UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________ 
FORM 10-Q 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberMarch 26, 20192020
Commission file number: 001-33296 

ncma15.jpg
NATIONAL CINEMEDIA, INC.
(Exact name of registrant as specified in its charter) 

Delaware 20-5665602
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
6300 S. Syracuse Way, Suite 300
Centennial, Colorado
 80111
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (303) 792-3600 
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbolName of each exchange on which registered
Common Stock, par value $0.01 per shareNCMIThe Nasdaq Stock Market LLC
(Title of each class)(Trading symbol)(Name of each exchange on which registered)

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  x    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation 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  x No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☐ Accelerated filerx
     
Non-accelerated filer☐ Smaller reporting company☐
     
   Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards 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  x
As of NovemberMay 1, 2019, 79,241,2242020, 79,625,789 shares of the registrant’s common stock (including unvested restricted shares), par value of $0.01 per share, were outstanding.

TABLE OF CONTENTS
  Page
   
 
PART I
 
   
Item 1.
Unaudited Financial Statements
1
 
Unaudited Condensed Consolidated Balance Sheets
1
 
Unaudited Condensed Consolidated Statements of Income and Comprehensive Income
2
 
Unaudited Condensed Consolidated Statements of Cash Flows
3
 
Unaudited Condensed Consolidated Statements of Equity/(Deficit)
5
 
Notes to Unaudited Condensed Consolidated Financial Statements
6
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2322
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
3634
Item 4.
Controls and Procedures
3634
   
 
PART II
 
   
Item 1.
Legal Proceedings
3635
Item 1A.
Risk Factors
3635
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
4938
Item 3.
Defaults Upon Senior Securities
4938
Item 4.
Mine Safety Disclosures
4938
Item 5.
Other Information
4938
Item 6.
Exhibits
5039
   
Signatures
5140

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
(UNAUDITED)

PART I
Item 1. Financial Statements
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
(UNAUDITED)
September 26, 2019 December 27, 2018March 26, 2020 December 26, 2019
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents$46.3
 $41.4
$193.2
 $55.9
Short-term marketable securities8.1
 24.0
16.8
 17.5
Receivables, net of allowance of $5.7 and $6.0, respectively121.6
 149.9
Income tax receivable0.2
 0.3
Receivables, net of allowance of $3.5 and $6.2, respectively113.7
 170.8
Amounts due from founding members, net3.7
 5.8
—
 6.6
Current portion of notes receivable - founding members (including receivables from related parties
of $2.8 and $4.2, respectively)
4.2
 5.6
Prepaid expenses and other current assets3.5
 3.9
3.5
 3.5
Total current assets187.6
 230.9
327.2
 254.3
NON-CURRENT ASSETS:      
Property and equipment, net of accumulated depreciation of $70.0 and $62.5, respectively32.1
 33.6
Intangible assets, net of accumulated amortization of $193.0 and $172.7, respectively658.3
 684.5
Deferred tax assets, net of valuation allowance of $78.9 and $80.1, respectively167.9
 173.9
Property and equipment, net of accumulated depreciation of $73.8 and $70.7, respectively32.8
 33.2
Intangible assets, net of accumulated amortization of $205.0 and $198.9, respectively646.7
 643.7
Deferred tax assets, net of valuation allowance of $73.7 and $81.6, respectively162.7
 162.1
Other investments1.1
 3.0
1.1
 1.0
Long-term marketable securities8.5
 10.2
5.3
 7.5
Debt issuance costs, net4.2
 5.0
3.6
 3.9
Other assets24.4
 0.7
25.2
 24.3
Total non-current assets896.5
 910.9
877.4
 875.7
TOTAL ASSETS$1,084.1
 $1,141.8
$1,204.6
 $1,130.0
LIABILITIES AND EQUITY/(DEFICIT)      
CURRENT LIABILITIES:      
Amounts due to founding members, net$24.8
 $30.0
$10.2
 $36.8
Payable to founding members under tax receivable agreement (including payables to related
parties of $11.1 and $11.2, respectively)
15.3
 15.5
Payable to founding members under tax receivable agreement (including payables to related
parties of $10.1 and $10.3, respectively)
14.2
 14.2
Accrued expenses21.6
 21.7
24.7
 22.1
Accrued payroll and related expenses11.7
 15.3
6.5
 13.8
Accounts payable16.5
 18.0
12.7
 20.7
Deferred revenue10.4
 7.3
7.5
 7.6
Short-term debt2.7
 2.7
2.7
 2.7
Other current liabilities1.5
 —
1.7
 1.6
Total current liabilities104.5
 110.5
80.2
 119.5
NON-CURRENT LIABILITIES:      
Long-term debt, net of debt issuance costs of $6.6 and $7.8, respectively894.0
 920.9
Payable to founding members under tax receivable agreement (including payables to related
parties of $133.2 and $141.1, respectively)
183.4
 195.6
Long-term debt, net of debt issuance costs of $8.7 and $9.0, respectively1,051.6
 923.9
Payable to founding members under tax receivable agreement (including payables to related
parties of $134.6 and $133.5, respectively)
185.0
 183.8
Other liabilities24.5
 4.0
24.1
 24.0
Total non-current liabilities1,101.9
 1,120.5
1,260.7
 1,131.7
Total liabilities1,206.4
 1,231.0
1,340.9
 1,251.2
COMMITMENTS AND CONTINGENCIES (NOTE 8)
 

  
EQUITY/(DEFICIT):      
NCM, Inc. Stockholders’ Equity/(Deficit):      
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding,
respectively
—
 —
—
 —
Common stock, $0.01 par value; 175,000,000 shares authorized, 77,362,387 and 76,976,398 issued
and outstanding, respectively
0.8
 0.8
Common stock, $0.01 par value; 175,000,000 shares authorized, 77,973,648 and 77,568,986 issued
and outstanding, respectively
0.8
 0.8
Additional paid in capital/(deficit)(210.8) (215.2)(209.1) (209.2)
Retained earnings (distributions in excess of earnings)(176.9) (153.6)(188.3) (171.1)
Total NCM, Inc. stockholders’ equity/(deficit)(386.9) (368.0)(396.6) (379.5)
Noncontrolling interests264.6
 278.8
260.3
 258.3
Total equity/(deficit)(122.3) (89.2)(136.3) (121.2)
TOTAL LIABILITIES AND EQUITY/(DEFICIT)$1,084.1
 $1,141.8
$1,204.6
 $1,130.0
See accompanying notes to the unaudited Condensed Consolidated Financial Statements.
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In millions, except share and per share data)
(UNAUDITED)


Three Months Ended Nine Months EndedThree Months Ended
September 26,
2019		 September 27,
2018		 September 26,
2019		 September 27,
2018		March 26,
2020		 March 28,
2019
REVENUE (including revenue from related parties of $5.7, $5.8, $17.5 and $21.8, respectively)$110.5
 $110.1
 $297.6
 $304.0
REVENUE (including revenue from related parties of $4.3 and $5.3, respectively)$64.7
 $76.9
OPERATING EXPENSES:          
Advertising operating costs9.6
 10.3
 26.8
 26.5
6.2
 7.3
Network costs3.2
 3.2
 10.1
 10.0
2.9
 3.5
Theater access fees—founding members (including fees to related parties of
$13.5, $13.4, $40.9 and $55.5, respectively)
20.1
 19.7
 60.8
 61.8
Theater access fees and revenue share to founding members (including fees to related parties of $12.5
and $12.9, respectively)
17.7
 19.1
Selling and marketing costs17.0
 15.3
 48.4
 48.0
13.9
 15.2
Administrative and other costs10.4
 9.3
 32.2
 34.7
9.8
 10.7
Depreciation expense3.4
 3.1
 10.0
 9.0
3.2
 3.3
Amortization expense—
 6.9
 —
 20.5
Amortization of intangibles recorded for network theater screen leases6.8
 —
 20.7
 —
6.1
 6.9
Total70.5
 67.8
 209.0
 210.5
59.8
 66.0
OPERATING INCOME40.0
 42.3
 88.6
 93.5
4.9
 10.9
NON-OPERATING EXPENSES:          
Interest on borrowings13.8
 14.4
 42.4
 42.3
13.6
 14.4
Interest income(0.4) (0.3) (1.4) (1.0)(0.2) (0.5)
(Gain) loss on early retirement of debt, net—
 (0.3) (0.3) 0.9
(Gain) loss on re-measurement of the payable to founding members under the tax
receivable agreement
(0.5) 3.2
 1.0
 (4.6)
Gain on early retirement of debt, net—
 (0.3)
Loss on re-measurement of the payable to founding members under the tax receivable agreement0.2
 0.7
Other non-operating income—
 (0.1) (0.3) (0.1)(0.1) (0.2)
Total12.9
 16.9
 41.4
 37.5
13.5
 14.1
INCOME BEFORE INCOME TAXES27.1
 25.4
 47.2
 56.0
Income tax expense (benefit)4.3
 (0.3) 6.0
 16.7
CONSOLIDATED NET INCOME22.8
 25.7
 41.2
 39.3
Less: Net income attributable to noncontrolling interests13.6
 14.5
 24.2
 25.8
NET INCOME ATTRIBUTABLE TO NCM, INC.$9.2
 $11.2
 $17.0
 $13.5
COMPREHENSIVE INCOME ATTRIBUTABLE TO NCM, INC.$9.2
 $11.2
 $17.0
 $13.5
LOSS BEFORE INCOME TAXES(8.6) (3.2)
Income tax benefit(0.4) (0.6)
CONSOLIDATED NET LOSS(8.2) (2.6)
Less: Net loss attributable to noncontrolling interests(4.5) (1.5)
NET LOSS ATTRIBUTABLE TO NCM, INC.$(3.7) $(1.1)
COMPREHENSIVE LOSS ATTRIBUTABLE TO NCM, INC.$(3.7) $(1.1)
          
NET INCOME PER NCM, INC. COMMON SHARE:       
NET LOSS PER NCM, INC. COMMON SHARE:   
Basic$0.12
 $0.15
 $0.22
 $0.18
$(0.05) $(0.01)
Diluted$0.12
 $0.14
 $0.22
 $0.16
$(0.05) $(0.01)
WEIGHTED AVERAGE SHARES OUTSTANDING:          
Basic77,356,833
 76,924,983
 77,293,234
 76,825,828
77,763,967
 77,179,777
Diluted77,883,571
 77,485,561
 77,687,393
 156,987,736
77,763,967
 77,179,777
See accompanying notes to the unaudited Condensed Consolidated Financial Statements.
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions) (UNAUDITED)


Nine Months EndedThree Months Ended
September 26, 2019 September 27, 2018March 26, 2020 March 28, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:      
Consolidated net income$41.2
 $39.3
Adjustments to reconcile consolidated net income to net cash provided by operating activities:   
Deferred income tax expense6.0
 16.6
Consolidated net loss$(8.2) $(2.6)
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:   
Deferred income tax benefit(0.4) (0.7)
Depreciation expense10.0
 9.0
3.2
 3.3
Amortization expense—
 20.5
Amortization of intangibles recorded for network theater screen leases20.7
 —
6.1
 6.9
Non-cash share-based compensation4.2
 6.2
0.2
 0.8
Impairment on investment2.0
 0.4
Amortization of debt issuance costs1.9
 2.0
0.6
 0.6
(Gain) loss on early retirement of debt, net(0.3) 0.9
Non-cash loss (gain) on re-measurement of the payable to founding members under
the tax receivable agreement
1.0
 (4.6)
Gain on early retirement of debt, net—
 (0.3)
Non-cash loss on re-measurement of the payable to founding members under
the tax receivable agreement
0.2
 0.7
Other(0.9) (0.9)(1.3) (0.9)
Payments to third parties for extension of intangible assets(0.6) —
Proceeds from disposition of intangible assets by network affiliates0.5
 —
Founding member integration and other encumbered theater payments (including
payments from related parties of $0.8 in 2019)
16.3
 —
Founding member integration and encumbered theater payments (including payments from related parties of $0.1 and $0.4, respectively)8.5
 8.1
Changes in operating assets and liabilities:      
Receivables, net28.3
 46.5
60.5
 44.3
Accounts payable and accrued expenses(3.0) (0.4)(11.1) (11.5)
Amounts due to/from founding members, net(0.2) (0.5)0.8
 0.3
Payment to the founding members under tax receivable agreement (including
payments to related parties of $9.8 and $17.6, respectively)
(14.0) (17.6)
Deferred revenue3.1
 (0.6)(0.2) (0.5)
Other, net(2.6) 2.0
(0.8) (2.5)
Net cash provided by operating activities113.6
 118.8
58.1
 46.0
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchases of property and equipment(9.8) (10.0)(3.3) (2.9)
Purchases of marketable securities(9.9) (30.9)(7.2) (2.9)
Proceeds from sale and maturities of marketable securities28.3
 20.9
11.3
 19.4
Proceeds from notes receivable - founding members1.4
 —
Net cash provided by (used in) investing activities10.0
 (20.0)
Proceeds from notes receivable - founding members (including payments from related parties of $0.0 and $1.4, respectively)—
 1.4
Net cash provided by investing activities0.8
 15.0
CASH FLOWS FROM FINANCING ACTIVITIES:      
Payment of dividends(40.4) (41.2)(15.5) (14.0)
Proceeds from revolving credit facility100.0
 139.2
210.0
 62.0
Repayments of revolving credit facility(121.0) (137.2)(82.0) (52.0)
Repayments of Notes due 2026(4.6) (7.2)
Proceeds from term loan facility—
 270.0
Repayment of term loan facility(2.0) (270.7)(0.7) (0.7)
Repayment of Senior Notes due 2026

—
 (4.6)
Payment of debt issuance costs—
 (6.6)(0.1) —
Founding member integration and other encumbered theater payments (including
payments from related parties of $12.1 in 2018)
—
 17.2
Distributions to founding members(49.4) (63.0)(32.4) (27.9)
Repurchase of stock for restricted stock tax withholding(1.3) (2.2)(0.9) (1.2)
Net cash used in financing activities(118.7) (101.7)
Net cash provided by (used in) financing activities78.4
 (38.4)
CHANGE IN CASH AND CASH EQUIVALENTS:4.9
 (2.9)137.3
 22.6
Cash and cash equivalents at beginning of period41.4
 30.2
55.9
 41.4
Cash and cash equivalents at end of period$46.3
 $27.3
$193.2
 $64.0
See accompanying notes to the unaudited Condensed Consolidated Financial Statements.
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In millions)
(UNAUDITED)

Nine Months EndedThree Months Ended
September 26,
2019		 September 27,
2018		March 26,
2020		 March 28,
2019
Supplemental disclosure of non-cash financing and investing activity:      
Purchase of an intangible asset with NCM LLC equity$7.6
 $15.9
$10.5
 $7.6
Accrued distributions to founding members (including accrued distributions to related parties of $22.4
and $19.1, respectively)
$22.5
 $19.1
Accrued integration and other encumbered theater payments due from founding members (including
accrued payments due from related parties of $0.0 and $0.3, respectively)
$5.2
 $5.1
Accrued purchases of property and equipment$—
 $1.0
Increase (decrease) in dividend equivalent accrual not requiring cash in the period$0.8
 $(1.3)
Accrued distributions to founding members (including accrued distributions to related parties of $4.3
and $6.1, respectively)		$4.4
 $6.1
Accrued integration and other encumbered theater payments due from founding members (including
accrued payments due from related parties of $0.0 and $0.1, respectively)
$1.2
 $2.2
(Decrease) increase in dividend equivalent accrual not requiring cash in the period$(0.1) $0.1
Supplemental disclosure of cash flow information:      
Cash paid for interest$37.1
 $38.2
$10.4
 $10.9
Cash paid for income taxes, net of refunds$0.3
 $0.3
$0.3
 $—
See accompanying notes to the unaudited Condensed Consolidated Financial Statements.
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY/(DEFICIT)
(In millions, except share and per share data)
(UNAUDITED)


   Three Months Ended  
       Additional
Paid in Capital (Deficit)		 Retained
Earnings
(Distribution in Excess of Earnings)		 Noncontrolling Interest
   Common Stock   
 Consolidated Shares Amount   
Balance—June 28, 2018$(95.1) 76,915,532
 $0.8
 $(227.1) $(154.9) $286.1
Distributions to founding members(19.1) —
 —
 —
 —
 (19.1)
Income tax and other impacts of NCM LLC ownership changes9.9
 —
 —
 10.0
 —
 (0.1)
Comprehensive income, net of tax25.7
 —
 —
 —
 11.2
 14.5
Share-based compensation issued—
 16,962
 —
 —
 —
 —
Share-based compensation expense/capitalized1.3
 —
 —
 0.9
 —
 0.4
Cash dividends declared $0.17 per share(13.1) —
 —
 —
 (13.1) —
Balance—September 27, 2018$(90.4) 76,932,494
 $0.8
 $(216.2) $(156.8) $281.8
            
