 0.2 ) ( 0.2 )

1 unchanged sentence

Receivables, net 52.7 10.0

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

$ 0.0 and $ 0.6 , respectively)

Accounts payable and accrued expenses 6.4 ( 4.1 )

Amounts due to/from founding members, net ( 3.5 ) ( 1.6 )

1 unchanged sentence

Other, net ( 5.0 ) ( 1.5 )

Net cash used in operating activities ( 36.7 ) ( 92.5 )

Net cash provided by (used in) operating activities 10.4 ( 23.6 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment ( 1.0 ) ( 0.7 )

Proceeds from sale and maturities of marketable securities — 0.3

Proceeds from the sale of assets 0.3 —

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

2 unchanged sentences

Issuance of revolving credit facility — 50.0

Issuance of term loans — 50.0

Repayment of Notes due 2028 ( 19.8 ) —

Repayment of term loan facility ( 0.8 ) ( 1.6 )

1 unchanged sentence

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

Net cash provided by financing activities 11.0 25.9

CHANGE IN CASH AND CASH EQUIVALENTS:

( 27.7 ) ( 70.2 )

Cash and cash equivalents at beginning of period 101.2 180.3

Cash and cash equivalents at end of period $ 73.5 $ 110.1

Net cash (used in) provided by financing activities ( 2.4 ) 36.9

CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

Cash, cash equivalents and restricted cash at beginning of period 63.8 101.2

Cash, cash equivalents and restricted cash at end of period $ 71.1 $ 113.8

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

3 unchanged sentences

(In millions)

Nine Months Ended

September 29, 2022 September 30, 2021

Three Months Ended

March 30, 2023 March 31, 2022

Supplemental disclosure of non-cash financing and investing activity:

Purchase of an intangible asset with NCM LLC equity $ — $ 10.4

Purchase of subsidiary equity with NCM, Inc.

Accrued purchases of property and equipment $ 0.2 $ —

Exchange of subsidiary equity with NCM, Inc.

equity $ 10.3 $ —

2 unchanged sentences

Cash paid for interest $ 12.2 $ 15.6

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

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

6 unchanged sentences

Consolidated Shares Amount

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

Income tax and other impacts of NCM LLC ownership

changes 0.1 — — 0.3 — ( 0.2 )

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

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

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

Cash dividends declared $ 0.05 per share

( 4.1 ) — — — ( 4.1 ) —

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

Balance—June 30, 2022 $ ( 431.3 ) 81,492,426 $ 0.8 $ ( 190.4 ) $ ( 364.9 ) $ 123.3

Income tax and other impacts of NCM LLC ownership

changes ( 0.2 ) — — 0.1 — ( 0.3 )

Comprehensive loss, net of tax ( 21.7 ) — — — ( 8.9 ) ( 12.8 )

Share-based compensation issued, net of tax ( 0.1 ) 209,235 — ( 0.1 ) — —

Share-based compensation expensed/capitalized 2.2 — — 1.4 — 0.8

Cash dividends declared $ 0.03 per share

( 2.7 ) — — — ( 2.7 ) —

Balance—September 29, 2022 $ ( 453.8 ) 81,701,661 $ 0.8 $ ( 189.1 ) $ ( 376.5 ) $ 111.0

Paid in Capital (Deficit) Retained

(Distribution in Excess of Earnings) Noncontrolling Interest

Consolidated Shares Amount

Balance—December 31, 2021 $ ( 383.5 ) 80,626,889 $ 0.8 $ ( 195.5 ) $ ( 332.0 ) $ 143.2

2 unchanged sentences

changes 0.6 — — ( 1.7 ) — 2.3

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

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

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

3 unchanged sentences

( 4.2 ) — — — ( 4.2 ) —

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

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

Balance—December 29, 2022 $ ( 464.0 ) 128,402,636 $ 1.2 $ ( 146.2 ) $ ( 370.4 ) $ 51.4

NCM LLC equity issued for purchase of intangible asset 10.4 — — 4.9 — 5.5

Income tax and other impacts of NCM LLC ownership

changes ( 15.5 ) — — 27.5 — ( 43.0 )

Issuance of shares 10.3 43,690,797 0.4 9.9 — —

NCM LLC common membership unit redemption ( 10.3 ) — — ( 10.3 ) — —

Comprehensive loss, net of tax ( 54.0 ) — — — ( 45.5 ) ( 8.5 )

1 unchanged sentence

Share-based compensation expensed/capitalized 1.6 — — 1.5 — 0.1

Cash dividends declared $ 0.11 per share

( 9.7 ) — — — ( 9.7 ) —

Balance—September 29, 2022 $ ( 453.8 ) 81,701,661 $ 0.8 $ ( 189.1 ) $ ( 376.5 ) $ 111.0

Balance—March 30, 2023 $ ( 531.8 ) 174,054,114 $ 1.7 ( 117.6 ) $ ( 415.9 ) $ —

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

3 unchanged sentences

Description of Business

National CineMedia, Inc., a Delaware corporation (“NCM, Inc.”), is a holding company with the sole purpose of becoming a member and sole manager of National CineMedia, LLC (“NCM LLC”), a Delaware limited liability company.

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

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

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

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

National CineMedia, Inc., a Delaware corporation (“NCM, Inc.”), is a holding company with the sole purpose of being a member and serving as sole manager of National CineMedia, LLC (“NCM LLC”), a Delaware limited liability company.

NCM LLC is currently owned by NCM, Inc.

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

In December 2022, American Multi-Cinema, Inc., a wholly owned subsidiary of AMC Entertainment, Inc.

(“AMC”) and Regal Cinemas, Inc.

and Regal CineMedia Corporation, wholly owned subsidiaries of Cineworld Group plc and Regal Entertainment Group (“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 % in NCM LLC as of March 30, 2023.

On February 23, 2023 and March 23, 2023, Cinemark Media, Inc.

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

(“Cinemark”), collectively redeemed 41,969,862 and 1,720,935 , respectively, of their outstanding common membership units, in exchange for shares of NCM, Inc.

common stock.

These redemptions reduced Cinemark’s ownership interest to 0.0 % as of March 23, 2023.

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

The Company operates the largest cinema advertising network reaching movie audiences in the U.S.

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

The impacts from the COVID-19 Pandemic have had and continue to have an effect on the world and our business.

The movie slate for 2022 has improved from prior years but continues to be limited by post-production delays and major motion picture release schedule changes.

The attendance level has increased from the prior year, but it has not met historical levels and has not been consistent throughout the year due to timing of major motion picture releases.

In-theater advertising revenue for the year ended December 30, 2021 and the nine months ended September 29, 2022 also remained below historical levels due in part to a lag between the recovery of attendees and advertisers, as well as current macroeconomic factors.

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

The 2019 ESA Amendments extended the contract life of the ESAs with Cinemark and Regal by four years resulting in a weighted average remaining term of the ESAs with the founding members (weighted based upon pre-COVID-19 attendance levels) of approximately 17.0 years as of September 29, 2022.

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

The weighted average remaining term of the ESAs and the network affiliate agreements together is 15.1 years as of September 29, 2022 (weighted based upon pre-COVID-19 attendance levels).

As of September 29, 2022, NCM LLC had 172,030,901 common membership units outstanding, of which 81,701,661 ( 47.5 %) were owned by NCM, Inc., 40,683,797 ( 23.6 %) were owned by Regal, 43,690,797 ( 25.4 %) were owned by Cinemark and 5,954,646 ( 3.5 %) were owned by AMC.

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

The Company operates the largest cinema advertising network reaching movie audiences in the U.S., allowing NCM LLC to sell advertising under long-term ESAs with the founding members and certain third-party network affiliates, under long-term network affiliate agreements.

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

The network affiliate agreements expire at various dates between May 29, 2023 and December 31, 2037.

The weighted average remaining term of the ESAs and the network affiliate agreements together is 13.7 years as of March 30, 2023.

As of March 30, 2023, NCM LLC had 174,054,114 common membership units outstanding, all of which 174,054,114 common membership units ( 100.0 %) were owned by NCM, Inc, and its wholly owned subsidiary.

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

common stock on a one -for-one basis, at the discretion of the holder.

