What changed in this filing

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Item 1. Financial Statements

2024-05-06 compared with 2023-11-07 · 278 added, 440 removed, 426 unchanged (63% of the section changed)

4 unchanged sentences

(In millions, except share and per share data)

September 28, 2023 December 29, 2022

March 28, 2024 December 28, 2023

CURRENT ASSETS:

1 unchanged sentence

Restricted cash 3.0 3.0

Short-term marketable securities — 0.7

Receivables, net of allowance of $ 1.3 and $ 1.4 , respectively

Prepaid expenses 10.6 3.9

Other current assets 0.5 4.0

Prepaid expenses and other current assets 8.7 9.6

Total current assets 117.4 143.8

3 unchanged sentences

Other investments 1.0 0.7

Long-term marketable securities — 0.3

Debt issuance costs, net 1.9 2.2

2 unchanged sentences

TOTAL ASSETS $ 538.6 $ 567.7

LIABILITIES AND EQUITY/(DEFICIT)

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Amounts due to NCM LLC’s other members, net (related party payables of $ 0.0 and $ 15.2 , respectively)

Payable under tax receivable agreement (including payables to related parties of $ 0.0 and $ 0.2 , respectively)

Amounts due to ESA Parties, net $ 4.9 $ 6.6

Accrued expenses 1.7 1.6

2 unchanged sentences

Deferred revenue 13.0 9.8

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

Short-term operating lease liability 1.1 2.2

Other current liabilities 1.3 1.0

Total current liabilities 42.5 58.4

1 unchanged sentence

Long-term debt 10.0 10.0

Payable under tax receivable agreement (including payables to related parties of $ 0.0 and $ 25.5 , respectively)

Long-term operating lease liability 5.3 18.0

Payable under TRA 71.9 59.8

Other liabilities 11.9 5.0

Total non-current liabilities 93.8 74.8

1 unchanged sentence

COMMITMENTS AND CONTINGENCIES (NOTE 9)

EQUITY/(DEFICIT):

Stockholders’ Equity/(Deficit):

Stockholders’ Equity:

Preferred stock, $ 0.01 par value;

1 unchanged sentence

Common stock, $ 0.01 par value;

260,000,000 and 260,000,000 shares authorized, 96,784,236 and 12,840,264

260,000,000 shares authorized, 97,082,436 and 96,837,039

issued and outstanding, respectively

Additional paid in capital/(deficit) 113.8 ( 146.2 )

Retained earnings (accumulated deficit) 293.0 ( 370.4 )

Additional paid in capital 118.0 115.3

Retained earnings 281.8 316.6

Total NCM, Inc.

stockholders’ equity/(deficit) 409.3 ( 515.3 )

stockholders’ equity 402.3 434.5

Noncontrolling interests — —

Total equity/(deficit) 409.3 ( 464.0 )

TOTAL LIABILITIES AND EQUITY/(DEFICIT) $ 539.0 $ 792.4

Total equity 402.3 434.5

TOTAL LIABILITIES AND EQUITY $ 538.6 $ 567.7

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

3 unchanged sentences

(In millions, except share and per share data)

Three Months Ended Nine Months Ended

September 28, 2023 September 29, 2022 September 28, 2023 September 29, 2022

REVENUE (including revenue from related parties of $ 0.0 , $ 3.9 , $ 11.8 and $ 11.3 ,

respectively)

Three Months Ended

March 28, 2024 March 30, 2023

REVENUE (including revenue from related parties of $ 0.0 , and $ 3.3 , respectively)

$ 37.4 $ 34.9

OPERATING EXPENSES:

Advertising operating costs 8.3 6.3 15.0 19.3

Network costs 1.5 2.1 4.1 6.2

ESA theater access fees and revenue share (including fees to related parties of

$ 0.0 , $ 15.4 , $ 16.5 , and $ 45.2 , respectively)

7.3 21.3 30.6 62.4

Network operating costs 3.6 3.9

ESA Parties and network affiliate fees (including fees to related parties of $ 0.0 , and $ 13.9 , respectively)

Selling and marketing costs 10.0 9.5

Administrative and other costs 13.5 20.8

Impairment of long-lived assets — — — 5.8

Depreciation expense 1.0 1.3

2 unchanged sentences

OPERATING LOSS ( 22.7 ) ( 30.6 )

NON-OPERATING EXPENSES (INCOME):

NON-OPERATING EXPENSE (INCOME):

Interest on borrowings 0.4 24.0

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

Loss (gain) on re-measurement of the payable under the tax receivable

agreement 9.3 ( 2.2 ) 12.7 4.0

Gain on sale of asset — — ( 0.3 ) —

Gain on deconsolidation of affiliate — — ( 557.7 ) —

Gain on re-measurement of investment in NCM LLC ( 35.3 ) — ( 35.5 ) —

Gain on reconsolidation of NCM LLC ( 168.0 ) — ( 168.0 ) —

Other non-operating (income) expense ( 0.4 ) ( 0.1 ) 0.2 ( 0.3 )

Loss (gain) on re-measurement of the payable under the tax receivable agreement 12.3 ( 0.6 )

Other non-operating income ( 0.7 ) —

Total 12.0 23.4

INCOME (LOSS) BEFORE INCOME TAXES 181.8 ( 21.7 ) 673.0 ( 76.3 )

LOSS BEFORE INCOME TAXES ( 34.7 ) ( 54.0 )

Income tax expense — —

CONSOLIDATED NET INCOME (LOSS) 181.8 ( 21.7 ) 673.0 ( 76.3 )

CONSOLIDATED NET LOSS ( 34.7 ) ( 54.0 )

Net loss attributable to noncontrolling interests — ( 8.5 )

NET INCOME (LOSS) ATTRIBUTABLE TO NCM, INC.

NET LOSS ATTRIBUTABLE TO NCM, INC.

$ ( 34.7 ) $ ( 45.5 )

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO NCM, INC.

COMPREHENSIVE LOSS ATTRIBUTABLE TO NCM, INC.

$ ( 34.7 ) $ ( 45.5 )

NET INCOME (LOSS) PER NCM, INC.

NET LOSS PER NCM, INC.

COMMON SHARE:

9 unchanged sentences

(In millions) (UNAUDITED)

Nine Months Ended

September 28, 2023 September 29, 2022

Three Months Ended

March 28, 2024 March 30, 2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Consolidated net income (loss) $ 673.0 $ ( 76.3 )

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

Consolidated net loss $ ( 34.7 ) $ ( 54.0 )

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

Depreciation expense 1.0 1.3

1 unchanged sentence

Non-cash share-based compensation 2.6 1.5

Impairment of long-lived assets — 5.8

Gain on sale of assets ( 0.3 ) —

Gain on deconsolidation of affiliate ( 557.7 ) —

Gain on re-measurement of NCM LLC ( 35.5 ) —

Gain on reconsolidation of NCM LLC ( 168.0 ) —

Amortization of debt issuance costs 0.2 2.7

Loss (gain) on modification and retirement of debt, net 0.4 ( 5.9 )

Non-cash loss on re-measurement of the payable under

the tax receivable agreement 12.7 4.0

Non-cash loss (gain) on re-measurement of the payable under the tax receivable

agreement 12.3 ( 0.6 )

Other ( 0.2 ) —

3 unchanged sentences

Receivables, net 47.9 52.7

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

$ 0.0 and $ 0.0 , respectively)

Accounts payable and accrued expenses ( 17.1 ) 6.4

ESA amounts due to/from, net ( 1.7 ) ( 3.5 )

2 unchanged sentences

Other, net ( 0.1 ) ( 5.0 )

Net cash used in operating activities ( 22.3 ) ( 36.7 )

Net cash provided by operating activities 24.1 10.4

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment ( 1.5 ) ( 1.0 )

Cash contributed in reconsolidation ( 15.5 ) —

Cash, cash equivalents and restricted cash reconsolidated 49.5 —

Proceeds from the sale of assets — 0.3

Proceeds from sale and maturities of marketable securities 1.0 —

Net cash provided by (used in) investing activities 33.6 ( 2.0 )

Proceeds received from equity method investment 0.2 —

Net cash used in investing activities ( 1.3 ) ( 0.7 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of dividends ( 0.3 ) ( 0.4 )

Issuance of revolving credit facility — 50.0

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

Repayment of Notes due 2028 — ( 19.8 )

Repayment of term loan facility — ( 0.8 )

Payment of debt issuance costs — ( 1.2 )

Repurchase of stock for restricted stock tax withholding — ( 0.3 )

Net cash (used in) provided by financing activities ( 52.1 ) 11.0

Net cash used in financing activities ( 0.3 ) ( 2.4 )

CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 22.5 7.3

6 unchanged sentences

(In millions)

Nine Months Ended

September 28, 2023 September 29, 2022

Three Months Ended

March 28, 2024 March 30, 2023

Supplemental disclosure of non-cash financing and investing activity:

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

Issuance of shares upon the reconsolidation of NCM LLC $ 245.3 $ —

Fair Value of NCM LLC net assets reconsolidated, net of cash $ 434.0 $ —

Purchase of subsidiary equity with NCM, Inc.