Balance—June 27, 2019$(110.5) 77,349,628
 $0.8
 $(211.9) $(172.6) $273.2
Distributions to founding members(22.5) —
 —
 —
 —
 (22.5)
Income tax and other impacts of NCM LLC ownership changes—
 —
 —
 0.1
 —
 (0.1)
Comprehensive income, net of tax22.8
 —
 —
 —
 9.2
 13.6
Share-based compensation issued—
 12,759
 —
 —
 —
 —
Share-based compensation expense/capitalized1.4
 —
 —
 1.0
 —
 0.4
Cash dividends declared $0.17 per share(13.5) —
 —
 —
 (13.5) —
Balance—September 26, 2019$(122.3) 77,362,387
 $0.8
 $(210.8) $(176.9) $264.6
  Nine Months Ended    NCM, Inc.  
      Additional
Paid in Capital (Deficit)		 Retained
Earnings
(Distribution in Excess of Earnings)		 Noncontrolling Interest      Additional
Paid in Capital (Deficit)		 Retained
Earnings
(Distribution in Excess of Earnings)		 Noncontrolling Interest
  Common Stock   Common Stock 
Consolidated Shares Amount 
Balance—December 28, 2017$(74.8) 76,242,222
 $0.8
 $(233.1) $(130.2) $287.7
Cumulative-effect adjustment for adoption of ASU 2014-09(0.2) —
 —
 —
 (0.2) —
Distributions to founding members(44.5) —
 —
 —
 —
 (44.5)
NCM LLC equity issued for purchase of intangible asset15.9
 —
 —
 7.7
 —
 8.2
Income tax and other impacts of NCM LLC ownership changes9.6
 —
 —
 6.9
 —
 2.7
Comprehensive income, net of tax39.3
 —
 —
 —
 13.5
 25.8
Share-based compensation issued(2.1) 690,272
 —
 (2.1) —
 —
Share-based compensation expense/capitalized6.3
 —
 —
 4.4
 —
 1.9
Cash dividends declared $0.51 per share(39.9) —
 —
 —
 (39.9) —
Balance—September 27, 2018$(90.4) 76,932,494
 $0.8
 $(216.2) $(156.8) $281.8
           Consolidated Shares Amount Additional
Paid in Capital (Deficit)		 Retained
Earnings
(Distribution in Excess of Earnings)		 Noncontrolling Interest
Balance—December 27, 2018$(89.2) 76,976,398
 $0.8
 $(215.2) $(153.6) $278.8
$(89.2) 76,976,398
 $0.8
 
Distributions to founding members(44.0) —
 —
 —
 —
 (44.0)(6.1) —
 —
 
NCM LLC equity issued for purchase of intangible asset7.6
 —
 —
 3.7
 —
 3.9
7.6
 —
 —
 3.7
 —
 3.9
Income tax and other impacts of NCM LLC ownership changes(0.6) —
 —
 (1.2) —
 0.6
(0.7) —
 —
 (1.4) —
 0.7
Comprehensive income, net of tax41.2
 —
 —
 —
 17.0
 24.2
(2.6) —
 —
 —
 (1.1) (1.5)
Share-based compensation issued(1.3) 385,989
 —
 (1.3) —
 —
(1.2) 342,573
 —
 (1.2) —
 —
Share-based compensation expense/capitalized4.3
 —
 —
 3.2
 —
 1.1
Cash dividends declared $0.51 per share(40.3) —
 —
 —
 (40.3) —
Balance—September 26, 2019$(122.3) 77,362,387
 $0.8
 $(210.8) $(176.9) $264.6
Share-based compensation expensed/capitalized0.8
 —
 —
 0.5
 —
 0.3
Cash dividends declared $0.17 per share(13.3) —
 —
 —
 (13.3) —
Balance—March 28, 2019$(104.7) 77,318,971
 $0.8
 $(213.6) $(168.0) $276.1
           
Balance—December 27, 2019$(121.2) 77,568,986
 $0.8
 $(209.2) $(171.1) $258.3
Cumulative-effect adjustment for adoption of ASU 2016-13, net of tax2.8
 —
 —
 —
 1.2
 1.6
Distributions to founding members(4.4) —
 —
 —
 —
 (4.4)
NCM LLC equity issued for purchase of intangible asset10.5
 —
 —
 5.0
 —
 5.5
Income tax and other impacts of NCM LLC ownership changes(0.4) —
 —
 (4.0) —
 3.6
Comprehensive income, net of tax(8.2) —
 —
 —
 (3.7) (4.5)
Share-based compensation issued(0.9) 404,662
 —
 (0.9) —
 —
Share-based compensation expensed/capitalized0.2
 —
 —
 —
 —
 0.2
Cash dividends declared $0.19 per share(14.7) —
 —
 —
 (14.7) —
Balance—March 26, 2020$(136.3) 77,973,648
 $0.8
 $(209.1) $(188.3) $260.3
See accompanying notes to the unaudited Condensed Consolidated Financial Statements.
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


1.  THE COMPANY
Description of Business
National CineMedia, Inc. (“NCM, Inc.”) was incorporated in Delaware as a holding company with the sole purpose of becoming a member and sole manager of National CineMedia, LLC (“NCM LLC”), a limited liability company. NCM LLC is currently owned by NCM, Inc., Regal Cinemas, Inc. and Regal CineMedia Corporation, wholly owned subsidiaries of Cineworld Group plc and Regal Entertainment Group (“Regal”), Cinemark Media, Inc. and Cinemark USA, Inc., wholly owned subsidiaries of Cinemark Holdings, Inc. (“Cinemark”) and American Multi-Cinema, Inc., a wholly owned subsidiary of AMC Entertainment, Inc. (“AMC”).  The terms “NCM”, “the Company” or “we” shall, unless the context otherwise requires, be deemed to include the consolidated entity. AMC, Regal, Cinemark and their affiliates are referred to in this document as “founding members”. 
NCM LLCThe Company operates the largest cinema advertising network reaching movie audiences in North America,the U.S., allowing NCM LLC to sell advertising under long-term exhibitor services agreements (“ESAs”) with the founding members and certain third-party theater circuits, referred to in this document as “network affiliates” under long-term network affiliate agreements. As of March 26, 2020, almost all of the theaters within the Company's network have been temporarily closed to address the COVID-19 Pandemic. The Company is unable to advertise in the theaters, and thus will not generate any in theater revenue, for the duration of time that the theaters are closed.
On September 17, 2019, NCM LLC entered into amendments to the ESAs with Cinemark and Regal (collectively, the “2019 ESA Amendments”). The 2019 ESA Amendments extended the contract life of the ESAs with Cinemark and Regal by four years resulting in a weighted average remaining term of the ESAs with the founding members (based on attendance) of approximately 20.019.5 years as of SeptemberMarch 26, 2019.2020. The network affiliate agreements expire at various dates between December 2019September 2020 and July 2031. The weighted average remaining term (based on attendance) of the ESAs and the network affiliate agreements together is 17.417.1 years as of SeptemberMarch 26, 2019.2020.
As of SeptemberMarch 26, 2019,2020, NCM LLC had 159,067,874162,504,976 common membership units outstanding, of which 77,362,387 (48.6%77,973,648 (48.0%) were owned by NCM, Inc., 41,770,669 (26.3%42,290,694 (26.0%) were owned by Regal, 39,737,700 (25.0%40,850,068 (25.1%) were owned by Cinemark and 197,118 (0.1%1,390,566 (0.9%) were owned by AMC. The membership units held by the founding members are exchangeable into NCM, Inc. common stock on a one-for-one basis.
Basis of Presentation
The Company has prepared the unaudited Condensed Consolidated Financial Statements and related notes of NCM, Inc. in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain reclassifications have been made to the prior year's financial statements to conform to the current presentation (refer to the Condensed Consolidated Statements of Income and Condensed Consolidated Statement of Cash Flows, whereby the Company presented depreciation expense and amortization expense as two separate lines and refer to the Condensed Consolidated Statements of Income, whereby the Company presented loss (gain) on retirement of debt, net as a separate line). Certain information and footnote disclosures typically included in an annual report have been condensed or omitted for this quarterly report.  The balance sheet as of December 27, 201826, 2019 is derived from the audited financial statements of NCM, Inc. Therefore, the unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company’s annual report on Form 10-K filed for the fiscal year ended December 27, 2018.26, 2019.
In the opinion of management, all adjustments necessary to present fairly in all material respects the financial position, results of operations and cash flows for all periods presented have been made.  The Company’s business is seasonal and for this and other reasons operating results for interim periods may not be indicative of the Company’s full year results or future performance. As a result of the various related party agreements discussed in Note 5—Related Party Transactions, the operating results as presented are not necessarily indicative of the results that might have occurred if all agreements were with non-related third parties.  The Company manages its business under one reportable segment of advertising.
Estimates—The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include those related to the reserve for uncollectible accounts receivable, share-based compensation and income taxes. Actual results could differ from those estimates.
Significant Accounting Policies
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The Company’s annual financial statements included in its Form 10-K filed for the fiscal year ended December 27, 201826, 2019 contain a complete discussion of the Company’s significant accounting policies. Following is additional information related to the Company’s accounting policies.
Revenue Recognition—The Company derives revenue principally from the advertising business, which includes on-screen and lobby network (LEN) advertising and lobby promotions and advertising on websites and mobile applications 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—Bad debts are providedThe risk of credit loss related to the Company's trade receivables and unbilled receivables balances is accounted for usingthrough the allowance for doubtful accounts, method based ona contra asset account which reduces the net receivables balance. The allowance for doubtful accounts balance is determined by pooling the Company's receivables with similar risk characteristics, specifically by type of customer (national or local/ regional) and then age of receivable, and applying historical experience and management’s evaluationwrite off percentages to these pools in order to determine the amount of outstanding receivables at the endexpected credit losses as of the period. Receivablesbalance sheet date. National receivables arewritten off when management determines amounts are uncollectible. Trade accounts receivable are uncollateralized and represent a with large number of geographically dispersed debtors. The collectability risk with respect to national and regional advertising isreduced by transacting with founding members or large, national advertising agencies that havewith strong reputations in the advertising industry and clients with stable financial positions.positions and good credit ratings, represent larger receivables balances per customer and have significantly lower historical and expected credit loss patterns. Local and regional receivables are with much smaller companies with limited credit information available, smaller receivable balances per customer and higher historical and expected credit loss patterns. The Company has smaller contracts with thousands of local clients that are not individually significant. The Company also considers current economic conditions and trends to determine whether adjustments to historical loss rates are necessary. As of SeptemberMarch 26, 2020, the Company increased the allowance related to local and regional customers, recording an incremental $0.7 million in bad debt expense during the three months ended March 26, 2020 compared to the three months ended March 28, 2019, given the adverse impact of the COVID-19 Pandemic on certain businesses, in particular, categories of small businesses (i.e. restaurants, travel, etc.) which the Company expects could lead to an increased rate of default. The Company also reserves for specific receivable balances that it expects to write off based on known concerns regarding the financial health of the customer. Receivables arewritten off when management determines amounts are uncollectible.
As of March 26, 2020 and December 27, 2018,26, 2019, there were no advertising agency groups or individual customers through which the Company sources national advertising revenue representing more than 10% of the Company’s outstanding gross receivable balance.  During the three and nine months ended SeptemberMarch 26, 20192020 and September 27, 2018,March 28, 2019, the Company had no customers that accounted for more than 10% of revenue.
Share-Based Compensation—The Company has issued stock options and restricted stock to certain employees and restricted stock units to its independent directors. In 2018 and 2019, theThe restricted stock 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 that vests 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 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 that is expected to vest and are only paid with respect to shares that actually vest. During the three months ended SeptemberMarch 26, 2020 and March 28, 2019, 524,303 and September 27, 2018 and the nine months ended September 26, 2019 and September 27, 2018, 18,889, 21,807, 568,584 and 997,403511,996 shares of restricted stock and restricted stock units vested, respectively.
Consolidation—NCM, Inc. consolidates the accounts of NCM LLC under the provisions of ASC 810, Consolidation (“ASC 810”).  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 Nine Months EndedThree Months Ended
September 26,
2019		 September 27,
2018		 September 26,
2019		 September 27,
2018		March 26,
2020		 March 28,
2019
Net income attributable to NCM, Inc.$9.2
 $11.2
 $17.0
 $13.5
$(3.7) $(1.1)
NCM LLC equity issued for purchase of intangible asset—
 —
 3.7
 7.7
5.0
 3.7
Income tax and other impacts of subsidiary ownership changes0.1
 10.0
 (1.2) 6.9
(4.0) (1.4)
Change from net income attributable to NCM, Inc. and transfers from noncontrolling interests$9.3
 $21.2
 $19.5
 $28.1
$(2.7) $1.2
 
Recently Adopted Accounting Pronouncements
During the first quarter of 2019, the Company adopted Accounting Standards Update 2016-2 and subsequent amendments, Leases (Topic 842) (together “ASC 842”) utilizing the Comparatives Under 840 option where only the current period financial statements and related disclosures are presented in accordance with the new standard. As of the adoption date of December 28, 2018 the Company recognized the following on the unaudited Condensed Consolidated Balance Sheets: a right-of-use (“ROU”) asset of $21.7 million within 'Other assets', a short-term lease liability of $1.4 million within Other current liabilities', a long-term lease liability of $24.5 million within 'Other liabilities' and reversed the related deferred rent liability balance of $4.2 million for all leases with terms longer than twelve months related to its building operating leases. The Company elected to utilize the following practical expedients: (i) not being required to separate lease and non-lease components
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

when accounting for the lease for all asset classes; and (ii) not accounting for short-term leases under the new standard. The Company also determined that the ESAs and affiliate agreements are considered leases under ASC 842. However, the identification of the asset and determination of the period of control is dependent upon the scheduling of the showtimes by the exhibitors. As the schedules are typically not determined until one week in advance of the showtime, on average, the leases are considered short term in nature, specifically less than one month. As such, no ROU assets or lease liabilities were recognized for these agreements. The issuance of NCM LLC membership units to the founding members in accordance with NCM LLC’s Common Unit Adjustment Agreement and upfront cash payments to affiliates for the contractual rights to provide services within their theaters will continue to be classified as intangible assets. However, the amortization of these intangible assets is now considered lease expense and has been reclassified within the current period from 'Depreciation and amortization expense' to 'Amortization of intangibles recorded for network theater screen leases' on the unaudited Condensed Consolidated Statement of Income. Additionally, these upfront cash payments to affiliates and receipt of integration payments from the founding members, as defined within Note 4 - Intangible Assets, will be considered cash flows from operating activities on the unaudited Condensed Consolidated Statement of Cash Flows when incurred as they are related to operating leases and will be reclassified from cash flows from investing and financing activities, respectively. The Company has also incorporated additional disclosures in Note 8 - Commitments and Contingencies to comply with ASC 842.Recently Adopted Accounting Pronouncements
During the first quarter of 2019,2020, the Company adopted Accounting Standards Update 2018-7, Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-7”), which amends Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The adoption of ASU 2018-7 had no impact on the unaudited Condensed Consolidated Financial statements or notes thereto.
During the first quarter of 2019, the Company adopted a final rule issued by the SEC in March 2019 simplifying certain Regulation S-K requirements. The rule eliminated the following requirements in certain circumstances: (1) to disclose discussion of the earliest year of three years of audited financial statements presented within Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations section of the Form 10-K, (2) to request permission from the SEC to redact confidential information from exhibits in the event the information is not material to the agreement and would cause competitive harm, (3) to disclose immaterial physical property and (4) to disclose schedules and attachments to exhibits which do not contain material information. The rule also adds the requirement to disclose the registrant's trading symbol on the cover page of certain SEC forms. The applicable amended disclosure requirements have been incorporated within this Quarterly Report on Form 10-Q.
During the fourth quarter of 2018, the Company adopted a final rule issued by the SEC amending certain disclosure requirements deemed by the SEC to be redundant, duplicative, overlapping, outdated or superseded. The rule also added requirements to disclose (1) the changes in each caption of stockholders’ equity and non-controlling interests for the current and comparative year-to-date periods, with subtotals for each interim period and (2) the amount of dividends per share for each class of shares. The Company's adoption of the guidance resulted in changes to the presentation of the unaudited Consolidated Statement of Equity as a quarter to date equity rollforward is now also required for the current and comparable period. The Company implemented the amended disclosure requirements in the first quarter of 2019. The codification was updated to reflect the aforementioned SEC changes within Accounting Standards Update 2019-7, Codification Updates to SEC Sections ("ASU 2019-7") issued and effective during the third quarter of 2019.
Recently Issued Accounting Pronouncements
In June 2016, the FASB issued Accounting Standards Update 2016-13, Financial Instruments –- Credit Losses (Topic 326), Measurement of Credit Losses on Financial Statements (“ASU 2016-13”), which requires a financial asset (or group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial asset(s) to present the net carrying value at the amount expected to be collected on the financial asset. Upon the adoption of ASU 2016-13 is effectiveon December 27, 2019, the Company recorded a $3.2 million cumulative-effect adjustment to retained earnings related to the change in methodology surrounding the historical losses utilized in the calculation of the allowance for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with earlycredit losses related to trade and unbilled accounts receivable reducing the allowance to $3.0 million as of the adoption permitted and is to be adopted on a modified retrospective basis.date. The Company is currently evaluatingalso recorded a corresponding $0.4 million reduction to the impact that adopting this guidance will have oncorresponding deferred tax asset with the offset also recorded to retained earnings. The other impacts upon adoption were immaterial to the unaudited Condensed Consolidated Financial Statements. The Company has incorporated additional disclosures in Note 1—The Company, Note 2—Revenue from Contracts with Customers and Accounts Receivable and Note 9—Fair Value Measurements to its Condensed Consolidated Financial Statements or notes thereto.to comply with ASU 2016-13. The Company has also designed and implemented changes to certain processes and internal controls related to its adoption of ASU 2016-13.