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) that certain Credit Agreement, dated as of June 20, 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 January 5, 2022 among NCM LLC as Borrower, Wilmington Savings Fund Society, FSB 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 Credit Agreement 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 and other joint venture agreements, meaning (a) that certain Third Amended and Restated

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 (“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.

will 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.

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.

The Restructuring Support Agreement contemplates NCM LLC to emerge from bankruptcy in or around September 2023.

However, emergence from the Chapter 11 Case is dependent on the satisfaction of certain conditions precedent (some of which are beyond NCM LLC and NCM, Inc.’s control) and there can be no assurance that these conditions will be satisfied.

If one or more conditions is not satisfied, emergence from the Chapter 11 Case could be delayed or compromised altogether.

On April 26, 2023, the Office of the United States Trustee for Region 7 appointed an official committee of unsecured creditors pursuant to section 1102 of the Bankruptcy Code (the “Committee”).

On April 26, 2023, NCM LLC filed a Plan of Reorganization of National CineMedia Pursuant to Chapter 11 of the Bankruptcy Code (the “Plan”) and a related proposed disclosure statement (the “Disclosure Statement”).

NCM LLC also filed a motion with the Bankruptcy Court requesting approval of the Disclosure Statement and various Plan solicitation materials, including the solicitation and voting procedures (the “Solicitation and Voting Procedures”), and establishment of certain deadlines in connection with the approval of the Disclosure Statement.

The Plan and the Disclosure Statement describe, among other things, the proposed Plan;

the restructuring contemplated by the Restructuring Support Agreement;

the events leading to the Chapter 11 Case;

certain events that have occurred or are anticipated to occur during the Chapter 11 Case, including the anticipated solicitation of votes to approve the proposed Plan from certain of NCM LLC’s creditors;

and certain other aspects of the restructuring.

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Plan is intended to generally implement the restructuring contemplated by the Restructuring Support Agreement and provides for, among other things, the treatment for classes of claims and interests as follows:

• Secured Debt Claims .

Each holder of a Secured Debt Claim (the secured portion of the aggregate principal amount outstanding under the Prepetition Secured Debt Documents) shall receive its pro rata share of 100 % of new common membership units (the equity in reorganized NCM LLC) subject to (a) reallocation of new common membership units to NCMI pursuant to the NCMI 9019 Settlement and (b) dilution on account of new common membership units issued on account of, among other things, a post-emergence management incentive plan.

• General Unsecured Claims .

Each holder of a general unsecured claim (“General Unsecured Claims”), which includes, among other things, claims under the Unsecured Notes Indenture and the unsecured portion of the aggregate principal amount outstanding under the Prepetition Secured Debt Documents, shall receive its pro rata share of $ 250,000 .

The treatment of General Unsecured Claims was changed in the Plan upon the appointment of the Committee.

• General Unsecured Convenience Claims .

Each holder of a General Unsecured Claim in the amount of $ 2,500 or less shall receive payment in full in cash on NCM LLC’s emergence from chapter 11 or the date due in the ordinary course of business in accordance with the terms and conditions of the particular transaction giving rise to such claim.

• Existing NCM LLC Interests .

Interest in NCM LLC will receive no recovery and shall be cancelled.

For more information about the Chapter 11 Case refer to Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 10— Subsequent Events of the unaudited Condensed Consolidated Financial Statements .

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

NCM LLC filed a petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the Southern District of Texas on April 11, 2023.

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.

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.

As a result of the bankruptcy petition, the realization of NCM LLC’s assets and the satisfaction of liabilities are subject to significant uncertainty.

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

Given the Chapter 11 Case, NCM LLC’s outstanding debt became immediately due and payable and was reclassified as current within the Company’s Consolidated Balance Sheet as of December 29, 2022 and remains current as of March 30, 2023.

Further, a Chapter 11 plan of reorganization for NCM LLC is likely to materially change the amounts and classifications of assets and other liabilities reported in the Company’s unaudited Condensed Consolidated Balance Sheet as of March 30, 2023.

As the progress of these plans and transactions is subject to approval of the Bankruptcy Court and therefore not within our control, NCM LLC’s successful reorganization and emergence from bankruptcy cannot be considered probable.

As a result, the proceedings do not alleviate the substantial doubt about the Company’s ability to continue as a going concern.

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

Basis of Presentation

5 unchanged sentences

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

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

Historically, the Company’s business has been seasonal and for this and other reasons operating

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

results for interim periods have not been indicative of the Company’s full year results or future performance.

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

1 unchanged sentence

Estimates —The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Significant estimates include those related to the reserve for uncollectible accounts receivable, share-based compensation and income taxes.

Significant estimates include those related to the reserve for uncollectible accounts receivable, share-based compensation, income taxes, intangible assets and forecasts utilized to evaluate the Company’s ability to continue as a going concern.

Actual results could differ from estimates.

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The Company, through NCM LLC, has borrowings under two Revolving Credit Facilities with $ 217.0 million outstanding as of September 29, 2022, that mature on June 20, 2023 (refer to Note 6— Borrowings ).

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

Additionally, based on current projections, the Company does not expect to meet certain financial covenants for the period ending March 30, 2023.

Further, if the Company’s independent registered public accounting firm includes a “going concern” or like qualification or exception, other than for debt maturing within one year, in its report on the Company’s financial statements for the year ending December 29, 2022, this would be an event of default under the Company’s Credit Agreement at the time the Company’s financial statements for the year ending December 29, 2022 are filed.

Under the Credit Agreement, failure to remain in compliance with these covenants or inability 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.

Should the Company’s borrowings become due and payable, 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.

Significant Accounting Policies

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

The Company has changed the classification of the make good provision, retrospectively, to now be included within “Deferred Revenue” on the unaudited Consolidated Balance Sheet rather than “Accrued Expenses” as of September 29, 2022.

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

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Receivables are written off when management determines amounts are uncollectible.

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The Company had no agencies through which it sourced advertising revenue that accounted for more than 10% of the Company’s gross outstanding receivable balance as of September 29, 2022.

The Company had no agencies through which it sourced advertising revenue that accounted for more than 10% of the Company’s gross outstanding receivable balance as of March 30, 2023.

The Company had one agency through which it sourced advertising revenue that accounted for 13.0 % of the Company's gross outstanding receivable balance as of December 29, 2022.

During the three and nine months ended September 29, 2022, the Company had one customer that accounted for 14.6 % and 15.0 % of the Company’s revenue, respectively.

During the three and nine months ended September 30, 2021, the Company had one customer that accounted for 11.8 % and 11.6 % of the Company's revenue, respectively.

During the three months ended March 30, 2023 and March 31, 2022, the Company had one customer that accounted for 13.7 % and 11.4 % of the Company's revenue, respectively.

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

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

The Company recorded losses of $ 0.0 million, $ 0.0 million, $ 5.8 million and $ 0.0 million related to the write-off of certain internally developed software during the three months ended September 29, 2022 and September 30, 2021 and nine months ended September 29, 2022 and September 30, 2021, respectively.

The Company recorded losses of $ 0.0 million and $ 5.8 million, related to the write-off of certain internally developed software during the three months ended March 30, 2023 and March 31, 2022, respectively.

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

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Ultimately, the Company adjusts the expense recognized to reflect the actual vested shares following the resolution of the performance conditions.

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

On February 28, 2021, March 2, 2021 and January 19, 2022, the Company’s Board of Directors approved certain modifications to equity awards awarded under the Company’s 2016 Equity Incentive Plan and 2020 Omnibus Equity Incentive Plan to adjust performance metrics, vesting amount and future performance goals in light of the COVID-19 Pandemic resulting in incremental share-based compensation expense of $ 0.1 million, $ 0.2 million, $ 0.5 million and $ 1.7 million for the three months ended September 29, 2022 and September 30, 2021 and nine months ended September 29, 2022 and September 30, 2021, respectively.

During the three months ended September 29, 2022 and September 30, 2021 and the nine months ended September 29, 2022 and September 30, 2021, 230,689 , 268,782 , 1,155,817 and 1,394,321 shares of restricted stock and restricted stock units vested, respectively.

Dividends are accrued when declared on unvested restricted

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stock and restricted stock units that are expected to vest and are only paid with respect to shares that actually vest.

