What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-08-01 compared with 2023-05-09 · 603 added, 389 removed, 498 unchanged (67% of the section changed)

1 unchanged sentence

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)

March 30, 2023 December 29, 2022

June 29, 2023 December 29, 2022

CURRENT ASSETS:

2 unchanged sentences

Short-term marketable securities 1.0 0.7

Receivables, net of allowance of $ 1.7 and $ 1.7 , respectively

Other current assets and prepaid expenses 10.7 7.9

Receivables, net of allowance of $ 0.0 and $ 1.7 , respectively (including receivables from related

parties of $ 0.2 and $ 0.0 .

respectively)

Prepaid expenses and other current assets 7.1 7.9

Total current assets 23.8 164.4

3 unchanged sentences

Other investments — 0.9

Long-term marketable securities 0.3 0.3

Long-term investments 7.7 0.3

Investment in unconsolidated affiliate 11.9 —

Debt issuance costs, net — 3.3

5 unchanged sentences

Amounts due to founding members, net (related party payables of $ 0.0 and $ 15.2 , respectively)

$ 15.3 $ 18.2

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

5 unchanged sentences

Short-term debt, net of debt issuance costs of $ 0.0 and $ 7.9 , respectively

1,120.9 1,121.1

Other current liabilities — 2.2

23 unchanged sentences

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)

Three Months Ended

March 30, 2023 March 31, 2022

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

Three Months Ended Six Months Ended

June 29, 2023 June 30, 2022 June 29, 2023 June 30, 2022

REVENUE (including revenue from related parties of $ 8.5 , $ 4.6 , $ 11.8 , and

$ 7.4 respectively)

$ 14.8 $ 67.1 $ 49.7 $ 103.0

2 unchanged sentences

Network costs 0.3 2.1 2.7 4.1

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

$ 12.8 , respectively)

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

to related parties of $ 2.7 , $ 16.9 , $ 16.5 , and $ 29.8 respectively)

3.7 23.2 23.3 41.1

Selling and marketing costs 1.1 10.4 10.6 20.6

4 unchanged sentences

Total 19.7 61.5 85.2 119.9

OPERATING LOSS ( 30.6 ) ( 22.5 )

OPERATING (LOSS) INCOME ( 4.9 ) 5.6 ( 35.5 ) ( 16.9 )

NON-OPERATING EXPENSES (INCOME):

Interest on borrowings 3.1 20.4 27.1 37.6

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) loss on modification of debt — ( 5.9 ) 0.4 ( 5.9 )

Loss (gain) on re-measurement of the payable to founding members under

the tax receivable agreement 4.0 ( 0.1 ) 3.4 6.3

Gain on sale of asset — — ( 0.3 ) —

Other non-operating income ( 0.1 ) ( 0.1 )

Gain on deconsolidation of affiliate ( 557.7 ) — ( 557.7 ) —

Other non-operating expenses (income) 0.4 ( 0.2 ) 0.3 ( 0.3 )

Total ( 550.2 ) 14.2 ( 526.8 ) 37.7

LOSS BEFORE INCOME TAXES ( 54.0 ) ( 46.0 )

INCOME (LOSS) BEFORE INCOME TAXES 545.3 ( 8.6 ) 491.3 ( 54.6 )

Income tax expense — — — —

CONSOLIDATED NET LOSS ( 54.0 ) ( 46.0 )

NET INCOME (LOSS) 545.3 ( 8.6 ) 491.3 ( 54.6 )

Net loss attributable to noncontrolling interests — ( 7.9 ) ( 8.5 ) ( 28.7 )

NET LOSS ATTRIBUTABLE TO NCM, INC.

NET INCOME (LOSS) ATTRIBUTABLE TO NCM, INC.

$ 545.3 $ ( 0.7 ) $ 499.8 $ ( 25.9 )

COMPREHENSIVE LOSS ATTRIBUTABLE TO NCM, INC.

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NCM, INC.

$ 545.3 $ ( 0.7 ) $ 499.8 $ ( 25.9 )

NET LOSS PER NCM, INC.

NET INCOME (LOSS) PER NCM, INC.

COMMON SHARE:

6 unchanged sentences

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) (UNAUDITED)

Three Months Ended

March 30, 2023 March 31, 2022

Six Months Ended

June 29, 2023 June 30, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Consolidated net loss $ ( 54.0 ) $ ( 46.0 )

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

operating activities:

Net income (loss) $ 491.3 $ ( 54.6 )

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

Depreciation expense 1.5 3.5

3 unchanged sentences

Amortization of debt issuance costs 3.1 4.5

Loss on modification of debt 0.4 —

Gain on deconsolidation ( 557.7 ) —

Loss (gain) on modification of debt 0.4 ( 5.9 )

Gain on sale of assets ( 0.3 ) —

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

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

the tax receivable agreement 3.4 6.3

6 unchanged sentences

Amounts due to/from founding members, net ( 1.0 ) 0.4

Amounts due to/from unconsolidated affiliate, net ( 1.1 ) —

Prepaid expenses ( 15.7 ) ( 0.8 )

Deferred revenue ( 0.3 ) ( 6.5 )

7 unchanged sentences

Payment of dividends ( 0.4 ) ( 7.0 )

Removal of cash, cash equivalents and restricted cash of unconsolidated affiliate ( 49.6 ) —

Issuance of revolving credit facility — 50.0

Repayment of Notes due 2028 — ( 19.8 )

Repayment of term loan facility ( 0.8 ) ( 2.4 )

3 unchanged sentences

CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

( 48.3 ) ( 28.1 )

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

2 unchanged sentences

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In millions)

Three Months Ended

March 30, 2023 March 31, 2022

Six Months Ended

June 29, 2023 June 30, 2022

Supplemental disclosure of non-cash financing and investing activity:

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

Accrued purchases of property and equipment $ 0.2 $ —

Exchange of subsidiary equity with NCM, Inc.

3 unchanged sentences

Cash paid for interest $ 12.2 $ 35.0

Cash payments for income taxes $ 0.1 $ 0.1

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY/(DEFICIT)

3 unchanged sentences

Consolidated Shares Amount

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

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

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

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

Cash dividends declared $ 0.05 per share

( 2.8 ) — — — ( 2.8 ) —

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

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

Deconsolidation of affiliate ( 33.3 ) — — ( 15.2 ) ( 18.1 ) —

Comprehensive income, net of tax 545.3 — — — 545.3 —

Share-based compensation issued, net of tax — 5,660 — — — —

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

Balance—June 29, 2023 $ ( 19.3 ) 174,059,774 $ 1.7 $ ( 132.3 ) $ 111.3 $ —

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

7 unchanged sentences

( 7.0 ) — — — ( 7.0 ) —

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

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

Balance—December 29, 2022 $ ( 464.0 ) 128,402,636 $ 1.2 $ ( 146.2 ) $ ( 370.4 ) $ 51.40

Deconsolidation of affiliate ( 33.3 ) — — ( 15.2 ) ( 18.1 ) —

Income tax and other impacts of NCM LLC ownership

2 unchanged sentences

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

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

Comprehensive income (loss), net of tax 491.3 — — — 499.8 ( 8.5 )

Share-based compensation issued, net of tax 0.1 1,966,341 0.1 — — —

Share-based compensation expensed/capitalized 2.0 — — 1.9 — 0.1

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

Balance—June 29, 2023 $ ( 19.3 ) 174,059,774 $ 1.7 $ ( 132.3 ) $ 111.3 $ —

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

2 unchanged sentences

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.

