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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-33892

AMC ENTERTAINMENT HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)

26-0303916
(I.R.S. Employer
Identification No.)

One AMC Way
11500 Ash Street, Leawood, KS
(Address of principal executive offices)


66211
(Zip Code)

Registrant’s telephone number, including area code: (913213-2000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  

Accelerated filer  

Non-accelerated filer 

Smaller reporting company 

Emerging growth company 

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Class A common stock

AMC

New York Stock Exchange

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Title of each class of common stock

   

Number of shares
outstanding as of November 2, 2021

Class A common stock

513,960,784

AMC ENTERTAINMENT HOLDINGS, INC.

INDEX

Page
Number

PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements (Unaudited)

3

Condensed Consolidated Statements of Operations

3

Condensed Consolidated Statements of Comprehensive Loss

4

Condensed Consolidated Balance Sheets

5

Condensed Consolidated Statements of Cash Flows

6

Notes to Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

36

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

71

Item 4.

Controls and Procedures

72

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

72

Item 1A.

Risk Factors

73

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

75

Item 3.

Defaults Upon Senior Securities

75

Item 5.

Other Information

75

Item 6.

Exhibits

76

Signatures

77

2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements. (Unaudited)

AMC ENTERTAINMENT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

(In millions, except share and per share amounts)

    

2021

    

2020

    

2021

    

2020

(unaudited)

(unaudited)

Revenues

Admissions

$

425.1

$

62.9

$

727.6

$

631.8

Food and beverage

 

265.2

 

29.1

 

476.8

 

317.6

Other theatre

 

72.9

 

27.5

 

151.8

 

130.5

Total revenues

763.2

119.5

1,356.2

1,079.9

Operating costs and expenses

Film exhibition costs

176.5

26.6

 

297.4

 

298.5

Food and beverage costs

 

42.9

 

8.8

 

78.9

 

66.7

Operating expense, excluding depreciation and amortization below

 

321.5

 

192.1

 

747.4

 

663.8

Rent

 

214.9

 

214.3

 

612.5

 

676.2

General and administrative:

Merger, acquisition and other costs

 

1.4

 

1.0

 

12.4

 

3.0

Other, excluding depreciation and amortization below

 

47.5

 

32.7

 

153.7

 

91.3

Depreciation and amortization

103.7

123.5

323.5

365.7

Impairment of long-lived assets, definite and indefinite-lived intangible assets and goodwill

 

 

195.9

 

 

2,047.8

Operating costs and expenses

 

908.4

794.9

 

2,225.8

4,213.0

Operating loss

(145.2)

(675.4)

(869.6)

(3,133.1)

Other expense (income):

Other expense (income)

 

(11.7)

 

125.0

 

(71.8)

 

145.3

Interest expense:

Corporate borrowings

 

88.7

 

82.8

 

328.3

 

233.7

Finance lease obligations

 

1.2

 

1.4

 

4.0

 

4.5

Non-cash NCM exhibitor services agreement

9.4

10.1

28.7

30.1

Equity in (earnings) loss of non-consolidated entities

 

(6.7)

 

10.6

 

(1.2)

 

25.9

Investment expense (income)

 

 

(4.1)

 

(8.3)

 

4.0

Total other expense, net

 

80.9

225.8

 

279.7

443.5

Net loss before income taxes

 

(226.1)

(901.2)

 

(1,149.3)

(3,576.6)

Income tax provision (benefit)

 

(1.9)

 

4.6

 

(13.9)

66.7

Net loss

(224.2)

(905.8)

(1,135.4)

(3,643.3)

Less: Net loss attributable to noncontrolling interests

(0.7)

Net loss attributable to AMC Entertainment Holdings, Inc.

$

(224.2)

$

(905.8)

$

(1,134.7)

$

(3,643.3)

Net loss per share attributable to AMC Entertainment Holdings, Inc.'s common stockholders:

Basic

$

(0.44)

$

(8.41)

$

(2.44)

$

(34.56)

Diluted

$

(0.44)

$

(8.41)

$

(2.44)

$

(34.56)

Average shares outstanding:

Basic (in thousands)

513,330

107,695

465,139

105,428

Diluted (in thousands)

513,330

107,695

465,139

105,428

See Notes to Condensed Consolidated Financial Statements.

