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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

June 30,

(Mark One)

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

For the quarterly period ended June 30, 2022

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 August 4, 2022

Class A common stock

516,820,595

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

34

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

64

Item 4.

Controls and Procedures

66

PART II—OTHER INFORMATION

Item 1.

Legal Proceedings

66

Item 1A.

Risk Factors

66

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

67

Item 3.

Defaults Upon Senior Securities

67

Item 4.

Mine Safety Disclosures

67

Item 5.

Other Information

68

Item 6.

Exhibits

69

Signature

70

2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements. (Unaudited)

AMC ENTERTAINMENT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Six Months Ended

(In millions, except share and per share amounts)

    

June 30, 2022

    

June 30, 2021

    

June 30, 2022

    

June 30, 2021

(unaudited)

(unaudited)

Revenues

Admissions

$

651.0

$

233.0

$

1,094.8

$

302.5

Food and beverage

 

396.7

 

161.5

 

649.2

 

211.6

Other theatre

 

118.7

 

50.2

 

208.1

 

78.9

Total revenues

1,166.4

444.7

1,952.1

593.0

Operating costs and expenses

Film exhibition costs

328.7

98.9

 

518.5

 

120.9

Food and beverage costs

 

64.6

 

26.3

 

107.2

 

36.0

Operating expense, excluding depreciation and amortization below

 

402.2

 

246.2

 

747.0

 

425.9

Rent

 

222.4

 

205.5

 

445.6

 

397.6

General and administrative:

Merger, acquisition and other costs

 

(0.3)

 

4.3

 

0.1

 

11.0

Other, excluding depreciation and amortization below

 

67.5

 

54.4

 

120.6

 

106.2

Depreciation and amortization

97.4

105.7

196.1

219.8

Operating costs and expenses

 

1,182.5

741.3

 

2,135.1

1,317.4

Operating loss

(16.1)

(296.6)

(183.0)

(724.4)

Other expense, net:

Other expense (income)

 

(43.7)

 

(42.7)

 

92.6

 

(60.1)

Interest expense:

Corporate borrowings

 

79.5

 

88.1

 

161.5

 

239.6

Finance lease obligations

 

1.0

 

1.4

 

2.2

 

2.8

Non-cash NCM exhibitor services agreement

9.8

9.4

19.0

19.3

Equity in loss of non-consolidated entities

 

1.0

 

2.7

 

6.1

 

5.5

Investment expense (income)

 

57.3

 

(6.3)

 

(6.1)

 

(8.3)

Total other expense, net

 

104.9

52.6

 

275.3

198.8

Net loss before income taxes

 

(121.0)

(349.2)

 

(458.3)

(923.2)

Income tax provision (benefit)

 

0.6

 

(5.2)

 

0.7

(12.0)

Net loss

(121.6)

(344.0)

(459.0)

(911.2)

Less: Net loss attributable to noncontrolling interests

(0.4)

(0.7)

Net loss attributable to AMC Entertainment Holdings, Inc.

$

(121.6)

$

(343.6)

$

(459.0)

$

(910.5)

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

Basic

$

(0.24)

$

(0.71)

$

(0.89)

$

(2.07)

Diluted

$

(0.24)

$

(0.71)

$

(0.89)

$

(2.07)

Average shares outstanding:

Basic (in thousands)

516,821

480,731

516,368

440,644

Diluted (in thousands)

516,821

480,731

516,368

440,644

See Notes to Condensed Consolidated Financial Statements.

3

AMC ENTERTAINMENT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

Three Months Ended

Six Months Ended

(In millions)

    

June 30, 2022

    

June 30, 2021

    

June 30, 2022

    

June 30, 2021

(unaudited)

(unaudited)

Net loss

$

(121.6)

$

(344.0)

$

(459.0)

$

(911.2)

Other comprehensive income (loss):

Unrealized foreign currency translation adjustments

 

(46.3)

 

21.1

 

(52.3)

 

(33.6)

Realized loss on foreign currency transactions reclassified into investment expense (income), net of tax

(0.9)

(0.9)

Pension adjustments:

Net gain arising during the period

 

 

0.3

 

0.2

 

3.8

Other comprehensive income (loss):

 

(46.3)

 

20.5

 

(52.1)

 

(30.7)

Total comprehensive loss

(167.9)

(323.5)

(511.1)

(941.9)

Comprehensive loss attributable to noncontrolling interests

(0.4)

(0.9)

Comprehensive loss attributable to AMC Entertainment Holdings, Inc.