Consolidated.

NCM LLC 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 original founding members (AMC Entertainment, Inc.

Regal Cinemas, Inc.

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

and 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.

(“Cinemark”) and certain third-party network affiliates, under long-term network affiliate agreements.

As of June 29, 2023, the weighted average remaining term of the ESAs with the founding members was approximately 16.2 years.

The network affiliate agreements expire at various dates between August 9, 2023 and December 31, 2037.

The weighted average remaining term of the ESAs and the network affiliate agreements together is 13.3 years as of June 29, 2023.

NCM LLC was wholly owned by NCM, Inc.

Consolidated prior to April 11, 2023 when 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”), as further discussed below.

As a result of the Chapter 11 Case and in accordance with applicable GAAP, the Company concluded that NCM, Inc.

no longer controls NCM LLC for accounting purposes, and therefore, NCM LLC was deconsolidated from the Company’s unaudited financial statements prospectively as of April 11, 2023.

Within the unaudited financial statements and notes to the financial statements included within this Form 10-Q as of June 29, 2023, all periods subsequent to deconsolidation on April 11, 2023 represent activity and balances for NCM, Inc.

standalone and all activity and balances prior to deconsolidation on April 11, 2023 represent NCM, Inc.

consolidated, inclusive of NCM LLC.

Please refer to Note 4— Investment in Unconsolidated NCM LLC for more information regarding the deconsolidation of NCM LLC.

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

On June 27, 2023, the Bankruptcy Court entered an order (the “Confirmation Order”) approving the Disclosure Statement on a final basis and confirming the Company’s Plan, as those terms are defined below.

There can be no guarantee that NCM LLC will successfully implement the Plan or that the Plan will be implemented in a time frame that is acceptable to the Bankruptcy Court or NCM LLC’s lenders party to the Restructuring Support Agreement.

On June 29, 2023, AMC and Cinemark filed a notice of appeal of the Confirmation Order.

After June 29, 2023, AMC and Cinemark sought a stay of the Confirmation Order in the Bankruptcy Court, which the Bankruptcy Court denied, and then sought a stay of the Confirmation Order in the United States District Court for the Southern District of Texas which is currently pending.

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

common stock, reducing AMC’s and Regal’s ownership to 0.0 % in NCM LLC as of June 29, 2023.

On February 23, 2023 and March 23, 2023, Cinemark redeemed 41,969,862 and 1,720,935 , respectively, of its 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.

These redemptions reduced Cinemark’s ownership interest to 0.0 % as of June 29, 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., 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 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 16.5 years as of March 30, 2023.

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”).

Subsequent to June 29, 2023, Regal will no longer be a founding member.

Please refer to Note 11 - Subsequent Events .

NCM LLC’s Chapter 11 Proceedings

On April 11, 2023 (the “petition date”), NCM LLC filed a voluntary petition for reorganization with a prearranged Chapter 11 plan under Chapter 11 of title 11 of the United States 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:

1 unchanged sentence

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.

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”).

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

1 unchanged sentence

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;

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

(b) that certain Common Unit Adjustment Agreement;

16 unchanged sentences

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.

continues 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”).

5 unchanged sentences

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.

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

NCM LLC also filed a motion with the Bankruptcy

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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;

3 unchanged sentences

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:

1 unchanged sentence

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.

Each holder may elect to convert its new common membership units into an equal number of shares in NCM, Inc.

only at the time of issuance and the Company currently expects all holders to make this election.

• 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.

Each holder of a general unsecured claim (“General Unsecured Claims”), which includes, among other things, claims under the Unsecured Notes Indenture, shall receive its pro rata share of $ 15,000,000 , with (i) $ 14,500,000 contributed by NCM LLC and (ii) $ 500,000 contributed directly from NCM, Inc.

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

• General Unsecured Convenience Claims .

Each holder of a General Unsecured Claim in the amount of $ 50,000 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;

provided that any General Unsecured Claim (other than claims under the Unsecured Note Indenture) that is allowed in excess of $ 50,000 shall not be treated as a General Unsecured Convenience Claim unless the Holder of such allowed General Unsecured Claim opts in to such treatment and agrees to reduce its allowed General Unsecured Claim to $ 50,000 pursuant to the procedures set forth in the Confirmation Order.

• 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.

On June 27, 2023, the Bankruptcy Court entered an order (the “Confirmation Order”) approving the Disclosure Statement on a final basis and confirming the Company’s Plan.

In order for the Plan to become effective, NCM LLC must satisfy a number of conditions, which include the funding of an exit financing facility and NCM, Inc.

implementing a reverse stock split.

currently has a special meeting of the stockholders scheduled for August 2, 2023 and NCM LLC is diligently working to complete all other conditions, but there can be no guarantee that NCM LLC will successfully implement the Plan or that the Plan will be implemented in a time frame that is acceptable to the Bankruptcy Court.

Basis of Presentation

4 unchanged sentences

Therefore, the unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s annual report on Form 10-K filed for the fiscal year ended December 29, 2022.

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

Any activity earned or incurred by NCM LLC that occurred prior to deconsolidation, on April 11, 2023, is included within the Condensed Consolidated Statement of Operations and Condensed Consolidated Statement of Cash Flows.

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

As a result of the various related party agreements discussed in Note 6— Related Party Transactions , the operating results as presented are not necessarily indicative of the results that might have occurred if all

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

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.

The Company manages its business under one operating and reportable segment of advertising.

agreements were with non-related third parties.

NCM LLC manages its business under one operating and reportable segment of advertising.

manages its business under one operating and reportable segment of managing NCM LLC.

In the first quarter of 2023, conditions existed that raised substantial doubt about the Company’s ability to continue as a going concern.

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.

NCM, Inc.’s primary sources of cash flow from operations are distributions from NCM LLC pursuant to the NCM LLC Operating Agreement, management fee payments pursuant to a management services agreement with NCM LLC in exchange for providing specified management services to NCM LLC and NCM, Inc.’s existing cash balance.

Pursuant to the Plan that was confirmed by the Bankruptcy Court on June 27, 2023, NCM, Inc.

continues to be the manager of NCM LLC and NCM LLC will assume its agreements with NCM, Inc., including the management services agreement.

Pursuant to the Plan, when NCM LLC successfully emerges from Chapter 11, NCM, Inc.

will make a capital contribution of its cash on hand, expected to be approximately $ 15.0 million, in exchange for new common membership units under the NCMI 9019 Capital Contribution within the Restructuring Support Agreement.

Following this contribution, NCM, Inc.

will continue to receive management fee payments from NCM LLC, which will be sufficient to fund its day-to-day operations such that substantial doubt would no longer exist.

NCM LLC currently expects to emerge from bankruptcy within one month of this filing;

however, NCM LLC’s status in Chapter 11 and conditions precedent required for emergence create uncertainty around the future satisfaction of its liabilities, including the payments due to NCM, Inc.

under the Operating Agreement and management services agreement.

If NCM LLC fails to emerge from Chapter 11 in the required timeline and the Plan is not implemented, NCM, Inc.

will have sufficient liquidity through the use of NCM, Inc.’s existing cash balance.