3

AMC ENTERTAINMENT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

(In millions)

    

2021

    

2020

    

2021

    

2020

(unaudited)

(unaudited)

Net loss

$

(224.2)

$

(905.8)

$

(1,135.4)

$

(3,643.3)

Other comprehensive income (loss):

Unrealized foreign currency translation adjustments, net of tax

 

(18.8)

 

11.4

 

(52.4)

 

(26.8)

Realized loss on foreign currency transactions reclassified into investment expense (income)

(0.9)

Pension adjustments:

Realized net gain reclassified into other expense

 

 

0.2

 

3.8

 

0.9

Other comprehensive income (loss)

 

(18.8)

 

11.6

 

(49.5)

 

(25.9)

Total comprehensive loss

(243.0)

(894.2)

(1,184.9)

(3,669.2)

Comprehensive loss attributable to noncontrolling interests

(0.9)

Comprehensive loss attributable to AMC Entertainment Holdings, Inc.

$

(243.0)

$

(894.2)

$

(1,184.0)

$

(3,669.2)

See Notes to Condensed Consolidated Financial Statements.

4

AMC ENTERTAINMENT HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except share data)

    

September 30, 2021

    

December 31, 2020

 

ASSETS

Current assets:

Cash and cash equivalents

$

1,612.5

$

308.3

Restricted cash

27.7

13.1

Receivables, net

 

129.6

 

91.0

Other current assets

 

93.1

 

74.6

Total current assets

 

1,862.9

 

487.0

Property, net

 

2,032.9

 

2,322.5

Operating lease right-of-use assets, net

4,302.0

4,451.5

Intangible assets, net

 

154.7

 

163.2

Goodwill

 

2,451.2

 

2,547.3

Deferred tax asset, net

 

2.4

 

0.3

Other long-term assets

 

251.4

 

304.6

Total assets

$

11,057.5

$

10,276.4

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

267.6

$

298.8

Accrued expenses and other liabilities

 

393.3

 

257.8

Deferred revenues and income

 

392.1

 

405.4

Current maturities of corporate borrowings

 

20.0

 

20.0

Current maturities of finance lease liabilities

10.2

12.9

Current maturities of operating lease liabilities

605.9

583.6

Total current liabilities

 

1,689.1

 

1,578.5

Corporate borrowings

 

5,432.8

 

5,695.8

Finance lease liabilities

66.1

83.1

Operating lease liabilities

4,786.9

4,957.8

Exhibitor services agreement

 

515.0

 

537.6

Deferred tax liability, net

 

28.9

 

40.5

Other long-term liabilities

 

181.4

 

241.3

Total liabilities

 

12,700.2

 

13,134.6

Commitments and contingencies

Stockholders’ deficit:

AMC Entertainment Holdings, Inc.'s stockholders' deficit:

Class A common stock ($.01 par value, 524,173,073 shares authorized; 513,330,240 shares issued and outstanding as of September 30, 2021; 176,295,874 shares issued and 172,563,249 outstanding as of December 31, 2020)

 

5.1

 

1.8

Class B common stock ($.01 par value, 0 shares authorized, issued and outstanding as of September 30, 2021 and 51,769,784 shares authorized, issued and outstanding as of December 31, 2020)

 

 

0.5

Additional paid-in capital

 

4,852.3

 

2,465.6

Treasury stock (0 shares as of September 30, 2021 and 3,732,625 shares as of December 31, 2020, at cost)

 

 

(56.4)

Accumulated other comprehensive income (loss)

 

(10.6)

 

38.7

Accumulated deficit

 

(6,489.5)

 

(5,335.3)

Total AMC Entertainment Holdings, Inc.'s stockholders’ deficit

 

(1,642.7)

 

(2,885.1)

Noncontrolling interests

26.9

Total deficit

(1,642.7)

(2,858.2)

Total liabilities and stockholders’ deficit

$

11,057.5

$

10,276.4

See Notes to Condensed Consolidated Financial Statements.

5

AMC ENTERTAINMENT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

(In millions)

September 30, 2021

September 30, 2020

Cash flows from operating activities:

(unaudited)

Net loss

$

(1,135.4)

$

(3,643.3)

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

Depreciation and amortization

323.5

365.7

Deferred income taxes

(11.6)

65.2

Impairment of long-lived assets, definite and indefinite-lived intangible assets and goodwill

2,047.8

Loss on extinguishment of debt

14.4

Amortization of net discount (premium) on corporate borrowings to interest expense

10.5

(4.2)

Amortization of deferred financing costs to interest expense

19.5

11.6

PIK interest expense

116.2

29.8

Non-cash portion of stock-based compensation

18.8

9.5

Gain on disposition of Baltics

(5.5)

Loss (gain) on dispositions

0.3

(3.3)

Loss on derivative asset and derivative liability

109.0

Equity in loss from non-consolidated entities, net of distributions

4.8

40.3

Landlord contributions

17.7

31.9

Other non-cash rent benefit

(22.2)

(1.7)

Deferred rent

(84.5)

(8.1)

Net periodic benefit cost (income)

(0.5)

0.8

Change in assets and liabilities:

Receivables

(41.8)

165.3

Other assets

(34.1)