On February 28, 2021, March 2, 2021 and January 19, 2022, the Company’s Board of Directors approved certain modifications to equity awards awarded under the Company’s 2016 Equity Incentive Plan and 2020 Omnibus Equity Incentive Plan to adjust performance metrics, vesting amount and future performance goals in light of the COVID-19 Pandemic resulting in incremental share-based compensation expense of $ 0.1 million, and $ 0.2 million for the three months ended March 30, 2023 and March 31, 2022, respectively.

During the three months ended March 30, 2023 and March 31, 2022, 2,044,313 , and 855,753 , shares of restricted stock and restricted stock units vested, respectively.

Consolidation —NCM, Inc.

consolidates the accounts of NCM LLC under the provisions of ASC 810, Consolidation .

The following table presents the changes in NCM, Inc.’s equity resulting from net income attributable to NCM, Inc.

The following table presents the changes in NCM, Inc.’s equity resulting from net loss attributable to NCM, Inc.

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

Three Months Ended Nine Months Ended

September 29, 2022 September 30, 2021 September 29, 2022 September 30, 2021

Three Months Ended

March 30, 2023 March 31, 2022

Net loss attributable to NCM, Inc.

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Recently Adopted Accounting Pronouncements

During the first quarter of 2021, the Company adopted Accounting Standards Update 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which removes the following exceptions for the Company to analyze in a given period:

the exception to the incremental approach for intraperiod tax allocation;

the exception to accounting for basis differences when there are ownership changes in foreign investments;

and the exception in interim periods income tax accounting for year-to-date losses that exceed anticipated losses.

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

The Company did not adopt any new accounting pronouncements during the three months ended March 30, 2023.

Recently Issued Accounting Pronouncements

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

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Revenue Recognition

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

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

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

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

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

The Company does not have any contracts with customers with terms in excess of one year that are noncancellable as of September 29, 2022.

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The Company does not have any contracts with terms in excess of one year that are noncancellable as of March 30, 2023.

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

In addition, the Company’s other contracts longer than one year that are cancellable are not included within this disclosure.

In addition, the Company’s contracts longer than one year that are cancellable are not included within this disclosure.

Disaggregation of Revenue

The Company disaggregates revenue based upon the type of customer:

national, local and regional and beverage concessionaire.

local and regional;

and beverage concessionaire.

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

The following table summarizes revenue from contracts with customers for the three months and nine months ended September 29, 2022 and September 30, 2021 (in millions):

Three Months Ended Nine Months Ended

September 29, 2022 September 30, 2021 September 29, 2022 September 30, 2021

The following table summarizes revenue from contracts with customers for the three months ended March 30, 2023 and March 31, 2022 (in millions):

Three Months Ended

March 30, 2023 March 31, 2022

National advertising revenue $ 22.5 $ 26.3

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Deferred Revenue and Unbilled Accounts Receivable

Revenue recognized in the nine months ended September 29, 2022 that was included within the Deferred Revenue balance as of December 30, 2021 was $ 12.0 million.

As of September 29, 2022 and December 30, 2021, the Company had $ 6.5 million and $ 4.4 million in unbilled accounts receivable, respectively.

Revenue recognized in the three months ended March 30, 2023 that was included within the Deferred Revenue balance as of December 29, 2022 was $ 5.0 million.

As of March 30, 2023 and March 31, 2022, the Company had $ 3.5 million and $ 3.9 million, respectively, in unbilled accounts receivable.

Allowance for Doubtful Accounts

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

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

The changes within the allowance for doubtful accounts balances for the nine months ended September 29, 2022 and September 30, 2021, respectively, were as follows (in millions):

Nine Months Ended

September 29, 2022 September 30, 2021

The changes within the allowance for doubtful accounts balances for the three months ended March 30, 2023 and March 31, 2022, respectively, were as follows (in millions):

Three Months Ended

March 30, 2023 March 31, 2022

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

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share are as follows:

Three Months Ended Nine Months Ended

September 29, 2022 September 30, 2021 September 29, 2022 September 30, 2021

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Three Months Ended

March 30, 2023 March 31, 2022

Net loss attributable to NCM, Inc.

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Diluted $ ( 0.31 ) $ ( 0.31 )

The effect of 90,329,240 , 86,188,344 , 88,964,109 and 85,601,326 weighted average exchangeable NCM LLC common units held by the founding members for the three months ended September 29, 2022 and September 30, 2021 and nine months ended September 29, 2022 and September 30, 2021, respectively, have been excluded from the calculation of diluted weighted average shares and loss per NCM, Inc.

The effect of 27,416,163 , and 86,233,848 weighted average exchangeable NCM LLC common units held by the founding members for the three months ended March 30, 2023 and March 31, 2022, respectively, have been excluded from the calculation of diluted weighted average shares and loss per NCM, Inc.

share as they were anti-dilutive.

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

In addition, there were 7,275,326 , 4,797,243 , 7,275,326 and 4,797,243 stock options and non-vested (restricted) shares for the three months ended September 29, 2022 and September 30, 2021 and nine months ended September 29, 2022 and September 30, 2021, respectively, excluded from the calculation as they were anti-dilutive.

In addition, there were 4,946,950 and 3,463,302 stock options and non-vested (restricted) shares for the three months ended March 30, 2023 and March 31, 2022, respectively, excluded from the calculation as they were anti-dilutive.

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

INTANGIBLE ASSETS

Intangible assets consist of contractual rights to provide the Company’s services within the theaters of the founding members and network affiliates and are stated at cost, net of accumulated amortization.

The Company’s intangible assets with its founding members are recorded at the fair market value of NCM, Inc.’s publicly traded stock as of the date on which the common membership units were issued.

The Company’s intangible assets consist of contractual rights to provide its services within the theaters of the founding members and network affiliates.

The Company records amortization using the straight-line method over the contractual life of the intangibles, corresponding to the term of the ESAs or the term of the contract with the network affiliate.

The Company’s intangible assets with the founding members are recorded at the fair market value of NCM, Inc.’s publicly traded stock as of the date on which the common membership units were issued.

The NCM LLC common membership units are fully convertible into NCM, Inc.’s common stock.

In addition, the Company records intangible assets for up-front fees paid to network affiliates upon commencement of a network affiliate agreement.

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

The Company also records intangible assets for upfront fees paid to network affiliates upon commencement of a network affiliate agreement.

Pursuant to ASC 350-10— Intangibles—Goodwill and Other, the Company’s intangible assets have a finite useful life and the Company amortizes the assets over the remaining useful life corresponding with the ESAs or the term of the contract with the network affiliate.

The Company extended the useful life of the intangible asset for Cinemark and Regal in 2019 following the extension of the ESA term in conjunction with the 2019 ESA Amendments.

There was no impact to the Payable to founding members under tax receivable agreement as the useful life of the intangible assets were not deemed to be extended for tax purposes and there were no changes made to the tax receivable agreements.

During the third quarter of 2022, Cineworld Group plc, the parent company of Regal, and certain of its subsidiaries, including Regal, Regal Cinemas, Inc., a party to the ESA, and Regal CineMedia Holdings, LLC, a party to other agreements with NCM LLC and NCM, Inc., filed petitions of 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

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

NCM LLC has also filed a complaint 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 Company determined that this announced restructuring and subsequent developments constituted a triggering event for the Company’s intangible asset group, including the amount related to Regal, under ASC No.

360, Impairment and Disposal of Long-Lived Assets during the third and fourth quarter of 2022.

Management considered possible scenarios in a probability-weighted estimated future undiscounted cash flow analysis, including the potential of further permanent closure of the theaters within the Company's network, renegotiation of the ESA terms and other potential adverse impacts to the Company’s intangible asset group resulting from the Cineworld Proceeding.

The estimated future cash flows calculated within the probability-weighted analysis were in excess of the net book value of the Company’s intangible assets and no impairment charge was recorded in the year ended December 29, 2022.

The Company concluded that a triggering event did not occur during the three months ended March 30, 2023 for the Company’s intangible asset group given the relative insignificance of the impact on the probability-weighted future undiscounted cash flow analysis of the changes within the circumstances during the three months end March 30, 2023.