$

(167.9)

$

(323.1)

$

(511.1)

$

(941.0)

See Notes to Condensed Consolidated Financial Statements.

4

AMC ENTERTAINMENT HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions, except share data)

    

June 30, 2022

    

December 31, 2021

 

ASSETS

Current assets:

Cash and cash equivalents

$

965.2

$

1,592.5

Restricted cash

22.7

27.8

Receivables, net

 

120.7

 

168.5

Other current assets

 

102.8

 

81.5

Total current assets

 

1,211.4

 

1,870.3

Property, net

 

1,815.3

 

1,962.5

Operating lease right-of-use assets, net

4,027.9

4,155.9

Intangible assets, net

 

148.1

 

153.4

Goodwill

 

2,354.6

 

2,429.8

Deferred tax asset, net

 

0.4

 

0.6

Other long-term assets

 

260.6

 

249.0

Total assets

$

9,818.3

$

10,821.5

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

Accounts payable

$

308.9

$

377.1

Accrued expenses and other liabilities

 

325.9

 

367.5

Deferred revenues and income

 

373.1

 

408.6

Current maturities of corporate borrowings

 

20.0

 

20.0

Current maturities of finance lease liabilities

6.6

9.5

Current maturities of operating lease liabilities

582.2

605.2

Total current liabilities

 

1,616.7

 

1,787.9

Corporate borrowings

 

5,358.2

 

5,408.0

Finance lease liabilities

55.3

63.2

Operating lease liabilities

4,433.7

4,645.2

Exhibitor services agreement

 

515.8

 

510.4

Deferred tax liability, net

 

31.2

 

31.3

Other long-term liabilities

 

134.2

 

165.0

Total liabilities

 

12,145.1

 

12,611.0

Commitments and contingencies

Stockholders’ deficit:

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

Class A common stock ($.01 par value, 524,173,073 shares authorized; 516,820,595 shares issued and outstanding as of June 30, 2022; 513,979,100 shares issued and outstanding as of December 31, 2021)

 

5.2

 

5.1

Additional paid-in capital

 

4,831.2

 

4,857.5

Accumulated other comprehensive loss

 

(80.2)

 

(28.1)

Accumulated deficit

 

(7,083.0)

 

(6,624.0)

Total stockholders' deficit

(2,326.8)

(1,789.5)

Total liabilities and stockholders’ deficit

$

9,818.3

$

10,821.5

See Notes to Condensed Consolidated Financial Statements.

5

AMC ENTERTAINMENT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended

(In millions)

June 30, 2022

June 30, 2021

Cash flows from operating activities:

(unaudited)

Net loss

$

(459.0)

$

(911.2)

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

Depreciation and amortization

196.1

219.8

Deferred income taxes

0.3

(12.3)

Loss on extinguishment of debt

96.4

Unrealized gain on investments in Hycroft

(16.1)

Unrealized loss (gain) on investments in NCM

9.5

(1.2)

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

(32.0)

24.5

Amortization of deferred financing costs to interest expense

6.8

15.5

PIK interest expense

107.1

Non-cash portion of stock-based compensation

25.9

13.8

Gain on disposition of assets

(0.4)

Gain on disposition of Baltics

(5.5)

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

6.7

5.5

Landlord contributions

5.2

11.1

Other non-cash rent benefit

(14.0)

(19.2)

Deferred rent

(90.7)

(29.9)

Net periodic benefit income

(0.2)

(0.4)

Change in assets and liabilities:

Receivables

46.4

6.3

Other assets

(26.3)

(11.0)

Accounts payable

(58.4)

(67.9)

Accrued expenses and other liabilities

(82.7)

116.8

Other, net

14.9

(8.5)

Net cash used in operating activities

(371.6)

(546.7)

Cash flows from investing activities:

Capital expenditures

(75.2)

(29.8)

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

35.2

Acquisition of theatre assets

(17.8)

Proceeds from disposition of long-term assets

7.2

1.4

Proceeds from sale of securities

11.4

Investments in non-consolidated entities, net

(27.9)

(9.3)