67.3

Accounts payable

(31.2)

(121.2)

Accrued expenses and other liabilities

188.8

17.2

Other, net

(8.3)

48.8

Net cash used in operating activities

(660.6)

(771.6)

Cash flows from investing activities:

Capital expenditures

(53.9)

(156.0)

Proceeds from disposition of Baltics, net of cash and transaction costs

34.2

Acquisition of theatre assets

(5.8)

Proceeds from disposition of long-term assets

3.4

8.6

Investments in non-consolidated entities, net

(9.3)

(9.3)

Other, net

0.1

1.9

Net cash used in investing activities

(31.3)

(154.8)

Cash flows from financing activities:

Proceeds from issuance of Odeon Term Loan due 2023

534.3

Proceeds from First Lien Toggle Notes due 2026

100.0

Principal payments under First Lien Toggle Notes due 2026

(35.0)

Premium paid to extinguish First Lien Toggle Notes due 2026

(5.3)

Proceeds from issuance of First Lien Notes due 2025

490.0

Proceeds from issuance of First Lien Notes due 2026

270.0

Borrowings (repayments) under revolving credit facilities

(335.0)

322.2

Scheduled principal payments under Term Loan due 2026

(15.0)

(15.0)

Net proceeds from Class A common stock issuance

1,570.7

2.8

Net proceeds from Class A common stock issuance to Mudrick

230.4

Payments related to sale of noncontrolling interest

(0.4)

37.5

Principal payments under finance lease obligations

(6.2)

(4.5)

Cash used to pay for deferred financing costs

(19.9)

(15.2)

Cash used to pay dividends

(4.3)

Taxes paid for restricted unit withholdings

(1.0)

6

Net cash provided by financing activities

2,018.6

1,082.5

Effect of exchange rate changes on cash and cash equivalents and restricted cash

(7.9)

(2.8)

Net increase in cash and cash equivalents and restricted cash

1,318.8

153.3

Cash and cash equivalents and restricted cash at beginning of period

321.4

275.5

Cash and cash equivalents and restricted cash at end of period

$

1,640.2

$

428.8

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest (including amounts capitalized of $0.2 million and $0.8 million, respectively)

$

116.6

$

182.1

Income taxes received, net

$

(6.0)

$

(9.6)

Schedule of non-cash activities:

Investment in NCM

$

$

3.8

Construction payables at period end

$

18.0

$

32.5

See Notes to Condensed Consolidated Financial Statements.

7

AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2021

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

AMC Entertainment Holdings, Inc. (“Holdings”), through its direct and indirect subsidiaries, including American Multi-Cinema, Inc. and its subsidiaries, (collectively with Holdings, unless the context otherwise requires, the “Company” or “AMC”), is principally involved in the theatrical exhibition business and owns, operates or has interests in theatres located in the United States and Europe.

Temporarily suspended or limited operations. Throughout the first quarter of 2020, the Company temporarily suspended theatre operations in its U.S. markets and International markets in compliance with local, state, and federal governmental restrictions and recommendations on social gatherings to prevent the spread of COVID-19 and as a precaution to help ensure the health and safety of the Company’s guests and theatre staff. As of March 17, 2020, all of the Company’s U.S. and International theatre operations were temporarily suspended. The Company resumed limited operations in the International markets in early June 2020 and limited operations in the U.S. markets in late August 2020. A COVID-19 resurgence during the fourth quarter of 2020 resulted in additional local, state, and federal governmental restrictions and many previously reopened theatres in International markets temporarily suspended operations again.

As of March 31, 2021, the Company operated at 585 domestic theatres with limited seating capacities, representing approximately 99% of its domestic theatres. As of June 30, 2021, the Company operated 593 domestic theatres, representing approximately 100% of its domestic theatres with remaining seating capacity restrictions winding down throughout the quarter. As of September 30, 2021, the Company operated 596 domestic theatres representing essentially 100% of its domestic theatres. Total revenues for the U.S. markets increased $490.6 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 and increased $325.6 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

As of March 31, 2021, the Company operated at 97 international theatres, with limited seating capacities, representing approximately 27% of its international theatres. As of June 30, 2021, the Company operated 335 international theatres with limited seating capacities, representing approximately 95% of its international theatres. The majority of international theatre operations were suspended for the first two months of the second quarter of 2021 due to a COVID-19 resurgence and did not reopen until early June 2021. At September 30, 2021, the Company operated 351 international theatres representing approximately 99% of its international theatres. Total revenues for the International markets increased $153.1 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 and decreased $49.3 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

Consolidated revenues increased $643.7 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020 and increased $276.3 million for the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020.