Right of use assets obtained in exchange for lease liabilities $ 7.2 $ —

Accrued purchases of property and equipment $ 0.5 $ 0.2

Exchange of subsidiary equity with NCM, Inc.

equity $ — $ 10.3

Dividends declared not requiring cash in the period $ ( 0.1 ) $ 0.7

Supplemental disclosure of cash flow information:

7 unchanged sentences

Paid in Capital (Deficit) Retained

(Accumulated Deficit) Noncontrolling Interest

Common Stock Preferred Stock

Consolidated Shares Amount Shares Amount

Balance—June 30, 2022 $ ( 431.3 ) 8,149,243 $ 0.8 — $ — $ ( 190.4 ) $ ( 364.9 ) $ 123.3

Income tax and other impacts of NCM

LLC ownership changes ( 0.2 ) — — — — 0.1 — ( 0.3 )

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

Share-based compensation issued, net of

tax ( 0.1 ) 20,924 — — — ( 0.1 ) — —

Share-based compensation expensed/

capitalized 2.2 — — — — 1.4 — 0.8

Cash dividends declared $ 0.03 per share

( 2.7 ) — — — — — ( 2.7 ) —

Balance— September 29, 2022 $ ( 453.8 ) 8,170,167 $ 0.8 — $ — $ ( 189.1 ) $ ( 376.5 ) $ 111.0

Balance—June 29, 2023 $ ( 19.3 ) 17,405,978 $ 1.7 — $ — $ ( 132.3 ) $ 111.3 $ —

Income tax and other impacts of NCM

LLC ownership changes 5.8 — — — — 5.9 ( 0.1 ) —

Issuance of shares, net 232.3 79,353,079 0.8 50 — 231.5 — —

NCM LLC common membership unit

redemption 7.7 — — — — 7.7 — —

Comprehensive income, net of tax 181.8 — — — — — 181.8 —

Share-based compensation issued, net of

tax — 25,179 — — — — — —

Share-based compensation expensed/

capitalized 1.0 — — — — 1.0 — —

Balance—September 28, 2023 $ 409.3 96,784,236 $ 2.5 50 $ — $ 113.8 $ 293.0 $ —

Paid in Capital (Deficit) Retained

(Accumulated Deficit) Noncontrolling Interest

(Accumulated Deficit) Non-controlling Interest

Common Stock Preferred Stock

1 unchanged sentence

Balance—December 29, 2022 $ ( 464.0 ) 12,840,264 $ 1.2 — $ — $ ( 146.2 ) $ ( 370.4 ) $ 51.4

NCM LLC equity issued for purchase of

intangible asset 10.4 — — — — 4.9 — 5.5

Income tax and other impacts of NCM

LLC ownership changes 0.4 — — — — ( 1.6 ) — 2.0

Income tax and other impacts of NCM LLC

ownership changes ( 15.5 ) — — — — 27.5 — ( 43.0 )

Issuance of shares 10.3 4,369,080 0.4 — — 9.9 — —

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

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

Share-based compensation issued, net of

tax ( 0.3 ) 107,478 — — — ( 0.3 ) — —

Share-based compensation issued, net of tax 0.1 196,068 0.1 — — — — —

Share-based compensation expensed/

capitalized 1.6 — — — — 1.5 — 0.1

Cash dividends declared $ 0.11 per share

( 9.7 ) — — — — — ( 9.7 ) —

Balance— September 29, 2022 $ ( 453.8 ) 8,170,167 $ 0.8 — $ — $ ( 189.1 ) $ ( 376.5 ) $ 111.0

Balance— March 30, 2023 $ ( 531.8 ) 17,405,412 $ 1.7 — $ — $ ( 117.6 ) $ ( 415.9 ) $ —

Balance—December 28, 2023 $ 434.5 96,837,039 $ 2.6 50 $ — $ 115.3 $ 316.6 $ —

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

Income tax and other impacts of NCM

LLC ownership changes ( 9.6 ) — — — — 33.4 — ( 43.0 )

Issuance of shares, net 242.6 83,722,159 1.2 50 — 241.4 — —

NCM LLC common membership unit

redemption ( 2.6 ) — — — — ( 2.6 ) — —

Comprehensive income, net of tax 673.0 — — — — — 681.5 ( 8.5 )

Share-based compensation issued, net of

tax 0.1 221,813 0.1 — — — — —

Share repurchases ( 0.2 ) ( 8,000 ) ( 0.1 ) — — — ( 0.1 ) —

Comprehensive loss, net of tax ( 34.7 ) — — — — — ( 34.7 ) —

Share-based compensation issued, net of tax 0.1 253,397 — — — 0.1 — —

Share-based compensation expensed/

capitalized 2.6 — — — — 2.6 — —

Balance—September 28, 2023 $ 409.3 96,784,236 $ 2.5 50 $ — $ 113.8 $ 293.0 $ —

Balance—March 28, 2024 $ 402.3 97,082,436 $ 2.5 50 $ — $ 118.0 $ 281.8 $ —

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

7 unchanged sentences

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

and sells advertising under long-term exhibitor service agreements (“ESAs”) with Cinemark Media, Inc.

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

and sells advertising under long-term exhibitor service agreements (“ESAs”) with Cinemark USA, Inc., a wholly owned subsidiary of Cinemark Holdings, Inc.

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

(“AMC”) and with certain network affiliates under long-term network affiliates agreements, including Regal Cinemas, Inc.

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

As of September 28, 2023, the weighted average remaining term of the ESAs with Cinemark and AMC was approximately 15.3 years.

The network affiliate agreements expire at various dates between December 2023 and July 2033.

The weighted average remaining term of the ESAs and the network affiliate agreements together is 12.1 years as of September 28, 2023.

Chapter 11 Proceedings

NCM LLC was wholly owned by NCM, Inc.

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 a result of the Chapter 11 Case and in accordance with applicable accounting principles generally accepted in the United States of America (“GAAP”), the Company concluded that NCM, Inc.

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

On June 27, 2023, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming NCM LLC’s Modified First Amended Plan of Reorganization of National CineMedia, LLC Pursuant to Chapter 11 of the Bankruptcy Code (as amended, modified, or supplemented from time to time, the “Plan”) and approving the Disclosure Statement on a final basis.

Following confirmation of the Plan, on August 7, 2023, all the conditions to effectiveness of the Plan were satisfied or waived, the Restructuring Transactions were substantially consummated, and NCM LLC emerged from bankruptcy (the “Effective Date”).

Among other things, on the Effective Date, in accordance with the Plan, NCM, Inc.

transferred approximately $ 15.5 million to NCM LLC consistent with the NCMI 9019 Settlement, NCM LLC assumed certain unexpired Executory Contracts and Unexpired Leases, including AMC’s and Cinemark’s ESAs, all Common Units under NCM LLC’s Third Amended and Restated Limited Liability Company Operating Agreement (the “NCM LLC Operating Agreement”) were canceled and extinguished, NCM LLC commenced distributions to creditors, including the issuance of shares of NCM, Inc.

common stock to Holders of Secured Debt Claims and NCM LLC entered into an exit facility to support operations upon emergence, as described herein.

Capitalized terms used but not otherwise defined in this Quarterly Report on Form 10-Q have the meanings given to them in the Plan.

Upon emergence from bankruptcy, NCM, Inc.

retained ownership and regained control of NCM LLC.

NCM LLC was again consolidated into the Company’s consolidated financial statements prospectively as of the Effective Date.

Upon emergence, NCM LLC transferred $ 8.8 million of cash to a professional fees escrow account and $ 15.0 million to an unsecured creditor settlements escrow account.

As of September 28, 2023, the Company had not completed all agreed upon payments to NCM LLC’s unsecured creditors or professional service providers and held a total of $ 5.8 million within the escrow accounts and accruals, presented within ‘Restricted cash’ and ‘Accounts Payable’ on the unaudited Condensed Consolidated Balance Sheet as of September 28, 2023, respectively.

Please refer to Note 4— Reconsolidation of NCM LLC for more information regarding the reconsolidation of NCM LLC.

(“AMC”) and with certain network affiliates under long-term network affiliates agreements, including Regal Cinemas, Inc., a wholly owned subsidiary of Cineworld Group plc and Regal Entertainment Group (“Regal”).

As of March 28, 2024, the weighted average remaining term of the ESAs with Cinemark and AMC was approximately 14.8 years.

The network affiliate agreements expire at various dates between January 2025 and July 2033.

The weighted average remaining term of the ESAs and the network affiliate agreements together is 11.7 years as of March 28, 2024.