As such, substantial doubt about the Company's ability to continue as a going concern no longer exists.

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, income taxes, intangible assets and forecasts utilized to evaluate the Company’s ability to continue as a going concern.

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

Actual results could differ from estimates.

2 unchanged sentences

Following is additional information related to the Company’s accounting policies.

Revenue Recognition —The Company derives revenue principally from the advertising business, which includes advertising through its on-screen cinema network, lobby network (LEN) and lobby promotions in theaters, and on websites, mobile applications and out-of-home locations owned by NCM LLC and other companies.

Revenue is recognized over time as the customer receives the benefits provided by NCM LLC’s advertising services and the Company has the right to payment for performance to date.

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

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.

The allowance for doubtful accounts balance is determined by pooling the Company's receivables with similar risk characteristics, specifically by type of customer (national or local/ regional) and then age of receivable and applying historical write off percentages to these pools in order to determine the amount of expected credit losses as of the balance sheet date.

Revenue Recognition —NCM, Inc.

derives revenue principally from its role as sole manager of NCM LLC over time as services are rendered.

NCM LLC derives revenue principally from the advertising business, which includes advertising through its on-screen cinema network, lobby network (LEN) and lobby promotions in theaters, and on websites, mobile applications and out-of-home locations owned by NCM LLC and other companies.

Revenue is recognized over time as the customer receives the benefits provided by NCM LLC’s advertising services and NCM LLC has the right to payment for performance to date.

NCM LLC considers the terms of each arrangement to determine the appropriate accounting treatment.

Concentration of Credit Risk and Significant Customers —The risk of credit loss related to NCM LLC'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.

The allowance for doubtful accounts balance is determined by pooling NCM LLC's receivables with similar risk characteristics, specifically by type of customer (national or local/ regional) and then age of receivable and applying historical write off percentages to these pools in order to determine the amount of expected credit losses as of the balance sheet date.

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

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

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

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

The Company also reserves for specific receivable balances that it expects to write off based on known concerns regarding the financial health of the customer.

NCM LLC has smaller contracts with many local clients that are not individually significant.

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

NCM LLC also reserves for specific receivable balances that it expects to write off based on known

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

concerns regarding the financial health of the customer.

Receivables are written off when management determines amounts are uncollectible.

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 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 .

sourced management fee revenue from NCM LLC for 100.0 % of the Company’s gross outstanding receivable balance as of June 29, 2023 and sourced advertising revenue from no agencies that accounted for more than 10% of the Company’s gross outstanding receivable balance as of June 29, 2023.

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

During the three and six months ended June 29, 2023, NCM, Inc.

had one customer that accounted for 51.8 % and 15.4 % of its revenue, respectively.

During the three and six months ended June 30, 2022, NCM Inc.

had one customer that accounted for 14.8 % and 15.3 % of its revenue, respectively.

Long-lived Assets —NCM, Inc.

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 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.

recorded losses of $ 0.0 million, $ 0.0 million, $ 0.0 million, and $ 5.8 million related to the write-off of certain internally developed software during the three months ended June 29, 2023 and June 30, 2022, and six months ended June 29, 2023 and June 30, 2022, respectively.

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

The restricted stock and restricted stock unit grants for Company management vest upon the achievement of Company performance measures and/or service conditions, while non-management grants vest only upon the achievement of service conditions.

2 unchanged sentences

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

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 loss attributable to NCM, Inc.

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, $ 0.1 million, $ 0.1 million, and $ 0.3 million for the three months ended June 29, 2023 and June 30, 2022 and six months ended June 29, 2023 and June 30, 2022, respectively.

During the three months ended June 29, 2023 and June 30, 2022, and the six months ended June 29, 2023 and June 30, 2022, 6,000 , 89,375 , 2,050,313 and 925,128 , shares of restricted stock and restricted stock units vested, respectively.

Consolidation —Prior to April 11, 2023, NCM, Inc.

consolidated the financial results of its wholly owned subsidiaries NCM LLC and NCMI II, LLC under the provisions of ASC 810, Consolidation.

Subsequent to April 11, 2023, NCM, Inc.

consolidated only the accounts of NCMI II, LLC.

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

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

Three Months Ended

March 30, 2023 March 31, 2022

Net loss attributable to NCM, Inc.

Three Months Ended Six Months Ended

June 29, 2023 June 30, 2022 June 29, 2023 June 30, 2022

Net income (loss) attributable to NCM, Inc.

$ 545.3 $ ( 0.7 ) $ 499.8 $ ( 25.9 )

3 unchanged sentences

Issuance of shares to founding members — — 9.9 —

Change from net loss attributable to NCM, Inc.

Change from net income (loss) attributable to NCM, Inc.

transfers from noncontrolling interests $ 545.3 $ ( 0.7 ) $ 484.0 $ ( 22.7 )

Deconsolidation of NCM LLC

Subsequent to April 11, 2023, while NCM, Inc.

continues to manage NCM LLC, the “debtor in possession”, as the Company no longer controls NCM LLC for accounting purposes, NCM LLC was deconsolidated from the Company’s financial statements prospectively as of April 11, 2023 and recorded as an investment accounted for in accordance with ASC 321 on the Condensed Consolidated Balance Sheet as of June 29, 2023.

Please refer to Note 4- Investment in Unconsolidated NCM LLC for more information regarding the deconsolidation of NCM LLC.

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recently Adopted Accounting Pronouncements

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

The Company did not adopt any new accounting pronouncements during the three and six months ended June 29, 2023.

Recently Issued Accounting Pronouncements

4 unchanged sentences

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

In October 2021, the FASB issued ASU No.

2021-08, “Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.” ASU 2021-08 requires the company acquiring contract assets and contract liabilities obtained in a business combination to recognize and measure them in accordance with ASC 606, “Revenue from Contracts with Customers”.

At the acquisition date, the company acquiring the business should record related revenue, as if it had originated the contract.

Before the update such amounts would be recognized by the acquiring company at fair value.

The amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted, including in interim periods, for any financial statements that have not yet been issued.

The Company expects to adopt this in the third quarter of 2023 and does not believe this will have a material impact on the Company’s unaudited Condensed Consolidated Financial Statements.

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

1 unchanged sentence

Revenue Recognition

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.

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

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

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

The Company makes contractual guarantees to deliver a specified number of impressions to view the customers’ advertising.

derives revenue principally from its role as sole manager of NCM LLC.

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

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

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

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

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

NCM LLC makes contractual guarantees to deliver a specified number of impressions to view the customers’ advertising.

If the contracted number of impressions are not delivered, the Company will run additional advertising to deliver the contracted impressions at a later date.

1 unchanged sentence

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.

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 contracts longer than one year that are cancellable are not included within this disclosure.

NCM LLC does not have any contracts with terms in excess of one year that are noncancellable as of June 29, 2023.

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

In addition, NCM LLC’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:

disaggregates revenue based upon the type of customer:

local and regional;

and beverage concessionaire.

beverage concessionaire;

and management fee reimbursement revenue related to NCM LLC.