Other, net

(0.6)

Net cash used in investing activities

(102.9)

(2.5)

Cash flows from financing activities:

Proceeds from issuance of First Lien Notes due 2029

950.0

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 Notes due 2025

(500.0)

Principal payments under First Lien Notes due 2026

(300.0)

Principal payments under First Lien Toggle Notes due 2026

(73.5)

Premium paid to extinguish First Lien Notes due 2025

(34.5)

Premium paid to extinguish First Lien Notes due 2026

(25.6)

Premium paid to extinguish First Lien Toggle Notes due 2026

(14.6)

Repurchase of Second Lien Notes due 2026

(50.0)

Repayments under revolving credit facilities

(335.0)

Scheduled principal payments under Term Loan due 2026

(10.0)

(10.0)

Net proceeds from Class A common stock issuance

1,570.8

Net proceeds from Class A common stock issuance to Mudrick

230.4

Payments related to sale of noncontrolling interest

(0.4)

6

Principal payments under finance lease obligations

(5.4)

(3.9)

Cash used to pay for deferred financing costs

(19.5)

(19.3)

Cash used to pay dividends

(0.7)

Taxes paid for restricted unit withholdings

(52.2)

Net cash provided by (used in) financing activities

(136.0)

2,066.9

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

(21.9)

0.5

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

(632.4)

1,518.2

Cash and cash equivalents and restricted cash at beginning of period

1,620.3

321.4

Cash and cash equivalents and restricted cash at end of period

$

987.9

$

1,839.6

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest (including amounts capitalized of $0.1 million and $0.5 million, respectively)

$

178.7

$

98.7

Income taxes paid (received), net

$

1.4

$

(6.1)

Schedule of non-cash activities:

Investment in NCM

$

15.1

$

Construction payables at period end

$

30.9

$

15.0

See Notes to Condensed Consolidated Financial Statements.

7

AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(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. Total consolidated revenues increased $1,359.1 million for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. The increase in total consolidated revenues was primarily due to the reduced impact of the COVID-19 pandemic on the current year which resulted in increased operating capacity and increased availability of films with broad consumer appeal. As of January 1, 2021 the Company operated at 394 domestic theatres, with limited seating capacities, representing approximately 67% of its domestic theatres. 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 at 593 domestic theatres, representing approximately 100% of its domestic theatres with remaining seating capacity restrictions winding down throughout the quarter. As of January 1, 2021, the Company operated at 109 International leased and partnership theatres, with limited seating capacities, representing approximately 30% of our International theatres. 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 at 335 international theatres, with limited seating capacities, representing approximately 95% of its international theatres. Our average consolidated screens operated during the three months ended June 30, 2021 increased by 8,830 screens to 8,890 screens. During the six months ended June 30, 2022, the Company operated essentially 100% of its U.S. and International theatres. As of June 30, 2022 there are no restrictions on operations in any of the U.S. or International theatres.

Liquidity. As of June 30, 2022, the Company has cash and cash equivalents of approximately $965.2 million. In response to the COVID-19 pandemic, the Company adjusted certain elements of its business strategy and took significant steps to preserve cash. The Company is continuing to take measures to further strengthen its financial position and enhance its operations, by minimizing non-essential costs, including reductions to its variable costs and elements of its fixed cost structure, introducing new initiatives, and optimizing its theatrical footprint.

Additionally, the Company enhanced future liquidity through debt refinancing at lower interest rates and repurchasing debt at 69% of par value. See Note 6Corporate Borrowings and Finance Lease Obligations for further information.

8

The table below summarizes net increase (decrease) in cash and cash equivalents and restricted cash by quarter for the year ended December 31, 2021:

Three Months Ended

Year Ended

March 31,

June 30,

September 30,

December 31,

December 31,

(In millions)

2021

2021

2021

2021

2021

Cash flows from operating activities:

Net cash provided by (used in) operating activities

$

(312.9)

$

(233.8)

$

(113.9)

$

46.5

$

(614.1)

Cash flows from investing activities:

Net cash provided by (used in) investing activities

(16.0)

13.5

(28.8)

(36.9)

(68.2)

Cash flows from financing activities:

Net cash provided by (used in) financing activities

854.7

1,212.2

(48.3)

(27.9)

1,990.7

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

(5.1)