Bankruptcy Filing, Deconsolidation and Reconsolidation of NCM LLC

On April 11, 2023 NCM LLC filed a voluntary petition for reorganization (the “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 (“Bankruptcy Court”).

During the Chapter 11 Case, the Company was deemed to no longer control NCM LLC for accounting purposes and NCM LLC was deconsolidated from the Company’s financial statements prospectively as of April 11, 2023.

continued to operate as the manager of the debtor-in-possession pursuant to the authority granted under Chapter 11 of the Bankruptcy Code throughout the Chapter 11 Case.

428] (as may be amended, modified, or supplemented form time to time, the “Plan”) and approving the Amended Disclosure Statement for First Amended Chapter 11 Plan of Reorganization of National CineMedia, LLC [Docket No.

250] (the “Disclosure Statement”) on a final basis.

Following confirmation of the Plan on August 7, 2023 (the “Effective Date”), all the conditions to effectiveness of the Plan were satisfied or waived, the Restructuring Transactions (as defined in the Plan”) were substantially consummated and NCM LLC emerged from bankruptcy.

Among other things, on the Effective Date, in accordance with the Plan, all common units under the NCM LLC’s Third Amended and Restated Limited Liability Company Operating Agreement (the “NCM LLC Operating Agreement”) were canceled and extinguished, NCM, Inc.

received NCM LLC common units and transferred the NCM Capital Contribution (as defined in the Plan) of approximately $ 15.5 million to NCM LLC, NCM LLC assumed certain unexpired Executory Contracts and Unexpired Leases (each, as defined in the Plan), including AMC’s and Cinemark’s ESAs, NCM LLC transferred $ 8.8 million of cash to a professional fees escrow account and $ 15.0 million to an unsecured creditor settlements escrow account for the General Unsecured Claim Pool (as defined in the Plan).

NCM LLC commenced distributions to creditors, including the issuance of shares of NCM, Inc.

common stock to holders of Secured Debt Claims (as defined in the Plan) and NCM LLC entered into an Exit Facility (as defined in the Plan) to support operations upon emergence.

As a result of the Plan, all historical debt of NCM LLC was discharged and NCM LLC recorded a gain on bankruptcy of $ 916.4 million for the year ended December 28, 2023.

Additionally, upon emergence from bankruptcy, NCM, Inc., regained control and retained 100.0 % ownership of NCM LLC, after taking into account elections by the holders of Secured Debt Claims to receive NCM, Inc.

common stock in lieu of NCM LLC common units and was therefore reconsolidated into the Company’s financial statements prospectively as of August 7, 2023 akin to an acquisition under ASC 805 – Business Combinations .

In accordance with ASC 805 – Business Combinations , the assets and liabilities of NCM LLC were adjusted to their estimated fair value as of the Effective Date.

As of March 28, 2024, the Company had not completed all agreed upon payments to the General Unsecured Claim Pool and held a total of $ 3.0 million within the escrow accounts and accruals, presented within ‘Restricted cash’ and ‘Accounts payable’ on the unaudited Consolidated Balance Sheet as of March 28, 2024, respectively.

Other Developments

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 September 28, 2023.

common stock, reducing AMC’s and Regal’s ownership to 0.0 % in NCM LLC as of December 28, 2023 and March 28, 2024.

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 in NCM LLC to 0.0 % as of September 28, 2023.

AMC and Cinemark and their affiliates are referred to in this document as “ESA Parties”.

NATIONAL CINEMEDIA, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

common stock.

These redemptions reduced Cinemark’s ownership interest in NCM LLC to 0.0 % as of December 28, 2023 and March 28, 2024.

AMC and Cinemark and their affiliates are referred to in this document as “ESA Parties”.

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

5 unchanged sentences

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.

As of July 14, 2023, Regal is no longer a founding member of NCM, Inc.

Beginning on July 14, 2023, Regal is no longer an ESA Party of NCM, Inc.

Basis of Presentation

6 unchanged sentences

The Company has reclassified certain historical amounts on the unaudited Condensed Consolidated Balance Sheets, Statements of Operations and Statements of Cash Flows to conform to current period presentation.

In the three months ended March 28, 2024, the Company reclassified certain historical expenses on the unaudited Condensed Consolidated Statements of Operations from ‘Advertising operating costs’ and ‘Network costs’ to ‘Network operating costs’ and certain historical expenses from ‘Advertising operating costs’ and ‘ESA theater access fees and revenue shares’ to ‘ESA Parties and network affiliate fees’ to conform to current period presentation.

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

7 unchanged sentences

The reverse stock split reduced the number of outstanding shares of the Company’s common stock from 174,112,385 shares as of August 3, 2023, to 17,411,323 shares outstanding post-split.

The primary purpose of the reverse stock split was to comply with the Company’s obligations under the NCMI 9019 Settlement and so that the Plan may become effective as well as to increase the per share market price of the Company’s common stock in an effort to maintain compliance with applicable Nasdaq continued listing standards with respect to the closing price of the Company’s common stock.

The primary purpose of the reverse stock split was to comply with the Company’s obligations under a settlement reached between the Company, NCM LLC and certain lender parties thereto in connection with the Chapter 11 Case (the “NCMI 9019 Settlement”) and so that the Plan may become effective as well as to increase the per share market price of the Company’s common stock in an effort to maintain compliance with applicable Nasdaq continued listing standards with respect to the closing price of the Company’s common stock.

The number of shares of common stock issued and outstanding for the three months ended March 30, 2023 prior to the reverse stock split have been retroactively adjusted by the one-for-ten reverse stock split.

Significant Accounting Policies

1 unchanged sentence

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

NATIONAL CINEMEDIA, INC.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

account which reduces the net receivables balance.

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.

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.

5 unchanged sentences

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 September 28, 2023.

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

During the three and nine months ended September 28, 2023, the Company had two customers that accounted for 30.5 % and 26.5 % of the Company’s revenue, respectively.

During the three and nine months ended September 29, 2022, the Company had two customers that accounted for 14.6 % and 15.0 % 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 .

The Company had no agencies through which it sourced advertising revenue that accounted for 10.0 % of the Company’s gross outstanding receivable balance as of March 28, 2024 and December 28, 2023.

During the three months ended March 28, 2024 and March 30, 2023, the Company had one customer that accounted for 10.2 % a nd 13.7 % of the Company’s revenue, respectively.

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

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

The Company recorded losses of $ 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 September 28, 2023 and September 29, 2022 and nine months ended September 28, 2023 and September 29, 2022, respectively.

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

Compensation expense of restricted stock and restricted stock units that vest upon the achievement of Company performance measures is based on management’s financial projections and the probability of achieving the projections, which require considerable judgment.

A cumulative adjustment is recorded to share-based compensation expense in periods that management changes its estimate of the number of shares of restricted stock and restricted stock units expected to vest.

The Company did not record any losses related to the write-off of certain internally developed software during the three months ended March 28, 2024 and March 30, 2023, respectively.

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

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

Compensation expense of restricted stock units that vest upon the achievement of Company performance measures is based on management’s financial projections and the probability of achieving the projections, which require considerable judgment.

A cumulative adjustment is recorded to share-based compensation expense in periods that management changes its estimate of the number of shares of restricted stock units expected to vest.

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

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

On February 28, 2021, March 2, 2021 and January 19, 2022, the Company’s Board of Directors approved certain modifications to equity awards awarded under the Company’s 2016 Equity Incentive Plan and 2020 Omnibus Equity Incentive Plan to adjust performance metrics, vesting amount and future performance goals in light of the novel coronavirus pandemic (“COVID-19 Pandemic”) resulting in incremental share-based compensation expense of $ 0.1 million, $ 0.1 million, $ 0.2 million and $ 0.5 million for the three months ended September 28, 2023 and September 29, 2022 and nine months ended September 28, 2023 and September 29, 2022, respectively.

During the three months ended September 28, 2023 and September 29, 2022 and the nine months ended September 28, 2023 and September 29, 2022, 29,954 , 23,069 , 234,870 and 115,582 shares of restricted stock and restricted stock units vested, respectively.

Additionally, in conjunction with NCM LLC’s emergence from bankruptcy, 50 shares of Series B Preferred Stock were issued to the Company’s Chief Executive Officer.

Compensation expense of restricted stock units that vest upon achievement of certain market conditions is based on an estimate of the fair value of the granted restricted stock units on the grant date, which requires considerable judgement.

The fair value of the granted restricted stock units is expensed over an estimated derived service period, which also requires considerable judgement.

In accordance with ASC 718 — Stock Compensation , the Company does not adjust the expense recognized to reflect the actual vested shares following the resolution of the market condition.

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

During the three months ended March 28, 2024, 6.3 million shares of restricted stock units were granted.

During the three months ended March 30, 2023, no shares of restricted stock units were granted.