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

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

Three Months Ended

March 30, 2023 March 31, 2022

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes revenue from contracts with customers for the three and six months ended June 29, 2023 and June 30, 2022 (in millions):

Three Months Ended Six Months Ended

June 29, 2023 June 30, 2022 June 29, 2023 June 30, 2022

National advertising revenue $ 5.0 $ 50.7 $ 27.5 $ 77.0

2 unchanged sentences

concessionaire agreements 1.0 5.9 5.4 9.4

Management fee reimbursement 7.7 — 7.7 —

Total revenue $ 14.8 $ 67.1 $ 49.7 $ 103.0

Deferred Revenue and Unbilled Accounts Receivable

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.

Revenue recognized in the six months ended June 29, 2023 that was included within the deferred revenue balance as of December 29, 2022 was $ 5.0 million.

As of June 29, 2023 and December 29, 2022, the Company had $ 3.8 million and $ 10.2 million of deferred revenue on NCM, Inc.’s Condensed Consolidated Balance Sheet, respectively.

As of June 29, 2023 and December 29, 2022, the Company had $ 0.0 million and $ 5.0 million, respectively, in unbilled accounts receivable, following the deconsolidation of NCM LLC on the petition date.

Allowance for Doubtful Accounts

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

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

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

Three Months Ended

March 30, 2023 March 31, 2022

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

NCM LLC has determined that two pools, national customers and local/regional customers, is appropriate.

Following the deconsolidation of NCM LLC on the petition date, there is no allowance for doubtful accounts on NCM, Inc.’s Condensed Consolidated Balance Sheet as of June 29, 2023.

The changes within the allowance for doubtful accounts balances for the six months ended June 29, 2023 and June 30, 2022, respectively, were as follows (in millions):

Six Months Ended

June 29, 2023 June 30, 2022

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

2 unchanged sentences

Write-offs, net — — ( 0.2 ) ( 0.2 )

Deconsolidation of NCM LLC ( 0.3 ) ( 1.4 ) — —

Balance at end of period $ — $ — $ 0.1 $ 1.8

LOSS PER SHARE

Basic loss per share is computed on the basis of the weighted average number of common shares outstanding.

Diluted loss per share is computed on the basis of the weighted average number of common shares outstanding plus the effect of potentially dilutive common stock options, restricted stock and restricted stock units using the treasury stock method.

The components of basic and diluted loss per NCM, Inc.

INCOME (LOSS) PER SHARE

Basic income (loss) per share is computed on the basis of the weighted average number of common shares outstanding.

Diluted income (loss) per share is computed on the basis of the weighted average number of common shares outstanding plus the effect of the weighted average number of potentially dilutive common stock options, restricted stock and restricted stock units using the treasury stock method, as well as exchangeable membership units.

The components of basic and diluted income (loss) per NCM, Inc.

share are as follows:

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended

March 30, 2023 March 31, 2022

Net loss attributable to NCM, Inc.

Three Months Ended Six Months Ended

June 29, 2023 June 30, 2022 June 29, 2023 June 30, 2022

Net income (loss) attributable to NCM, Inc.

(in millions) $ 545.3 $ ( 0.7 ) $ 499.8 $ ( 25.9 )

4 unchanged sentences

Diluted 174,058,637 81,467,651 173,491,390 81,254,152

Loss per NCM, Inc.

Income (loss) per NCM, Inc.

Basic $ 3.13 $ ( 0.01 ) $ 3.13 $ ( 0.32 )

Diluted $ 3.13 $ ( 0.01 ) $ 2.83 $ ( 0.32 )

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.

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The effect of 90,374,744 and 88,281,544 weighted average exchangeable NCM LLC common units held by the founding members for the three and six months ended June 30, 2022, respectively, have been excluded from the calculation of diluted weighted average shares and income (loss) per NCM, Inc.

share as they were anti-dilutive.

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

In addition, there were 4,946,950 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.

In addition, there were 4,915,168 , 6,442,164 , 4,915,168 and 6,442,164 stock options and non-vested (restricted) shares for the three months ended June 29, 2023 and June 30, 2022 and six months ended June 29, 2023 and June 30, 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.

INVESTMENT IN UNCONSOLIDATED NCM LLC

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.

As a result of the Chapter 11 Case and in accordance with applicable GAAP, the Company concluded that NCM, Inc.

no longer controls NCM LLC for accounting purposes, and therefore, NCM LLC was deconsolidated from the Company’s financial statements prospectively as of April 11, 2023.

recorded a gain on deconsolidation of $ 557.7 million on April 11, 2023 as a result of the deconsolidation of NCM LLC, which is included in “Gain on deconsolidation of affiliate” on the Condensed Consolidated Statement of Operations as of June 29, 2023.

The recorded gain was measured as the excess of the estimated fair value of the investment in NCM LLC retained over the Net Liabilities of NCM LLC as of April 11, 2023.

The investment of NCM LLC was measured at cost minus any impairment in accordance with the measurement alternative outlined in ASC 321— Investments—Equity Securities .

While NCM LLC remains in bankruptcy, NCM, Inc.

accounted for the retained equity interest in NCM LLC at cost less impairment, if any, plus or minus changes resulting from observable price changes in orderly market transactions.

does not continue to exert significant influence over NCM LLC while it is under the control of the Bankruptcy Court and NCM LLC does not have a readily determinable fair value.

recorded an investment of $ 11.9 million as of April 11, 2023, which is presented in “Investment in unconsolidated affiliate” on the unaudited Condensed Consolidated Balance Sheets as of June 29, 2023.

Upon the deconsolidation of NCM LLC, the original cost of the investment was valued based upon NCM, Inc.'s ownership of the secured debt of NCM LLC and an estimation of the enterprise value of NCM LLC developed utilizing discounted cash flows and comparable company analysis as of the petition date.

Significant assumptions utilized within these analyses include the weighted average cost of capital and NCM LLC’s forecasted cash flows.

The financial statements of the unconsolidated NCM LLC, the subsidiary in bankruptcy, are as follows in accordance with ASC 852 - Reorganizations (millions):

NATIONAL CINEMEDIA, LLC - DEBTOR-IN-POSSESSION

CONDENSED BALANCE SHEETS

(In millions) (UNAUDITED)

June 29, 2023 December 29, 2022

CURRENT ASSETS:

Cash and cash equivalents $ 55.6 $ 59.4

Restricted cash 2.1 2.1

Receivables, net of allowance of $ 1.7 and $ 1.7 , respectively

Prepaid administrative fees to managing member 0.6 —

Prepaid expenses and other current assets 10.3 7.4

Total current assets 127.9 151.8

NON-CURRENT ASSETS:

Property and equipment, net of accumulated depreciation of $ 56.7 and $ 54.8 , respectively

Intangible assets, net of accumulated amortization of $ 282.7 and $ 270.2 , respectively

Other investments 0.9 0.9

Debt issuance costs, net — 3.3

Other assets 21.7 23.8

Total non-current assets 608.1 627.7

TOTAL ASSETS $ 736.0 $ 779.5

LIABILITIES AND MEMBERS’ EQUITY/(DEFICIT)

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

CURRENT LIABILITIES:

Amounts due to founding members, net (related party payables of $ 3.3 and $ 15.2 ,

respectively)

Amounts due to managing member, net 0.2 18.9

Accrued expenses 0.5 17.3

Accrued payroll and related expenses 7.8 7.7

Accounts payable 21.0 23.3

Deferred revenue 12.4 10.2

Short-term debt, net of debt issuance costs of $ 0.0 and $ 7.9 , respectively

Other current liabilities — 2.2

Total current liabilities 46.4 1,244.6

NON-CURRENT LIABILITIES:

Other liabilities — 18.0

Total non-current liabilities — 18.0

LIABILITIES SUBJECT TO COMPROMISE

Liabilities subject to compromise (1)

Total liabilities 1,276.9 1,262.6

COMMITMENTS AND CONTINGENCIES

MEMBERS’ EQUITY/(DEFICIT) ( 540.9 ) ( 483.1 )

TOTAL LIABILITIES AND EQUITY/(DEFICIT) $ 736.0 $ 779.5

_______________________________________

(1) Liabilities subject to compromise was determined by evaluating the payable balances on April, 11, 2023, the petition date.