Liquidity. As of September 30, 2021, the Company has cash and cash equivalents of approximately $1.6 billion. In response to the COVID-19 pandemic, the Company adjusted certain elements of its business strategy and took significant steps to preserve cash, and is continuing to take significant steps to preserve cash, by eliminating non-essential costs, including reductions to its variable costs and elements of its fixed cost structure.

In addition to preserving cash, the Company enhanced liquidity through debt issuances, debt exchanges and equity sales as previously reported in its Annual Report on Form 10-K for the year ended December 31, 2020 and in its Quarterly Reports on Form 10-Q for the periods ended March 31, 2021 and June 30, 2021. See Note 6Corporate Borrowings and Finance Lease Obligations and Note 7Stockholders’ Equity for further information.

8

The table below summarizes net increase (decrease) in cash equivalents and restricted cash by quarter for the nine months ended September 30, 2021:

Three Months Ended

Nine Months Ended

March 31,

June 30,

September 30,

September 30,

(In millions)

2021

2021

2021

2021

Cash flows from operating activities:

Net cash used in operating activities

$

(312.9)

$

(233.8)

$

(113.9)

$

(660.6)

Cash flows from investing activities:

Net cash provided by (used in) investing activities

(16.0)

13.5

(28.8)

(31.3)

Cash flows from financing activities:

Net cash provided by (used in) financing activities

854.7

1,212.2

(48.3)

2,018.6

Effect of exchange rate changes on cash and cash equivalents and restricted cash

(5.1)

5.6

(8.4)

(7.9)

Net increase (decrease) in cash and cash equivalents and restricted cash

520.7

997.5

(199.4)

1,318.8

Cash and cash equivalents and restricted cash at beginning of period

321.4

842.1

1,839.6

321.4

Cash and cash equivalents and restricted cash at end of period

$

842.1

$

1,839.6

$

1,640.2

$

1,640.2

The Company’s net cash used in operating activities improved by $79.1 million during the three months ended June 30, 2021, and has further improved by $119.9 million from ($233.8) million to $(113.9) million during the three months ended September 30, 2021. This is primarily attributable to continued increases in attendance and industry box office revenues during the nine months ended September 30, 2021. The Company will continue to repay rent amounts that were deferred during the pandemic, which will increase its cash outflows from operating activities. See Note 2—Leases for a summary of the estimated future repayment terms for the remaining $375.9 million of rentals that were deferred during the COVID-19 pandemic.

The Company’s net cash provided by (used in) investing activities included:

$(11.9) million of capital expenditures and $(9.3) million of investments in non-consolidated entities, partially offset by proceeds from the disposition of the Baltics’ theatres of $3.8 million and proceeds from the disposition of long-term assets of $1.4 million during the three months ended March 31, 2021;
$31.4 million of proceeds from the disposition of the Baltics’ theatres, partially offset by $(17.9) million of capital expenditures during the three months ended June 30, 2021; and
$(24.1) million of capital expenditures, $(5.8) million related to the acquisition of assets at two theatres and $(1.0) million of transaction costs related to the Baltics’ theatre sale, partially offset by $2.0 million of proceeds from disposition of long-term assets during the three months ended September 30, 2021.

The Company’s net cash provided by (used in) financing activities included:

Net proceeds from the Company’s debt and equity issuances of $861.9 million during the three months ended March 31, 2021;
Net proceeds from the Company’s equity issuances of $1,219.6 million during the three months ended June 30, 2021; and
Principal and premium payments of $(40.3) million related to an optional redemption of the Company’s First Lien Toggle Notes due 2026 during the three months ended September 30, 2021.

The Company believes its existing cash and cash equivalents, together with cash generated from operations, will be sufficient to fund its operations, satisfy its obligations, including cash outflows for deferred rent and planned capital expenditures, and comply with minimum liquidity and financial covenant requirements under its debt covenants related to borrowings pursuant to the Senior Secured Revolving Credit Facility and Odeon Term Loan Facility for at least the next 12 months. In order to achieve net positive operating cash flows and long-term profitability, the Company believes it will need to increase attendance levels significantly from their current levels to achieve levels in line with pre-COVID-19 attendance. The Company believes the global re-opening of its theatres, the anticipated volume of titles available for theatrical release, and the anticipated broad appeal of many of those titles will support increased attendance

9

levels. However, there remain significant risks that may negatively impact attendance, including a resurgence of COVID-19 related restrictions, potential movie-goer reluctance to attend theatres due to concerns about the COVID-19 variant strains, movie studios release schedules and direct to streaming or other changing movie studio practices.