During the three months ended March 28, 2024 and March 30, 2023, 187,602 , and 204,431 shares of restricted stock units vested, respectively.

Additionally, the Company recorded $ 2.6 million and $ 1.6 million in share-based compensation expense during the three months ended March 28, 2024 and March 30, 2023, respectively, within ‘Network operating costs’, ‘Selling and marketing costs’ and ‘Administrative and other costs’ within the unaudited Condensed Consolidated Statements of Operations.

Consolidation —NCM, Inc.

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having a controlling financial interest in NCM LLC.

As a result, NCM LLC was deemed to be the primary beneficiary of NCM LLC and the Company has consolidated NCM LLC under the variable interest entity provisions of ASC 810 — Consolidation.

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

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

As a result, NCM LLC was deemed to be the primary beneficiary of NCM LLC and the Company has consolidated NCM LLC

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended Nine Months Ended

September 28, 2023 September 29, 2022 September 28, 2023 September 29, 2022

Net income (loss) attributable to NCM, Inc.

under the variable interest entity provisions of ASC 810 — Consolidation.

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

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

Three Months Ended

March 28, 2024 March 30, 2023

Net loss attributable to NCM, Inc.

$ ( 34.7 ) $ ( 45.5 )

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

Income tax and other impacts of subsidiary ownership changes — 27.5

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Issuance of shares, net — 9.9

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

transfers from noncontrolling interests $ 426.9 $ ( 8.8 ) $ 953.7 $ ( 31.5 )

Change from net loss attributable to NCM, Inc.

and transfers from noncontrolling interests $ ( 34.7 ) $ ( 18.4 )

Recently Adopted Accounting Pronouncements

The Company did not adopt any new accounting pronouncements during the three and nine months ended September 28, 2023.

The Company did not adopt any accounting pronouncements during the three months ended March 28, 2024.

Recently Issued Accounting Pronouncements

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

2020-04, Reference Rate Reform (“ASU 2020-04”), which provides temporary optional guidance to companies impacted by the transition away from the London Interbank Offered Rate (“LIBOR”).

The guidance provides certain expedients and exceptions to applying GAAP in order to lessen the potential accounting burden when contracts, hedging relationships, and other transactions that reference LIBOR as a benchmark rate are modified.

This guidance is effective upon issuance and expires on December 31, 2024.

The Company concluded the LIBOR transition did not 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.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which establishes segment disclosure requirements in addition to modifying and eliminating certain existing requirements.

Under the new guidance, entities must disclose incremental segment information on an annual and interim basis to enable investors to develop more decision-useful financial analyses.

This guidance is effective for issuances on and after December 15, 2024.

The Company does not believe this will have a material impact on the Company’s Consolidated Financial Statements.

In January 2024, the FASB issued Accounting Standards Update No.

2023-09, Income Tax Disclosures (“ASU 2023-09”), which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements.

Under the new guidance, entities must consistently categorize and provide greater disaggregation of information in the rate reconciliation.

They must also further disaggregate income taxes paid.

This guidance is effective for issuances on and after December 15, 2024.

The Company does not believe this will have a material impact on the Company’s 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 Consolidated Financial Statements or notes thereto.

REVENUE FROM CONTRACTS WITH CUSTOMERS AND ACCOUNTS RECEIVABLE

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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, and through the Company’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 .

In addition, the Company sells online and mobile advertising, including through Noovie Audience Accelerator, and through the Company’s digital gaming products .

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

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

The Company does not have any contracts with customers with terms in excess of one year that are noncancellable as of September 28, 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.

The Company does not have any significant contracts with customers with terms in excess of one year that are noncancellable as of March 28, 2024.

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

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

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The Company disaggregates revenue based upon the type of customer:

local and regional;

beverage concessionaire;

and management fee reimbursement revenue related to NCM LLC.

local and regional and beverage concessionaire.

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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes revenue from contracts with customers for the three months and nine months ended September 28, 2023 and September 29, 2022 (in millions):

Three Months Ended Nine Months Ended

September 28, 2023 September 29, 2022 September 28, 2023 September 29, 2022

The following table summarizes revenue from contracts with customers for the three months ended March 28, 2024 and March 30, 2023 (in millions):

Three Months Ended

March 28, 2024 March 30, 2023

National advertising revenue $ 29.5 $ 22.5

Local and regional advertising revenue 5.3 8.0

ESA advertising revenue from beverage concessionaire

agreements 1.7 5.0 7.1 14.4

Management fee reimbursement 2.4 — 10.1 —

ESA advertising revenue from beverage concessionaire agreements 2.6 4.4

Total revenue $ 37.4 $ 34.9

Deferred Revenue and Unbilled Accounts Receivable

Revenue recognized in the nine months ended September 28, 2023 that was included within the Deferred Revenue balance as of December 29, 2022 was $ 8.6 million.

As of September 28, 2023 and December 29, 2022, the Company had $ 1.5 million and $ 5.0 million in unbilled accounts receivable, respectively.

Revenue recognized in the three months ended March 28, 2024 that was included within the ‘Deferred revenue’ balance as of December 28, 2023 was $ 6.7 million.

As of March 28, 2024 and March 30, 2023, the Company had $ 1.6 million and $ 3.5 million in unbilled accounts receivable, respectively.

Allowance for Doubtful Accounts

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

The changes within the allowance for doubtful accounts balances for the nine months ended September 28, 2023 and September 29, 2022, respectively, were as follows (in millions):

Nine Months Ended

September 28, 2023 September 29, 2022

The changes within the allowance for doubtful accounts balances for the three months ended March 28, 2024 and March 30, 2023, respectively, were as follows (in millions):

Three Months Ended

March 28, 2024 March 30, 2023

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

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Balance at end of period $ 0.1 $ 1.2 $ 0.3 $ 1.4

INCOME (LOSS) PER SHARE

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

Diluted income (loss) per share is computed on the basis of the weighted average number of shares of common stock 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 income (loss) per NCM, Inc.

LOSS PER SHARE

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

Diluted loss per share is computed on the basis of the weighted average number of shares of common stock 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.

share are as follows:

Three Months Ended Nine Months Ended

September 28, 2023 September 29, 2022 September 28, 2023 September 29, 2022

Net income (loss) attributable to NCM, Inc.

Three Months Ended

March 28, 2024 March 30, 2023

Net loss attributable to NCM, Inc.

(in millions) $ ( 34.7 ) $ ( 45.5 )

Net income attributable to NCM, Inc.

following conversion of

dilutive membership units (in millions) $ 181.8 $ ( 8.9 ) $ 673.0 $ ( 34.8 )

Weighted average shares outstanding:

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Diluted 96,918,564 14,550,799

Income (loss) per NCM, Inc.

Loss per NCM, Inc.

Basic $ ( 0.36 ) $ ( 3.13 )

Diluted $ ( 0.36 ) $ ( 3.13 )

The effect of the 2,741,617 weighted average exchangeable NCM LLC common units held by AMC, Cinemark, and Regal for the three months ended March 30, 2023 have been excluded from the calculation of diluted weighted average shares and loss per NCM, Inc.

share as they were anti-dilutive.

There were no weighted average exchangeable NCM LLC common units held by NCM LLC’s other members for the three months ended March 28, 2024.

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

In addition, there were 7,108,951 , and 494,695 stock options and non-vested (restricted) shares for the three months ended March 28, 2024 and March 30, 2023, respectively, excluded from the

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The effect of the 9,032,924 and 8,896,411 weighted average exchangeable NCM LLC common units held by AMC, Cinemark, and Regal for the three months and nine months ended September 29, 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.

The weighted average exchangeable NCM LLC common units held by NCM LLC’s other members for the three months and nine months ended September 28, 2023 is 0 and 913,872 , respectively.

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

In addition, there were 983,825 , 727,533 , 983,825 and 727,533 stock options and non-vested (restricted) shares for the three months ended September 28, 2023 and September 29, 2022 and nine months ended September 28, 2023 and September 29, 2022, respectively, excluded from the calculation as they were anti-dilutive.

calculation as they were anti-dilutive.

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

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The reverse stock split reduced the number of outstanding shares of the Company’s common stock from 174,112,385 shares as of August 3, 2023 to 17,411,323 shares outstanding post-split.

In accordance with ASC 260— Earnings Per Share, loss per share for the three months and nine months ended September 29, 2022 were retrospectively adjusted for the reverse stock split.

In accordance with ASC 260—Earnings Per Share , loss per share for the three months ended March 30, 2023 were retrospectively adjusted for the reverse stock split.

RECONSOLIDATION OF NCM LLC

On April 11, 2023, NCM LLC filed the Chapter 11 Case.