Liabilities subject to compromise was comprised of the following (in millions):

June 29, 2023 December 29, 2022

Amounts due to founding members (related party payables of $ 14.5 and

$ 0.0 , respectively)

Accounts payable 19.7 —

Accrued expenses 29.1 —

Short-term debt, net of debt issuance costs of $ 7.2 and $ 0.0 ,

Other current liabilities 2.3 —

Other long-term liabilities 16.8 —

Total liabilities subject to compromise $ 1,230.5 $ —

NATIONAL CINEMEDIA, LLC - DEBTOR-IN-POSSESSION

CONDENSED STATEMENTS OF OPERATIONS

(In millions)

Three Months Ended Six Months Ended

June 29, 2023 June 30, 2022 June 29, 2023 June 30, 2022

REVENUE (including revenue from related parties of $ 5.0 , $ 4.6 , $ 8.3 and

$ 7.4 , respectively)

$ 64.4 $ 67.1 $ 99.3 $ 103.0

OPERATING EXPENSES:

Advertising operating costs 7.4 8.3 13.1 13.0

Network costs 2.2 2.1 4.6 4.1

Theater access fees and revenue share to founding members (including

fees to related parties of $ 17.0 , $ 16.9 , $ 30.9 and $ 29.8 , respectively)

23.9 23.2 43.5 41.1

Selling and marketing costs 10.1 10.4 19.6 20.6

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Administrative and other costs 9.1 7.0 25.0 14.2

Administrative fee—managing member 6.4 2.7 11.3 5.2

Impairment of long-lived assets — — — 5.8

Depreciation expense 1.3 1.5 2.5 3.5

Amortization of intangibles recorded for network theater screen leases 6.2 6.3 12.5 12.4

Total 66.6 61.5 132.1 119.9

OPERATING (LOSS) INCOME ( 2.2 ) 5.6 ( 32.8 ) ( 16.9 )

NON-OPERATING EXPENSE (INCOME):

Interest on borrowings, net (contractual interest of $ 22.0 , $ 20.6 , $ 46.4 ,

and $ 37.8 , respectively)

3.0 20.6 27.4 37.8

Loss (gain) on modification and retirement of debt, net ( 0.1 ) 0.1 0.3 0.1

Gain on sale of asset — — ( 0.3 ) —

Reorganization items (1)

18.6 — 18.6 —

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

Total 21.4 20.6 45.8 37.7

LOSS BEFORE INCOME TAXES ( 23.6 ) ( 15.0 ) ( 78.6 ) ( 54.6 )

Income tax expense — — — —

NET LOSS $ ( 23.6 ) $ ( 15.0 ) $ ( 78.6 ) $ ( 54.6 )

COMPREHENSIVE LOSS $ ( 23.6 ) $ ( 15.0 ) $ ( 78.6 ) $ ( 54.6 )

_______________________________________

(1) Reorganization items was determined by evaluating what legal and professional fees had occurred subsequent to April 11, 2023.

Reorganizations items was comprised of the following (in millions):

Three Months Ended Six Months Ended

June 29, 2023 June 30, 2022 June 29, 2023 June 30, 2022

Professional fees $ 18.3 $ — $ 18.3 $ —

Administrative fee - managing member 0.3 — 0.3 —

Total reorganizations items $ 18.6 $ — $ 18.6 $ —

NATIONAL CINEMEDIA, LLC - DEBTOR-IN-POSSESSION

CONDENSED STATEMENTS OF CASH FLOWS

(In millions)

Six Months Ended

June 29, 2023 June 30, 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 78.6 ) $ ( 54.6 )

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

Depreciation expense 2.5 3.5

Amortization of intangibles recorded for network theater screen leases 12.5 12.4

Non-cash share-based compensation 1.5 1.9

Impairment of long-lived assets — 5.8

Amortization of debt issuance costs 3.1 4.5

Gain on sale of asset ( 0.3 ) —

Loss on modification and retirement of debt, net 0.3 —

Other — ( 0.2 )

Founding member integration and other encumbered theater payments 4.1 1.5

Other cash flows from operating activities — ( 0.2 )

Changes in operating assets and liabilities:

Receivables, net 23.4 ( 10.6 )

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accounts payable and accrued expenses 30.0 1.3

Amounts due to/from founding members and managing member, net 4.7 2.5

Deferred revenue 2.2 ( 6.5 )

Other, net ( 5.7 ) ( 1.0 )

Net cash used in operating activities (1)

( 0.3 ) ( 39.7 )

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment ( 1.8 ) ( 1.5 )

Proceeds from sale of asset 0.3 —

Net cash used in investing activities ( 1.5 ) ( 1.5 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Issuance of revolving credit facility — 50.0

Repayment of term loan facility ( 0.8 ) ( 2.4 )

Payment of debt issuance costs ( 1.2 ) ( 6.8 )

Repurchase of stock for restricted stock tax withholding — ( 0.5 )

Net cash (used in) provided by financing activities ( 2.0 ) 40.3

CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

( 3.8 ) ( 0.9 )

Cash, cash equivalents and restricted cash at beginning of period 61.5 58.6

Cash, cash equivalents and restricted cash at end of period $ 57.7 $ 57.7

NATIONAL CINEMEDIA, LLC

CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)

DEBTOR IN POSSESSION

(In millions)

Six Months Ended

June 29, 2023 June 30, 2022

Supplemental disclosure of non-cash financing and investing activity:

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

Accrued purchases of property and equipment $ 0.1 $ —

Supplemental disclosure of cash flow information:

Cash paid for interest $ 12.2 $ 35.0

_______________________________________

(1) Cash flows within Operating Activities relating to the reorganization are comprised of the following (in millions):

Six Months Ended

June 29, 2023 June 30, 2022

Supplemental disclosure of reorganization related operating activity:

Cash paid for professional fees $ 7.1 $ —

Cash paid for incremental Administrative fee - managing member $ 0.3 $ —

INTANGIBLE ASSETS

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.

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

NCM LLC 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.

NCM LLC’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.

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.

NCM LLC 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, NCM LLC’s intangible assets have a finite useful life and NCM LLC amortizes the assets over the remaining useful life corresponding with the ESAs or the term of the contract with the network affiliate.

NCM LLC extended the useful life of the intangible asset for Cinemark and

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

The Company determined that this announced restructuring and subsequent developments constituted a triggering event for NCM LLC’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.

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 NCM LLC's network, renegotiation of the ESA terms and other potential adverse impacts to NCM LLC’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 NCM LLC’s intangible assets and no impairment charge was recorded in the year ended December 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,

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

NCM LLC has been in continued negotiations with Regal during 2023.