5.6

(8.4)

(1.6)

(9.5)

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

520.7

997.5

(199.4)

(19.9)

1,298.9

Cash and cash equivalents and restricted cash at beginning of period

321.4

842.1

1,839.6

1,640.2

321.4

Cash and cash equivalents and restricted cash at end of period

$

842.1

$

1,839.6

$

1,640.2

$

1,620.3

$

1,620.3

The Company’s net cash used in operating activities improved by $79.1 million during the three months ended June 30, 2021 compared to the three months ended March 31, 2021, $119.9 million during the three months ended September 30, 2021 compared to the three months ended June 30, 2021, and $160.4 million during the three months ended December 31, 2021 compared to the three months ended September 30, 2021.

The table below summarizes net decrease in cash equivalents and restricted cash by quarter for the six months ended June 30, 2022:

Three Months Ended

Six Months Ended

March 31,

June 30,

June 30,

(In millions)

2022

2022

2022

Cash flows from operating activities:

Net cash used in operating activities

$

(295.0)

$

(76.6)

$

(371.6)

Cash flows from investing activities:

Net cash used in investing activities

(54.9)

(48.0)

(102.9)

Cash flows from financing activities:

Net cash used in financing activities

(76.3)

(59.7)

(136.0)

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

(5.5)

(16.4)

(21.9)

Net decrease in cash and cash equivalents and restricted cash

(431.7)

(200.7)

(632.4)

Cash and cash equivalents and restricted cash at beginning of period

1,620.3

1,188.6

1,620.3

Cash and cash equivalents and restricted cash at end of period

$

1,188.6

$

987.9

$

987.9

The Company’s net cash provided by (used in) operating activities deteriorated by $341.5 million during the three months ended March 31, 2022 compared to the three months ended December 31, 2021 from $46.5 million to $(295.0) million. The decline in net cash provided by operating activities from the three months ended December 31, 2021 to the three months ended March 31, 2022 was primarily attributable to a decrease in attendance and increase in net

9

loss and increases in seasonal working capital uses as the Company paid for the strong late fourth quarter 2021 results in early first quarter of 2022. The Company’s net cash used in operating activities improved by $218.4 million during the three months ended June 30, 2022 compared to the three months ended March 31, 2022 from $(295.0) million to $(76.6) million. The improvement in net cash used in operating activities from the three months ended March 31, 2022 to the three months ended June 30, 2022 was primarily attributable to an increase in attendance and decrease in net loss and decreases in seasonal working capital uses as we will pay for the strong second quarter 2022 results in early third quarter of 2022. The Company has also continued to repay rent amounts that were deferred during the COVID-19 pandemic, which increases its cash outflows from operating activities. See Note 2—Leases for a summary of the estimated future repayment terms for the remaining $218.9 million of rentals that were deferred during the COVID-19 pandemic.

The Company’s net cash used in investing activities included:

$34.8 million of capital expenditures and $27.9 million of investments in non-consolidated entities, partially offset by proceeds from the disposition of long-term assets of $7.2 million during the three months ended March 31, 2022.
$40.4 million of capital expenditures, $17.8 million for the acquisition of theatres, partially offset by proceeds of $11.4 million from the sale of securities in conjunction with the liquidation of a non-qualified deferred compensation plan during the three months ended June 30, 2022.

The Company’s net cash used in financing activities included:

$955.7 million of principal and premium payments of, $52.2 million of taxes paid for restricted unit withholdings, and $17.7 million of cash used to pay for deferred financing costs, partially offset by proceeds from the Company’s debt issuance of $950.0 million, during the three months ended March 31, 2022.
$57.9 million of principal and premium payments, $1.8 million of cash used to pay for deferred financing costs during the three months ended June 30, 2022.

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 to repay rent amounts that were deferred during the COVID-19 pandemic 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 that box office revenues will need to increase significantly compared to 2021 and the combined first and second quarter of 2022 to levels in line with pre COVID-19 box office revenues. 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 levels. The Company believes that recent attendance levels are positive signs of continued demand for the moviegoing experience. For the six months ended June 30, 2022 attendance was 98.2 million patrons, a 69.3 million patron increase from the approximately 28.9 million patrons for the six months ended June 30, 2021. The Company’s business is seasonal, with higher attendance and revenues generally occurring during the summer months and holiday seasons. However, there remain significant risks that may negatively impact attendance, including a potential resurgence of COVID-19 related restrictions, potential movie-goer reluctance to attend theatres due to concerns about COVID-19 variant strains, movie studios release schedules, the production and theatrical release of fewer films compared to levels before the onset of the COVID-19 pandemic, and direct to streaming or other changing movie studio practices.