Upon filing the Chapter 11 Case and in accordance with applicable GAAP, the Company concluded that NCM, Inc.

no longer controlled NCM LLC for accounting purposes as of April 11, 2023 (the “Petition Date”), the date on which NCM LLC filed its Chapter 11 petition, as NCM LLC was under the control of the Bankruptcy Court, and therefore, NCM LLC was deconsolidated from the Company’s consolidated financial statements prospectively, resulting in a $ 557.7 million gain recorded in “Gain on deconsolidation of affiliate” in the unaudited Condensed Consolidated Statement of Operations.

no longer controlled NCM LLC for accounting purposes as of April 11, 2023 (the “Petition Date”), the date on which NCM LLC filed its Chapter 11 petition, as NCM LLC was under the control of the Bankruptcy Court, and therefore, NCM LLC was deconsolidated from the Company’s consolidated financial statements prospectively, resulting in a $ 557.7 million gain recorded in ‘Gain on deconsolidation of affiliate’ in the Consolidated Statements of Operations for the year ended December 28, 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 remained 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.

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 included the weighted average cost of capital and NCM LLC’s forecasted cash flows.

On August 7, 2023, NCM LLC emerged from bankruptcy and NCM, Inc.

contributed $ 15.0 million in cash to NCM LLC in exchange for 2.8 % of additional ownership of NCM LLC in accordance with the NCMI 9019 Settlement stipulated within the Plan and $ 0.5 million to assist with payments to unsecured creditors in accordance with the settlement with the unsecured creditors.

contributed $ 15.0 million in cash to NCM LLC in exchange for 2.8 % of additional ownership of NCM LLC in accordance with the NCMI Capital Contribution and $ 0.5 million to assist with payments to unsecured creditors in accordance with the settlement with the unsecured creditors.

also issued 83,421,135 shares to the secured creditors in accordance with the NCMI 9019 Settlement and terms of the Plan with a fair value of $ 245.3 million based on the closing stock price of $ 2.94 .

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The Company accounted for the NCM LLC reconsolidation as a business combination under ASC 805 — Business Combinations and accordingly, the purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the date of reconsolidation, the Effective Date.

The determination of fair values requires management to make significant estimates and assumptions.

The determination of fair values required management to make significant estimates and assumptions.

The estimated fair values of the assets acquired and liabilities assumed are considered provisional and are based on currently available information.

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The Company expects to finalize the valuation of assets and liabilities as soon as practicable, but not later than one year from the reconsolidation date.

The following table summarizes the fair value of NCM LLC and provisional fair values of the assets acquired and liabilities assumed as of the reconsolidation date:

The following table summarizes the fair value of NCM LLC and provisional fair values of the assets acquired and liabilities assumed as of the reconsolidation date (in millions):

Fair value of assets acquired:

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Amounts due to members, net ( 15.3 )

Accrued expenses ( 0.7 )

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Accrued expenses ( 0.7 )

Accrued payroll and related expenses ( 9.9 )

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Fair value of NCM LLC $ 483.4

There have been no adjustments to the provisional purchase price and fair value estimates presented in Note 5 of the Company’s Form 10-K for the year ended December 28, 2023.

The provisional identifiable intangible assets of $ 415.0 million are subject to amortization.

The following table summarizes the major classes of intangible assets acquired and their respective weighted-average estimated useful lives.

Estimated Fair Value Useful Life (years)

Estimated Fair Value (in millions) Useful Life (years)

Exhibitor service agreements $ 250.0 13.0

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Upon NCM LLC’s emergence from the Chapter 11 Case, NCM, Inc.

remeasured the value of the investment in NCM LLC to the estimated fair value calculated as NCM, Inc.’s percentage ownership of NCM LLC, due to NCM, Inc.’s ownership of the secured debt of NCM LLC and the NCMI 9019 Settlement, multiplied by the fair value of NCM LLC as of the Effective Date of $ 483.6 million.

remeasured the value of the investment in NCM LLC to the estimated fair value calculated as NCM, Inc.’s percentage ownership of NCM LLC, due to NCM, Inc.’s ownership of the secured debt of NCM LLC and the NCMI Capital Contribution, multiplied by the fair value of NCM LLC as of the Effective Date of $ 483.4 million.

The value of the cost investment of NCM LLC immediately prior to the Effective Date was $ 11.9 million 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.

The increase in the fair value resulted in a gain on remeasurement of the investment in NCM LLC of $ 35.3 million.

The increase in the fair value resulted in a ‘Gain on re-measurement of the investment in NCM LLC’ of $ 35.5 million in the Consolidated Statements of Operations for the year ended December 28, 2023.

Upon reconsolidation, NCM, Inc.

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The difference between the purchase price of NCM LLC and the fair value of NCM, Inc.’s investment in NCM LLC as calculated above, the $ 15.5 million of cash contributed by NCM, Inc.

and the shares issued to NCM LLC’s secured lenders of $ 245.3 million resulted in a gain on reconsolidation of $ 168.0 million upon the reconsolidation of NCM LLC.

(consisting of $ 0.5 million related to the General Unsecured Claim Pool and $ 15.0 million under the NCMI Capital Contribution) and the shares issued to NCM LLC’s secured lenders of $ 245.3 million resulted in a gain of $ 167.8 million upon the reconsolidation of NCM LLC.

The Company recognized a gain due to the variance between the fair value of NCM LLC’s assets and liabilities and NCM, Inc.’s depressed stock price on the Effective Date and the NCM, Inc.

shares retained by the existing shareholders as part of the NCMI 9019 Settlement.

NCM, Inc.’s stock price has been negatively impacted beginning with the COVID-19 pandemic followed by Cineworld’s bankruptcy proceeding and NCM LLC’s Chapter 11 Case, as well as by other socioeconomic factors.

The Company’s unaudited condensed Consolidated Statements of Operations include total net revenues and net loss attributable to NCM LLC of $ 64.3 million and $ 64.6 million, respectively, for the total of the consolidated periods of December 30, 2022 through April 11, 2023 and August 7, 2023 through September 28, 2023.

NCM, Inc.’s stock price had been negatively impacted beginning with the COVID-19 pandemic followed by Cineworld’s bankruptcy proceeding and NCM LLC’s Chapter 11 Case, as well as by other socioeconomic factors.

Pro Forma Financial Information (Unaudited)

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The unaudited pro forma results reflect adjustments for depreciation of acquired property and equipment, amortization of acquired intangible assets and amortization of acquired debt issuance costs.

The unaudited pro

The unaudited pro forma financial information is presented for informational purposes only and is not necessarily indicative of future operations or results had the NCM LLC reconsolidation been completed as of December 31, 2021.

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

forma financial information is presented for informational purposes only and is not necessarily indicative of future operations or results had the NCM LLC reconsolidation been completed as of December 31, 2021.

Three months ended Nine months ended

September 28, 2023 September 29, 2022 September 28, 2023 September 29, 2022

Three months ended

March 30, 2023

Revenue $ 34.9

Net (Loss) Income $ ( 146.9 ) $ ( 5.2 ) $ ( 210.3 ) $ 726.8

Net Loss $ ( 33.9 )

INTANGIBLE ASSETS

The Company’s intangible assets consist of contractual rights to provide its services within the theaters under the ESAs and the network affiliate agreements, customer relationships developed and maintained by the Company’s sales force and trademarks held and used by the Company.

The intangible assets are stated at their estimated fair values upon the reconsolidation of NCM LLC on August 7, 2023 as further described within Note 4— Reconsolidation of NCM LLC, net of accumulated amortization.

The Company records amortization using the straight-line method over the estimated useful life of the intangibles, corresponding to the expected term of the ESAs, the average renewable term of the contracts with the network affiliates and industry standard lives for customer relationships and trademarks.

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

The Company’s intangible assets consist of contractual rights to provide its services within the theaters under the ESAs and the network affiliate agreements, as well as for customer relationships developed and maintained by the Company’s sales force and trademarks held and used by the Company.

The intangible assets are stated at their estimated fair values upon the reconsolidation of NCM LLC on August 7, 2023 , net of accumulated amortization.

The Company records amortization using the straight-line method over the estimated useful life of the intangibles.

For the contractual rights to provide its service within the theaters under the ESA and network affiliate agreements, the estimated useful life corresponds to the term of the ESAs and the average renewable term of the contracts with the network affiliates.

For the customer relationships developed and maintained by the Company’s sales force and trademarks held and used by the Company, the estimated useful life corresponds to industry standard lives for customer relationships and trademarks.

In accordance with ASC 360 — Property, Plant and Equipment, the Company continuously monitors the performance of the underlying assets for potential triggering events suggesting an impairment review should be performed.

No such triggering events were identified in the period since the reconsolidation of NCM LLC on August 7, 2023.

No such triggering events were identified in the three months ended March 28, 2024 and March 30, 2023.

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

In the event AMC or Cinemark does not have sufficient common membership units to return, the adjustment is satisfied in cash in an amount calculated pursuant to NCM LLC’s Common Unit Adjustment Agreement.