Refer to Note 11— Subsequent Events for discussion of the resolution of NCM LLC’s negotiations with Regal and the dismissal of the adversary proceeding in the third quarter of 2023.

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.

3 unchanged sentences

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.

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.

3 unchanged sentences

The integration payments will continue until the earlier of (i) the date the theaters are transferred to NCM LLC’s network or (ii) the expiration of the ESA.

Integration payments are calculated based upon the advertising cash flow that the Company would have generated if it had exclusive access to sell advertising in the theaters with pre-existing advertising agreements.

Integration payments are calculated based upon the advertising cash flow that NCM LLC would have generated if it had exclusive access to sell advertising in the theaters with pre-existing advertising agreements.

The ESAs additionally entitle NCM LLC to payments related to the founding members’ on-screen advertising commitments under their beverage concessionaire agreements for encumbered theaters.

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

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).

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

During the three months ended June 29, 2023 and June 30, 2022 and six months ended June 29, 2023 and June 30, 2022, AMC and Cinemark paid a total of $ 0.0 million , $ 0.3 million, $ 3.9 million and $ 1.5 million, respectively, in integration and other encumbered theater payments (as payments are made one quarter

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

RELATED PARTY TRANSACTIONS

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.

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 and NCM, Inc.

and the founding members which are outlined below.

The material agreement with the managing member includes the Management Services Agreement (the “MSA”).

The MSA provides that NCM, Inc.

will provide certain management services to NCM LLC in exchange for the reimbursement for compensation and other expenses of NCM, Inc.’s compensation and other expenses of our offices and employees and for certain out-of-pocket costs.

NCM LLC also provides certain administrative and support services to NCM, Inc., including office facilities, equipment, supplies, payroll and accounting and financial reporting.

The management services provided by NCM, Inc.

include but are not limited to executive oversight, sales, marketing, advertisement, production, distribution, finance and accounting support and reporting, legal support and other services and activities as are customarily performed by persons holding officer or director type positions.

Additionally, NCM Inc.

purchased $ 25.8 million in corporate bonds of NCM LLC’s Notes due 2028 on the open market, in the quarter ended June 30, 2022.

Prior to the deconsolidation of NCM LLC, these intercompany balances were eliminated on consolidation.

Founding Member Transactions — In connection with the 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.

3 unchanged sentences

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

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

As of June 29, 2023, AMC’s ownership was 0.0 % of NCM LLC and NCM, Inc.

As further described in Note 11- Subsequent Events , Regal will no longer be a founding member following July 14, 2023, the effective date of the Regal Advertising Agreement and the Regal Termination Agreement.

NCM LLC has been in continued negotiations with Regal following Cineworld’s petition for reorganization under Chapter 11 in 2022.

Refer to Note 11— Subsequent Events for discussion of the resolution of NCM LLC’s negotiations with Regal in the third quarter of 2023.

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 DCN equipment required to

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

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

4 unchanged sentences

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.

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

• Tax Receivable Agreement.

5 unchanged sentences

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):

Three Months Ended

The following tables provide summaries of the transactions between NCM, Inc.

and the related party founding members (in millions):

Three Months Ended Six 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)

June 29, 2023 June 30, 2022 June 29, 2023 June 30, 2022

Beverage concessionaire revenue (included in advertising

$ 0.8 $ 4.6 $ 4.1 $ 7.4

Management fee reimbursement $ 7.7 $ — $ 7.7 $ —

Operating expenses:

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

Theater access fee and revenue share to founding

$ 2.7 $ 16.9 $ 16.5 $ 29.8

________________________________________

(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.

(1) For the three and six months ended June 29, 2023 and June 30, 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 NCM LLC’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”).

Included in the unaudited Condensed Consolidated Balance Sheets:

March 30, 2023 December 29, 2022

June 29, 2023 December 29, 2022

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

$ 308.0 $ 312.2

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

4 unchanged sentences

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

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(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.

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.

These amounts were eliminated within the deconsolidation of NCM LLC in the Condensed Consolidated Balance Sheet as of June 29, 2023.

(2) NCM, Inc.

paid Cinemark and Regal $ 0.0 million and $ 0.0 million during the six months ended June 29, 2023 and June 30, 2022, respectively, in payments pursuant to the TRA for the 2022 or 2021 tax years.

Pursuant to the terms of the NCM LLC operating agreement in place since the completion of NCM, Inc.’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 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.

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.

for the six months ended June 29, 2023 was calculated as negative $ 31.6 million.

Therefore, there will be no payment received for the second quarter of 2023.

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 NCM LLC's compliance with the covenants outlined within the Credit Agreement Third Amendment defined within Note 7— Borrowings and in accordance with the NCM LLC operating agreement.

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

Theater access fees and revenue share, net of beverage revenues and other

encumbered theater payments $ 9.7 $ 4.1 $ 13.8

Total amounts due to founding members, net $ 9.7 $ 4.1 $ 13.8

During the second quarter of 2023 and in accordance with the NCM operating agreement, the positive available cash

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

distribution calculated for the fourth quarter of 2022 was netted against the negative amounts calculated for the first three quarters of 2022 and removed from NCM, Inc.’s receivable balance as of June 29, 2023.

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

3 unchanged sentences

Total amounts due to founding members, net $ 11.1 $ 4.1 $ 15.2

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

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

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 $ 0.9 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.

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Following the deconsolidation of NCM LLC on the petition date, there is no debt on NCM, Inc.’s Condensed Consolidated Balance Sheet as of June 29, 2023.

Outstanding Balance as of

Borrowings March 30, 2023 December 29, 2022 Maturity

Borrowings June 29, 2023 December 29, 2022 Maturity

Date Interest

14 unchanged sentences

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

As of March 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).

As of December 29, 2022, NCM LLC’s senior secured credit facility consisted of a $ 175.0 million revolving credit facility, a $ 258.5 million term loan (first tranche) and a $ 49.3 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.

2 unchanged sentences

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.

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.

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

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

consolidated net senior secured leverage ratio financial covenants to be set to 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) a fourth amendment to its Credit Agreement (the “Credit Agreement Fourth Amendment”), 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 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 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:

2 unchanged sentences

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

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

The term loans amortize at a rate equal to 1.00 % annually, to be paid in equal quarterly installments, prior to the commencement of the Chapter 11 Case.

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

The interest rate on the term loans as of March 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 March 30, 2023, NCM LLC has paid principal of $ 0.9 million, reducing the outstanding balance to $ 49.1 million.

The term loans amortize at a rate equal to 1.00 % annually, to be paid in equal quarterly installments, prior to the commencement of the Chapter 11 Case.

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

As of March 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.

As of December 29, 2022, 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.

2 unchanged sentences

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 %.

The revolving credit facility 2018 was scheduled to mature on June 20, 2023.

However, the maturity of the revolving credit facility has been stayed during the bankruptcy proceeding.

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.

2 unchanged sentences

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

As of March 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 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

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

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Agreements and senior notes.

The revolving credit facility 2022 was scheduled to mature on June 20, 2023.

However, the maturity of the revolving credit facility has been stayed during the bankruptcy proceeding.

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 and are 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 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 are 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 due 2026.

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:

7 unchanged sentences

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.

1 unchanged sentence

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.

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.

In the year ended December 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 December 29, 2022.