In August 2018,During the FASB issuedfirst quarter of 2020, the Company adopted Accounting Standards Update 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which modifies the disclosure requirements on fair value measurements. The Company adoption of ASU 2018-13 did not have a material impact on the unaudited Condensed Consolidated Financial Statements or notes thereto.
Recently Issued Accounting Pronouncements
In December 2019, the FASB issued Accounting Standards Update 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which removes the following exceptions for the Company to analyze in a given period: the exception to the incremental approach for intraperiod tax allocation; the exception to accounting for basis differences when there are ownership changes in foreign investments; and the exception in interim periods income tax accounting for year-to-date losses that exceed anticipated losses. ASU 2019-12 is effective for fiscal years beginning after December 15, 2019,2020, including interim periods within those fiscal years, with partial early adoption permitted for eliminated disclosures. The method of adoption varies by the disclosure.permitted. The Company does not expect the adoption of ASU 2018-13this guidance to have a material impact on the unaudited Condensed Consolidated Financial Statements or notes thereto.
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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, 2022. The Company is currently assessing the impact of the LIBOR transition and this ASU 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.
2.  REVENUE FROM CONTRACTS WITH CUSTOMERS AND ACCOUNTS RECEIVABLE
Revenue Recognition
The Company derives revenue principally from the sale of advertising to national, regional and local businesses in Noovie, the Company’s cinema advertising and entertainment pre-show. The Company also sells advertising through the LEN, a series of strategically-placedstrategically 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 through Cinema Accelerator and NCM's digital gaming products including Noovie ARcade, Fantasy Movie League, Name That Movie and Noovie Shuffle, which can be played on the mobile apps or at Noovie.com. The Company also has a long-term agreement to exhibit the advertising of the founding members’ beverage suppliers.
The Company makes contractual guarantees to deliver a specified number of impressions to view the customers’ advertising. If the contracted number of impressions are not delivered, the Company will run additional advertising to deliver the contracted impressions at a later date.  The deferred portion of the revenue associated with undelivered impressions is
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

referred to as a make-good provision. The Company defers the revenue associated with the make-good until the advertising airs to the theater attendance specified in the advertising contract. The make-good provision is recorded within accrued expenses in the unaudited Condensed Consolidated Balance Sheet. As of SeptemberMarch 26, 20192020 and December 27, 2018,26, 2019, the Company had a make-good provision of $4.8$8.6 million and $8.0$8.7 million, respectively.
The Company has certaindoes not have any contracts with two-yearcustomers with terms in excess of one year that are noncancelable following a specified date within the contract period.  The estimated revenue expected to be recognized in the future related to these contracted performance obligations that are unsatisfied (or partially unsatisfied) as of SeptemberMarch 26, 2019, was $25.5 million, which is expected to be recognized in 2019.2020.  Agreements with a duration less than one year are not included within this disclosure as the Company elected to use the practical expedient in ASC 606-10-50-14 for those contracts.  In addition, other of the Company’s contracts longer than one year that are cancelable are not included within this disclosure.
Disaggregation of Revenue
The Company disaggregates revenue based upon the type of customer: national, local, regional and beverage concessionaire. This method of disaggregation is in alignment with how revenue is reviewed by management and discussed with and historically disclosed to investors.
The following table summarizes revenue from contracts with customers for the three and nine months ended SeptemberMarch 26, 20192020 and September 27, 2018March 28, 2019 (in millions):
Three Months Ended Nine Months EndedThree Months Ended
September 26,
2019		 September 27,
2018		 September 26,
2019		 September 27,
2018		March 26,
2020		 March 28,
2019
National advertising revenue$82.3
 $80.8
 $213.9
 $214.4
National and regional advertising revenue$49.8
 $57.4
Local advertising revenue16.8
 17.4
 47.3
 49.0
9.4
 12.8
Regional advertising revenue4.1
 4.5
 14.2
 16.6
Founding member advertising revenue from beverage concessionaire agreements7.3
 7.4
 22.2
 24.0
5.5
 6.7
Total revenue$110.5
 $110.1
 $297.6
 $304.0
$64.7
 $76.9
Deferred Revenue and Unbilled Accounts Receivable
The changes in deferred revenue for the three months ended March 26, 2020 were as follows (in millions):
 Three Months Ended
 March 26,
2020
Balance at beginning of period$(7.6)
Performance obligations satisfied5.4
New contract liabilities(5.3)
Balance at end of period$(7.5)
As of March 26, 2020 and December 26, 2019, the Company had $7.3 million and $8.0 million in unbilled accounts receivable, respectively.   
Allowance for Doubtful Accounts
The allowance for doubtful accounts balance is determined separately for each pool of the Company's receivables with similar risk characteristics. The Company has determined that two pools, national customers and local/ regional customers, is appropriate. The changes within the allowance for doubtful accounts balances for the three months ended March 26, 2020 were as follows (in millions):
 Three Months Ended
 March 26,
2020
 Allowance for National Customer Receivables Allowance for Local/ Regional Customer Receivables
Balance at beginning of period$1.1
 $1.9
Provision for bad debt(0.1) 1.1
Write-offs, net(0.1) (0.4)
Balance at end of period$0.9
 $2.6
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The changes in deferred revenue for the nine months ended September 26, 2019 were as follows (in millions):
 Nine Months Ended
 September 26,
2019
Balance at beginning of period$7.3
Performance obligations satisfied(7.3)
New contract liabilities10.4
Balance at end of period$10.4
As of September 26, 2019 and December 27, 2018, the Company had $11.6 million and $6.0 million in unbilled accounts receivable, respectively.   
3.  EARNINGSLOSS PER SHARE
Basic earningsloss per share is computed on the basis of the weighted average number of common shares outstanding.  Diluted earningsloss per share is computed on the basis of the weighted average number of common shares outstanding plus the effect of potentially dilutive common stock options, restricted stock and restricted stock units using the treasury stock method.  The components of basic and diluted incomeloss per NCM, Inc. share are as follows:
Three Months Ended Nine Months EndedThree Months Ended
September 26,
2019		 September 27,
2018		 September 26,
2019		 September 27,
2018		March 26,
2020		 March 28,
2019
Net income attributable to NCM, Inc. (in millions)$9.2
 $11.2
 $17.0
 $13.5
Net income attributable to NCM, Inc. following conversion of dilutive membership units (net of estimated taxes of $0.0, $0.0, $0.0 and $14.7)(in millions)$9.2
 $11.2
 $17.0
 $24.6
Net loss attributable to NCM, Inc. (in millions)$(3.7) $(1.1)
Weighted average shares outstanding:          
Basic77,356,833
 76,924,983
 77,293,234
 76,825,828
77,763,967
 77,179,777
Add: Dilutive effect of stock options, restricted stock and exchangeable membership units526,738
 560,578
 394,159
 80,161,908
—
 —
Diluted77,883,571
 77,485,561
 77,687,393
 156,987,736
77,763,967
 77,179,777
Earnings per NCM, Inc. share:       
Loss per NCM, Inc. share:   
Basic$0.12
 $0.15
 $0.22
 $0.18
$(0.05) $(0.01)
Diluted$0.12
 $0.14
 $0.22
 $0.16
$(0.05) $(0.01)
The effect of 81,705,487, 80,660,82281,973,440 and 81,410,83880,821,540 weighted average exchangeable NCM LLC common units held by the founding members for the three months ended SeptemberMarch 26, 20192020 and September 27, 2018 and the nine months ended September 26,March 28, 2019, respectively, have been excluded from the calculation of diluted weighted average shares and loss per NCM, Inc. share as they were anti-dilutive. The diluted weighted average shares outstanding for the nine months ended September 27, 2018 assumes the conversion of all founding member common units to NCM, Inc. shares as they were dilutive. Upon the conversion of all common units, all of the consolidated NCM LLC net income would be attributable to NCM, Inc. and thus has been utilized as the numerator of the diluted earnings per share calculation for the nine months ended September 27, 2018. Consolidated NCM LLC net income for the nine months ended September 27, 2018 has been tax effected utilizing NCM, Inc.’s effective tax rate of 55.3% for the respective period. NCM LLC common units do not participate in dividends paid on NCM, Inc.’s common stock. In addition, there were 2,553,449, 2,016,709, 2,593,2313,821,388 and 2,223,4403,718,641 stock options and non-vested (restricted) shares for the three months ended SeptemberMarch 26, 20192020 and September 27, 2018 and the nine months ended September 26,March 28, 2019, and September 27, 2018, respectively, excluded from the calculation as they were anti-dilutive.  The Company’s non-vested (restricted) shares do not meet the definition of a participating security as the dividends will not be paid if the shares do not vest.
4.  INTANGIBLE ASSETS
Intangible assets consist of contractual rights to provide the Company’s services within the theaters of the founding members and network affiliates and are stated at cost, net of accumulated amortization.  The Company’s intangible assets with its founding members are recorded at fair market value of NCM, Inc.’s publicly traded stock as of the date on which the
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

common membership units were issued.  The NCM LLC common membership units are fully convertible into NCM, Inc.’s common stock. In addition, the Company records intangible assets for up-front fees paid to network affiliates upon commencement of a network affiliate agreement. The Company’s intangible assets have a finite useful life and the Company amortizes the assets over the remaining useful life corresponding with the ESAs or the term of the network affiliate agreement. The Company extended the useful lifedetermined that recent adverse changes in macroeconomic trends, reduced cash flows as a consequence of the intangible asset for Cinemark and Regal following the extensiontemporary closure of the ESA termtheaters within the Company's network in conjunction withresponse to the 2019 ESA Amendments. The Company has adopted an accounting policy to capitalize extension costs on itsoutbreak of the COVID-19 Pandemic, a decline in the fair value of NCM LLC’s debt and the further sustained decline in the market price of our common stock as of March 26, 2020 constituted a triggering event under Accounting Standards Certification No. 360, Impairment and Disposal of Long-Lived Assets. However, the estimated future cash flows from the affiliate agreements and ESAs were in excess of the net book value of these intangible assets and thus, capitalized the legal and professional costs incurred in conjunction with the ESA amendments. Duringno impairment charges were recorded for the three months ended SeptemberMarch 26, 20192020. Such analysis required management to make estimates and September 27, 2018assumptions based on historical data and consideration of future market conditions.  Given the nine months ended September 26, 2019 and September 27, 2018,uncertainty inherent in any projection, heightened by the Company capitalized $1.1 million, $0.0 million, $1.1 million, and $0.0 million within the intangible asset balance. There was no impact to the Payable to founding members under tax receivable agreement as the useful lifepossibility of unforeseen additional effects of the intangible assets were not deemed to be extended for tax purposesCOVID-19 Pandemic, actual results may differ from the estimates and there were no changes made toassumptions used, or conditions may change, which could result in impairment charges in the tax receivable agreements.future.
Common Unit Adjustments—In accordance with NCM LLC’s Common Unit Adjustment Agreement with its founding members, on an annual basis NCM LLC determines the amount of common membership units to be issued to or returned by the founding members based on theater additions or dispositions during the previous year.  In addition, NCM LLC’s Common Unit Adjustment Agreement requires that a Common Unit Adjustment occur for a specific founding member 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.  
During the first quarter of 2020, NCM LLC issued 3,022,959 common membership units to its founding members for the rights to exclusive access to the theater screens and attendees added, net of dispositions by the founding members to NCM
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

LLC’s network during the 2019 fiscal year and NCM LLC recorded a net intangible asset of $10.5 million during the first quarter of 2020 as a result of the Common Unit Adjustment.
During the first quarter of 2019, NCM LLC issued 1,044,665 common membership units to its founding members for the rights to exclusive access to the theater screens and attendees added, net of dispositions by the founding members to NCM LLC’s network during the 2018 fiscal year and NCM LLC recorded a net intangible asset of $7.6 million during the first quarter of 2019 as a result of the Common Unit Adjustment.
During the first quarter of 2018, NCM LLC issued 2,821,710 (3,736,860 issued, net of 915,150 returned) common membership units to its founding members for the rights to exclusive access to the theater screens and attendees added, net of dispositions by the founding members to NCM LLC’s network during the 2017 fiscal year and NCM LLC recorded a net intangible asset of $15.9 million during the first quarter of 2018 as a result of the Common Unit Adjustment.
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"theaters”), the founding members may elect to receive common membership units related to those encumbered theaters in connection with the Common Unit Adjustment.  If the founding members make this election, then they are required to make payments on a quarterly basis in arrears in accordance with certain run-out provisions pursuant to the ESAs (“integration payments”). Because the Carmike Cinemas, Inc. (“Carmike”) theaters acquired by AMC are subject to an existing on-screen advertising agreement with an alternative provider, AMC will make integration payments to NCM LLC. The integration payments will continue until the earlier of (i) the date the theaters are transferred to NCM LLC’s network or (ii) the expiration of the ESA. In 2019, AMC and Cinemark also made integration payments to NCM LLC related to their respective acquisitions of theaters from Rave Cinemas. The advertising agreements with an alternative provider for these theaters ended during 2019 and the theaters were transferred to our network. Integration payments are no longer due related to these theaters. Integration payments are calculated based upon the advertising cash flow that the Company would have generated if it had exclusive access to sell advertising in the theaters with pre-existing advertising agreements. The ESAs additionally entitle NCM LLC to payments related to the founding members’ on-screen advertising commitments under their beverage concessionaire agreements for encumbered theaters. These payments are also accounted for as a reduction to the intangible asset. During the three months ended SeptemberMarch 26, 20192020 and September 27, 2018 and the nine months ended September 26,March 28, 2019, and September 27, 2018, the Company recorded a reduction to net intangible assets of $5.6 million, $5.5 million, $13.7$1.4 million and $13.3$2.5 million, respectively, related to integration and other encumbered theater payments. TheseDuring the three months ended March 26, 2020 and March 28, 2019, AMC and Cinemark paid a total of $8.5 million and $8.1 million, respectively, in integration and other encumbered theater payments (as payments are made one quarter and one month in arrears, respectively). The payments received during the three months ended March 26, 2020 relate to AMC's acquisition of theaters from AMC relatedCarmike. The payments received during the three months ended March 28, 2019 relate to itsAMC's acquisitions of theaters from Carmike and Rave Cinemas and from Cinemark related primarily to its acquisition of theaters from Rave Cinemas. During the three months ended September 26, 2019 and September 27, 2018 and the nine months ended September 26, 2019 and September 27, 2018, AMC and Cinemark paid a total of $5.7 million, $5.6 million, $16.3 million and $17.2 million, respectively, in integration and other encumbered theater payments (as payments are made one quarter and one month in arrears, respectively). If common membership units are issued to a founding member for newly acquired theaters that are subject to an existing on-screen advertising agreement with an alternative provider, the amortization of the intangible asset commences after the existing agreement expires and NCM LLC can utilize the theaters for all of its services.
5.  RELATED PARTY TRANSACTIONS
Founding Member Transactions—In connection with NCM, Inc.’s IPO, the Company entered into several agreements to define and regulate the relationships among NCM, Inc., NCM LLC and the founding members which are outlined below. As AMC owns less than 5% of NCM LLC as of SeptemberMarch 26, 2019,2020, AMC is no longer a related party. AMC remains a party to
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