The Company entered the Ninth Amendment to the Credit Agreement, dated as of March 8, 2021, 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 from March 31, 2021 to March 31, 2022, which was further extended from March 31, 2022 to March 31, 2023 by the Eleventh Amendment, dated as of December 20, 2021, as described, and on the terms and conditions specified, therein. The Company is currently subject to minimum liquidity requirements of approximately $139.5 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 $39.5 million) of which is required under the Odeon Term Loan Facility. Following the expiration of the Extended Covenant Suspension Period ending March 31, 2023, the Company will be subject to the financial covenant under the Senior Secured Revolving Credit Facility as of the last day of each quarter on

10

which the aggregate principal amount of revolving loans and letters of credit (excluding letters of credit that are cash collateralized) in excess of $25 million outstanding under the Senior Secured Revolving Credit Facility exceeds 35% of the principal amount of commitments under the Senior Secured Revolving Credit facility then in effect, beginning with the quarter ending June 30, 2023. 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.

The 11.25% Odeon Term Loan due 2023 matures on August 19, 2023 during the third fiscal quarter of the Company’s next calendar year. The Company is currently negotiating terms of new debt intended to refinance the existing £147.6 million and €312.2 million aggregate principal amounts of Odeon Term Loan due 2023. While the Company intends to fully refinance the 11.25% Odeon Term Loan due 2023 and extend current maturity dates, there are no assurances that the Company will be able to do so. If the Company is unable to refinance these amounts, the principal amounts will be reported as current maturities which may increase uncertainty regarding its ability to meet future commitments.

The Company may, at any time and from time to time, seek to retire or purchase its outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as it may determine, and will depend on prevailing market conditions, its liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

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 $218.9 million as of June 30, 2022. The Company’s cash expenditures for rent increased significantly during the six months ended June 30, 2022, compared to the six months ended June 30, 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, 2021. The accompanying condensed consolidated balance sheet as of December 31, 2021, 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 recovery of the industry from the global COVID-19 pandemic, results for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022. The Company manages its business under two reportable segments for its theatrical exhibition operations, U.S. markets and International markets.

11

Cash and equivalents. At June 30, 2022, cash and cash equivalents for the U.S. markets and International markets were $812.8 million and $152.4 million respectively, and at December 31, 2021, cash and cash equivalents were $1,311.4 million and $281.1 million, respectively.

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 loss. The following table presents the change in accumulated other comprehensive loss by component:

Foreign

(In millions)

    

Currency

    

Pension Benefits

    

Total

Balance December 31, 2021

$

(19.0)

$

(9.1)

$

(28.1)

Other comprehensive income (loss)

(52.3)

0.2

(52.1)

Balance June 30, 2022

$

(71.3)

$

(8.9)

$

(80.2)

Accumulated depreciation and amortization. Accumulated depreciation was $2,680.0 million and $2,583.4 million at June 30, 2022 and December 31, 2021, respectively, related to property. Accumulated amortization of intangible assets was $42.0 million and $41.2 million at June 30, 2022 and December 31, 2021, respectively.

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

Three Months Ended

Six Months Ended

(In millions)

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Decreases related to contingent lease guarantees

$

$

(3.7)

$

(0.1)

$

(5.7)

Governmental assistance due to COVID-19 - International markets

(8.5)

(42.2)

(10.8)

(50.4)

Governmental assistance due to COVID-19 - U.S. markets

(1.1)

(4.2)

Foreign currency transaction (gains) losses

3.6

3.4

8.4

(0.4)

Non-operating components of net periodic benefit income

(0.2)

(0.2)

(0.2)

(0.4)

(Gain) Loss on extinguishment of debt

(38.6)

96.4

Financing fees related to modification of debt agreements

1.0

Total other expense (income)

$

(43.7)

$

(42.7)

$

92.6

$

(60.1)

Accounting Pronouncements Recently Adopted

Government Assistance. In November 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-10, Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance (“ASU 2021-10”). The amendments in ASU 2021-10 require annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy, including (1) information about the nature of the transactions and the related accounting policy used to account for the transactions, (2) the line items on the balance sheet and income statement that are affected by the transactions and the amounts applicable to each financial statement line item, and (3) significant terms and conditions of the transactions, including commitments and contingencies. The Company is applying the amendments in ASU 2021-10 prospectively as of January 1, 2022 and the annual government assistance disclosure requirements are effective for the Company during the year ending December 31, 2022.