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

While the Company believes that the rights will survive any attempted rejection in the bankruptcy court by Regal, given the uncertainty inherent in any projection,

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specifying an effective date for the rejection and indicated that Regal currently plans on negotiating with the Company regarding the ESA.

NCM LLC has also filed a complaint 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.

The Company determined that this announced restructuring and subsequent developments constituted a triggering event for the intangible asset related to Regal under ASC No.

360, Impairment and Disposal of Long-Lived Assets.

The estimated future cash flows from the ESA calculated within the probability-weighted analysis were in excess of the net book value of the intangible asset and no impairment charge was recorded in the three and nine months ended September 29, 2022.

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

While the Company believes that the rights will survive any attempted rejection in the bankruptcy court by Regal, given the uncertainty inherent in any projection, heightened by the possibility of unforeseen additional effects of the Cineworld Proceeding, actual results may differ from the estimates and assumptions used, or conditions may change, which could result in impairment charges in the future.

heightened by the possibility of unforeseen additional effects of the Cineworld Proceeding, actual results may differ from the estimates and assumptions used, or conditions may change, which could result in impairment charges in the future.

Common Unit Adjustments —In accordance with NCM LLC’s Common Unit Adjustment Agreement with its founding members, on an annual basis NCM LLC determines the amount of common membership units to be issued to or returned by the founding members based on theater additions, new builds or dispositions during the previous year.

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

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

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

NCM LLC did not issue common membership units to its founding members for the rights to exclusive access to the theater screens and attendees added, net of dispositions, to NCM LLC’s network for the 2022 fiscal year during the first quarter of 2023.

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

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

During the three months ended September 29, 2022 and September 30, 2021 and nine months ended September 29, 2022 and September 30, 2021, the Company recorded a reduction to net intangible assets of $ 0.3 million, $ 0.2 million, $ 1.6 million and $ 0.3 million, respectively, related to other encumbered theater payments.

During the three months ended September 29, 2022 and September 30, 2021 and nine months ended September 29, 2022 and September 30, 2021, AMC and Cinemark paid a total of $ 1.2 million, $ 0.2 million, $ 2.6 million and $ 0.3 million, respectively, in integration and other encumbered theater payments (as payments are made one quarter and one month in arrears, respectively).

During the three months ended March 30, 2023 and March 31, 2022, the Company recorded a reduction to net intangible assets of $ 0.3 million and $ 0.2 million, respectively, related to other encumbered theater payments.

During the three months ended March 30, 2023 and March 31, 2022, AMC and Cinemark paid a total of $ 3.9 million and $ 1.2 million, respectively, in integration and other encumbered theater payments (as payments are made one quarter and one month in arrears, respectively).

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

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RELATED PARTY TRANSACTIONS

Founding Member Transactions —In connection with NCM, Inc.’s initial public offering (“IPO”), the Company entered into several agreements to define and regulate the relationships among NCM, Inc., NCM LLC and the founding members which are outlined below.

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

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

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

Founding Member and Managing Member Transactions — In connection with NCM, Inc.’s initial public offering (“IPO”), the Company entered into several agreements to define and regulate the relationships among NCM LLC, NCM, Inc.

and the founding members which are outlined below.

AMC has owned less than 5% of NCM LLC, on an as converted basis, since July 2018 and is no longer a related party.

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

Further, AMC will continue to pay beverage revenue, among other things.

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

As of September 29, 2022, AMC’s ownership was 3.5 % on an as converted to NCM, Inc.’s common stock basis.

As of March 30, 2023, AMC’s ownership was 0.0 %.

The material agreements with the founding members are as follows:

Under the ESAs, NCM LLC is the exclusive provider within the United States of advertising services in the founding members’ theaters (subject to pre-existing contractual obligations and other limited exceptions for the benefit of the founding members).

The advertising services include the use of the digital content network (“DCN”) equipment required to deliver the on-screen advertising and other content included in the Noovie ® pre-show, use of the LEN and rights to sell and display certain lobby promotions.

Further, NCM LLC’s founding members have elected to purchase 30 seconds to 60 seconds of advertising, out of the 90 seconds allowed for under the ESA, in the Noovie pre-show to satisfy the founding members’ on-screen advertising commitments under their beverage concessionaire agreements.

The advertising services include the use of the DCN equipment required to

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deliver the on-screen advertising and other content included in the Noovie ® show, use of the LEN and rights to sell and display certain lobby promotions.

Further, 30 to 60 seconds of advertising included in the Noovie show is sold to the founding members to satisfy the founding members’ on-screen advertising commitments under their beverage concessionaire agreements.

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

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

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

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

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

• Common Unit Adjustment Agreement.

The Common Unit Adjustment Agreement provides a mechanism for increasing or decreasing the membership units held by the founding members based on the acquisition or construction of new theaters or sale or closure of theaters that are operated by each founding member and included in NCM LLC’s network.

The common unit adjustment agreement provides a mechanism for increasing or decreasing the membership units held by the founding members based on the acquisition or construction of new theaters or sale of theaters that are operated by each founding member and included in NCM LLC’s network.

• Tax Receivable Agreement.

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• Software License Agreement.

At the date of the Company’s IPO, NCM LLC was granted a perpetual, royalty-free license from NCM LLC’s founding members to use certain proprietary software that existed at the time for the delivery of digital advertising and other content through the DCN to screens in the U.S.

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

At the date of the Company’s IPO, NCM LLC was granted a perpetual, royalty-free license from the founding members to use certain proprietary software that existed at the time for the delivery of digital advertising and other content through the DCN to screens in the U.S.

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

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

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Three Months Ended Nine Months Ended

Included in the unaudited Condensed Consolidated Statements of Income:

September 29, 2022 September 30, 2021 September 29, 2022 September 30, 2021

Three Months Ended

Included in the unaudited Condensed Consolidated Statements of Operations:

March 30, 2023 March 31, 2022

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

$ 3.9 $ 2.7 $ 11.3 $ 4.7

Operating expenses:

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$ 13.9 $ 12.8

Selling and marketing costs (3)

________________________________________

Advertising operating costs (3)

$ — $ — $ — $ 0.1

________________________________________

(1) For the three and nine months ended September 29, 2022 and September 30, 2021, Cinemark and Regal purchased 60 seconds of on-screen advertising time from NCM LLC to satisfy their obligations under their beverage concessionaire agreements at a 30 seconds equivalent cost per thousand impressions (“CPM”) rate specified by the ESA.

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

(1) For the three months ended March 30, 2023 and March 31, 2022, Cinemark and Regal purchased 60 seconds of on-screen advertising time from NCM LLC to satisfy their obligations under their beverage concessionaire agreements at a 30 seconds equivalent cost per thousand impressions (“CPM”) rate specified by the ESA.

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

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

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

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

Included in the unaudited Condensed Consolidated Balance Sheets:

September 29, 2022 December 30, 2021

March 30, 2023 December 29, 2022

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

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

This balance includes common unit adjustments issued to all founding members (including AMC).

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

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

Due to the continued recovery from the COVID-19 Pandemic during the nine months ended September 29, 2022, the mandatory distributions of available cash by NCM LLC to its related party founding members and NCM, Inc.

for the three months ended September 29, 2022 were calculated as negative $ 7.7 million (including negative $ 2.0 million for Cinemark, negative $ 1.9 million for Regal and negative $ 3.8 million for NCM, Inc.).

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

for the nine months ended September 29, 2022 were calculated as negative $ 39.9 million (including negative $ 10.5 million for Cinemark, negative $ 9.8 million for Regal and negative $ 19.6 million for NCM, Inc.).

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

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

Amounts due to related party founding members, net, as of September 29, 2022 were comprised of the following (in millions):

This balance includes common unit adjustments issued to Cinemark and Regal.

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(2) The Company paid Cinemark and Regal $ 0.0 million and $ 0.0 million during the first quarter of 2023, respectively, in payments pursuant to the TRA which were for the 2022 tax year.

Due to the continued recovery of theater attendance following the COVID-19 Pandemic, the mandatory distributions of available cash by NCM LLC to NCM, Inc.

for the three months ended March 30, 2023 was calculated as negative $ 31.6 million .

Therefore, there will be no payment made for the first quarter of 2023.

All distributions will be deferred during the Chapter 11 Case.