The Company entered the Ninth Amendment (as defined below) to the Credit Agreement (as defined below) pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant (the secured leverage ratio) applicable to the Senior Secured Revolving Credit Facility (as defined below) from March 31, 2021 to March 31, 2022 (the “Extended Covenant Suspension Period”), as described, and on the terms and conditions specified, therein. The Company is currently subject to minimum liquidity requirements of approximately $144 million, of which $100 million is required under the conditions for the Extended Covenant Suspension Period, as amended, under the Senior Secured Revolving Credit Facility, and £32.5 million (approximately $44 million) of which is required under the Odeon Term Loan Facility. Following the expiration of the Extended Covenant Suspension Period, the Company will be subject to the financial covenant under the Senior Secured Revolving Credit Facility, beginning with the quarter ending June 30, 2022. The Company currently expects it will be able to comply with this financial covenant, however the Company does not anticipate the need to borrow under the Senior Secured Revolving Credit Facility during the next twelve months. See Note 6—Corporate Borrowings and Finance Lease Obligations for further information. The Company’s liquidity needs thereafter will depend, among other things, on the timing of movie releases and its ability to generate cash from operations.

The Company received rent concessions provided by the lessors that aided in mitigating the economic effects of COVID-19 during the pandemic. These concessions primarily consisted of rent abatements and the deferral of rent payments. As a result, deferred lease amounts were approximately $375.9 million as of September 30, 2021. The Company’s cash expenditures for rent increased significantly in both the second and third quarters of 2021. See Note 2—Leases for a summary of the estimated future repayment terms for the deferred lease amounts due to COVID-19.

Use of estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of consolidation. The accompanying unaudited condensed consolidated financial statements include the accounts of AMC, as discussed above, and should be read in conjunction with the Company’s Annual Report on Form 10–K for the year ended December 31, 2020. The accompanying condensed consolidated balance sheet as of December 31, 2020, which was derived from audited financial statements, and the unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10–Q. Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, these interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company’s financial position and results of operations. All significant intercompany balances and transactions have been eliminated in consolidation. Due to the seasonal nature of the Company’s business and the temporarily suspended or limited operations at the Company’s theatres due to the COVID-19 pandemic, results for the nine months ended September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021. The Company manages its business under two reportable segments for its theatrical exhibition operations, U.S. markets and International markets.

Baltics’ theatre sale. On August 28, 2020, the Company entered into an agreement to sell its equity interest in Forum Cinemas OU, which consisted of nine theatres located in the Baltics’ region (Latvia, Lithuania and Estonia) and was included in the Company’s International markets reportable segment. The completion of the sale took place in several steps and was contingent upon clearance from each regulatory competition council in each country. In October 2020, the Company completed the divestiture of its equity interest in Latvia. In February 2021, the Company received cash consideration for the remaining equity interest in Estonia of $3.8 million (€3.2 million), net of cash of $0.3 million. In May 2021, the Company received cash consideration of $31.4 million (€26.2 million), net of cash of $0.1 million and transaction costs of $0.3 million, which completed the sale of its remaining 51% equity interest in Lithuania and eliminated the Company’s noncontrolling interest in Forum Cinemas OU. Accrued transaction costs of $1.0 million were paid during the three months ended September 30, 2021. The Company recorded the net gain from the sale of its equity interest in Forum Cinemas OU of $0 million and $5.5 million (net of transaction costs of $2.6 million) in investment expense (income), during the three and nine months ended September 30, 2021, respectively.

10

Restricted cash. Restricted cash is cash held in the Company’s bank accounts in International markets as a guarantee for certain landlords.

Accumulated other comprehensive income (loss). The following table presents the change in accumulated other comprehensive income (loss) by component:

Foreign

(In millions)

    

Currency

    

Pension Benefits

    

Total

Balance December 31, 2020

$

60.1

$

(21.4)

$

38.7

Other comprehensive income (loss)

(52.2)

3.8

(48.4)

Realized loss on foreign currency transactions reclassified into investment expense (income)

(0.9)

(0.9)

Balance September 30, 2021

$

7.0

$

(17.6)

$

(10.6)

Accumulated depreciation and amortization. Accumulated depreciation was $2,484.2 million and $2,243.1 million at September 30, 2021 and December 31, 2020, respectively, related to property. Accumulated amortization of intangible assets was $44.0 million and $42.0 million at September 30, 2021 and December 31, 2020, respectively.