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

12

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 from 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 future periods are provided below:

As of

As of

December 31,

Decrease

June 30,

(In millions)

2021

in deferred amounts

2022

Fixed operating lease deferred amounts (1)

$

299.3

$

(90.5)

$

208.8

Finance lease deferred amounts

2.4

(1.2)

1.2

Variable lease deferred amounts

13.4

(4.5)

8.9

Total deferred lease amounts

$

315.1

$

(96.2)

$

218.9

(1) During the six months ended June 30, 2022, the decrease in fixed operating lease deferred amounts includes $79.4 million of decreases in the deferred balances as of December 31, 2021 related to payments and abatements.

13

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

Three Months Ended

Six Months Ended

June 30,

June 30,

June 30,

June 30,

(In millions)

Consolidated Statements of Operations

2022

2021

2022

2021

Operating lease cost

Theatre properties

Rent

$

204.4

$

190.7

$

406.9

$

366.2

Theatre properties

Operating expense (income)

1.4

(0.7)

2.6

0.1

Equipment

Operating expense

1.9

2.3

4.7

4.6

Office and other

General and administrative: other

1.3

1.3

2.7

2.7

Finance lease cost

Amortization of finance lease assets

Depreciation and amortization

0.7

1.3

1.4

2.6

Interest expense on lease liabilities

Finance lease obligations

1.0

1.4

2.2

2.8

Variable lease cost

Theatre properties

Rent

18.0

14.8

38.7

31.4

Equipment

Operating expense

18.8

4.8

31.4

5.0

Total lease cost

$

247.5

$

215.9

$

490.6

$

415.4

Cash flow and supplemental information is presented below:

Six Months Ended

June 30,

June 30,

(In millions)

2022

2021

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

Operating cash flows used in finance leases

$

(2.0)

$

(1.2)

Operating cash flows used in operating leases

(532.7)

(360.4)

Financing cash flows used in finance leases

(5.4)

(3.9)

Landlord contributions:

Operating cashflows provided by operating leases

5.2

11.1

Supplemental disclosure of noncash leasing activities:

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

193.2

60.7

(1) Includes lease extensions and option exercises.

The following table represents the weighted-average remaining lease term and discount rate as of June 30, 2022:

As of June 30, 2022

Weighted Average

Weighted Average

Remaining

Discount

Lease Term and Discount Rate

Lease Term (years)

Rate

Operating leases

9.7

9.8%

Finance leases

13.7

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 June 30, 2022 are as follows:

Operating Lease

Financing Lease

(In millions)

Payments (2)

Payments (2)

Six months ending December 31, 2022 (1)

$

509.6

$

5.8

2023 (1)

954.3

9.0

2024

833.5

8.0

2025

786.3

7.4

2026

723.6

7.2

2027

664.8

7.2

Thereafter

3,278.6

50.8

Total lease payments

7,750.7

95.4

Less imputed interest

(2,734.8)

(33.5)

Total operating and finance lease liabilities, respectively

$

5,015.9

$

61.9

(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 September 30, 2022

$

15.7

Three months ended December 31, 2022

0.8

Three months ended March 31, 2023

5.6

Total deferred lease amounts recorded in AP

$

22.1

(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 September 30, 2022

$

31.6

$

0.5

Three months ended December 31, 2022

31.0

0.3

2023

83.0

0.4

2024

15.8

2025

5.7

2026

4.2

2027

3.4

Thereafter

20.9

Total deferred lease amounts

$

195.6

$

1.2

As of June 30, 2022, the Company had signed additional operating lease agreements for three theatres that have not yet commenced with minimum annual payments of approximately $68.9 million, which are expected to commence between years 2022 and 2024 and carry lease terms ranging from 11 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

Six Months Ended

(In millions)