In the event that either AMC or Cinemark does not have sufficient common membership units to return, the adjustment is satisfied in cash in an amount calculated pursuant to NCM LLC’s Common Unit Adjustment Agreement.

In addition, NCM LLC’s Common Unit Adjustment Agreement requires that a Common Unit Adjustment occur for either AMC or Cinemark if its acquisition or disposition of theaters, in a single transaction or cumulatively since the most recent Common Unit Adjustment, results in an attendance increase or decrease in excess of two percent of the annual total attendance at the prior adjustment date.

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

During the first quarter of 2022, NCM LLC issued 4,140,896 ( 6,483,893 issued, net of 2,342,997 returned) common membership units to AMC, Cinemark, and Regal for the rights to exclusive access to the theater screens and attendees added, net of dispositions, to NCM LLC’s network during the 2021 fiscal year.

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

Pursuant to the Plan and in connection with the Chapter 11 Case, during the nine months ended September 28, 2023, NCM LLC did not issue common membership units to Cinemark 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 and the 16,581,829 units issued to AMC were issued and cancelled on the Effective Date.

Subsequent to the first quarter of 2024, NCM LLC issued 135,473 common membership units to AMC and Cinemark for the rights to exclusive access to the theater screens and attendees added, net of dispositions, to NCM LLC’s network during the 2023 fiscal year.

Pursuant to and in connection with the Chapter 11 Case during the year ended December 28, 2023, NCM LLC did not issue common membership units to Cinemark 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 and the 16,581,829 units issued to AMC were issued and cancelled on the Effective Date.

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 applicable ESA Party may elect to receive common membership units related to those encumbered theaters in connection with the Common Unit Adjustment.

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These payments are also accounted for as a reduction to the intangible asset related to the ESAs.

During the three months ended September 28, 2023 and September 29, 2022 and nine months ended September 28, 2023 and September 29, 2022, the Company recorded a reduction to net intangible assets of $ 0.9 million, $ 0.3 million, $ 2.1 million and $ 1.6 million, respectively, related to other encumbered theater payments.

During the three months ended September 28, 2023 and September 29, 2022 and nine months ended September 28, 2023 and September 29, 2022, AMC and Cinemark paid a total of $ 1.1 million, $ 1.2 million,

During the three months ended March 28, 2024 and March 30, 2023, the Company recorded a reduction to net intangible assets of $ 0.2 million and $ 0.3 million, respectively, related to other encumbered theater payments.

During the three months ended March 28, 2024 and March 30, 2023, AMC and Cinemark paid a total of $ 0.3 million and $ 3.9 million, respectively, in integration and other encumbered theater payments (as payments are made one quarter and one month in arrears, respectively).

If common membership units are issued to an ESA Party for newly acquired theaters that are subject to an existing on-screen advertising agreement with an

NATIONAL CINEMEDIA, INC.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

$ 5.2 million and $ 2.6 million, respectively, in integration and other encumbered theater payments (as payments are made one quarter and one month in arrears, respectively).

If common membership units are issued to an ESA Party 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.

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.

As of March 28, 2024 and December 28, 2023, the Company’s intangible assets related to the ESA Party agreements was $ 231.8 million, net of accumulated amortization of $ 12.3 million, and $ 236.7 million, net of accumulated amortization of $ 7.6 million, respectively, with weighted average remaining lives of 12.4 years and 12.6 years, respectively.

As of March 28, 2024 and December 28, 2023, the Company’s intangible assets related to the network affiliate agreements was $ 72.0 million, net of accumulated amortization of $ 3.0 million, and $ 73.2 million, net of accumulated amortization of $ 1.8 million, respectively, with weighted average remaining lives of 15.4 years and 15.6 years, respectively.

As of March 28, 2024 and December 28, 2023, the Company’s intangible assets related to customer relationships, was $ 67.0 million, net of accumulated amortization of $ 8.0 million, and $ 70.1 million, net of accumulated amortization of $ 4.9 million, respectively, with weighted average remaining lives of 5.4 years and 5.6 years, respectively.

As of March 28, 2024 and December 28, 2023, the Company’s intangible assets related to the trademark, was $ 13.8 million, net of accumulated amortization of $ 1.2 million, and $ 14.3 million, net of accumulated amortization of $ 0.7 million, respectively, with weighted average remaining lives of 7.4 years and 7.6 years, respectively.

The estimated aggregate amortization expense for the remainder of fiscal 2024 is $ 28.3 million and $ 37.8 million each for fiscal years 2025 and 2028.

RELATED PARTY TRANSACTIONS

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

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

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

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

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

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

As of September 28, 2023, AMC’s ownership was 0.0 % of NCM LLC and NCM, Inc.

As of March 28, 2024, AMC’s ownership was 0.0 % of NCM LLC and NCM, Inc.

Cinemark has owned less than 5 % of NCM LLC, on an as converted basis, since NCM LLC emerged from bankruptcy on August 7, 2023 and is no longer a related party.

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

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

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

Further, Cinemark will continue to pay beverage revenue, among other things, to NCM LLC.

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

As of September 28, 2023, Cinemark’s ownership was 4.5 % of NCM, Inc.

As of March 28, 2024, Cinemark’s ownership was 4.5 % of NCM, Inc.

and 0.0 % of NCM LLC.

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As of July 14, 2023, Regal is no longer an ESA Party or related party to NCM, Inc.

From and after July 14, 2023, Regal is no longer an ESA Party or related party to NCM, Inc.

The material agreements with the ESA Parties are as follows:

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

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of the ESA Parties).

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

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

In conjunction with the 2019 ESA Amendments, NCM LLC also pays Cinemark and Regal (through July 14, 2023) incremental monthly theater access fees and, subject to NCM LLC’s use of specified inventory, a revenue share in consideration for NCM LLC’s access to certain on-screen advertising inventory after the advertised showtime of a feature film beginning November 1, 2019 and the underlying term of the Cinemark ESA was extended until 2041.

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

In conjunction with the 2019 ESA Amendments, NCM LLC also pays Cinemark and paid Regal (through July 14, 2023) incremental monthly theater access fees and, subject to NCM LLC’s use of specified inventory, a revenue share in consideration for NCM LLC’s access to certain on-screen advertising inventory after the advertised showtime of a feature film beginning November 1, 2019 and the underlying term of the Cinemark ESA was extended until 2041.

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

As described above, the Regal ESA was rejected by Regal in connection with Regal’s Chapter 11 case and terminated by the Regal Termination Agreement.

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

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• Tax Receivable Agreement.

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and AMC, Cinemark, and Regal when they were related parties (in millions):

Three Months Ended Nine Months Ended

Three Months Ended

Included in the unaudited Condensed Consolidated Statements of Operations:

September 28, 2023 September 29, 2022 September 28, 2023 September 29, 2022

Beverage concessionaire revenue (included in advertising revenue) (2)

$ — $ 3.9 $ 4.1 $ 11.3

Management fee reimbursement $ 2.4 $ — $ 10.1 $ —

March 28, 2024 March 30, 2023

Beverage concessionaire revenue (included in revenue) (2)

Operating expenses:

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________________________________________

Selling and marketing costs (4)

$ — $ 0.1 $ — $ 0.1

Advertising operating costs (3)

$ — $ — $ — $ —

________________________________________

(1) For the three months ended September 28, 2023 there was no related party activity for AMC, Cinemark, and Regal as for all activity following the reconsolidation of NCM LLC on August 7, 2023, none of AMC, Cinemark and Regal were considered related parties.

(2) For the nine months ended September 28, 2023 and three and nine months ended September 29, 2022, Cinemark and Regal (through July 14, 2023) 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.

(1) For the three months ended March 28, 2024 there was no related party activity for AMC, Cinemark or Regal.

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

Beverage revenue above is only reflective of periods where Cinemark and Regal were related parties.

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

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

Following the 2019 ESA Amendments this also includes payments to Cinemark and Regal (through July 14, 2023) for their share of the revenue from the sale of an additional single unit that is either 30 or 60 seconds of the Noovie pre-show in the trailer position directly prior to the “attached” trailers preceding the feature film (the “Platinum Spot”).

Theater access fees and revenue share expenses above are only reflective of periods where Cinemark and Regal were related parties.

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

Included in the unaudited Condensed Consolidated Balance Sheets:

September 28, 2023 December 29, 2022

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

Current payable under tax receivable agreement (2)

Long-term payable under tax receivable agreement (2)

________________________________________

(1) Refer to Note 5— Intangible Assets for further information on common unit adjustments and integration payments.

As Cinemark and Regal are no longer related parties, there are no related party balances to reflect as of September 28, 2023.

(2) NCM, Inc.

paid Cinemark and Regal $ 0.0 million and $ 0.0 million during the nine months ended September 28, 2023 and September 29, 2022, respectively, in payments pursuant to the TRA for the 2022 or 2021 tax years.