Other expense (income). The following table sets forth the components of other expense (income):

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

(In millions)

2021

2020

2021

2020

Derivative liability fair value adjustment for embedded conversion feature in the Convertible Notes

$

$

89.9

$

$

89.4

Derivative asset fair value adjustment for contingent call option related to the Class B common stock purchase and cancellation agreement

5.9

19.6

Credit losses (income) related to contingent lease guarantees

6.1

(5.7)

15.3

Governmental assistance due to COVID-19- International markets

(24.7)

(13.5)

(75.1)

(17.9)

Governmental assistance due to COVID-19 - Domestic markets

(0.4)

(4.6)

Foreign currency transaction (gains) losses

(0.7)

0.1

(1.1)

Non-operating components of net periodic benefit cost (income)

(0.3)

0.2

(0.7)

0.3

Loss on debt extinguishment

14.4

14.4

Financing fees related to modification of debt agreements

36.3

1.0

39.1

Other

(0.5)

Total other expense (income)

$

(11.7)

$

125.0

$

(71.8)

$

145.3

11

Impairments. The following table summarizes the Company’s assets that were impaired:

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

(In millions)

    

2021

    

2020

    

2021

 

2020

Impairment of long-lived assets

$

$

28.1

$

$

119.4

Impairment of definite-lived intangible assets

6.4

14.4

Impairment of indefinite-lived intangible assets

4.6

12.9

Impairment of goodwill

156.8

1,901.1

Impairment of long-lived assets, definite and indefinite-lived intangible assets and goodwill

195.9

2,047.8

Impairment of other assets recorded in investment expense (income)

7.2

Total impairment loss

$

$

195.9

$

$

2,055.0

There was no goodwill impairment charge recorded during the three and nine months ended September 30, 2021. During the three months ended September 30, 2020, the enterprise fair values of the Domestic Theatres and International Theatres reporting units were less than their carrying values and goodwill impairment charges of $151.2 million and $5.6 million, respectively, were recorded. During the nine months ended September 30, 2020, the enterprise fair values of the Domestic Theatres and International Theatres reporting units were less than their carrying values and goodwill impairment charges of $1,276.1 million and $625.0 million were recorded for the Company’s Domestic Theatres and International Theatres reporting units, respectively. The Step 1 quantitative goodwill impairment test was performed at March 31, 2020 and September 30, 2020 due to a decline in the common stock price and prices of the Company’s corporate borrowings and the resulting impact on market capitalization, which were two of several factors considered when making this evaluation, including the sustained declines during 2020 in the Company’s enterprise market capitalization and the temporary suspension of operations at all of the Company’s theatres on or before March 17, 2020 due to the COVID-19 pandemic.

The Company evaluates definite-lived and indefinite-lived intangible assets for impairment annually or more frequently as specific events or circumstances dictate or changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable.

There was no impairment charge of long-lived assets, definite-lived intangible assets, and other assets without a readily determinable fair value accounted for under the cost method during the three and nine months ended September 30, 2021. During the three months ended September 30, 2020, the Company recorded non-cash impairment of long-lived assets of $28.1 million on 49 theatres in the U.S. markets with 527 screens (in Alabama, California, Colorado, Florida, Illinois, Indiana, Iowa, Massachusetts, Michigan, Minnesota, Missouri, Nebraska, New Hampshire, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Tennessee, Texas, Wisconsin, and Wyoming) and $0 million in the International markets. During the nine months ended September 30, 2020, the Company recorded non-cash impairment charges of long-lived assets of $109.5 million on 75 theatres in the U.S. markets with 851 screens (in Alabama, Arkansas, California, Colorado, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming) and $9.9 million on 23 theatres in the International markets with 213 screens (in Germany, Italy, Spain, UK and Sweden). During the three and nine months ended September 30, 2020, the Company recorded impairment losses related to definite-lived intangible assets of $6.4 million and $14.4 million, respectively. In addition, during the three and nine months ended September 30, 2020, the Company recorded an impairment loss of $0 million and $7.2 million, respectively, within investment expense (income), related to equity interest investments without a readily determinable fair value accounted for under the cost method.

There was no impairment charge of indefinite-lived intangible assets during the three and nine months ended September 30, 2021. The Company first assessed the qualitative factors to determine whether the existence of events and circumstances indicated that it was more likely than not the fair value amounts of any indefinite-lived intangible assets were less than their carrying amounts and concluded it was not more likely than not that the fair value amounts were less than their carrying amounts. At September 30, 2020 and March 31, 2020, the Company performed a quantitative impairment evaluation of its indefinite-lived intangible assets related to the AMC, Odeon and Nordic trade names. The Company recorded impairment charges of $4.5 million and $0.1 million related to the Odeon and Nordic trade names, respectively, during the three months ended September 30, 2020. During the nine months ended September 30, 2020, the Company recorded impairment charges of $10.4 million and $2.5 million related to the Odeon and Nordic trade names,

12

respectively. No impairment charges were recorded related to the AMC trade name for the three and nine months ended September 30, 2020. To estimate fair value of the Company’s indefinite-lived trade names, the Company employed a derivation of the Income Approach known as the Royalty Savings.