the ESA, Common Unit Adjustment Agreement, Tax Receivable Agreement ("TRA"(“TRA”) and certain other original agreements and is a member under the terms of the NCM LLC Operating Agreement, subject to fulfilling the requirements of Section 3.1 of the NCM LLC Operating Agreement. AMC will continue to participate in the annual Common Unit Adjustment and receive available cash distributions or allocation of earnings and losses in NCM LLC (as long as its ownership is greater than zero), TRA payments and theater access fees. Further, AMC will continue to pay beverage revenue, among other things. AMC's ownership percentage does not impact future integration payments and other encumbered theater payments owed to NCM LLC by AMC. AMC is considered a related party through the date its ownership fell below the 5% threshold (July 5, 2018) and related party transactions with AMC through this period are included within the disclosures below (specifically the first quarter and first six months of 2018).
The material agreements with the founding members are as follows:
ESAs. Under the ESAs, NCM LLC is the exclusive provider within the United States of advertising services in the founding members’ theaters (subject to pre-existing contractual obligations and other limited exceptions for the benefit of the founding members). The advertising services include the use of the digital content network (“DCN”) equipment required to deliver the on-screen advertising and other content included in the Noovie pre-show, use of the LEN and rights to sell and display certain lobby promotions. Further, 30 to 60 seconds of advertising included in the Noovie pre-show is sold to NCM LLC’s founding members to satisfy the founding members’ on-screen advertising commitments under their beverage concessionaire agreements. In consideration for access to the founding members’ theaters, theater patrons, the network equipment required to display on-screen and LEN video advertising and the use of theaters for lobby promotions, the founding members receive a
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

monthly theater access fee. In conjunction with the 2019 ESA Amendments, NCM LLC agreed to pay Cinemark and Regal incremental monthly theater access fees and, subject to NCM LLC's use of specified inventory, a revenue share in consideration for NCM LLC's access to certain on-screen advertising inventory after the advertised showtime of a feature film beginning November 1, 2019 and the underlying term of the ESAs were extended until 2041. The ESAs and 2019 ESA Amendments with Cinemark and Regal are considered leases with related parties under ASC 842.
Common Unit Adjustment Agreement. The Common Unit Adjustment Agreement provides a mechanism for increasing or decreasing the membership units held by the founding members based on the acquisition or construction of new theaters or sale or closure of theaters that are operated by each founding member and included in NCM LLC’s network.
Tax Receivable Agreement. The TRA provides for the effective payment by NCM, Inc. to the founding members of 90% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that is actually realized as a result of certain increases in NCM, Inc.’s proportionate share of tax basis in NCM LLC’s tangible and intangible assets resulting from the IPO and related transactions.
Software License Agreement. At the date of the Company’s IPO, NCM LLC was granted a perpetual, royalty-free license from NCM LLC’s founding members to use certain proprietary software that existed at the time for the delivery of digital advertising and other content through the DCN to screens in the U.S. NCM LLC has made improvements to this software since the IPO date and NCM LLC owns those improvements, except for improvements that were developed jointly by NCM LLC and NCM LLC’s founding members, if any.
The following tables provide summaries of the transactions between the Company and the founding members (in millions):
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Three Months Ended Nine Months EndedThree Months Ended
Included in the unaudited Condensed Consolidated Statements of Income: (1)
September 26,
2019		 September 27,
2018		 September 26,
2019		 September 27,
2018		March 26,
2020		 March 28,
2019
Revenue:          
Beverage concessionaire revenue (included in advertising revenue) (2)(1)
$5.7
 $5.8
 $17.5
 $21.8
$4.3
 $5.3
Operating expenses:          
Theater access fee (3)
13.5
 13.4
 40.9
 55.5
Theater access fee and revenue share (2)
12.5
 12.9
Purchase of movie tickets and concession products and rental of theater space (included in selling and marketing costs) (4)(3)
0.1
 0.2
 0.3
 0.9
0.1
 0.1
Purchase of movie tickets and concession products and rental of theater space (included in advertising operating costs) (4)

0.1
 0.1
 0.1
 0.1
Non-operating expenses:          
Interest income from notes receivable (included in interest
income) (5)
0.1
 0.1
 0.2
 0.3
Interest income from notes receivable (included in interest
income) (4)
—
 0.1

(1)AMC is no longer considered a related party as of July 5, 2018, as described further above. As such, the figures within the table above only include related party activity with AMC for the six months ended June 28, 2018.
(2)For the three and nine months ended SeptemberMarch 26, 2020 and March 28, 2019, Cinemark and September 27, 2018, two of the founding membersRegal purchased 60 seconds of on-screen advertising time and one founding member purchased 30 seconds (with all three founding members having a right to purchase up to 90 seconds) from NCM LLC to satisfy their obligations under their beverage concessionaire agreements at a 30 seconds equivalent CPM rate specified by the ESA.
(3)(2)
Comprised of payments per theater attendee, and payments per digital screen with respect to the founding member theaters included in the Company’s network includingand payments for access to higher quality digital cinema equipment. Following the 2019 ESA Amendments in September of 2019 this also includes payments to Cinemark and Regal for their share of the revenue from the sale of an additional single unit that is either 30 or 60 seconds of the Noovie pre-show in the trailer position directly prior to the “attached” trailers preceding the feature film (the “Platinum Spot”).
(4)(3)Used primarily for marketing to NCM LLC’s advertising clients.
(5)(4)On December 26, 2013, NCM LLC sold its Fathom Events business to a newly formed limited liability company (AC JV, LLC) owned 32% by each of the founding members and 4% by NCM LLC.  In consideration for the sale, NCM LLC received a total of $25.0 million in promissory notes from its founding members (one-third or approximately $8.3 million from each founding member).  The notes bear interest at a fixed rate of 5.0% per annum, compounded annually.  Interest and principal payments arewere due annually in six equal installments commencing on the first anniversary of the closing.closing and ended on December 26, 2019.
 As of
Included in the unaudited Condensed Consolidated Balance Sheets:September 26,
2019		 December 27,
2018
Current portion of notes receivable - related parties (1) (2)
2.8
 4.2
Interest receivable on notes receivable (included in other current assets) (1) (2)
0.2
 0.1
Common unit adjustments, net of amortization and integration payments (included in intangible assets) (3)
633.2
 657.6
Current payable to founding members under tax receivable agreement (1)(4)
11.1
 11.2
Long-term payable to founding members under tax receivable agreement (1)(4)
133.2
 141.1
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 As of
Included in the unaudited Condensed Consolidated Balance Sheets:March 26,
2020		 December 26,
2019
Common unit adjustments, net of amortization and integration payments (included in intangible assets) (1)
$624.3
 $620.5
Current payable to founding members under tax receivable agreement (2)
$10.1
 $10.3
Long-term payable to founding members under tax receivable agreement (2)
$134.6
 $133.5

(1)
AMC is no longer considered a related party as of July 5, 2018, as described further above. As such, the figures as of September 26, 2019 and December 27, 2018 do not include AMC.
(2)Refer to the discussion of notes receivable from the founding members above.
(3)
Refer to Note 4—Intangible Assets for further information on common unit adjustments and integration payments. This balance includes common unit adjustments issued to all of the founding members (including AMC) as the Company's intangible balance is considered one asset inclusive of all common unit adjustment activity.
(4)(2)The Company paid Cinemark and Regal $3.5$3.7 million and $6.3$6.7 million, respectively, in payments pursuant to the TRA during 2019 which was for the 2018 tax year. The Company paid AMC, Cinemark and Regal $5.4 million, $4.6 million and $8.4 million, respectively, in payments pursuant toOn March 21, 2020, a Treasury Department Notice postponed the TRA during 2018 which wasdue date for the 2017Company's U.S. federal income tax year.return to July 15, 2020 from April 15, 2020. As AMC is no longer considered a related party as of July 5, 2018,such, the AMCdate the 2019 TRA payment includes only related party activity with AMC for the six months ended June 28, 2018.will begin accruing interest was also delayed until July 15, 2020.

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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.  Mandatory distributions of available cash for the three and nine months ended SeptemberMarch 26, 20192020 and September 27, 2018March 28, 2019 were as follows (in millions):
Three Months Ended Nine Months EndedThree Months Ended
September 26,
2019		 September 27,
2018		 September 26,
2019		 September 27,
2018		March 26,
2020		 March 28,
2019
AMC$—
 $—
 $—
 $2.2
Cinemark10.9
 9.4
 21.4
 20.7
$2.1
 $3.0
Regal11.5
 9.7
 22.5
 21.5
2.2
 3.1
Total distributions to related parties22.4
 19.1
 43.9
 44.4
4.3
 6.1
NCM, Inc.21.3
 18.2
 41.7
 42.5
4.1
 5.8
Total$43.7
 $37.3
 $85.6
 $86.9
$8.4
 $11.9
The mandatory distributions of available cash by NCM LLC to RegalCinemark and CinemarkRegal for the three months ended SeptemberMarch 26, 20192020 of $22.4$4.3 million are included in amounts due to founding members, net on the unaudited Condensed Consolidated Balance Sheets as of SeptemberMarch 26, 20192020 and will be made in the fourth quarter of 2019. AMC’s distribution for the three months ended June 28, 2018 was split equally between Cinemark and Regal because NCM LLC used a record date of July 6, 2018 (following the sale of AMC's membership units to Cinemark and Regal) to accommodate an agreement between each of AMC and Cinemark and AMC and Regal. These agreements entitled AMC to half of the second quarter of 2018 available cash distribution, or approximately $2.2 million, of which Cinemark and Regal each independently paid AMC approximately $1.1 million.2020. The mandatory distributions to NCM, Inc. are eliminated in consolidation.
Amounts due to related party founding members, net as of SeptemberMarch 26, 2020 were comprised of the following (in millions):
 Cinemark Regal Total
Theater access fees and revenue share, net of beverage revenues and other encumbered theater payments$2.0
 $2.7
 $4.7
Distributions payable to founding members2.1
 2.2
 4.3
Total amounts due to founding members, net$4.1
 $4.9
 $9.0
Amounts due to related party founding members, net as of December 26, 2019 were comprised of the following (in millions):
 Cinemark Regal Total
Theater access fees, net of beverage revenues and other encumbered theater
   payments
$1.0
 $1.4
 $2.4
Distributions payable to founding members10.9
 11.5
 22.4
Total amounts due to founding members, net$11.9
 $12.9
 $24.8
Amounts due to founding members, net as of December 27, 2018 were comprised of the following (in millions):
 Cinemark Regal Total
Theater access fees and revenue share, net of beverage revenues and other encumbered theater payments$2.0
 $2.5
 $4.5
Distributions payable to founding members15.8
 16.6
 32.4
Integration payments due from founding members(0.1) —
 (0.1)
Total amounts due to founding members, net$17.7
 $19.1
 $36.8
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Cinemark Regal Total
Theater access fees, net of beverage revenues and other encumbered theater
   payments
$1.0
 $1.5
 $2.5
Distributions payable to founding members13.7
 14.2
 27.9
Integration payments due from founding members(0.4) —
 (0.4)
Total amounts due to founding members, net$14.3
 $15.7
 $30.0

The Amounts due from founding members, net balance asNetwork Affiliate Transactions—NCM LLC paid a network affiliate owned by a family member of September 26, 2019a director on the Company's Board of Directors $0.2 million and December 27, 2018 per the Condensed Consolidated Balance Sheets relates to$0.1 million in circuit share payments due from AMC to NCM LLC. Given that AMC ceased being a related party as of July 5, 2018, the detail of that balance has not been included within the tables above.
Duringduring the three and nine months ended September 27, 2018, AMC received cash dividends of approximately $0.1 millionMarch 26, 2020 and $0.4 million, respectively, on its shares of NCM, Inc. common stock held at that time.March 28, 2019.
AC JV, LLC Transactions—In December 2013, NCM LLC sold its Fathom Events business to a newly formed limited liability company, AC JV, LLC, owned 32% by each of the founding members and 4% by NCM LLC.  The Company accounts for its investment in AC JV, LLC under the equity method of accounting in accordance with ASC 323-30, Investments—Equity Method and Joint Ventures (“ASC 323-30”) because AC JV, LLC is a limited liability company with the characteristics of a limited partnership and ASC 323-30 requires the use of equity method accounting unless the Company’s interest is so minor that it would have virtually no influence over partnership operating and financial policies.  Although NCM LLC does not have a representative on AC JV, LLC’s Board of Directors or any voting, consent or blocking rights with respect to the governance or
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

operations of AC JV, LLC, the Company concluded that its interest was more than minor under the accounting guidance. The Company’s investment in AC JV, LLC was $1.0 million and $0.9 million as of SeptemberMarch 26, 20192020 and December 27, 2018, respectively. During the three months ended September 26, 2019, and September 27, 2018 and the nine months ended September 26, 2019 and September 27, 2018, NCM LLC received cash distributions from AC JV, LLC of $0.1 million, $0.0 million, $0.2 million and $0.0 million, respectively. Equity in earnings from AC JV, LLC of $0.1 million and $0.2 million for the three months ended SeptemberMarch 26, 2020 and March 28, 2019, and September 27, 2018 and the nine months ended September 26, 2019 and September 27, 2018, were $0.0 million, $0.0 million, $0.3 million and $0.1 million, respectively, and is included in “Other non-operating expensesincome” in the unaudited Condensed Consolidated Statements of Income. NCM LLC also received fees from AC JV, LLC of $0.1 million, $0.1 million, $0.1 million, and $0.2 million in the three months ended September 26, 2019 and September 27, 2018 and the nine months ended September 26, 2019 and September 27, 2018, respectively, related to the transition services agreement with AC JV, LLC whereby the Company provides certain corporate overhead or creative services or use of facilities in exchange for a fee. These fees received by NCM LLC are included as an offset to network costs in the unaudited Condensed Consolidated Statements of Income.    
6.  BORROWINGS
The following table summarizes NCM LLC’s total outstanding debt as of SeptemberMarch 26, 20192020 and December 27, 201826, 2019 and the significant terms of its borrowing arrangements (in millions):
 Outstanding Balance as of     Outstanding Balance as of    
Borrowings September 26,
2019		 December 27,
2018		 
Maturity
Date
 
Interest
Rate
 March 26,
2020		 December 26,
2019		 Maturity
Date		 Interest
Rate
Senior secured notes due 2022 $400.0
 $400.0
 April 15, 2022 6.000%
Revolving credit facility 6.0
 27.0
 June 20, 2023 (1) $167.0
 $39.0
 June 20, 2023 (1)
Term loan 267.3
 269.4
 June 20, 2025 (1)
Term loans 266.0
 266.6
 June 20, 2025 (1)
Senior unsecured notes due 2026 230.0
 235.0
 August 15, 2026 5.750% 230.0
 230.0
 August 15, 2026 5.750%
Senior secured notes due 2028 400.0
 400.0
 April 15, 2028 5.875%
Total borrowings 903.3
 931.4
   1,063.0
 935.6
  
Less: debt issuance costs related to term loan and senior notes (6.6) (7.8)  
Less: debt issuance costs related to term loans and senior notes (8.7) (9.0)  
Total borrowings, net 896.7
 923.6
  1,054.3
 926.6
 
Less: current portion of debt (2.7) (2.7)  (2.7) (2.7) 
Carrying value of long-term debt $894.0
 $920.9
     $1,051.6
 $923.9
    