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Major revenue types

Admissions

$

651.0

$

233.0

$

1,094.8

$

302.5

Food and beverage

396.7

161.5

649.2

211.6

Other theatre:

Screen advertising

32.3

19.7

61.2

36.6

Other

86.4

30.5

146.9

42.3

Other theatre

118.7

50.2

208.1

78.9

Total revenues

$

1,166.4

$

444.7

$

1,952.1

$

593.0

Three Months Ended

Six Months Ended

(In millions)

June 30, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Timing of revenue recognition

Products and services transferred at a point in time

$

1,082.7

$

414.1

$

1,790.8

$

540.9

Products and services transferred over time(1)

83.7

30.6

161.3

52.1

Total revenues

$

1,166.4

$

444.7

$

1,952.1

$

593.0

(1) Amounts primarily include subscription and advertising revenues.

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

(In millions)

June 30, 2022

December 31, 2021

Current assets

Receivables related to contracts with customers

$

53.9

$

85.4

Miscellaneous receivables

66.8

83.1

Receivables, net

$

120.7

$

168.5

(In millions)

June 30, 2022

December 31, 2021

Current liabilities

Deferred revenue related to contracts with customers

$

370.1

$

405.1

Miscellaneous deferred income

3.0

3.5

Deferred revenue and income

$

373.1

$

408.6

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, 2021

$

405.1

Cash received in advance(1)

139.8

Customer loyalty rewards accumulated, net of expirations:

Admission revenues (2)

7.7

Food and beverage (2)

9.3

Other theatre (2)

0.1

Reclassification to revenue as the result of performance obligations satisfied:

Admission revenues (3)

(118.0)

Food and beverage (3)

(29.7)

Other theatre (4)

(40.8)

Foreign currency translation adjustment

(3.4)

Balance June 30, 2022

$

370.1

(1) Includes movie tickets, food and beverage, gift cards, exchange tickets, and AMC Stubs® loyalty membership fees.

(2) Amount of rewards accumulated, net of expirations, that are attributed to AMC Stubs® and other loyalty programs.

(3) Amount of rewards redeemed that are attributed to gift cards, exchange tickets, movie tickets, AMC Stubs® loyalty programs and other loyalty programs.

(4) Amounts relate to income from non-redeemed or partially redeemed gift cards, non-redeemed exchange tickets, AMC Stubs® loyalty membership fees and other loyalty programs.

The significant changes to contract liabilities included in the exhibitor services agreement in the condensed consolidated balance sheets, are as follows:

Exhibitor Services

(In millions)

Agreement (1)

Balance December 31, 2021

$

510.4

Common Unit Adjustment–additions of common units

15.0

Reclassification of portion of the beginning balance to other theatre revenue, as the result of performance obligations satisfied

(9.6)

Balance June 30, 2022

$

515.8

(1) Represents the carrying amount of the National CineMedia, LLC (“NCM”) common units that were previously received under the annual Common Unit Adjustment (“CUA”). The deferred revenues are being amortized to other theatre revenues over the remainder of the 30-year term of the Exhibitor Service Agreement (“ESA”) ending in February 2037.

Gift cards and exchange tickets. The total amount of non-redeemed gift cards and exchange tickets included in deferred revenues and income in the condensed consolidated balance sheet as of June 30, 2022 was $274.0 million. This will be recognized as revenues as the gift cards and exchange tickets are redeemed or as the non-redeemed gift card and exchange ticket revenues are recognized in proportion to the pattern of actual redemptions, which is estimated to occur over the next 24 months.

Loyalty programs. As of June 30, 2022, the amount of deferred revenues allocated to the loyalty programs included in deferred revenues and income in the condensed consolidated balance sheet was $66.7 million. The earned points will be recognized as revenue as the points are redeemed, which is estimated to occur over the next 24 months. The AMC Stubs® annual membership fee is recognized ratably over the one-year membership period.

The Company applies the practical expedient in ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

17

NOTE 4—GOODWILL

The following table summarizes the changes in goodwill by reporting unit for the six months ended June 30, 2022:

(In millions)

    

Domestic Theatres

 

International Theatres

Total

Balance December 31, 2021

$

1,796.5

$

633.3

$

2,429.8

Currency translation adjustment

(75.2)

(75.2)

Balance June 30, 2022