Accounting Pronouncements Recently Adopted

Income taxes. In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to improve consistency and simplify several areas of existing guidance. ASU 2019-12 removes certain exceptions to the general principles related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also clarifies the accounting for transactions that result in a step-up in the tax basis for goodwill. ASU 2019-12 was effective for the Company in the first quarter of 2021. The adoption of ASU 2019-12 did not have a material impact on the Company’s consolidated financial statements.

NOTE 2—LEASES

The Company leases theatres and equipment under operating and finance leases. The Company typically does not believe that exercise of the renewal options is reasonably certain at the lease commencement and, therefore, considers the initial base term as the lease term. Lease terms vary but generally the leases provide for fixed and escalating rentals, contingent escalating rentals based on the Consumer Price Index and other indexes not to exceed certain specified amounts and variable rentals based on a percentage of revenues. The Company often receives contributions from landlords for renovations at existing locations. The Company records the amounts received from landlords as an adjustment to the right-of-use asset and amortizes the balance as a reduction to rent expense over the base term of the lease agreement. Equipment leases primarily consist of food and beverage equipment.

The Company received rent concessions provided by the lessors that aided in mitigating the economic effects of COVID-19 during the pandemic. These concessions primarily consisted of rent abatements and the deferral of rent payments. In instances where there were no substantive changes to the lease terms, i.e., modifications that resulted in total payments of the modified lease being substantially the same or less than the total payments of the existing lease, the Company elected the relief as provided by the FASB staff related to the accounting for certain lease concessions. The Company elected not to account for these concessions as a lease modification, and therefore the Company has remeasured the related lease liability and right-of-use asset but did not reassess the lease classification or change the discount rate to the current rate in effect upon the remeasurement. The deferred payment amounts have been recorded in the Company’s lease liabilities to reflect the change in the timing of payments. The deferred payment amounts included in current maturities of operating lease liabilities and long-term operating lease liabilities are reflected in the condensed consolidated statements of cash flows as part of the change in accrued expenses and other liabilities. Those leases that did not meet the criteria for treatment under the FASB relief were evaluated as lease modifications. The deferred payment amounts included in accounts payable for contractual rent amounts due and not paid are reflected in accounts payable on the condensed consolidated balance sheets and in the condensed consolidated statements of cash flows as part of the change in accounts payable. In addition, the Company included deferred lease payments in operating lease right-of-use assets as a result of lease remeasurements.

A summary of deferred payment amounts related to rent obligations for which payments were deferred to 2021 and future years are provided below:

As of

As of

December 31,

Increase (decrease)

September 30,

(In millions)

2020

in deferred amounts

2021

Fixed operating lease deferred amounts (1) (2)

$

383.9

$

(30.9)

$

353.0

Finance lease deferred amounts

12.8

(9.7)

3.1

Variable lease deferred amounts (2)

53.3

(33.5)

19.8

Total deferred lease amounts

$

450.0

$

(74.1)

$

375.9

(1) During the nine months ended September 30, 2021, the decrease in fixed operating lease deferred amounts includes $93.3 million of decreases in the deferred balances as of December 31, 2020 related to payments and abatements.

13

(2) During the nine months ended September 30, 2021, decreases in variable lease deferred amounts were primarily due to resolution of contingencies, therefore, variable amounts became fixed and were reclassified to fixed operating lease deferred amounts.

The following table reflects the lease costs for the periods presented:

Three Months Ended

Nine Months Ended

Consolidated Statement

September 30,

September 30,

September 30,

September 30,

(In millions)

of Operations

2021

2020

2021

2020

Operating lease cost

Theatre properties

Rent

$

186.4

$

198.6

$

552.6

$

619.4

Theatre properties

Operating expense

0.7

0.3

0.8

2.6

Equipment

Operating expense

3.4

3.8

8.0

11.5

Office and other

General and administrative: other

1.4

1.3

4.1

3.9

Finance lease cost

Amortization of finance lease assets

Depreciation and amortization

1.1

1.6

3.7

5.2

Interest expense on lease liabilities

Finance lease obligations

1.2

1.4

4.0

4.5

Variable lease cost

Theatre properties

Rent

28.5

15.7

59.9

56.8

Equipment

Operating expense

7.9

0.1

12.9

6.6

Total lease cost

$

230.6

$

222.8

$

646.0

$

710.5

Cash flow and supplemental information is presented below:

Nine Months Ended

September 30,

September 30,

(In millions)

2021

2020

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows used in finance leases

$

(2.1)

$

(1.8)

Operating cash flows used in operating leases

(609.8)

(316.7)

Financing cash flows used in finance leases

(6.2)

(4.5)

Landlord contributions:

Operating cashflows provided by operating leases

17.7

31.9

Supplemental disclosure of noncash leasing activities:

Right-of-use assets obtained in exchange for new operating lease liabilities (1)

176.0

139.1

(1) Includes lease extensions and option exercises.