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

Senior Secured Credit Facility—On June 20, 2018, NCM LLC entered into a credit agreement to replace NCM LLC's senior secured credit facility, dated as of February 13, 2007, as amended (the “previous facility”). Consistent with the structure of the previous facility, the agreement consists of a term loan facility and a revolving credit facility. As of SeptemberMarch 26, 2019,2020, NCM LLC’s senior secured credit facility consisted of a $175.0 million revolving credit facility and a $267.3$266.0 million term loan. The obligations under the senior secured credit facility are secured by a lien on substantially all of the assets of NCM LLC.
Revolving Credit Facility—The revolving credit facility portion of NCM LLC’s total borrowings is available, subject to certain conditions, for general corporate purposes of NCM LLC in the ordinary course of business and for other transactions permitted under the senior secured credit facility, and a portion is available for letters of credit.  During March 2020, NCM LLC drew down an additional $110.0 million on the revolving credit facility to fund operations during the period of expected disrupted cash flows due to the temporary closure of the theaters within NCM LLC's network to address the COVID-19 Pandemic. As of SeptemberMarch 26, 2019,2020, NCM LLC’s total availability under the $175.0 million revolving credit facility was $164.2$4.4 million, net of $6.0$167.0 million outstanding and $4.8$3.6 million in letters of credit.  The unused line fee is 0.50% per annum which is consistent with the previous facility.  Borrowings under the revolving credit facility bear interest at NCM LLC’s option of either the LIBOR index plus an applicable margin ranging from 1.75% to 2.25% or the base rate plus an applicable margin ranging from 0.75% to 1.25%. The applicable margin for the revolving credit facility is determined quarterly and is subject to adjustment based upon a consolidated net senior secured leverage ratio for NCM LLC (the ratio of secured funded debt less unrestricted cash and cash equivalents of up to $100.0 million, divided by Adjusted EBITDA for debt purposes, defined as
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NCM LLC's net income before depreciation and amortization expense adjusted to also exclude non-cash share based compensation costs for NCM LLC plus integration payments received). The revolving credit facility will mature on June 20, 2023. The weighted-average interest rate on the revolving credit facility as of SeptemberMarch 26, 20192020 was 6.00%2.80%.
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Term LoanLoans—The interest rate on the term loanloans is a rate chosen at NCM LLC’s option of either the LIBOR index plus 3.00% or the base rate plus 2.00%. The interest rate on the term loanloans as of SeptemberMarch 26, 20192020 was 5.19%4.63%.  The term loan amortizesloans amortize at a rate equal to 1.00% annually, to be paid in equal quarterly installments. As of SeptemberMarch 26, 2019,2020, NCM LLC has paid principal of $2.7$4.0 million, reducing the outstanding balance to $267.3$266.0 million. The term loanloans will mature on June 20, 2025.
The senior secured credit facility contains a number of covenants and various financial ratio requirements, including, (i) a consolidated net total leverage ratio covenant of 6.25 times for each quarterly period and (ii) with respect to the revolving credit facility, maintaining a consolidated net senior secured leverage ratio of equal to or less than 4.50 times on a quarterly basis for each quarterly period in which a balance is outstanding on the revolving credit facility. In addition, NCM LLC is permitted to make quarterly dividend payments and other restricted payments with its available cash as long as NCM LLC’s consolidated net senior secured leverage ratio (after giving effect to any such payment) is below 5.50 times and no default or event of default has occurred and continues to occur under the senior secured credit facility. As of SeptemberMarch 26, 2019,2020, NCM LLC’s consolidated net senior secured leverage ratio was 3.113.28 times (versus the dividend payment restriction of 5.50 times and the covenant of 4.50 times) and NCM LLC's consolidated net total leverage ratio was 4.174.31 times (versus the covenant of 6.25 times).
Senior Secured Notes due 2022—On April 27, 2012, NCM LLC completed a private placement of $400.0 million in aggregate principal amount of 6.000% Senior Secured Notes (the “Notes due 2022”) for which the registered exchange offering was completed on November 26, 2012.  The Notes due 2022 pay interest semi-annually in arrears on April 15 and October 15 of each year, which commenced on October 15, 2012. The Notes due 2022 share in the same collateral that secures NCM LLC's obligations under the senior secured credit facility.
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 pay interest semi-annually in arrears on February 15 and August 15 of each year, which commenced on February 15, 2017.  The Notes due 2026 were issued at 100% of the face amount thereof and are the senior unsecured obligations of NCM LLC. NCM LLC repurchased and canceled a total of $5.0 million and $15.0 million of the Notes due 2026 during 2019 and 2018, respectively, reducing the principal amount to $230.0 million as of SeptemberMarch 26, 2019.2020. These repurchases were treated as partial debt extinguishments and resulted in the realization of a non-operating gain, net of written off debt issuance costs, of $0.3$0.0 million and $0.3 million during the ninethree months ended SeptemberMarch 26, 2020 and March 28, 2019, respectively.
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. The Notes due 2028 will mature on April 15, 2028. Interest on the Notes due 2028 accrues at a rate of 5.875% per annum and September 27, 2018, respectively.is payable semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2020. The Notes due 2028 were issued at 100% of the face amount thereof and share in the same collateral that secures NCM LLC's obligations under the senior secured credit facility.
7.  INCOME TAXES
The Company’s provision for income taxes during the interim reporting periods has historically been calculated by applying an estimate of the annual effective tax rate for the full year to “ordinary” income or loss (pre-tax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. Although the Company believes the use of the annual effective tax rate method to be appropriate for prior interim reporting periods, the Company utilized a discrete effective tax rate method to calculate the provision for income taxes for the three months ended March 26, 2020, as allowed by ASC 740-270, Income Taxes, Interim Reporting. The Company determined that as small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate, the discrete effective tax rate would provide a more reliable estimate for the three months ended March 26, 2020.
Changes in the Company’s Effective Tax Rate—The Company’s effective tax rate increaseddecreased from (2.8)%34.4% for the three months ended September 27, 2018March 28, 2019 to 33.4%8.8% for the three months ended SeptemberMarch 26, 2019 primarily due to lower deferred2020, resulting in an income tax expensebenefit of $0.4 million for the three months ended September 27, 2018 from the Company's remeasurementMarch 26, 2020 compared to an income tax benefit of its deferred tax assets as a result of revised state tax apportionment rates. The Company’s effective tax rate decreased from 55.3%$0.6 million for the ninethree months ended September 27, 2018 to 26.9% for the nine months ended September 26, 2019 primarily due to a decrease in tax expense recorded for the change in the state effective tax rate.March 28, 2019. The decrease in income tax expensebenefit was primarily due to a decreasethe impact of incremental unfavorable permanent tax adjustments recognized in deferred tax expense for the ninethree months ended SeptemberMarch 26, 2019,2020, compared to the ninethree months ended September 27, 2018 related to the Company's remeasurement of its deferred taxes as a result of a 2018March 28, 2019, and state tax law change.rate changes recognized in the three months ended March 28, 2019 that did not impact the tax provision recorded for the three months ended March 26, 2020. The Company's current blended state and federal rate is 24.3%(net of federal benefit) was 24.4% as of Septemberboth March 26, 2019 as compared to 25.6% as of September 27, 2018.2020 and March 28, 2019.
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

8.  COMMITMENTS AND CONTINGENCIES
Legal Actions—The Company is subject to claims and legal actions in the ordinary course of business.  The Company believes such claims will not have a material effect individually or in the aggregate on its financial position, results of operations or cash flows.
Operating Commitments - Facilities - —The Company has entered into operating lease agreements for its corporate headquarters and other regional offices. The Company has right-of-use (“ROU”) assets of $21.9$21.8 million and short-term and long-term lease liabilities of $1.5$1.7 million and $24.5$24.1 million, respectively, on the balance sheet as of SeptemberMarch 26, 20192020 for all material leases with terms longer than twelve months. These balances are included within 'Other assets'“Other assets”, 'Other“Other current liabilities'liabilities” and 'Other liabilities'“Other liabilities”, respectively, on the unaudited Condensed Consolidated Balance Sheets. The Company has options on certain of these facilities to extend the lease or to terminate part or all of the leased space prior to the lease end date. Certain termination fees would be due upon exercise of the early termination options as outlined within the underlying agreements. None of these options were considered reasonably certain of exercise and thus have not been recognized as part of
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

the ROU assets and lease liabilities. As of SeptemberMarch 26, 2019,2020, the Company had a weighted average remaining lease term of 10.259.9 years on these leases.
The Company has also entered into certain short-term leases with a term of less than one year. These leases are not included within the Company’s ROU assets or lease liabilities due to the Company’s election of the practical expedient in ASC 842-20-25-2 for short-term leases.
During the three and nine months ended September 26, 2019, 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 Income depending upon the nature of the use of the facility.
 Three Months Ended Nine Months Ended
 September 26,
2019		 September 26,
2019
Operating lease cost$0.7
 $2.3
Short-term lease cost0.1
 0.2
Variable lease cost0.1
 0.4
Total lease cost$0.9
 $2.9
The Company made total lease payments of $0.9 million and $2.5 million during the three and nine months ended September 26, 2019. These payments are included within cash flows from operating activities within the unaudited Condensed Consolidated Statement of Cash Flows. The minimum lease payments under noncancelable operating leases as of December 27, 2018 were as follows (in millions).
Year Minimum Lease Payments
2019 $3.5
2020 3.3
2021 3.4
2022 3.4
2023 3.4
Thereafter 22.1
Total $39.1
The future lease payments under noncancelable operating leases as of September 26, 2019 were as follows (in millions).
Year Future Lease Payments
2019 (September 27, 2019 - December 26, 2019) $0.8
2020 3.5
2021 3.5
2022 3.7
2023 3.7
2024 3.7
Thereafter 18.6
Total 37.5
Less: Imputed interest on future lease payments (11.5)
Total lease liability as of September 26, 2019 per the Condensed Consolidated Balance Sheet $26.0
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 SeptemberMarch 26, 2019,2020, the Company’s weighted average annual discount rate used to establish the ROU assets and lease liabilities was 7.35%.
During the three months ended March 26, 2020, 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 Income depending upon the nature of the use of the facility.
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 Three Months Ended
 March 26,
2020		 March 28,
2019
Operating lease cost$0.9
 $0.8
Short-term lease cost—
 0.1
Variable lease cost0.1
 0.1
Total lease cost$1.0
 $1.0
The Company made total lease payments of $0.9 million and $0.8 million during the three months ended March 26, 2020 and March 28, 2019, respectively. These payments are included within cash flows from operating activities within the unaudited Condensed Consolidated Statement of Cash Flows.
Operating Commitments - ESAs and Affiliate Agreements- —The Company has entered into long-term ESAs with the founding members and multi-year agreements with certain network affiliates, or third-party theater circuits. The ESAs and network affiliate agreements grant NCM LLC exclusive rights in their theaters to sell advertising, subject to limited exceptions. The Company recognizes intangible assets upon issuance of membership units to the founding members in accordance with NCM LLC’s Common Unit Adjustment Agreement and upfront cash payments to the affiliates for the contractual rights to provide the Company’s services within their theaters as further discussed within Note 4 - 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. As such, the leases are considered short-term in nature, specifically less than one month. Within ASC 842, leases with terms of less than one month are exempt from the majority of the accounting and disclosure requirements, including disclosure of short-term lease expense. 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 was therefore, reclassified in the current period from 'Depreciation and amortization expense' to 'Amortizationis presented within “Amortization of intangibles recorded for network theater screen leases'leases” within the unaudited Condensed Consolidated Statement of Income.
In consideration for NCM LLC’s access to the founding members’ theater attendees for on-screen advertising and use of lobbies and other space within the founding members’ theaters for the LEN and lobby promotions, the founding members receive a monthly theater access fee under the ESAs. The theater access fee is composed of a fixed payment per patron, a fixed payment per digital screen (connected to the DCN) and a fee for access to higher quality digital cinema equipment. The payment per theater patron increases by 8% every five years, with this next increase occurring in fiscal year 2022, and the payment per digital screen and for digital cinema equipment increases annually by 5%. The theater access fee paid in the aggregate to all founding members cannot be less than 12% of NCM LLC’s aggregate advertising revenue (as defined in the ESA), or it will be adjusted upward to reach this minimum payment.  As of SeptemberMarch 26, 20192020 and December 27, 2018,26, 2019, the Company had no liabilities recorded for the minimum payment, as the theater access fee was in excess of the minimum.
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Following the 2019 ESA Amendments, Cinemark and Regal will receive an additional monthly theater access fee beginningthat began on November 1, 2019 in consideration for NCM LLC's access to certain on-screen advertising inventory after the advertised showtime of a feature film. These fees are also based upon a fixed payment per patron beginning at $0.025 per patron on November 1, 2019, (ii) $0.0375 per patron beginning on November 1, 2020, (iii) $0.05 per patron beginning on November 1, 2021, (iv) $0.052 per patron beginning on November 1, 2022 and (v) increase 8% every five years beginning November 1, 2027. Additionally, following the 2019 ESA Amendments, beginning on November 1, 2019, NCM LLC will beis entitled to display the Platinum Spot, an additional single unit that is either 30 or 60 seconds of the Noovie pre-show in the trailer position directly prior to the “attached” trailers preceding the feature film (the “Platinum Spot”).film. The “attached” trailers are those provided by studios to Cinemark and Regal that are with the feature film, which is at least one trailer, but sometimes two trailers. In consideration for the utilization of the theaters for the Platinum Spots, Cinemark and Regal will beare entitled to receive 25% of all revenue generated for the actual display of Platinum Spots in their applicable theaters, subject to a specified minimum. If NCM LLC runs advertising in more than one concurrent advertisers’ Platinum Spot for any portion of the network over a period of time, then NCM LLC will be required to satisfy a minimum average CPM for that period of time. The Company does not owe the founding members any theater access fees or any Platinum Spot revenue share when the theaters are not displaying the Company's pre-show or when the Company does not have access to the theaters. As such, the Company will not owe these fees during the duration a founding member's theaters are closed in connection with the COVID-19 Pandemic. The digital screen fee is calculated based upon average screens in use during each month. No digital screen fees will be incurred for months where no screens are in use and fees will be reduced for months where screens are in use for only part of the month.
The network affiliates compensation is considered variable lease expense and varies by circuit depending upon the agreed upon terms of the network affiliate agreement. The majority of agreements are centered around a revenue share where an agreed upon percentage of the advertising revenue received from a theater’s attendance is paid to the circuit. As part of the network affiliate agreements entered into in the ordinary course of business under which the Company sells advertising for display in various network affiliate theater chains, the Company has agreed to certain minimum revenue guarantees on a per attendee basis. If a network affiliate achieves the attendance set forth in their respective agreement, the Company has guaranteed minimum revenue for the network affiliate per attendee if such amount paid under the revenue share arrangement is less than its guaranteed amount.  As of SeptemberMarch 26, 2019,2020, the maximum potential amount of future payments the Company could be required to make pursuant to the minimum revenue guarantees is $83.6$77.7 million over the remaining terms of the network affiliate agreements. These minimum guarantees relate to various affiliate agreements ranging in term from one to twenty years, prior to any renewal periods of which some are at the option of the Company. During the three months ended September 26, 2019 and September 27, 2018 and the nine months ended September 26, 2019 and September 27, 2018,
theThe Company paid $0.3 million, $0.7 million, $0.3accrued $0.5 million and $0.7 million related to these minimum guarantees. Additionally, the Company accrued $0.4 million and $0.1$0.5 million related to affiliate agreements with guaranteed minimums in excess of the revenue share agreement as of SeptemberMarch 26, 2020 and December 26, 2019, and December 27, 2018, respectively.