Amounts due to related party founding members, net, as of March 30, 2023 were comprised of the following (in millions):

Cinemark Regal Total

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

The Company’s investment in AC JV, LLC was $ 0.7 million and $ 0.7 million as of September 29, 2022 and December 30, 2021, respectively.

During the three months ended September 29, 2022 and September 30, 2021 and nine months ended September 29, 2022 and September 30, 2021, NCM LLC received cash distributions from AC JV, LLC of $ 0.0 million , $ 0.0 million , $ 0.2 million and $ 0.0 million , respectively.

Equity in earnings (losses) from AC JV, LLC of $ 0.0 million , $ 0.0 million , $ 0.2 million and $( 0.1 ) million for the three months and nine months ended September 29, 2022 and September 30, 2021, respectively, are included in “Other non-operating income” in the unaudited Condensed Consolidated Statements of Income.

The following table summarizes NCM LLC’s total outstanding debt as of September 29, 2022 and December 30, 2021 and the significant terms of its borrowing arrangements (in millions):

The Company’s investment in AC JV, LLC was $ 0.9 million and $ 0.8 million as of March 30, 2023 and December 29, 2022, respectively.

During the three months ended March 30, 2023 and March 31, 2022, NCM LLC received cash distributions from AC JV, LLC of $ 0.0 million and $ 0.1 million, respectively.

Equity in earnings from AC JV, LLC of $ 0.1 million and $ 0.1 million, for the three months ended March 30, 2023 and March 31, 2022, respectively, are included in “Other non-operating income” in the unaudited Condensed Consolidated Statements of Operations.

The commencement of the Chapter 11 Case constituted an event of default and caused the automatic and immediate acceleration of all debt outstanding under or in respect of, NCM LLC’s Credit Agreements and senior notes.

However, any efforts to enforce payment obligations under the debt agreements are automatically stayed as a result of the filing of the Chapter 11 Case, and the creditors’ rights of enforcement in respect of the debt agreements are subject to the applicable provisions of the Bankruptcy Code.

Given the Chapter 11 Case, NCM LLC’s outstanding debt became immediately due and payable and was reclassified as current within the Company’s unaudited Condensed Consolidated Balance Sheet as of March 30, 2023.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Outstanding Balance as of

Borrowings September 29, 2022 December 30, 2021 Maturity

Borrowings March 30, 2023 December 29, 2022 Maturity

Date Interest

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current portion of debt ( 1,120.9 ) ( 1,121.1 )

( 220.2 ) ( 3.2 )

Carrying value of long-term debt $ — $ —

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

As of September 29, 2022, NCM LLC’s senior secured credit facility consisted of a $ 175.0 million revolving credit facility, a $ 259.2 million term loan (first tranche) and a $ 49.4 million term loan (second tranche).

As of March 30, 2023, NCM LLC’s senior secured credit facility consisted of a $ 175.0 million revolving credit facility, a $ 257.9 million term loan (first tranche) and a $ 49.1 million term loan (second tranche).

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

Upon execution of the Credit Agreement Second Amendment, the Company recorded $ 2.3 million as a discount, $ 3.9 million as debt issuance costs and $ 0.8 million within “(Gain) loss on modification and retirement of debt, net” within the nine months ended September 30, 2021.

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

Given the uncertainty of the resolution of the Chapter 11 Case, conditions may change, which could result in impairment of any discounts or debt issuance costs in the future.

On January 5, 2022, NCM LLC entered into the Credit Agreement Third Amendment to its Credit Agreement, dated as of June 20, 2018, among NCM LLC, the several banks and other financial institutions or entities from time to time parties thereto, and JPMorgan Chase Bank, N.A., as administrative agent, as previously amended.

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

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

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

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

Upon execution of the Credit Agreement Third Amendment, $ 6.4 million was recorded as debt issuance costs and $ 0.4 million was recorded within “(Gain) loss on modification and retirement of debt, net” during the year ended December 30, 2021.

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

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

On January 17, 2023, NCM LLC entered into (i) Credit Agreement Fourth Amendment to its Credit Agreement, dated as of June 20, 2018, among NCM LLC, the several banks and other financial institutions or entities from time to time parties thereto, and JPMorgan Chase Bank, N.A., as administrative agent, as previously amended and (ii) Revolving Credit Agreement Amendment.

The Credit Agreement Fourth Amendment and Revolving Credit Agreement Amendment provide for the addback of specified professional fees paid by NCM LLC during the period of January 6, 2023 through the date NCM LLC delivers a compliance certificate for the quarter ending on or about December 28, 2023, when calculating the sum of unrestricted cash on hand at NCM LLC and revolving credit facility availability under the Credit Agreement and Revolving Credit Agreement required to be maintained under each respective agreement.

The senior secured credit facility contains a number of covenants and financial ratio requirements, including (i) a consolidated net total leverage ratio covenant of 6.25 times for each quarterly period and (ii) with respect to the revolving credit facility, maintaining a consolidated net senior secured leverage ratio of equal to or less than 4.50 times on a quarterly basis for

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each quarterly period in which a balance is outstanding on the revolving credit facility, each of which has been modified by the Credit Agreement Third Amendment.

Pursuant to the terms of the Credit Agreement Third Amendment, NCM LLC is restricted from making available cash distributions until after NCM LLC delivers a compliance certificate for the quarter ending on or about December 28, 2023, and, thereafter, NCM LLC may only make available cash distributions if:

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

As of September 29, 2022, NCM LLC was in compliance with the requirements of the Credit Agreement Third Amendment described above and the noncompliance with the financial covenants was automatically waived.

Subsequent to March 30, 2023, the commencement of the Chapter 11 Case constituted an event of default and caused the automatic and immediate acceleration of all debt outstanding under or in respect of, NCM LLC’s Credit Agreements and senior notes.

Term Loans — First Tranche —The interest rate on the initial tranche of term loans was originally a rate chosen at NCM LLC’s option of either the LIBOR index plus 4.00 % or the base rate plus 3.00 %.

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

The interest rate on the term loans as of September 29, 2022 was 6.56 %.

The interest rate on the term loans as of March 30, 2023 was 8.88 %.

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

As of September 29, 2022, NCM LLC has paid principal of $ 10.8 million, reducing the outstanding balance to $ 259.2 million.

As of March 30, 2023, NCM LLC has paid principal of $ 12.1 million, reducing the outstanding balance to $ 257.9 million.

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

The interest rate on the term loans as of September 29, 2022 was 10.56 %.

The interest rate on the term loans as of March 30, 2023 was 12.88 %.

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

As of September 29, 2022, NCM LLC has paid principal of $ 0.6 million, reducing the outstanding balance to $ 49.4 million.

As of March 30, 2023, NCM LLC has paid principal of $ 0.9 million, reducing the outstanding balance to $ 49.1 million.

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

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

As of September 29, 2022, NCM LLC’s total availability under the $ 175.0 million revolving credit facility was $ 6.8 million, net of $ 167.0 million outstanding and $ 1.2 million in letters of credit.

As of March 30, 2023, NCM LLC’s total availability under the $ 175.0 million revolving credit facility was $ 7.2 million, net of $ 167.0 million outstanding and $ 0.8 million letters of credit.

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

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

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income before depreciation and amortization expense adjusted to also exclude non-cash share based compensation costs for NCM LLC plus integration payments received).

The weighted-average interest rate on the revolving credit facility as of September 29, 2022 was 6.18 %.

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

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

The revolving credit facility will mature on June 20, 2023.

The weighted-average interest rate on the outstanding balance on the revolving credit facility as of March 30, 2023 was 8.40 %.

Revolving Credit Facility 2022 —On January 5, 2022, NCM LLC also entered into the Revolving Credit Agreement 2022 among NCM LLC, the lenders party thereto and Wilmington Savings Fund Society, FSB, as administrative agent and collateral agent.

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

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

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

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

As of September 29, 2022, NCM LLC’s total availability under the $ 50.0 million revolving credit facility was $ 0.0 million.

The weighted-average interest rate on the revolving credit facility as of September 29, 2022 was 10.86 %.

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

As of March 30, 2023, NCM LLC’s total availability under the $ 50.0 million revolving credit facility was $ 0.0 million.