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

7 unchanged sentences

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.

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Changes in the Company’s Effective Tax Rate —The Company recorded income tax expense of $ 0.0 million for the three months ended March 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 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 %.

Changes in the Company’s Effective Tax Rate —NCM, Inc.

recorded income tax expense of $ 0.0 million for the six months ended June 29, 2023 and for the six months ended June 30, 2022 resulting in an effective tax rate of 0.0 % for both periods.

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 NCM, Inc.

will not be able to realize the benefit of those assets.

maintained a full valuation allowance as of June 29, 2023 and December 29, 2022, resulting in deferred tax expense of $ 0.0 million for the six months ended June 29, 2023 and the year ended December 29, 2022.

COMMITMENTS AND CONTINGENCIES

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.

Legal Actions —As discussed more fully in Note 1— The Company , 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.

continues 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.

Pursuant to “first day” motions filed with the Bankruptcy Court, the Bankruptcy Court authorized NCM

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

NCM LLC’s normal operating cash flows are providing liquidity for NCM, Inc.

to operate as usual and fulfill ongoing commitments to stakeholders.

NCM LLC currently expects to emerge from bankruptcy within one month of this filing;

however, NCM LLC’s status in Chapter 11 creates uncertainty around the future satisfaction of its liabilities, including the payments due to NCM, Inc.

under the Operating Agreement and management services agreement.

If NCM LLC fails to emerge from Chapter 11 in the required timeline and the Plan is not implemented, NCM, Inc.

will have sufficient liquidity through the use of NCM, Inc.’s existing cash balance.

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 $ 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.

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.

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

NCM LLC 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).

NCM LLC has right-of-use (“ROU”) assets of $ 16.9 million and short-term and long-term lease liabilities of $ 2.2 million and $ 18.0 million, respectively, on the balance sheet as of December 29, 2022 for all material leases with terms longer than twelve months.

These balances are included within “Other assets”, “Other current liabilities” and “Other liabilities”, respectively, on the unaudited Condensed Consolidated Balance Sheets as of December 29, 2022.

Following the deconsolidation of NCM LLC on the petition date, there are no ROU assets or liabilities on NCM, Inc.’s Condensed Consolidated Balance Sheet as of June 29, 2023.

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

These leases are not included within NCM, Inc.’s ROU assets or lease liabilities as of December 29, 2022 due to the Company’s election of the practical expedient in ASC 842-20-25-2 for short-term leases.

During the three and six months ended June 29, 2023 and June 30, 2022, NCM, Inc.

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

Three Months Ended Six Months Ended

June 29, 2023 June 30, 2022 June 29, 2023 June 30, 2022

Operating lease cost $ 0.1 $ 0.9 $ 1.0 $ 1.7

1 unchanged sentence

Total lease cost $ 0.1 $ 1.0 $ 1.1 $ 2.0

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

made total lease payments of $ 0.0 million , $ 1.0 million, $ 1.0 million and $ 1.9 million, during the three months ended June 29, 2023 and June 30, 2022 and six months ended June 29, 2023 and June 30, 2022, respectively.

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

Operating Commitments - ESAs and Affiliate Agreements —The Company has entered into long-term ESAs with the founding members and multi-year agreements with certain network affiliates, or third-party theater circuits.

Operating Commitments - ESAs and Affiliate Agreements —NCM LLC has entered into long-term ESAs with the founding members and multi-year agreements with certain network affiliates, or third-party theater circuits.

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

The Company recognizes intangible assets upon issuance of membership units to the founding members in accordance with NCM LLC’s Common Unit Adjustment Agreement and upfront cash payments to the affiliates for the contractual rights to provide the Company’s services within their theaters as further discussed within Note 5— Intangible Assets .

NCM LLC recognizes intangible assets upon issuance of membership units to the founding members in accordance with NCM LLC’s Common Unit Adjustment Agreement and upfront cash payments to the affiliates for the contractual rights to provide NCM LLC’s services within their theaters as further discussed within Note 5— Intangible Assets .

These ESAs and network affiliate agreements are considered leases under ASC 842 once the asset is identified and the period of control is determined upon the scheduling of the showtimes by the exhibitors, typically one week prior to the showtime.

2 unchanged sentences

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.

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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.

3 unchanged sentences

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

As of March 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 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.

As of December 29, 2022, NCM, Inc.

had no liabilities recorded for the minimum payment, as the theater access fee was in excess of the minimum.

Following the deconsolidation of NCM LLC on the petition date, there are no minimum payment accruals on NCM, Inc.’s Condensed Consolidated Balance Sheet as of June 29, 2023.

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

The majority of agreements are centered around a revenue share where an agreed upon percentage of the advertising revenue received from a theater’s attendance is paid to the circuit.

As part of the network affiliate agreements entered into in the ordinary course of business under which the Company sells advertising for display in various network affiliate theater chains, the Company has agreed to certain minimum revenue guarantees on a per attendee basis.

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

As of March 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.

As part of the network affiliate agreements entered into in the ordinary course of business under which NCM LLC sells advertising for display in various network affiliate theater chains, NCM LLC has agreed to certain minimum revenue guarantees on a per attendee basis.

If a network affiliate achieves the attendance set forth in their respective agreement, NCM LLC 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 December 29, 2022, the maximum potential amount of future payments NCM LLC could be required to make pursuant to the minimum revenue guarantees is $ 141.7 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 NCM LLC.

As of December 29, 2022, NCM, Inc.

had $ 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.

Following the deconsolidation of NCM LLC on the petition date, there are no affiliate related liabilities on NCM, Inc.’s Condensed Consolidated Balance Sheet as of June 29, 2023.

FAIR VALUE MEASUREMENTS

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

7 unchanged sentences

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.

Equity securities without a readily determinable fair value —On a periodic basis, but no less frequently than quarterly, the investment in equity securities without readily determinable fair value is qualitatively assessed for impairment if there are events or changes in circumstances that may have a significant adverse effect on the fair value of the investment.

If a significant adverse effect on the fair value of the investment were to occur and was deemed to be other-than-temporary, the fair value of the investment would be estimated, and the amount by which the carrying value of the investment exceeds its fair value would be recorded within Net Income.

NATIONAL CINEMEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 29, 2023 December 29, 2022

Investment in NCM LLC (1)

Other investments (2)(3)

Total $ 11.9 $ 0.1

_______________________________________

(1) Refer to Note 4— Investment in Unconsolidated NCM LLC .

This investment is accounted for at cost minus impairment in accordance with the measurement alternative outlined in ASC 321— Investments – Equity Securities .

(2) Following the deconsolidation of NCM LLC on the petition date, these investments are not on NCM, Inc.’s Condensed Consolidated Balance Sheet as of June 29, 2023.

(3) NCM LLC received equity securities in privately held companies as consideration for a portion of advertising contracts.

These investments were recorded based upon the fair value of the services provided in exchange for the investment.

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

NCM LLC does not exert significant influence on these companies’ operating or financial activities.

Long-Lived Assets, Intangible Assets and Other Investments —As described in Note 1— The Company , 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 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.

Following the deconsolidation of NCM LLC on the petition date, there are no other investments on NCM, Inc.’s Condensed Consolidated Balance Sheet as of June 29, 2023.