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 the duration an affiliate's theaters are closed or during a period where theater attendance or affiliate revenue levels are low as the minimum levels must first be met by the affiliate.
9.  FAIR VALUE MEASUREMENTS
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:
Level 1—Quoted prices in active markets for identical assets or liabilities.
Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.
Non-Recurring Measurements—Certain assets are measured at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances. These assets include long-lived assets, intangible assets, other investments, notes receivable and borrowings.
Long-Lived Assets, Intangible Assets and Other Investments and Notes Receivable—The Company regularly reviews long-lived assets (primarily property, plant and equipment), intangible assets and investments accounted for under the cost or equity method and notes receivable for impairment whenever certain qualitative factors, events or changes in circumstances indicate that the carrying amounts of the
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

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):
As ofAs of
September 26,
2019		 December 27,
2018		March 26,
2020		 December 26,
2019
Investment in AC JV, LLC (1)
$1.0
 $0.9
$1.0
 $0.9
Other investments (2)
0.1
 2.1
0.1
 0.1
Total$1.1
 $3.0
$1.1
 $1.0
 

(1)
Refer to Note 5—Related Party Transactions. This investment is accounted for utilizing the equity method.
(2)
The Company received equity securities in privately held companies as consideration for a portion of advertising contracts. The equity securities are accounted for at adjusted cost in accordance with the practicability exception under Accounting Standards Update 2016-1, Recognition and Measurement of Financial Assets and Financial Liabilities, and represent an ownership of less than 20%. The Company does not exert significant influence on these companies’ operating or financial activities.
During the three months ended September 26, 2019 and September 27, 2018 and the nine months ended September 26, 2019 and September 27, 2018, the Company recorded impairment charges of $2.0 million, $0.0 million, $2.0 million and $0.4 million, respectively, on certain of its investments due to a significant deterioration in the business prospects of the investee or new information regarding the fair value of the investee, which brought the total remaining value of the respective impaired investments to $0.0 million as of September 26, 2019 and September 27, 2018. As of SeptemberMarch 26, 2019,2020, no other observable price changes or impairments have been recorded as a result of the Company’s qualitative assessment of identified events or changes in the circumstances of the remaining investments. The investment in AC JV, LLC was initially valued using comparative market multiples. The other investments were recorded based upon the fair value of the services provided in exchange for the investment. 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.
As of September 26, 2019 and December 27, 2018, the Company had notes receivable totaling $4.2 million and $5.6 million, respectively, from its founding members related to the sale of Fathom Events, as described in Note 5—Related Party Transactions. These notes were initially valued using comparative market multiples.  There were no identified events or changes in circumstances that had a significant adverse effect on the fair value of the notes receivable.  The notes are classified as Level 3 in the fair value hierarchy as the inputs to the determination of fair value are based upon non-identical assets and use significant unobservable inputs.
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Borrowings—The carrying amount of the revolving credit facility is considered a reasonable estimate of fair value due to its floating-rate terms. The estimated fair values of the Company’s financial instruments where carrying values do not approximate fair value were as follows (in millions):
 As of September 26,
2019		 As of December 27,
2018
 Carrying Value Fair Value (1) Carrying Value 
Fair Value (1)
Term loan$267.3
 $267.5
 $269.4
 $261.2
Notes due 2022400.0
 406.0
 400.0
 401.8
Notes due 2026230.0
 224.4
 235.0
 211.0
 As of March 26,
2020		 As of December 26,
2019
 Carrying Value Fair Value (1) Carrying Value 
Fair Value (1)
Term loans$266.0
 $192.9
 $266.6
 $266.9
Notes due 2026230.0
 157.6
 230.0
 226.2
Notes due 2028400.0
 268.9
 400.0
 426.7
 

(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 Measurements at Reporting Date Using
Fair Value as of September 26,
2019		 Quoted Prices in Active Markets for Identical Assets
(Level 1)		 Significant Other
Observable
Inputs
(Level 2)		 Significant Unobservable Inputs
(Level 3)		Fair Value as of March 26,
2020		 Quoted Prices in Active Markets for Identical Assets
(Level 1)		 Significant Other
Observable
Inputs
(Level 2)		 Significant Unobservable Inputs
(Level 3)
ASSETS:              
Cash equivalents (1)
$36.9
 $15.2
 $21.7
 $—
$31.9
 $19.9
 $12.0
 $—
Short-term marketable securities (2)
8.1
 —
 8.1
 —
16.8
 —
 16.8
 —
Long-term marketable securities (2)
8.5
 —
 8.5
 —
5.3
 —
 5.3
 —
Total assets$53.5
 $15.2
 $38.3
 $—
$54.0
 $19.9
 $34.1
 $—
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

  Fair Value Measurements at Reporting Date Using  Fair Value Measurements at Reporting Date Using
Fair Value as of December 27,
2018		 Quoted Prices in Active Markets for Identical Assets
(Level 1)		 Significant Other
Observable
Inputs
(Level 2)		 Significant Unobservable Inputs
(Level 3)		Fair Value as of December 26,
2019		 Quoted Prices in Active Markets for Identical Assets
(Level 1)		 Significant Other
Observable
Inputs
(Level 2)		 Significant Unobservable Inputs
(Level 3)
ASSETS:              
Cash equivalents (1)
$18.2
 $11.2
 $7.0
 $—
$28.8
 $16.8
 $12.0
 $—
Short-term marketable securities (2)
24.0
 —
 24.0
 —
17.5
 —
 17.5
 —
Long-term marketable securities (2)
10.2
 —
 10.2
 —
7.5
 —
 7.5
 —
Total assets$52.4
 $11.2
 $41.2
 $—
$53.8
 $16.8
 $37.0
 $—

(1)
Cash Equivalents—The Company’s cash equivalents are carried at estimated fair value.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 March 26, 2020, there was $21.1 million of Available-for-sale debt securities in unrealized loss positions without an allowance for credit losses. The Company has not recorded an allowance for credit losses for the marketable securities balance as of March 26, 2020 given the immaterial difference between the amortized cost basis and the aggregate fair value of the Company's securities. For the three and nine months ended SeptemberMarch 26, 20192020 and September 27, 2018,March 28, 2019, there was an inconsequential amount of net realized gains (losses) recognized in interest income and an inconsequential amount of net unrealized holding gains (losses) included in interest income.  Original cost of short-term marketable securities is based on the specific identification method. As of SeptemberMarch 26, 2020 and December 26, 2019, there was $0.0 million and an inconsequential amount, respectively, of gross unrealized losses related to individual securities of $0.0 million and $6.5 million, respectively, that had been in a continuous loss position for 12 months or longer. The Company has not recorded an impairment because it has the intention and ability to hold these securities to maturity.
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

December 27, 2018, there was an inconsequential amount and $0.2 million, respectively, of gross unrealized losses related to individual securities of $6.5 million and $11.8 million, respectively, that had been in a continuous loss position for 12 months or longer. The Company has not recorded an impairment because it has the intention and ability to hold these securities to maturity.
The amortized cost basis, aggregate fair value and maturities of the marketable securities the Company held as of SeptemberMarch 26, 20192020 and December 27, 201826, 2019 were as follows:
NATIONAL CINEMEDIA, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 As of September 26, 2019
 Amortized Cost
Basis
(in millions)		 Aggregate Fair
Value
(in millions)		 
Maturities (1)
(in years)
MARKETABLE SECURITIES:     
Short-term U.S. government agency bonds$3.0
 $3.0
 0.6
Short-term commercial paper:     
Industrial2.0
 2.0
 0.2
Short-term municipal bonds1.2
 1.2
 0.8
Short-term certificates of deposit1.9
 1.9
 0.1
Total short-term marketable securities8.1
 8.1
 
      
Long-term U.S. government agency bonds5.9
 6.0
 3.0
Long-term certificates of deposit2.5
 2.5
 2.5
Total long-term marketable securities8.4
 8.5
  
Total marketable securities$16.5
 $16.6
  

As of December 27, 2018As of March 26, 2020
Amortized Cost
Basis
(in millions)		 Aggregate Fair
Value
(in millions)		 
Maturities (1)
(in years)
Amortized Cost
Basis
(in millions)		 Aggregate Fair
Value
(in millions)		 
Maturities (1)
(in years)
MARKETABLE SECURITIES:          
Short-term U.S. government agency bonds$3.9
 $3.9
 0.5$0.5
 $0.5
 0.5
Short-term U.S. government treasury bonds0.3
 0.3
 0.5
Short-term commercial paper:    
Industrial8.0
 8.0
 0.1
Financial6.0
 6.0
 0.1
Short-term municipal bonds1.2
 1.2
 0.3
Short-term certificates of deposit3.6
 3.6
 0.61.1
 1.1
 0.6
Short-term municipal bonds0.5
 0.5
 0.1
Short-term commercial paper:    
Financial3.8
 3.8
 0.1
Industrial12.0
 11.9
 0.1
Total short-term marketable securities24.1
 24.0
 16.8
 16.8
 
        
Long-term municipal bonds1.2
 1.3
 1.5
Long-term U.S. government agency bonds6.9
 6.8
 2.12.7
 2.8
 3.7
Long-term certificates of deposit2.4
 2.1
 2.92.5
 2.5
 3.5
Total long-term marketable securities10.5
 10.2
 5.2
 5.3
 
Total marketable securities$34.6
 $34.2
 $22.0
 $22.1
 
 As of December 26, 2019
 Amortized Cost
Basis
(in millions)		 Aggregate Fair
Value
(in millions)		 
Maturities (1)
(in years)
MARKETABLE SECURITIES:     
Short-term U.S. government agency bonds$3.5
 $3.5
 0.4
Short-term certificates of deposit0.9
 0.9
 0.8
Short-term certificates of deposit1.2
 1.2
 0.5
Short-term commercial paper:     
Financial8.0
 7.9
 0.3
Industrial4.0
 4.0
 0.2
Total short-term marketable securities17.6
 17.5
  
      
Long-term U.S. government agency bonds4.5
 4.5
 2.2
Long-term certificates of deposit3.0
 3.0
 3.6
Total long-term marketable securities7.5
 7.5
  
Total marketable securities$25.1
 $25.0
  

(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.
10.  SUBSEQUENT EVENTS
On October 8,March 27, 2020, the U.S. Government enacted various relief and stimulus measures in response to the unprecedented adverse economic impacts of the COVID-19 Pandemic commonly referred to as the CARES Act. The CARES Act makes changes to the U.S. tax code that will affect our fiscal year ending December 31, 2020, including, but not limited to, (1) reducing the limitation on deductible interest expense, (2) changing uses and limitations of net operating losses generated in tax years 2018, 2019, and 2020, (3) deferring the payment of the 6.2% FICA portion of Company's payroll taxes beginning on the enactment date through December 31, 2020 to the end of 2021 for one-half of the tax and the remaining half to the end of 2022 and (4) creating a refundable tax credit for the Company's portion of the 6.2% FICA payroll tax for certain qualifying employees. The Company is also evaluating the other provisions of the CARES Act to determine the impact to the Company.
On April 30, 2020, NCM LLC completed a private offeringamended its Credit Agreement, dated as of $400.0 million aggregate principal amount of 5.875% senior secured notes due 2028 (the “Notes due 2028”June 20, 2018 (“Credit Agreement Amendment”) to eligible purchasers. The Notes due 2028 will mature on April 15allow for the automatic waiver of any non-compliance with its Consolidated Net Senior Secured Leverage


, 2028. InterestRatio and Consolidated Total Leverage Ratio financial covenants occurring from the quarter ending June 25, 2020 until and including the quarter ending July 1, 2021 (the “Covenant Holiday Period”). As of March 26, 2020, NCM LLC was in compliance with the foregoing financial covenants. The Credit Agreement Amendment requires that, until the fiscal quarter ending July 1, 2021, NCM LLC must not permit the sum of unrestricted cash on hand at NCM LLC and availability under its Revolving Credit Facility to be less than $55.0 million. Further, NCM LLC can make available cash distributions to its members (AMC, Cinemark, Regal and NCM, Inc.) during the Notes due 2028 accrues at a rateCovenant Holiday Period only if trailing 12-month Consolidated EBITDA (as defined in the Credit Agreement) equals or exceeds $277.0 million and outstanding loans under the Revolving Credit Facility are equal to or less than $39.0 million. NCM LLC can make available cash distributions to its members outside of 5.875% per annumthe Covenant Holiday Period so long as NCM LLC’s Consolidated Net Senior Secured Leverage Ratio is equal to or less than 5.00 to 1.00 and no default or event of default under the Credit Agreement has occurred and is payable semi-annually in arrears on April 15 and October 15 of each year, commencing on April 15, 2020. Also, on October 8, 2019, NCM LLC called for redemption the entire $400.0 million aggregate principal amount of NCM LLC’s existing Notes due 2022. The redemption price for the Notes due 2022 is 101.000% of the principal amount thereof plus accrued and unpaid interest thereon, to but not including the redemption date. The redemption date will be November 7, 2019. Following the delivery of the redemption notice for the Notes due 2022, NCM LLC deposited funds with the trustee for the Notes due 2022 in an amount that is sufficient for the trustee to pay the full redemption price (including accrued and unpaid interest) to the holders of the Notes due 2022 on the redemption date.    

continuing.
On November 4, 2019,May 5, 2020, the Company declared a cash dividend of $0.17$0.07 per share (approximately $13.2$5.4 million) on each share of the Company’s common stock (not including outstanding restricted stock which will accrue dividends until the shares vest) to stockholders of record on November 14, 2019May 18, 2020 to be paid on November 29, 2019.June 1, 2020.
As of the date of the filing of this Form 10-Q, almost all the theaters across the Company’s network remain closed due to the COVID-19 Pandemic.  The ultimate significance of the COVID-19 Pandemic, including the extent of the adverse impact on the Company’s financial and operational results, will be dictated by the currently unknowable duration and the effect on the overall economy and of responsive governmental regulations, including shelter-in-place orders and mandated business closures.  The Company’s business also could be significantly affected should the disruptions caused by the COVID-19 Pandemic lead to changes in consumer behavior (such as social distancing), which the Company currently believes will be temporary, or further reductions to the customary theatrical release window. The COVID-19 Pandemic also makes it more challenging for management to estimate the future performance of our business over the near to medium term.   The Company is monitoring the rapidly evolving situation and its potential impacts on the Company’s financial position, results of operations, liquidity and cash flows.
    


Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
Some of the information in this Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended.  All statements other than statements of historical facts included in this Form 10-Q, including, without limitation, certain statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”Operations” and statements related to the impact of the current COVID-19 Pandemic on our business and results, may constitute forward-looking statements.  In some cases, you can identify these “forward-looking statements” by the specific words, including but not limited to “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of those words and other comparable words.  These forward-looking statements involve risks and uncertainties.  Our actual results could differ materially from those indicated in these statements as a result of certain factors as more fully discussed under the heading “Risk Factors” below and in our annual report on Form 10-K for the Company’s fiscal year ended December 27, 2018.26, 2019. Among other risks, we face significant risk and volatility related to the COVID-19 Pandemic as discussed in this report. Investors are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. The following discussion and analysis should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto included herein and the audited financial statements and other disclosure included in our annual report on Form 10-K for the Company’s fiscal year ended December 27, 2018.26, 2019. In the following discussion and analysis, the term net income refers to net income attributable to NCM, Inc.
Overview
We are America's Movie Network. As the #1 weekendlargest cinema advertising network for Millennials (age 18-34) in the U.S., we areunite brands with the connector between brandspower of movies and engage movie audiences.fans anytime and anywhere. We currently derive revenue principally from the sale of advertising to national, regional and local businesses in Noovie, our cinema advertising and entertainment pre-show seen on movie screens across the U.S. As of March 26, 2020, almost all of the theaters within our network have been temporarily closed to address the COVID-19 Pandemic. We are unable to advertise in the theaters, and thus will not generate any in theater revenue, for the duration of time that the theaters are closed. Refer to the “Recent Developments” section below for further information regarding the impact of and the Company's response to the COVID-19 Pandemic.
Beginning in November 2019 following the completion of the 2019 ESA Amendments, we now present two different formats of our Noovie pre-show depending on the theater circuit in which it runs. In Regal and Cinemark and 14 of our network affiliates' theaters, Noovie now includes advertising inventory after the advertised showtime consisting of (1) the lights down segment that runs for five minutes after the advertised showtime with trailer lighting and (2) the 30- or 60-second Platinum Spot (together, the “Post-Showtime Inventory”). As of March 26, 2020, theaters presenting the new Noovie format with Post-Showtime Inventory made up approximately 58% of our network based upon attendance. All other NCM network theater circuits, which make up the remaining 42% of our network based upon attendance as of March 26, 2020, present the Classic Noovie pre-show, which ends approximately at the advertised movie showtime when the movie trailers begin. The movie trailers that run before the feature film are not part of Noovie.  
We also sell advertising on our LEN, a series of strategically-placedstrategically placed screens located in movie theater lobbies, as well as other forms of advertising and promotions in theater lobbies. In addition, we sell online and mobile advertising through our Cinema Accelerator and across our othersuite of Noovie digital gaming productsproperties, including Noovie ARcade, Fantasy Movie League, Name That Movie Noovie.comand, Noovie Shuffle which can be played on, Name That Movie, Noovie Arcade, and Fantasy Movie League, in order to reach entertainment audiences beyond the mobile apps or at Noovie.com.theater. As of SeptemberMarch 26, 2019, over 3.52020, approximately 4.2 million movie goersmoviegoers have downloaded our mobile apps. These downloads and the acquisition of second party data have resulted in firstfirst- and second partysecond-party data sets of over 75 million.146million as of March 26, 2020. We have long-term ESAs (approximately 20.0 19.5weighted average years remaining based on attendance as of SeptemberMarch 26, 2019)2020) with the founding members and multi-year agreements with our network affiliates, which expire at various dates between December 2019September 2020 and July 2031. The weighted average remaining term (based on attendance) of the ESAs and the network affiliate agreements is 17.417.1 years as of SeptemberMarch 26, 2019.2020. The ESAs and network affiliate agreements grant NCM LLC exclusive rights in their theaters to sell advertising, subject to limited exceptions. Our Noovie pre-show and LEN programming are distributed predominantly via satellite through our proprietary DCN. Approximately 98%99% of the aggregate founding member and network affiliate theater attendance is generated by theaters connected to our DCN (the remaining screens receive advertisements on USB drives) and 100% of the Noovie pre-show is projected on digital projectors (95%(96% digital cinema projectors and 5%4% LCD projectors) as of SeptemberMarch 26, 2019.2020.
Management focuses on several measurements that we believe provide us with the necessary ratios and key performance indicators to manage our business, determine how we are performing versus our internal goals and targets, and against the performance of our competitors and other benchmarks in the marketplace in which we operate. Senior executives

hold meetings at least once per quarter with members of management to discuss and analyze operating results and address significant variances to budget and prior year in an effort to identify trends and changes in our business. We focus on operating metrics including changes in revenue, Adjusted OIBDA and Adjusted OIBDA margin, as defined and discussed below, as some of our primary measurement metrics. In addition, we monitor our monthly advertising performance measurements, including advertising inventory utilization, national and regional advertising pricing (CPM), local advertising rate per screen per week, national and local and regional and total advertising revenue per attendee.  We also monitor free cash flow, the dividend coverage ratio, financial leverage ratio (net debt divided by Adjusted OIBDA plus integration payments and other encumbered theater payments), cash balances and revolving credit facility availability to ensure financial debt covenant compliance and that there is adequate cash availability to fund our working capital needs and debt obligations and current and future dividends declared by our Board of Directors. Financial results, including the metrics outlined above, are presented to the Board of Directors on a monthly basis.
Our operating results may be affected by a variety of internal and external factors and trends described more fully in the section entitled “Risk Factors” below and in our Form 10-K filed with the SEC on February 22, 201920, 2020 for our fiscal year ended December 27, 2018.26, 2019.
Recent Developments