As Cinemark and Regal are no longer related parties, there are no related party balances to reflect as of September 28, 2023.

The following table summarizes total outstanding debt as of March 28, 2024 and December 28, 2023 and the significant terms of its borrowing arrangements (in millions):

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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.

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

for the nine months ended September 28, 2023 were calculated as negative $ 57.9 million due to a carryforward from negative available cash from previous quarters.

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 Revolving credit facility 2023 within Note 7— Borrowings and in accordance with the NCM LLC Operating Agreement

Amounts due to Cinemark and Regal as related parties, net as of December 29, 2022 were comprised of the following (in millions):

Cinemark Regal Total

ESA theater access fees and revenue share, net of beverage revenues and other

encumbered theater payments $ 11.1 $ 4.1 $ 15.2

Total amounts due, net $ 11.1 $ 4.1 $ 15.2

The following table summarizes total outstanding debt as of September 28, 2023 and December 29, 2022 and the significant terms of its borrowing arrangements (in millions):

Outstanding Balance as of

Borrowings September 28, 2023 December 29, 2022 Maturity

Date Interest

Borrowings March 28, 2024 December 28, 2023 Maturity Date Interest Rate

Revolving Credit Facility 2023 $ 10.0 $ 10.0 August 7, 2026 (1)

Revolving credit facility 2018 — 167.0 June 20, 2023 (1)

Revolving credit facility 2022 — 50.0 June 20, 2023 (1)

Term loans – first tranche — 258.5 June 20, 2025 (1)

Term loans – second tranche — 49.3 December 20, 2024 (1)

Senior secured notes due 2028 — 374.2 April 15, 2028 5.875 %

Senior unsecured notes due 2026 — 230.0 August 15, 2026 5.750 %

Total borrowings 10.0 10.0

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current portion of debt

— ( 1,121.1 )

Carrying value of long-term debt $ 10.0 $ 10.0

_________________________________________________

(1) The interest rates on the revolving credit facilities and term loans are described below.

(1) The interest rates on the revolving credit facility is described below.

Loan, Security and Guarantee Agreement — On August 7, 2023, NCM LLC entered into a Loan, Security and Guarantee Agreement (the “Revolving Credit Facility 2023”) with CIT Northbridge Credit LLC as agent.

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A Trigger Period ends only if (i) no event of default existed for the preceding thirty (30) consecutive days and (ii) availability is greater than both (a) $ 5,000,000 and (b) 10 % of aggregate revolving commitments.

Upon the effectiveness of the Revolving Credit Facility 2023, NCM LLC immediately drew $ 10.0 million from the facility, which represents the only amounts currently outstanding under the Revolving Credit Facility 2023, as of September 28, 2023.

The Revolving Credit Facility 2023 also contains customary representations, warranties, covenants, events of default, terms and conditions, including limitations on liens, incurrence of debt, mergers and significant

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asset dispositions.

As of September 28, 2023, NCM LLC’s maximum availability under the $ 55.0 million Revolving Credit Facility 2023 was $ 44.4 million, net of $ 10.0 million outstanding and net letters of credit of $ 0.6 million.

The weighted-average interest rate on the Revolving Credit Facility 2023 as of September 28, 2023 was 9.20 %.

Upon the effectiveness of the Revolving Credit Facility 2023, NCM LLC immediately drew $ 10.0 million from the facility, which represents the only amount currently outstanding under the Revolving Credit Facility 2023, as of March 28, 2024.

As of March 28, 2024, NCM LLC’s maximum availability under the $ 55.0 million Revolving Credit Facility 2023 was $ 44.4 million, net of $ 10.0 million outstanding and net of letters of credit of $ 0.6 million.

The weighted-average interest rate on the Revolving Credit Facility 2023 as of March 28, 2024 was 9.19 %.

Upon execution of the Revolving Credit Facility 2023, NCM LLC recorded $ 2.4 million as debt issuance costs and received $ 9.1 million in proceeds.

As of September 28, 2023, NCM LLC was in compliance with the financial covenants of the Revolving Credit Facility 2023 described above.

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

As of August 7, 2023, upon emergence from bankruptcy, all outstanding debt under the Credit Agreement was discharged and the Credit Agreement was terminated.

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

Among other things, the Credit Agreement Second Amendment provided for certain modifications to the negative covenants, additional waivers and term changes outlined below and granted security interests in certain assets of NCM LLC and other potential loan parties that were not then pledged to the lenders.

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.

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

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

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

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

and (iii) changes to the consolidated net total leverage ratio and consolidated net senior secured leverage ratio financial covenants.

Upon execution of the Credit Agreement Third Amendment, $ 6.4 million was recorded as debt issuance costs and $ 0.4 million was recorded within “Loss on modification and retirement of debt, net” during the year ended December 29, 2022.

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

As of August 7, 2023, upon emergence from bankruptcy, all outstanding debt under the Credit Agreement, including the terms loans, was discharged and the Credit Agreement was terminated.

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

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

As of August 7, 2023, upon emergence from bankruptcy, all outstanding debt under the Credit Agreement, including the term loans, was discharged and the Credit Agreement was terminated.

Revolving Credit Facility 2018 —The revolving credit facility portion of NCM LLC’s senior secured credit facility was 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 Credit Agreement, and a portion was available for letters of credit.

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

As of August 7, 2023, upon emergence from bankruptcy, all outstanding debt under the Credit Agreement, including borrowings under the revolving credit facility, was discharged and the Credit Agreement was terminated.

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

Borrowings under the revolving credit facility accrued interest at NCM LLC’s option of either the LIBOR index plus an applicable margin ranging from 3.00 % to 3.50 % or the base rate plus an applicable margin ranging from 2.00 % to 2.50 %.

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

The applicable margin for the revolving credit facility was determined quarterly and was 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).

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

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

As of August 7, 2023, upon emergence from bankruptcy, all outstanding debt under the Revolving Credit Agreement 2022 was discharged and the Revolving Credit Agreement 2022 was terminated.

The Revolving Credit Agreement 2022 provided for (i) a cash interest rate of term Secured Overnight Financing Rate (SOFR) plus 8.00 %, with a 1.00 % floor, (ii) a maturity date of June 20, 2023 and

The Revolving Credit Facility 2023 contains a number of covenants and financial ratio requirements, with which NCM LLC was in compliance at March 28, 2024, including maintaining a fixed charge coverage ratio in excess of 1.1 to 1.0 on a monthly basis while maintaining availability in excess of either (i) $ 8.25 million or (ii) 15.0 % of the aggregate revolver commitments (the “availability thresholds”).

NCM LLC is permitted to make quarterly dividend payments and other payments based on the fixed charge coverage ratio and availability thresholds so long as no default or event of default has occurred and continues to occur.

Dividend payments and other distributions are made if the fixed charge coverage ratio is in excess of 1.1 to 1.0 and availability, after the distribution, is in compliance with the availability thresholds.

There are no borrower distribution restrictions as long as NCM LLC’s fixed coverage ratio is 1.1 to 1.0 , NCM LLC maintains availability under the availability thresholds and NCM LLC is in compliance with its debt covenants.

If there are borrower distribution restrictions on the payments, NCM LLC may not declare or pay any dividends, or make any payments on account of NCM LLC or make any other distribution for obligations of NCM LLC.

When these restrictions are effective, NCM LLC may still pay the services fee and reimbursable costs pursuant to terms of a management services agreement, between NCM, Inc.

and NCM LLC, in exchange for NCM, Inc.

providing specified management services to NCM LLC.

NCM LLC can also make payments pursuant to the Common Unit Adjustment Agreement and Tax Receivable Agreement in the amount, and at the time necessary to satisfy the contractual obligations with respect to the actual cash tax benefits payable to NCM LLC’s ESA Parties.

As of March 28, 2024, the NCM LLC’s fixed charge coverage ratio was 6.6 to 1.0 (versus the required ratio of 1.1 to 1.0 ) and had maximum availability under the Revolving Credit Facility 2023 of $ 44.4 million (versus the applicable availability threshold of $ 8.25 million).

Changes in the Company’s Effective Tax Rate —The Company recorded income tax expense of $ 0.0 million for the three months ended March 28, 2024 and for the three months ended March 30, 2023 resulting in an effective tax rate of 0.0 %

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(iii) a termination premium if NCM LLC terminated the commitments under the Revolving Credit Agreement 2022 at any time before maturity.

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

The Notes due 2026 paid 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 were the senior unsecured obligations of NCM LLC.

As of August 7, 2023, upon emergence from bankruptcy, all outstanding debt under the Notes due 2026 was discharged and the Notes due 2026 were terminated, following $ 10.0 million made in cure payments.

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.