The weighted-average interest rate on the revolving credit facility as of March 30, 2023 was 12.86 %.

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

The Notes due 2026 pay interest semi-annually in arrears on February 15 and August 15 of each year, which commenced on February 15, 2017.

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

NCM LLC repurchased and canceled a total of $ 20.0 million of the Notes due 2026 during 2019 and 2018, reducing the principal amount to $ 230.0 million as of September 29, 2022.

The Notes due 2026 were issued at 100 % of the face amount thereof and are the senior unsecured obligations of NCM LLC and will be effectively subordinated to all existing and future secured debt, including the Notes due 2028, its senior secured credit facility and any future asset backed loan facility.

The Notes due 2026 will rank equally in right of payment with all of NCM LLC’s existing and future senior indebtedness, including the Notes due 2028, NCM LLC’s existing senior secured credit facility, any future asset backed loan facility, in each case, without giving effect to collateral arrangements.

The Notes due 2026 will be effectively subordinated to all liabilities of any subsidiaries that NCM LLC may form or acquire in the future, unless those subsidiaries become guarantors of the Notes

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NCM LLC does not currently have any subsidiaries, and the Notes due 2026 will not be guaranteed by any subsidiaries that NCM LLC may form or acquire in the future except in very limited circumstances.

On February 15, 2023, NCM LLC elected to enter into a 30-day grace period for the interest payment in the amount of $ 6.6 million under the Senior Notes due 2026 under the indenture governing the Senior Notes due 2026.

This amount is included in “Accrued Expenses” in the unaudited Condensed Consolidated Balance Sheet as of March 30, 2023.

On March 15, 2023, NCM LLC entered into a First Supplemental Indenture to the Indenture, dated as of August 19, 2016 (the “Indenture”) relating to NCM LLC’s 5.75 % Senior Notes due 2026 with Computershare Trust Company, N.A., as Trustee.

The First Supplemental Indenture was approved by holders of the Senior Notes due 2026 holding at least a majority of the aggregate principal amount of the Senior Notes due 2026.

The First Supplemental Indenture amends Section 6.01(a) of the Indenture by extending the grace period for payment of interest due on the Senior Notes due 2026 from 30 days to 47 days.

NCM LLC may redeem all or any portion of the Notes due 2026, at once or over time, on or after August 15, 2021 at specified redemption prices, plus accrued and unpaid interest, if any, to the redemption date.

In addition, at any time prior to August 15, 2019, NCM LLC may on any one or more occasions redeem up to 35% of the original aggregate principal amount of Notes due 2026 from the net proceeds of certain equity offerings at a redemption price equal to 105.750% of the principal amount of the Notes due 2026 redeemed, plus accrued and unpaid interest, if any to the redemption date.

Upon the occurrence of a Change of Control (as defined in the indenture), NCM LLC will be required to make an offer to each holder of the Notes due 2026 to repurchase all of such holder’s Notes due 2026 for a cash payment equal to 101.000 % of the aggregate principal amount of the Notes due 2026 repurchased, plus accrued and unpaid interest, if any, to the date of repurchase.

The indenture contains covenants that, among other things, restrict NCM LLC’s ability and the ability of its restricted subsidiaries, if any, to:

(1) incur additional debt;

(2) make distributions or make certain other restricted payments;

(3) make investments;

(4) incur liens;

(5) sell assets or merge with or into other companies;

and (6) enter into transactions with affiliates.

All of these restrictive covenants are subject to a number of important exceptions and qualifications.

In particular, NCM LLC has the ability to distribute all of its quarterly available cash as a restricted payment or as an investment, if it meets a minimum net senior secured leverage ratio.

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

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Interest on the Notes due 2028 accrues at a rate of 5.875 % per annum and is payable semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2020.

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

In the nine months ended September 29, 2022, NCM Inc.

purchased $ 25.8 million of the Notes due 2028 on the open market, reducing the principal amount owed by NCM LLC to third parties to $ 374.2 million as of September 29, 2022 and resulting in a $ 6.0 million gain on extinguishment of debt in the nine months ended September 29, 2022.

Changes in the Company’s Effective Tax Rate —The Company recorded income tax expense of $ 0.0 million for the nine months ended September 29, 2022 and for the nine months ended September 30, 2021 resulting in an effective tax rate of 0.0 % for both periods.

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

purchased $ 25.8 million of the Notes due 2028 on the open market, reducing the principal amount owed by NCM LLC to third parties to $ 374.2 million as of March 30, 2023.

NCM LLC may redeem all or any portion of the Notes due 2028 prior to April 15, 2023, at a redemption price equal to 100 % of the principal amount plus the applicable premium, plus accrued and unpaid interest, if any, to the redemption date.

NCM LLC may redeem all or any portion of the Notes due 2028, on or after April 15, 2023, at specified redemption prices, plus accrued and unpaid interest, if any, to the redemption date.

In addition, at any time prior to April 15, 2023, NCM LLC may on any one or more occasions redeem up to 35 % of the original aggregate principal amount of the Notes due 2028 from the net proceeds of certain equity offerings at a redemption price equal to 105.875 % of the principal amount of the Notes due 2028 redeemed, plus accrued and unpaid interest, if any, to the redemption date, provided that at least 65 % of the original aggregate principal amount of the Notes due 2028 remains outstanding after each such redemption and the redemption occurs within 90 days after the closing of such applicable equity offering.

The Indenture contains covenants that, among other things, restrict NCM LLC’s ability and the ability of its restricted subsidiaries, if any, to:

(1) incur additional debt;

(2) make distributions or make certain other restricted payments;

(3) make certain investments;

(4) incur certain liens;

(5) sell assets or merge with or into other companies;

and (6) enter into transactions with affiliates.

All of these restrictive covenants are subject to a number of important exceptions and qualifications.

In particular, NCM LLC may distribute all of its quarterly available cash as a restricted payment or as an investment, provided that NCM LLC satisfies a minimum net senior secured leverage ratio.

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Changes in the Company’s Effective Tax Rate —The Company recorded income tax expense of $ 0.0 million for the three months ended March 30, 2023 and for the three months ended March 31, 2022 resulting in an effective tax rate of 0.0 % for both periods.

The Company recorded a full valuation allowance on its net deferred tax assets as of December 29, 2022 following the determination it was more-likely-than-not that the Company will not be able to realize the benefit of those assets.

The Company maintained a full valuation allowance as of September 29, 2022, resulting in deferred tax expense of $ 0.0 million for the nine months ended September 29, 2022 and the Company’s effective tax rate of 0.0 %.

The Company maintained a full valuation allowance as of March 30, 2023, resulting in deferred tax expense of $ 0.0 million for the three months ended March 30, 2023 and the Company’s effective tax rate of 0.0 %.

COMMITMENTS AND CONTINGENCIES

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

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

Legal Actions —As discussed more fully in Note 10— Subsequent Events , on April 11, 2023, NCM LLC filed a voluntary petition for reorganization with a prearranged Chapter 11 plan under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.

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

National CineMedia, LLC , Case No.

The Company will continue to act as the manager of 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.

Pursuant to “first day” motions filed with the Bankruptcy Court, the Bankruptcy Court authorized NCM LLC to conduct NCM LLC’s business activities in the ordinary course, including, among other things and subject to the terms and conditions of such orders, authorizing NCM LLC to consensually use cash collateral, pay employee wages and benefits, and pay vendors and suppliers in the ordinary course for all go forward goods and services.

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

NCM LLC’s normal operating cash flows are providing liquidity for the Company to operate as usual and fulfill ongoing commitments to stakeholders.

The Company is unable to predict when NCM LLC will emerge from this Chapter 11 process.

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

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

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

The Company has right-of-use (“ROU”) assets of $ 17.4 million and short-term and long-term lease liabilities of $ 2.2 million and $ 18.6 million, respectively, on the balance sheet as of September 29, 2022 for all material leases with terms longer than twelve months.

The Company has right-of-use (“ROU”) assets of $ 16.4 million and short-term and long-term lease liabilities of $ 2.3 million and $ 17.4 million, respectively, on the balance sheet as of March 30, 2023 for all material leases with terms longer than twelve months.