The following table represents the weighted-average remaining lease term and discount rate as of September 30, 2021:

As of September 30, 2021

Weighted Average

Weighted Average

Remaining

Discount

Lease Term and Discount Rate

Lease Term (years)

Rate

Operating leases

10.1

9.9%

Finance leases

13.8

6.5%

14

Minimum annual payments, including deferred lease payments less contractual rent amounts due and not paid that were recorded in accounts payable, that are recorded as operating and finance lease liabilities and the net present value thereof as of September 30, 2021 are as follows:

Operating Lease

Financing Lease

(In millions)

Payments (2)

Payments (2)

Three months ending December 31, 2021 (1)

$

269.3

$

3.8

2022 (1)

1,037.1

14.0

2023

944.7

9.9

2024

822.4

8.8

2025

775.4

8.1

2026

711.3

8.0

Thereafter

3,883.4

64.2

Total lease payments

8,443.6

116.8

Less imputed interest

(3,050.8)

(40.5)

Total operating and finance lease liabilities, respectively

$

5,392.8

$

76.3

(1) The minimum annual payments table above does not include contractual cash rent amounts that were due and not paid, which are recorded in accounts payable as shown below, including estimated repayment dates:

Accounts Payable

(In millions)

Lease Payments

Three months ended December 31, 2021

$

50.3

Three months ended March 31, 2022

1.0

Three months ended June 30, 2022

0.9

Three months ended September 30, 2022

7.2

Total deferred lease amounts recorded in AP

$

59.4

(2) The minimum annual payments table above includes deferred undiscounted cash rent amounts that were due and not paid related to operating and finance leases, as shown below:

Operating Lease

Financing Lease

(In millions)

Payments

Payments

Three months ended December 31, 2021

$

42.8

$

0.6

Three months ended March 31, 2022

40.0

0.6

Three months ended June 30, 2022

36.1

0.4

Three months ended September 30, 2022

32.2

0.2

Three months ended December 31, 2022

31.5

0.2

2023

82.6

0.4

2024

15.3

2025

5.5

2026

4.1

Thereafter

24.0

Total deferred lease amounts

$

314.1

$

2.4

As of September 30, 2021, the Company had signed additional operating lease agreements for 4 theatres that have not yet commenced of approximately $136.8 million, which are expected to commence between 2022 and 2024 and carry lease terms of approximately 15 to 20 years. The timing of lease commencement is dependent on the landlord providing the Company with control and access to the related facility.

15

NOTE 3—REVENUE RECOGNITION

Disaggregation of revenue. Revenue is disaggregated in the following tables by major revenue types and by timing of revenue recognition:

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

(In millions)

2021

2020

2021

2020

Major revenue types

Admissions

$

425.1

$

62.9

$

727.6

$

631.8

Food and beverage

265.2

29.1

476.8

317.6

Other theatre:

Screen advertising

23.3

16.9

59.9

60.9

Other theatre

49.6

10.6

91.9

69.6

Other theatre

72.9

27.5

151.8

130.5

Total revenues

$

763.2

$

119.5

$

1,356.2

$

1,079.9

Three Months Ended

Nine Months Ended

September 30,

September 30,

September 30,

September 30,

(In millions)

2021

2020

2021

2020

Timing of revenue recognition

Products and services transferred at a point in time

$

693.1

$

96.3

$

1,234.0

$

951.7

Products and services transferred over time(1)

70.1

23.2

122.2

128.2

Total revenues

$

763.2

$

119.5

$

1,356.2

$

1,079.9

(1) Amounts primarily include subscription and advertising revenues.

The following tables provide the balances of receivables and deferred revenue income:

(In millions)

September 30, 2021

December 31, 2020

Current assets

Receivables related to contracts with customers

$

39.5

$

23.1

Miscellaneous receivables

90.1

67.9

Receivables, net

$

129.6

$

91.0

(In millions)

September 30, 2021

December 31, 2020

Current liabilities

Deferred revenue related to contracts with customers

$

387.8

$

400.6

Miscellaneous deferred income

4.3

4.8

Deferred revenue and income

$

392.1

$

405.4

16

The significant changes in contract liabilities with customers included in deferred revenues and income are as follows:

Deferred Revenues

Related to Contracts

(In millions)

with Customers

Balance December 31, 2020

$

400.6

Cash received in advance(1)

79.8

Customer loyalty rewards accumulated, net of expirations:

Admission revenues (2)

7.0

Food and beverage (2)

13.3

Other theatre (2)

0.1

Reclassification to revenue as the result of performance obligations satisfied:

Admission revenues (3)

(64.3)

Food and beverage (3)

(23.9)

Other theatre (4)

(2