Amendment to CinemarkCOVID-19—Following the World Health Organization’s declaration of the COVID-19 virus as a pandemic, the United States’ government and Regal ESAs
On September 17, 2019, NCM LLC entered into the 2019 ESA Amendments with affiliates ofother state and local governments issued precautionary restrictions on travel, public gatherings and other events and issued social distancing guidelines. Beginning in mid-March 2020, each of Cinemarkour founding members and Regal.all of our network affiliates announced that their theaters would be temporarily closed to address this pandemic. Several major motion picture releases were delayed until later in 2020 or 2021 and some other studios shortened the “release window” between the release of motion pictures in theaters and an alternative delivery method or released motion pictures directly to alternative delivery methods bypassing the theater entirely. The 2019 ESA Amendments extended the termsresults of the ESAsfirst quarter of 2020 were significantly impacted by these temporary closures as theater attendance was less than expected beginning in March, initially as the public was told to practice social distancing, and then further when theaters were closed following stay at home orders. These developments will be referred to as the “COVID-19 Pandemic.” As of the date of this filing, almost all theaters remain closed across the United States.    
We are unable to advertise in the theaters, and thus we will not generate any in theater revenue, for the duration of time that the theaters are closed. Our theater access fees, network affiliate payments and Platinum Spot revenue share payments are driven by attendance, active screens and revenue, and therefore, will not be incurred for the duration the theaters are closed. We have been working to preserve cash and ensure sufficient liquidity to endure the impacts of the COVID-19 Pandemic, even if prolonged. Among other measures, we have:
Temporarily furloughed approximately 30% of our staff and temporarily reduced the pay of the remaining employees by up to 50%, which in aggregate reduced our wage expense by 50%;
Temporarily reduced cash compensation of the Company's Board of Directors by 20%;
Suspended non-essential operating expenditures, including marketing, research, employee travel and consulting services;
Implemented a hiring freeze;
Temporarily suspended the 401K employee match program;
Terminated or deferred certain non-essential capital expenditures;
Strategically working with Cinemarkour landlords, vendors, and Regalother business partners to manage, defer, and/or abate certain costs during the disruptions caused by the COVID-19 Pandemic;
Decreased our quarterly dividend to $0.07 per share from February 13, 2037$0.19 per share in the fourth quarter of 2019. When compared to February 13, 2041the fourth quarter of 2019 this results in quarterly cash savings of $9.4 million for NCM, Inc.; and modified the Noovie pre-show in Cinemark
Introduced an active cash management process, which, among other things, requires CEO approval of all outgoing payments.
In March 2020, we drew down an additional $110.0 million on our revolving credit facility increasing our cash and Regal theaters.
Beginning on November 1, 2019,marketable securities balance to $215.3 million as of March 26, 2020 ($132.2 million at NCM LLC). The $132.2 million of cash at NCM LLC will be entitledused to display upfund operations during the period of expected reduced cash flows. Cash at NCM, Inc. cannot be used to five minutesfund operations at NCM LLC and is held for future payment of dividends to NCM, Inc. shareholders, income tax payments, income tax receivable payments to NCM LLC’s founding members and other obligations. Further, as of March 26, 2020, we had approximately $113.7 million of trade accounts receivable outstanding from customers, of which we have collected approximately $66.7 million as of May 4, 2020. Management believes that cash on hand following the Noovie pre-show afteradditional draw down on the advertised showtimerevolving credit facility, collection of a feature filmaccounts receivable, as well as future funds generated from NCM LLC’s operations once theaters re-open should be sufficient to fund working capital requirements, NCM LLC’s debt service requirements and capital expenditures through the next twelve months.

On April 30, 2020, NCM LLC amended its Credit Agreement, dated as of June 20, 2018 (“Credit Agreement Amendment”) to allow for the automatic waiver of any non-compliance with its Consolidated Net Senior Secured Leverage Ratio and Consolidated Total Leverage Ratio financial covenants occurring from the quarter ending June 25, 2020 until and including the quarter ending July 1, 2021 (the “Covenant Holiday Period”). As of March 26, 2020, NCM LLC was in Cinemark and Regal theaters.compliance with these financial covenants. The amount of time included inCredit Agreement Amendment requires that, until the Noovie pre-show displayed prior to showtime will be reduced byfiscal quarter ending July 1, 2021, NCM LLC must not permit the sum of five minutes plusunrestricted cash on hand at NCM LLC and availability under its Revolving Credit Facility to be less than $55.0 million. Further, NCM LLC can make available cash distributions to its members (AMC, Cinemark, Regal and NCM, Inc.) during the aggregate length of time of any Platinum Spot.
In consideration for utilizationCovenant Holiday Period only if trailing 12-month Consolidated EBITDA (as defined in the Credit Agreement) equals or exceeds $277.0 million and outstanding loans under the Revolving Credit Facility are equal to or less than $39.0 million. NCM LLC can make available cash distributions to its members outside of the theaters post-showtime, CinemarkCovenant Holiday Period so long as NCM LLC’s Consolidated Net Senior Secured Leverage Ratio is equal to or less than 5.00 to 1.00 and Regal will be entitled to receive post-showtime theater access fees. These fees are based upon Cinemark’sno default or Regal’s attendanceevent of default under the Credit Agreement has occurred and a post-showtime theater access fee per patron.is continuing. NCM LLC may continue to reimburse NCM, Inc. for its services provided under the management services agreement during the period of the automatic waiver.
On March 21, 2020, a Treasury Department Notice postponed the original due date for the Company's U.S. federal income tax return to July 15, 2020 from April 15, 2020. Due to the extension of the filing date, the date the 2019 TRA payment will pay a post-showtime theater access feebegin accruing interest was also delayed until July 15, 2020.
On March 27, 2020, the U.S. Government enacted various relief and stimulus measures in response to Cinemark and Regalthe unprecedented adverse economic impacts of the COVID-19 Pandemic commonly referred to as follows: (i)the CARES Act. Based on our preliminary analysis of the CARES Act, we expect to recognize the following benefits:
Deferral of the payment of the 6.2% FICA portion of Company's payroll taxes beginning on November 1, 2019, $0.025 per patron, (ii) beginning on November 1,the enactment date through December 31, 2020 $0.0375 per patron, (iii) beginning on November 1,until the end of 2021 $0.05 per patron, (iv) beginning on November 1, 2022, $0.052 per patron, and (v) beginning on November 1, 2027 and every five years thereafter on November 1, the post-showtime theater access fee per patron will increase by 8%.
In addition, beginning on November 1, 2019, NCM LLC will be entitled to display a Platinum Spot, an additional single unit that is either 30 or 60 secondsfor one-half of the Noovie pre-show intax and the trailer position directly priorremaining half to the “attached” trailers preceding the feature film. The “attached” trailers are those provided by studios to Cinemarkend of 2022; and Regal that are with the feature film, which is at least one trailer, but sometimes two trailers.
In considerationA refundable Employee Retention Payroll Tax Credit for the utilization of the theaters post-showtime for Platinum Spots, Cinemark and Regal will be entitled to receive 25% of all revenue generated for the actual display of Platinum Spots in their applicable theaters, subject to a specified minimum. If NCM LLC runs advertising in more than one concurrent advertisers’ Platinum Spot for anyCompany's portion of the 6.2% FICA payroll tax for certain qualifying employees from March 13, 2020 through December 31, 2020.
The Company is also evaluating the other provisions of the CARES Act and intends to seek any available potential benefits that would positively impact the Company.
We believe that the exhibition industry has historically fared well during recessions, and we remain optimistic, though cannot guarantee, that our founding members and network overaffiliates will rebound and attendance figures will benefit from pent-up social demand as home sheltering subsides and people seek togetherness with a periodreturn to normalcy. However, the ultimate significance of time, then NCM LLCthe COVID-19 Pandemic, including the extent of the adverse impact on our financial and operational results, will be required to satisfy a minimum average CPM for that period of time.
Refinancing of Notes due 2022
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 to eligible purchasers. The Notes due 2028 will mature on April 15, 2028. Interestdictated by the currently unknowable duration and the effect on the Notes due 2028 accrues at a rateoverall economy and of 5.875% per annumresponsive governmental regulations, including shelter-in-place orders and is payable semi-annuallymandated business closures. Our business also could be significantly affected should the disruptions caused by the COVID-19 Pandemic lead to changes in arrears on April 15 and October 15 of each year, commencing on April 15, 2020. Also, on October 8, 2019, NCM LLC called for redemption the entire $400.0 million aggregate principal amount of NCM LLC’s existing Notes due 2022. The redemption price for the Notes due 2022 is 101.000% of the principal amount thereof plus accrued and unpaid interest thereon, to but not including the redemption date. The redemption dateconsumer behavior (such as social distancing), which we believe will be November 7, 2019. Following the delivery of the redemption notice for the Notes due 2022, NCM LLC deposited funds with the trustee for the Notes due 2022 in an amount that is sufficient for the trustee to pay the full redemption price (including accrued and unpaid interest)temporary, or further reductions to the holderscustomary theatrical release window. The COVID-19 Pandemic also makes it more challenging for management to estimate the future performance of our business, particularly over the Notes due 2022near to medium term. We are monitoring the rapidly evolving situation and its potential impacts on the redemption date.our financial position, results of operations, liquidity and cash flows.
Summary Historical and Operating Data
You should read this information with the other information contained in this document, and our unaudited historical financial statements and the notes thereto included elsewhere in this document.
Our Operating Data—The following table presents operating data and Adjusted OIBDA (dollars in millions, except share and margin data):

      % Change  % Change
Q3 2019 Q3 2018 YTD 2019 YTD 2018 Q3 2019 to Q3 2018 YTD 2019 to YTD 2018Q1 2020 Q1 2019 Q1 2020 to Q1 2019
Revenue$110.5
 $110.1
 $297.6
 $304.0
 0.4 % (2.1)%$64.7
 $76.9
 (15.9)%
Operating expenses:                
Advertising44.3
 44.2
 130.8
 133.4
 0.2 % (1.9)%36.8
 39.2
 (6.1)%
Network, administrative and unallocated costs26.2
 23.6
 78.2
 77.1
 11.0 % 1.4 %23.0
 26.8
 (14.2)%
Total operating expenses70.5
 67.8
 209.0
 210.5
 4.0 % (0.7)%59.8
 66.0
 (9.4)%
Operating income40.0
 42.3
 88.6
 93.5
 (5.4)% (5.2)%4.9
 10.9
 (55.0)%
Non-operating expenses12.9
 16.9
 41.4
 37.5
 (23.7)% 10.4 %13.5
 14.1
 (4.3)%
Income tax expense (benefit)4.3
 (0.3) 6.0
 16.7
 NM
 (64.1)%
Net income attributable to noncontrolling interests13.6
 14.5
 24.2
 25.8
 (6.2)% (6.2)%
Net income attributable to NCM, Inc.$9.2
 $11.2
 $17.0
 $13.5
 (17.9)% 25.9 %
Income tax benefit(0.4) (0.6) (33.3)%
Net loss attributable to noncontrolling interests(4.5) (1.5) 200.0 %
Net loss attributable to NCM, Inc.$(3.7) $(1.1) 236.4 %
                
Net income per NCM, Inc. basic share$0.12
 $0.15
 $0.22
 $0.18
 (20.0)% 22.2 %
Net income per NCM, Inc. diluted share$0.12
 $0.14
 $0.22
 $0.16
 (14.3)% 37.5 %
Net loss per NCM, Inc. basic share$(0.05) $(0.01) 400.0 %
Net loss per NCM, Inc. diluted share$(0.05) $(0.01) 400.0 %
                
Adjusted OIBDA$51.7
 $53.6
 $124.0
 $129.2
 (3.5)% (4.0)%$14.4
 $22.1
 (34.8)%
Adjusted OIBDA margin46.8% 48.7% 41.7% 42.5% (1.9)% (0.8)%22.3% 28.8% (6.5)%
Total theater attendance (in millions) (1)
163.4
 164.7
 497.4
 535.8
 (0.8)% (7.2)%120.4
 148.7
 (19.0)%
_________________________
NM = Not Meaningful
(1)Represents the total attendance within our advertising network, excluding screens and attendance associated with certain AMC Carmike, AMC Rave and Cinemark Rave theaters that were part of another cinema advertising network for certain periods presented. Refer to Note 4 to the unaudited Condensed Consolidated Financial Statements included elsewhere in this document.

Non-GAAP Financial Measures
Adjusted Operating Income Before Depreciation and Amortization (“Adjusted OIBDA”) and Adjusted OIBDA margin are not financial measures calculated in accordance with GAAP in the United States.  Adjusted OIBDA represents operating income before depreciation and amortization expense adjusted to also exclude amortization of intangibles recorded for network theater screen leases, non-cash share-based compensation costsand Chief Executive Officer transition costs. Adjusted OIBDA margin is calculated by dividing Adjusted OIBDA by total revenue. Our management uses these non-GAAP financial measures to evaluate operating performance, to forecast future results and as a basis for compensation. The Company believes these are important supplemental measures of operating performance because they eliminate items that have less bearing on the Company's operating performance and so highlight trends in its core business that may not otherwise be apparent when relying solely on GAAP financial measures. The Company believes the presentation of these measures is relevant and useful for investors because it enables them to view performance in a manner similar to the method used by the Company’s management, helps improve their ability to understand the Company’s operating performance and makes it easier to compare the Company’s results with other companies that may have different depreciation and amortization policies, amortization of intangibles recorded for network theater screen leases, non-cash share based compensation programs, CEO turnover, interest rates, debt levels or income tax rates. A limitation of these measures, however, is that they exclude depreciation and amortization of intangibles recorded for network theater screen leases, which represent a proxy for the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company’s business. In addition, Adjusted OIBDA has the limitation of not reflecting the effect of the Company’s amortization of intangibles recorded for network theater screen leases, share basedshare-based payment costs or costs associated with the resignation of the Company’s former Chief Executive Officer. Adjusted OIBDA should not be regarded as an alternative to operating income, net income or as an indicator of operating performance, nor should it be considered in isolation of, or as a substitute for, financial measures prepared in accordance with GAAP. The Company believes that operating income is the most directly comparable GAAP financial measure to Adjusted OIBDA. Because not all companies use identical calculations, these non-GAAP presentations may not be comparable to other similarly titled measures of other companies, or calculations in the Company’s debt agreement.