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

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

As of August 7, 2023, upon emergence from bankruptcy, all outstanding debt under the Notes due 2028 was discharged and the Notes due 2028 were terminated.

Changes in the Company’s Effective Tax Rate —The Company recorded income tax expense of $ 0.0 million for the nine months ended September 28, 2023 and for the nine months ended September 29, 2022 resulting in an effective tax rate of 0.0 % for both periods.

for both periods.

The Company recorded a full valuation allowance on its net deferred tax assets as of December 28, 2023 following the determination it was more-likely-than-not that the Company will not be able to realize the benefit of those assets.

The Company maintained a full valuation allowance as of September 28, 2023, resulting in deferred tax expense of $ 0.0 million for the nine months ended September 28, 2023 and the Company’s effective tax rate of 0.0 %.

Following the Regal Termination Agreement whereby Regal waived all rights and interests as to the TRA, the Company reduced the “Payable under the TRA” on the unaudited Condensed Consolidated Balance Sheets for the amounts expected to be owed to Regal.

This decrease was ultimately offset by the increase in the ‘Payable under the TRA’ on the unaudited Condensed Consolidated Balance Sheets due to the additional basis created upon the revaluation and reconsolidation of NCM LLC on the Effective Date.

The Company maintained a full valuation allowance as of March 28, 2024, resulting in deferred tax expense of $ 0.0 million for the three months ended March 28, 2024 and the Company’s effective tax rate of 0.0 %.

COMMITMENTS AND CONTINGENCIES

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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 $ 4.6 million and short-term and long-term lease liabilities of $ 1.1 million and $ 5.3 million, respectively, on the balance sheet as of September 28, 2023 for all material leases with terms longer than twelve months.

These balances are included within “Other assets”, “Short-term operating lease liability” and “Long-term operating lease liability”, respectively, on the unaudited Condensed Consolidated Balance Sheets.

As of September 28, 2023, the Company had a weighted average remaining lease term of 6.1 years on these leases.

The Company has right-of-use (“ROU”) assets of $ 11.3 million and short-term and long-term lease liabilities of $ 1.2 million and $ 11.9 million, respectively, on the balance sheet as of March 28, 2024 for all material leases with terms longer than twelve months.

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

As of March 28, 2024, the Company had a weighted average remaining lease term of 7.7 years on these leases.

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

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

As of September 28, 2023, the Company’s weighted average annual discount rate used to establish the ROU assets and lease liabilities was 7.4 %.

During the three months ended September 28, 2023 and September 29, 2022, the Company recognized the following components of total lease cost (in millions).

As of March 28, 2024, the Company’s weighted average annual discount rate used to establish the ROU assets and lease liabilities was 7.4 %.

During the three months ended March 28, 2024 and March 30, 2023, the Company recognized the following components of total lease cost (in millions).

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

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Three Months Ended Nine Months Ended

September 28, 2023 September 29, 2022 September 28, 2023 September 29, 2022

Three Months Ended

March 28, 2024 March 30, 2023

Operating lease cost $ 0.8 $ 0.9

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Total lease cost $ 0.9 $ 1.0

The Company made total lease payments of $ 0.8 million, $ 0.9 million, $ 2.9 million and $ 2.9 million during the three months ended September 28, 2023 and September 29, 2022 and nine months ended September 28, 2023 and September 29, 2022, respectively.

The Company made total lease payments of $ 0.8 million and $ 1.0 million during the three months ended March 28, 2024 and March 30, 2023, respectively.

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

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The Company recognizes intangible assets upon issuance of membership units to the ESA Parties 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 .

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.

These ESAs and network affiliate agreements are considered leases under ASC 842 — Leases 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.

As such, the leases are considered short-term in nature, specifically less than one month.

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

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

However, the amortization of these intangible assets is considered lease expense and is presented within ‘Amortization expense’ within the unaudited Condensed Consolidated Statement of Operations.

The company recorded $ 5.9 million and $ 6.2 million in amortization of these intangible assets in the three months ended March 28, 2024 and March 30, 2023, respectively.

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

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

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

As of September 28, 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.

The theater access fee paid in the aggregate cannot be less than 12 % of NCM LLC’s aggregate advertising revenue (as defined in the ESA), or it will be

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adjusted upward to reach this minimum payment.

As of March 28, 2024 and December 28, 2023, 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 receives an additional monthly theater access fee that began on November 1, 2019 in consideration for NCM LLC's access to certain on-screen advertising inventory after the advertised showtime of a feature film.

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

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

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

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

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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

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guaranteed minimum revenue for the network affiliate per attendee if such amount paid under the revenue share arrangement is less than its guaranteed amount.

As of September 28, 2023, the maximum potential amount of future payments the Company could be required to make pursuant to the minimum revenue guarantees is $ 284.4 million over the remaining terms of the network affiliate agreements.

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

The Company accrued $ 0.4 million and $ 0.4 million related to affiliate agreements with guaranteed minimums in excess of the revenue share agreement as of September 28, 2023 and December 29, 2022, respectively within “Accounts payable” in the Unaudited Condensed Consolidated Balance Sheet.

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 28, 2024, the maximum potential amount of future payments the Company could be required to make pursuant to the minimum revenue guarantees is $ 258.3 million over the remaining terms of the network affiliate agreements.

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

The Company accrued $ 0.0 million related to affiliate agreements with guaranteed minimums in excess of the revenue share agreement as of March 28, 2024 and December 28, 2023, within ‘Accounts payable’ in the Unaudited Condensed Consolidated Balance Sheet.

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

9 unchanged sentences

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

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

assets may not be fully recoverable.

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

Other investments consisted of the following (in millions):

September 28, 2023 December 29, 2022

March 28, 2024 December 28, 2023

Investment in AC JV, LLC $ 1.0 $ 0.7

Other investments 0.1 0.1

Total $ 1.0 $ 0.7

As of September 28, 2023, no 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.

As of March 28, 2024, no 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.

1 unchanged sentence

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

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

As of August 7, 2023, upon emergence from bankruptcy, all historical debt of NCM LLC was discharged.

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

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 28, 2023 As of December 29, 2022

Carrying Value Fair Value (1)

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

Revolving credit facility 2022 $ — $ — $ 50.0 $ 13.4

Term loans - first tranche $ — $ — $ 258.5 $ 65.8

Term loans - second tranche $ — $ — $ 49.3 $ 13.1

Notes due 2026 $ — $ — $ 374.2 $ 91.7

Notes due 2028 $ — $ — $ 230.0 $ 6.9

____________________________________________

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

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

Fair Value Measurements at Reporting Date Using

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

(Level 1) Significant Other

Borrowings —The carrying amount of the Revolving Credit Facility 2023 is considered a reasonable estimate of fair value due to its floating-rate terms.

Following August 7, 2023, upon emergence from bankruptcy, all historical debt of NCM LLC was discharged.

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

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

Fair Value Measurements at

Reporting Date Using

Fair Value As of

March 28, 2024 Quoted Prices in Active Markets for Identical Assets

(Level 1) Significant Other Observable Inputs

(Level 2) Significant Unobservable Inputs

1 unchanged sentence

$ 10.0 $ 10.0 $ — $ —

Short-term marketable securities (2)

Long-term marketable securities (2)

Total assets $ 10.0 $ 10.0 $ — $ —

__________________________________________

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

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

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

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

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

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

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

The Company did not recorded an allowance for credit losses for the marketable securities balance as of 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 December 29, 2022 were as follows:

NATIONAL CINEMEDIA, INC.

AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of December 29, 2022

Amortized Cost

(in millions) Aggregate Fair

(in millions) Maturities (1)

MARKETABLE SECURITIES:

Short-term certificates of deposit $ 0.7 $ 0.7 1.0

Total short-term marketable securities 0.7 0.7

Long-term certificates of deposit 0.3 0.3 1.3

Total long-term marketable securities 0.3 0.3

Total marketable securities $ 1.0 $ 1.0

___________________________________

(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.

(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.

SUBSEQUENT EVENTS

Share Repurchase Program —Subsequent to the three months ended March 28, 2024, in accordance with the stock repurchase plan approved on March 18, 2024 by the Company’s Board of Directors, 509,348 shares were repurchased on the open market for $ 2.6 million.

In accordance with ASC 505—Equity , these shares were retired and any excess over par value paid was recorded as a reduction to retained earnings.

Common Unit Adjustment and Cinemark Redemption - On April 1, 2024, in accordance with the Common Unit Adjustment Agreement, NCM LLC issued 135,473 common membership units to AMC and Cinemark.

On April 16, 2024, the Company elected to satisfy a redemption request from Cinemark for all of their outstanding common membership units through a cash settlement as provided in NCM LLC’s Operating Agreement.

This redemption reduced Cinemark’s ownership interest in NCM LLC to 0.0 % as of April 16, 2024 while AMC’s ownership interest is de minimis.

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