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

As of September 29, 2022, the Company had a weighted average remaining lease term of 6.9 years on these leases.

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

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

As of September 29, 2022, the Company’s weighted average annual discount rate used to establish the ROU assets and lease liabilities was 7.4 %.

During the three months ended September 29, 2022 and September 30, 2021, the Company recognized the following components of total lease cost (in millions).

These costs are presented within “Selling and marketing costs” and

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

Three Months Ended Nine Months Ended

September 29, 2022 September 30, 2021 September 29, 2022 September 30, 2021

The Company has options on certain of these facilities to extend the lease or to terminate part or all of the leased space prior to the lease end date.

Certain termination fees would be due upon exercise of the early termination options as outlined within the underlying agreements.

None of these options were considered reasonably certain of exercise and thus have not been recognized as part of the ROU assets and lease liabilities.

As of March 30, 2023, the Company had a weighted average remaining lease term of 6.5 years on these leases.

Given the uncertainty of the resolution of the Chapter 11 Case, conditions may change, which could result in impairment of the Company’s ROU assets in future periods.

The Company has also entered into certain short-term leases with a term of less than one year.

These leases are not included within the Company’s ROU assets or lease liabilities due to the Company’s election of the practical expedient in ASC 842-20-25-2 for short-term leases.

During the three months ended March 30, 2023 and March 31, 2022, the Company recognized the following components of total lease cost (in millions).

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

Three Months Ended

March 30, 2023 March 31, 2022

Operating lease cost $ 0.9 $ 0.8

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Total lease cost $ 1.0 $ 1.0

The Company made total lease payments of $ 0.9 million, $ 0.9 million, $ 2.9 million and $ 2.9 million during the three months ended September 29, 2022 and September 30, 2021 and nine months ended September 29, 2022 and September 30, 2021, respectively.

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The Company made total lease payments of $ 1.0 million and $ 0.9 million, during the three months ended March 30, 2023 and March 31, 2022, respectively.

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

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No ROU assets or lease liabilities were recognized for these agreements and no change to the balance sheet presentation of the intangible assets was necessary.

However, the amortization of these intangible assets is considered lease expense and is presented within “Amortization of intangibles recorded for network theater screen leases” within the unaudited Condensed Consolidated Statement of Income.

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

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

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

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

The payment per theater patron increased by 4 % on November 1, 2022 and will increase by 8 % every five years with the next occurrence in 2027.

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

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

As of September 29, 2022 and December 30, 2021, the Company had no liabilities recorded for the minimum payment, as the theater access fee was in excess of the minimum.

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

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

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

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

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

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

As of March 30, 2023 and December 29, 2022, the Company had no liabilities recorded for the minimum payment, as the theater access fee was in excess of the minimum.

Following the 2019 ESA Amendments, Cinemark and Regal receive an additional monthly theater access fee 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.

These fees are also based upon a fixed payment per patron of $ 0.052 per patron beginning on November 1, 2022 and increase 8 % every five years beginning November 1, 2027.

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

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

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

The Company did not owe the founding members any theater access fees or any Platinum Spot revenue share when the theaters were not displaying the Company's pre-show or when the Company did not have access to the theaters.

As such, the Company did not owe these fees for the period of time the founding members' theaters were temporarily closed due to the COVID-19 Pandemic and future fees will be reduced if attendance remains lower than historical levels.

The Company does not owe the founding members any theater access fees or any Platinum Spot revenue share when the theaters are not displaying the Company's show or when the Company does not have access to the theaters.

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

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

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

As of September 29, 2022, the maximum potential amount of future payments the Company could be required to make pursuant to the minimum revenue guarantees is $ 122.8 million over the remaining terms of the network affiliate agreements.

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

The Company accrued $ 0.6 million and $ 0.4 million related to affiliate agreements with guaranteed minimums in excess of the revenue share agreement as of September 29, 2022 and December 30, 2021, respectively within “Accounts payable” in the Unaudited Condensed Consolidated Balance Sheet.

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

As of March 30, 2023, the maximum potential amount of future payments the Company could be required to make pursuant to the minimum revenue guarantees is $ 134.3 million over the remaining terms of the network affiliate agreements.

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

As of March 30, 2023 and December 29, 2022, the company had $ 0.3 million and $ 0.4 million in liabilities recorded within “Accounts payable” in the unaudited Condensed Consolidated Balance Sheet for these obligations, as such guarantees are less than the expected share of revenue paid to the affiliate.

FAIR VALUE MEASUREMENTS

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All current assets and liabilities are estimated to approximate their fair value due to the short-term nature of these balances.

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These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances.

These assets include long-lived assets, intangible assets, other investments, notes receivable and borrowings.

Long-Lived Assets, Intangible Assets and Other Investments —The Company regularly reviews long-lived assets (primarily property, plant and equipment), intangible assets and investments accounted for under the cost or equity method for impairment whenever certain qualitative factors, events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable.

These assets include long-lived assets, intangible assets, cost and equity method investments and borrowings.

Long-Lived Assets, Intangible Assets and Other Investments —As described in Note 1— Basis of Presentation and Summary of Significant Accounting Policies , the Company regularly reviews long-lived assets (primarily property, plant and equipment), intangible assets, investments accounted for under the cost or equity method and notes receivable for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable.

When the estimated fair value is determined to be lower than the carrying value of the asset, an impairment charge is recorded to write the asset down to its estimated fair value.

Other investments consisted of the following (in millions):

September 29, 2022 December 30, 2021

March 30, 2023 December 29, 2022

Investment in AC JV, LLC (1)

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This investment is accounted for utilizing the equity method.

During the three months ended September 29, 2022 and September 30, 2021 and nine months ended September 29, 2022 and September 30, 2021, the Company recorded impairment charges of $ 0.0 million, $ 0.0 million, $ 0.1 million and $ 0.0 million, respectively, on certain of its investments due to new information regarding the fair value of the investee, which

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brought the total remaining value of the respective impaired investments to $ 0.1 million as of September 29, 2022.

As of September 29, 2022, no other observable price changes or impairments have been recorded as a result of the Company’s qualitative assessment of identified events or changes in the circumstances of the remaining investments.

(2) The Company received equity securities in privately held companies as consideration for a portion of advertising contracts.

The equity securities were accounted for under the cost method and represent an ownership of less than 20%.

The Company does not exert significant influence on these companies’ operating or financial activities.

During the three months ended March 30, 2023 and March 31, 2022, the Company recorded impairment charges of $ 0.0 million and $ 0.1 million, respectively, on certain of its investments due to new information regarding the fair value of the investee, which brought the total remaining value of the respective impaired investments to $ 0.0 million as of March 30, 2023.

As of March 30, 2023, no other observable price changes or impairments have been recorded as a result of the Company’s qualitative assessment of identified events or changes in the circumstances of the remaining investments.

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

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

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

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

As of September 29, 2022 As of December 30, 2021

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

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As of March 30, 2023 As of December 29, 2022

Carrying Value Fair Value (1)

Revolving credit facility 2018 $ 167.0 $ 49.3 $ 167.0 $ 44.6

Revolving credit facility 2022 $ 50.0 $ 15.8 $ 50.0 $ 13.4

Term loans - first tranche $ 257.9 $ 78.0 $ 258.5 $ 65.8

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(1) If the Company were to measure the borrowings in the above table at fair value on the balance sheet they would be classified as Level 2 based upon the inputs utilized.

Recurring Measurements — The fair values of the Company’s assets and liabilities measured on a recurring basis pursuant to ASC 820-10, Fair Value Measurements and Disclosures are as follows (in millions):

(1) The Company has estimated the fair value on an average of at least two non-binding broker quotes and the Company’s analysis.

If the Company were to measure the borrowings in the above table at fair value on the balance sheet they would be classified as Level 2.

Recurring Measurements —All current assets and liabilities are estimated to approximate their fair value due to the short-term nature of these balances.

The fair values of the Company’s assets and liabilities measured on a recurring basis pursuant to ASC 820-10 Fair Value Measurements and Disclosures are as follows (in millions):

Fair Value Measurements at Reporting Date Using

Fair Value as of September 29, 2022 Quoted Prices in Active Markets for Identical Assets

Fair Value as of March 30, 2023 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other

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(1) Cash Equivalents —The Company’s cash equivalents are carried at estimated fair value following the Company's election of the fair value option.