Other investments consisted of the following (in millions):

March 30, 2023 December 29, 2022

June 29, 2023 December 29, 2022

Investment in AC JV, LLC (1)(2)

Other investments (2)

Total $ — $ 0.8

_______________________________________

(1) Refer to Note 5— Related Party Transactions .

(1) This investment is accounted for utilizing the equity method.

(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.

The other investments were recorded based upon the fair value of the services provided in exchange for the investment.

The investment was initially valued using comparative market multiples.

(2) Following the deconsolidation of NCM LLC on the petition date, these investments are not on NCM, Inc.’s Condensed Consolidated Balance Sheet as of June 29, 2023.

During the three months ended June 29, 2023 and June 30, 2022 and six months ended June 29, 2023 and June 30, 2022, NCM, Inc.

recorded impairment charges of $ 0.0 million, $ 0.0 million, $ 0.0 million and $ 0.1 million, respectively, on certain of its investments due to new information regarding the fair value of the investee.

As of June 29, 2023, no other observable price changes or impairments have been recorded as a result of NCM LLC’s qualitative assessment of identified events or changes in the circumstances of the investments.

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

Borrowings —As NCM LLC is the debtor of all loans held, there is no debt on NCM, Inc.’s Condensed Consolidated Balance Sheet as of June 29, 2023.

The estimated fair values of NCM, Inc.’s financial instruments where carrying values do not approximate fair value are as follows (in millions):

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Carrying Value Fair Value (1)

As of June 29, 2023 As of December 29, 2022

Carrying Value Fair Value Carrying Value Fair Value (1)

Revolving credit facility 2018 $ — $ — $ 167.0 $ 44.6

5 unchanged sentences

____________________________________________

(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.

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

If NCM LLC 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):

The fair values of the NCM, Inc.’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 March 30, 2023 Quoted Prices in Active Markets for Identical Assets

Fair Value as of June 29, 2023 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other

3 unchanged sentences

Short-term marketable securities (2)

Long-term marketable securities (2)

Long-term corporate bonds (2)(3)

Total assets $ 9.5 $ 0.8 $ 8.7 $ —

9 unchanged sentences

___________________________________________

(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.

(1) Cash Equivalents —NCM, Inc.’s cash equivalents are carried at estimated fair value.

Cash equivalents consist of money market accounts which NCM, Inc.

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 and municipal bonds are derived from quoted market information.

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

The value of NCM, Inc.’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.

The value of commercial paper and certificates of deposit is derived from pricing models using inputs based upon market information, including contractual terms, market prices and yield curves.

The value of corporate bonds, commercial paper and certificates of deposit is derived from pricing models using inputs based upon market information, including contractual terms, market prices and yield curves.

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.

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

As of June 29, 2023 and December 29, 2022, there were $ 8.5 million and $ 0.2 million, respectively, of available-for-sale debt securities in unrealized loss positions without an allowance for credit losses.

has not recorded an allowance for credit losses for the

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

purchased $ 25.8 million of the Notes due 2028 on the open market, in the quarter ended June 30, 2022.

Prior to the deconsolidation of NCM LLC, these intercompany balances were eliminated on consolidation.

The amortized cost basis, aggregate fair value and maturities of the Level 1 fair value securities NCM, Inc.

held as of June 29, 2023 and December 29, 2022 were as follows:

As of June 29, 2023

Amortized Cost

1 unchanged sentence

(in millions) Maturities (1)

MARKETABLE SECURITIES:

LEVEL 1 FAIR VALUE SECURITIES:

Short-term certificates of deposit $ 1.0 $ 1.0 0.6

Total short-term marketable securities 1.0 1.0

Long-term certificates of deposit 0.3 0.3 1.1

Long-term corporate bonds 25.8 7.7 4.9

Total long-term marketable securities 25.8 7.7

4 unchanged sentences

(in millions) Maturities (1)

MARKETABLE SECURITIES:

LEVEL 1 FAIR VALUE SECURITIES:

Short-term certificates of deposit $ 0.7 $ 0.7 1.0

5 unchanged sentences

(1) Maturities —Securities available for sale include obligations with various contractual maturity dates some of which are greater than one year.

The Company considers the securities to be liquid and convertible to cash within 30 days.

considers the securities to be liquid and convertible to cash within 30 days.

SUBSEQUENT EVENT

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;

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.

• 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.

Regal Agreements — On June 3, 2023, NCM LLC, entered into a Network Affiliate Transaction Agreement (the “Regal Advertising Agreement”) with Regal.

The Regal Advertising Agreement became effective on July 14, 2023.

The Regal Advertising Agreement provides that NCM LLC will acquire the exclusive right to provide on-screen advertisements at Regal’s theaters for a term of ten years in exchange for payments based on the attendance at Regal’s theaters and the revenue generated by NCM LLC through advertising displayed in Regal’s theaters.

Pursuant to the Regal Advertising Agreement, NCM LLC will have the right to display advertising in Regal’s theaters with a program of inventory that provides for (i) up to five minutes in length for exhibition on-screen immediately prior to showtime of a feature film or digital programming event, (ii) up to ten minutes immediately after the showtime of a feature film, extending the time available to NCM LLC by five minutes, and (iii) the Platinum Spot that may be exhibited on-screen prior to the last two trailers, which may be either thirty or sixty seconds in length, and subject to Regal’s approval, NCM LLC may display two thirty-second spots in the Platinum Spot and a Gold Spot, a thirty second spot displayed immediately prior to the fourth trailer preceding a feature film or digital programming event.

Pursuant to a separate termination agreement (the “Regal Termination Agreement”), effective on July 14, 2023, Regal rejected the ESA and it was terminated.

Additionally Regal and Regal’s affiliates’ waive all rights and interests as to the Tax Receivable Agreement, the Common Unit Adjustment Agreement, the Software License Agreement, the Director Designation Agreement, the Registration Rights Agreement and all the other joint venture agreements described in NCM LLC’s Third

Amended and Restated Limited Liability Company Operating Agreement and the Company and NCM LLC, and Regal and Regal’s affiliates waived and released claims against the other party.

Regal has also agreed to support NCM LLC’s Plan and surrender all shares in the Company upon the effective date of the Plan.

In connection with the Regal Advertising Agreement, NCM LLC and Regal also agreed to dismiss with prejudice the ongoing litigation between the parties related to NCM LLC’s request to enforce certain provisions of the ESA, including the exclusivity provision.

The Regal Termination Agreement will result in the material disposal of the intangible asset related to the common unit adjustments and ESA extension costs for Regal included on NCM LLC’s Condensed Balance Sheet included within Note 4— Investment in Unconsolidated NCM LLC .

Subsequent to June 29, 2023, Regal will no longer be a founding member or a related party to NCM, Inc.

Delisting of our Common Stock from NASDAQ —On July 28, 2023, the Company received written notice from The Nasdaq Stock Market LLC (“Nasdaq”) that the Nasdaq Hearings Panel (the “Panel”) had approved the Company’s request for continued listing subject to the Company demonstrating compliance with Nasdaq’s continued listing requirements on or before August 31, 2023.

As previously disclosed, on April 21, 2023, the Company requested an appeal with the Panel regarding a determination by the Listing Qualifications department of Nasdaq to delist the Company’s securities following NCM LLC’s Chapter 11 Case, and, on June 14, 2023, the Panel approved the Company’s request for continued listing on an interim basis through July 26, 2023.

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