Cash equivalents consist of money market accounts which the Company has classified as Level 1 given the active market for these accounts and commercial paper with original maturities of three months or less, which are classified as Level 2 and are valued as described below.

(1) Cash Equivalents —The Company’s cash equivalents are carried at estimated fair value.

Cash equivalents consist of money market accounts which the Company has classified as Level 1 given the active market for these accounts.

(2) Short-Term and Long-Term Marketable Securities —The carrying amount and fair value of the marketable securities are equivalent since the Company accounts for these instruments at fair value.

The Company’s government agency bonds, commercial paper and certificates of deposit are valued using third party broker quotes.

The value of the Company’s government agency bonds is derived from quoted market information.

The inputs in the valuation are

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classified as Level 1 if there is an active market for these securities;

The value of the Company’s government agency bonds and municipal bonds are derived from quoted market information.

The inputs in the valuation are classified as Level 1 if there is an active market for these securities;

however, if an active market does not exist, the inputs are recorded at a lower level in the fair value hierarchy.

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

As of September 29, 2022 and December 30, 2021, there were $ 1.0 million and $ 1.0 million, respectively, of available-for-sale debt securities in unrealized loss positions without an allowance for credit losses.

The Company has not recorded an allowance for credit losses for the marketable securities balance as of September 29, 2022 or December 30, 2021 given the immaterial difference between the amortized cost basis and the aggregate fair value of the Company's securities.

The amortized cost basis, aggregate fair value and maturities of the marketable securities the Company held as of September 29, 2022 and December 30, 2021 were as follows:

As of September 29, 2022

Original cost of short term marketable securities is based on the specific identification method.

As of March 30, 2023 and December 29, 2022, there were $ 0.8 million and $ 0.2 million, respectively, of available-for-sale debt securities in unrealized loss positions without an allowance for credit losses.

The Company has not recorded an allowance for credit losses for the

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marketable securities balance as of March 30, 2023 or December 29, 2022 given the immaterial difference between the amortized cost basis and the aggregate fair value of the Company's securities.

The amortized cost basis, aggregate fair value and maturities of the marketable securities the Company held as of March 30, 2023 and December 29, 2022 were as follows:

As of March 30, 2023

Amortized Cost

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SUBSEQUENT EVENT

On October 17, 2022, NCM LLC elected not to make an interest payment in the amount of $ 11.8 million, $ 0.8 million of which relates to notes held by NCM, Inc., due October 17, 2022 under the Senior Secured Notes due 2028, and entered a 30-day grace period under the indenture governing the Senior Secured Notes due 2028.

The Company made the payment on November 4, 2022, prior to the end of the applicable grace period.

On November 3, 2022, NCM LLC and NCM, Inc.

entered into a Receivable Sales Agreement pursuant to which, NCM, Inc.

acquired the right to approximately $ 4.9 million of NCM LLC’s accounts receivable at a purchase price equal to the book value of the accounts receivable in exchange for a cash payment.

Credit Agreement Amendment — On March 31, 2023, NCM LLC as the Borrower, entered into the fifth amendment of the Credit Agreement (the “Credit Agreement Fifth Amendment”), dated as of June 20, 2018, among the Borrower, the several banks and other financial institutions or entities from time to time parties thereto, and JPMorgan Chase Bank, N.A., as administrative agent, as previously amended (the “Credit Agreement”).

The Credit Agreement Fifth Amendment extends the grace period available for certain payments under the Credit Agreement for nine business days.

Indenture Amendment — On March 31, 2023, NCM LLC entered into a Second Supplemental Indenture to the Indenture, relating to NCM LLC’s 5.75 % Senior Notes due 2026 with Computershare Trust Company, N.A., as Trustee.

The Second Supplemental Indenture was approved by holders of the Senior Notes due 2026 holding at least a majority of the aggregate principal amount of the Senior Notes due 2026.

The Second Supplemental Indenture amends Section 6.01(a) of the Indenture by extending the grace period for payment of interest due on the Senior Notes due 2026 from 47 days to 57 days.

Bankruptcy Petition — On April 11, 2023, NCM LLC filed a voluntary petition for reorganization with a prearranged Chapter 11 plan under Chapter 11 of the Bankruptcy Code in the U.S.

Bankruptcy Court for the Southern District of Texas.

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

National CineMedia, LLC , Case No.

Operation and Implications of the Bankruptcy Filing

will 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.

The debtor in possession intends to continue to operate businesses in the ordinary course during the pendency of the Chapter 11 Case.

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 business activities in the ordinary course and, among other things and subject to the terms and conditions of such orders, authorized certain 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.

Plan and Disclosure Statement — On April 26, 2023, NCM LLC filed the Plan and the Disclosure Statement.

NCM LLC also filed a motion with the Bankruptcy Court requesting approval of the Disclosure Statement and various Plan solicitation materials, including the Solicitation and Voting Procedures, and establishment of certain deadlines in connection with the approval of the Disclosure Statement.

The Plan and the Disclosure Statement describe, among other things, the proposed Plan;

the restructuring contemplated by the Restructuring Support Agreement;

the events leading to the Chapter 11 Case;

and certain other aspects of the restructuring.

• Secured Debt Claims .

Each holder of a Secured Debt Claim (the secured portion of the aggregate principal amount outstanding under the Prepetition Secured Debt Documents) shall receive its pro rata share of 100% of new common membership units (the equity in reorganized NCM LLC) subject to (a) reallocation of new common membership units to NCMI pursuant to the NCMI 9019 Settlement and (b) dilution on account of new common membership units issued on account of, among other things, a post-emergence management incentive plan.

• General Unsecured Claims .

General Unsecured Claims, which includes, among other things, claims under the Unsecured Notes Indenture and the unsecured portion of the aggregate principal amount outstanding under the Prepetition Secured Debt Documents, shall receive its pro rata share of $250,000.

The treatment of General Unsecured Claims was changed in the Plan upon the appointment of the Committee.

• General Unsecured Convenience Claims .

Each holder of a General Unsecured Claim in the amount of $2,500 or less shall receive payment in full in cash on NCM LLC’s emergence from chapter 11 or the date due in the ordinary course of business in accordance with the terms and conditions of the particular transaction giving rise to such claim.

• Existing NCM LLC Interests .

Interest in NCM LLC will receive no recovery and shall be cancelled.

Confirmation of a plan of reorganization could materially alter the classifications and amounts reported in our unaudited condensed consolidated financial statements.

The financial statements as of and for the three months ended March 30, 2023, do not give effect to any adjustments to the carrying values of assets or amounts of liabilities that might be necessary as a consequence of confirmation of a plan of reorganization or other arrangement or the effect of any operational changes that may be implemented.

Deconsolidation of NCM LLC

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

As a result of this filing and in accordance with applicable GAAP, the Company concluded that NCM, Inc.

will no longer control NCM LLC for accounting purposes as of the petition date, and therefore, NCM LLC will be deconsolidated from the Company’s consolidated financial statements prospectively.

The Company expects to record a material gain on deconsolidation.

Delisting of our Common Stock from NASDAQ — On April 19, 2023, the Company received a letter from The Nasdaq Stock Market LLC (“Nasdaq”) indicating that as a result of NCM LLC filing a voluntary petition for reorganization with a prearranged Chapter 11 plan under Chapter 11 of the Bankruptcy Code in the U.S.

Bankruptcy Court for the Southern District of Texas on April 11, 2023, and in accordance with Nasdaq Listing Rule 5100, the Nasdaq Staff determined that the Company is a “public shell” and that continued listing of the Company’s common stock is no longer warranted.

The letter advises that Nasdaq will suspend trading of the common stock on April 28, 2023 and that Nasdaq will file a Form 25-NSE with the Securities and Exchange Commission to effect the delisting of the common stock unless the Company requests an appeal of this determination.

The Company filed such an appeal with the Nasdaq Hearings Panel (the “Panel”) on April 21, 2023 and the hearing has been scheduled for May 25, 2023.

The suspension and delisting of the Company’s securities has been stayed pending the Panel’s decision.

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

What changed 10-Q

Item 1. Financial Statements