The following table reconciles operating income to Adjusted OIBDA for the periods presented (dollars in millions):
Q3 2019 Q3 2018 YTD 2019 YTD 2018Q1 2020 Q1 2019
Operating income$40.0
 $42.3
 $88.6
 $93.5
$4.9
 $10.9
Depreciation expense3.4
 3.1
 10.0
 9.0
3.2
 3.3
Amortization expense (1)
—
 6.9
 —
 20.5
Amortization of intangibles recorded for network theater screen leases (1)
6.8
 —
 20.7
 —
Share-based compensation costs (2)
1.4
 1.3
 4.3
 6.2
CEO transition costs0.1
 —
 0.4
 —
Amortization of intangibles recorded for network theater screen leases6.1
 6.9
Share-based compensation costs (1)
0.2
 0.8
CEO transition costs (2)
—
 0.2
Adjusted OIBDA$51.7
 $53.6
 $124.0
 $129.2
$14.4
 $22.1
Total revenue$110.5
 $110.1
 $297.6
 $304.0
$64.7
 $76.9
Adjusted OIBDA margin46.8% 48.7% 41.7% 42.5%22.3% 28.8%

(1)Following the adoption of ASC 842, as discussed within Note 1 to the unaudited Condensed Consolidated Financial Statements included elsewhere in this document, amortization of the ESA and affiliate intangible balances is considered a form of lease expense and has been reclassified to this account as of the adoption date, December 28, 2018. The Company adopted ASC 842 prospectively and thus, prior period balances remain within amortization expense.
(2)Share-based compensation costs are included in network operations, selling and marketing and administrative expense in the accompanying unaudited Condensed Consolidated Financial Statements.
(2)Chief Executive Officer transition costs represents costs associated with the search for a new Company CEO during the first quarter of 2019.

Our Network—The change in the number of screens in our network by the founding members and network affiliates during the ninethree months ended SeptemberMarch 26, 20192020 was as follows.
Number of screensNumber of screens
Founding Members Network Affiliates TotalFounding Members Network Affiliates Total
Balance as of December 27, 201816,768
 4,404
 21,172
Balance as of December 26, 201916,880
 4,328
 21,208
Lost affiliates, net of new affiliates (1)
—
 (246) (246)—
 (175) (175)
Openings, net of closures(2)84
 63
 147
93
 (24) 69
Balance as of September 26, 201916,852
 4,221
 21,073
Balance as of March 26, 202016,973
 4,129
 21,102

(1)Represents the loss of threetwo of our affiliates that did not renew their contracts as of the end of the first quarter of 2020 resulting in a reduction of 250185 affiliate screens to our network, offset by the addition of onetwo new affiliateaffiliates which added 410 new screens to our network during the ninethree months ended SeptemberMarch 26, 2019.2020.
(2)Excludes the temporary theater closures in response to the COVID-19 Pandemic.
Our founding member and network affiliate agreements allow us to sell cinema advertising across the largest network of digitally equipped theaters in the U.S. We believe that our market coverage strengthens our selling proposition and competitive positioning against other national, regional and local video advertising platforms, including television, online and mobile video platforms and other out of home video advertising platforms by allowing advertisers the broad reach and national scale that they need to effectively reach their target audiences.
Basis of Presentation
The results of operations data for the three months ended SeptemberMarch 26, 2019 (third2020 (first quarter of 2019)2020) and September 27, 2018 (thirdMarch 28, 2019 (first quarter of 2018) and the nine months ended September 26, 2019 and September 27, 20182019) was derived from the unaudited Condensed Consolidated Financial Statements and accounting records of NCM, Inc. and should be read in conjunction with the notes thereto.
Results of Operations
ThirdFirst Quarter of 20192020 and ThirdFirst Quarter of 20182019

Revenue. Total revenue increased 0.4%decreased 15.9%, from $110.1$76.9 million for the thirdfirst quarter of 20182019 to $110.5$64.7 million for the thirdfirst quarter of 2019.2020.  The following is a summary of revenue by category (in millions):
  $ Change % Change  $ Change % Change
Q3 2019 Q3 2018 Q3 2019 to Q3 2018 Q3 2019 to Q3 2018Q1 2020 Q1 2019 Q1 2020 to Q1 2019 Q1 2020 to Q1 2019
National advertising revenue$82.3
 $80.8
 $1.5
 1.9 %
National and regional advertising revenue$49.8
 $57.4
 $(7.6) (13.2)%
Local advertising revenue16.8
 17.4
 (0.6) (3.4)%9.4
 12.8
 (3.4) (26.6)%
Regional advertising revenue4.1
 4.5
 (0.4) (8.9)%
Founding member advertising revenue from
beverage concessionaire agreements
7.3
 7.4
 (0.1) (1.4)%5.5
 6.7
 (1.2) (17.9)%
Total revenue$110.5
 $110.1
 $0.4
 0.4 %$64.7
 $76.9
 $(12.2) (15.9)%
The following table shows data on theater attendance and revenue per attendee for the thirdfirst quarter of 20192020 and the thirdfirst quarter of 2018:2019:
  % Change  % Change
Q3 2019 Q3 2018 Q3 2019 to Q3 2018Q1 2020 Q1 2019 Q1 2020 to Q1 2019
National advertising revenue per attendee$0.504
 $0.491
 2.6 %
National and regional advertising revenue per attendee$0.414
 $0.386
 7.3 %
Local advertising revenue per attendee$0.103
 $0.106
 (2.8)%$0.078
 $0.086
 (9.3)%
Regional advertising revenue per attendee$0.025
 $0.027
 (7.4)%
Total advertising revenue (excluding founding
member beverage revenue) per attendee
$0.632
 $0.624
 1.3 %$0.492
 $0.472
 4.2 %
Total advertising revenue per attendee$0.676
 $0.668
 1.2 %$0.537
 $0.517
 3.9 %
Total theater attendance (in millions) (1)
163.4
 164.7
 (0.8)%120.4
 148.7
 (19.0)%
 ________________________________________________________
(1)Represents the total attendance within our advertising network, excluding screens and attendance associated with certain AMC Carmike, AMC Rave and Cinemark Rave theaters that were part of another cinema advertising network for certain periods presented.
National and regional advertising revenue. The $1.5$7.6 million, or 1.9%13.2%, increasedecrease in national and regional advertising revenue (excluding beverage revenue from founding members) was primarily due to a $7.4 million increase9.4% decrease in other revenue not included in the inventory measured by impressions sold and CPMs. The increase in other revenue was primarily driven by higher sales of advertiser branded content segments within our Noovie pre-show, lobby promotions, and national digital advertisements. This increase was partially offset by a 9.0%an 8.7% decrease in national advertising CPMs (excluding beverage). The decrease in impressions sold was primarily related to a 19.0% decrease in network attendance as a result of the COVID-19 Pandemic and the government's guidelines surrounding social distancing which ultimately resulted in the temporary closure of our network's theaters beginning in mid-March 2020 and to a lesser extent a weaker movie slate in March of 2020, as compared to March 2019. National advertising utilization increased to 104.5% for the first quarter of 2020, compared to 93.4% for the first quarter of 2019. The first quarter of 2019 utilization was recalculated utilizing an updated weighted-average impressions to allow for comparability following the changes to the structure of our Noovie pre-show described above. Inventory utilization is calculated as utilized impressions divided by total advertising impressions, which is based on eleven 30-second salable national advertising units in our Noovie pre-show, which can be expanded, should market demand dictate. The decrease in national advertising CPMs was primarily driven by a decrease in upfront and scatter market demandCPMs in the thirdfirst quarter of 2020, as compared to the first quarter of 2019, due to the churn of certain higher CPM deals that shifted later in 2020 or did not return from 2019, that were replaced by lower CPM deals, as well as, a change in the mix of clients with a higher proportion of upfront clients and fewer higher CPM scatter market and content partner clients in the first quarter of 2020, as compared to the thirdfirst quarter of 2018.2019. The scatter market represents inventory not included within an upfront or content partner commitment sold closer to the advertisement air date for typically higher CPMs. Impressions sold remained relatively flat with a 0.4% increase primarily related to an increase in national advertising utilization from 133.2% in third quarter of 2018 to 134.8% in the third quarter of 2019 due in part to the placement of more of the make good balance that existed at the end of the second quarter of 2019, compared to the same period in 2018. The increase was partially offset by a 0.8% decrease in network attendance. Inventory utilization is calculated as utilized impressions divided by total advertising impressions, which is based on eleven 30-second salable national advertising units in our Noovie pre-show, which can be expanded, should market demand dictate.
Local advertising revenue. The $0.6$3.4 million, or 3.4%26.6%, decrease in local advertising revenue was primarily due to a 6.8%14.9% decrease in the volume of local contracts forand a 16.5% decrease in the third quarter of 2019, comparedaverage contract value primarily related to the third quarter of 2018, partially offseta significant decrease in larger contracts due to a 1) reduction in spend by a few customers year over year, 2) certain customers shifting their spending to later in 2020, and 3) an increase in local digital sales revenue driven by an increase incustomer churn for the number of integrated on-screen and digital sales.
Regional advertising revenue. The $0.4 million, or 8.9%, decrease in regional advertising revenue was primarily due to a decrease in average contract value driven by a reduction in spend of a few large customers during the thirdfirst quarter of 2019,2020, compared to the thirdfirst quarter of 2018.2019. In addition, there was an estimated $1.0 million of local advertising revenue that was lost in the first quarter of 2020 due to the temporary theater closures resulting from the COVID-19 Pandemic. In most cases, this revenue is expected to be shifted to later in 2020.
Founding member beverage revenue. The $0.1$1.2 million, or 1.4%17.9%, decrease in national advertising revenue from the founding members’ beverage concessionaire agreements was primarily due to a 0.3%19.4% decrease in founding member attendance, partially offset by a 0.7%net 1.7% increase in beverage revenue CPMs in the thirdfirst quarter of 2019,2020, compared to the

thirdthe first quarter of 2018.2019. The 20192020 beverage revenue CPM is based on a fixed annual increase of 2.0% for Cinemark and Regal following the 2019 ESA Amendments and the change in CPM during segment one of our pre-show from 20172018 to 2018,2019 for AMC, which increased 0.7%decreased 0.3%. 
Operating expenses. Total operating expenses increaseddecreased $2.76.2 million, or 4.0%9.4%, from $67.8$66.0 million for the thirdfirst quarter of 20182019 to $70.5$59.8 million for the thirdfirst quarter of 2019.2020. The following table shows the changes in operating expense for the thirdfirst quarter of 20192020 and the thirdfirst quarter of 20182019 (in millions):
  $ Change % Change  $ Change % Change
Q3 2019 Q3 2018 Q3 2019 to Q3 2018 Q3 2019 to Q3 2018Q1 2020 Q1 2019 Q1 2020 to Q1 2019 Q1 2020 to Q1 2019
Advertising operating costs$9.6
 $10.3
 $(0.7) (6.8)%$6.2
 $7.3
 $(1.1) (15.1)%
Network costs3.2
 3.2
 —
 — %2.9
 3.5
 (0.6) (17.1)%
Theater access fees—founding members20.1
 19.7
 0.4
 2.0 %
Theater access fees and revenue share—founding members17.7
 19.1
 (1.4) (7.3)%
Selling and marketing costs17.0
 15.3
 1.7
 11.1 %13.9
 15.2
 (1.3) (8.6)%
Administrative and other costs10.4
 9.3
 1.1
 11.8 %9.8
 10.7
 (0.9) (8.4)%
Depreciation expense3.4
 3.1
 0.3
 9.7 %3.2
 3.3
 (0.1) (3.0)%
Amortization expense—
 6.9
 (6.9) (100.0)%
Amortization of intangibles recorded for
network theater screen leases
6.8
 —
 6.8
 100.0 %6.1
 6.9
 (0.8) (11.6)%
Total operating expenses$70.5
 $67.8
 $2.7
 4.0 %$59.8
 $66.0
 $(6.2) (9.4)%
Advertising operating costs. Advertising operating costs decreased $0.7$1.1 million, or 6.8%15.1%, from $10.3$7.3 million for the thirdfirst quarter of 20182019 to $9.6$6.2 million for the thirdfirst quarter of 2019.2020. The decrease was primarily related to a $0.9$1.3 million decrease in affiliate advertising payments driven bydue to a 3.6%17.3% decrease in network affiliate attendance for the first quarter of 2020 as compared to the first quarter of 2019 due primarily to the COVID-19 Pandemic. The decrease was also due to a 2.0%, or 15688 screens, decrease in the number of average affiliate screens as of the thirdfirst quarter of 2019,2020, compared to the thirdfirst quarter of 2018 and a decrease in minimum guarantee payments to affiliates. This was partially offset by a $0.2 million increase in production costs associated with content produced for national advertisers.2019.
Network costs. Network costs remained consistent at $3.2decreased $0.6 million, or 17.1%, from $3.5 million for the thirdfirst quarter of 2018 and2019 to $2.9 million for the thirdfirst quarter of 2019.2020. The decrease was primarily related to a $0.5 million decrease in personnel related expenses primarily due to a decrease in performance-based compensation expense accrued following an update to the Company's projected performance against internal bonus and performance based restricted stock targets during the first quarter of 2020 primarily caused by the adverse impact of the COVID-19 Pandemic.
Theater access fees—fees and revenue share—founding members. Theater access fees increased $0.4and revenue share decreased $1.4 million, or 2.0%7.3%, from $19.7$19.1 million in the thirdfirst quarter of 20182019 to $20.1$17.7 million in the thirdfirst quarter of 2019. The increase was due to a $0.4 million increase in the expense associated with the founding member digital screens that are connected to the DCN (nearly 100% of our founding member screens as of September 26, 2019), due to the annual 5% increase specified in the ESAs. The expense associated with founding member attendance remained approximately flat due to a 0.3% decrease in attendance at founding members’ theaters during the third quarter of 2019, compared to the third quarter of 2018.
Selling and marketing costs. Selling and marketing costs increased $1.7 million, or 11.1%, from $15.3 million for the third quarter of 2018 to $17.0 million for the third quarter of 2019. This increase was primarily related to $2.0 million of non-cash impairment expense realized in the third quarter of 2019 related to investments obtained in prior years in exchange for advertising services and a $0.6 million increase in digital advertising expense driven by the increase in digital advertising sales in the third quarter of 2019, compared to the third quarter of 2018. These increases were partially offset by a $0.5 million decrease in expenses related to sales meetings, including related travel expenses, due to the timing of meetings.
Administrative and other costs. Administrative and other costs increased $1.1 million, or 11.8%, from $9.3 million in the third quarter of 2018 to $10.4 million in the third quarter of 2019. Administrative and other costs increased primarily due to a $1.4 million increase in personnel related expenses driven by an increase in bonus expense due to performance-based compensation expense accrued.
Depreciation expense. Depreciation expense increased $0.3 million, or 9.7%, from $3.1 million for the third quarter of 2018 to $3.4 million for the third quarter of 2019, primarily due to new fixed assets being placed into service during the fourth quarter of 2018.
Amortization expense and Amortization of intangibles recorded for network theater screen leases. Amortization of our ESA and affiliate intangibles was at $6.9 million for the third quarter of 2018, consistent with the $6.8 million of amortization of intangibles recorded for network theater screen leases for the third quarter of 2019. Following the adoption of ASC 842, as discussed within Note 1 to the unaudited Condensed Consolidated Financial Statements

included elsewhere in this document, amortization of the ESA and affiliate intangible balances is considered a form of lease expense and has been reclassified from amortization expense to amortization of intangibles recorded for network theater screen leases as of the adoption date, December 28, 2018. The Company adopted ASC 842 prospectively and thus, prior period balances remain within amortization expense.
Non-operating expenses. Total non-operating expenses decreased $4.0 million, or 23.7%, from $16.9 million for the third quarter of 2018 to $12.9 million for the third quarter of 2019. The following table shows the changes in non-operating expense for the third quarter of 2019 and the third quarter of 2018 (in millions): 
   $ Change % Change
 Q3 2019 Q3 2018 Q3 2019 to Q3 2018 Q3 2019 to Q3 2018
Interest on borrowings$13.8
 $14.4
 $(0.6) (4.2)%
Interest income(0.4) (0.3) (0.1) 33.3 %
Gain on extinguishment of debt—
 (0.3) 0.3
 (100.0)%
(Gain) loss on the re-measurement of the payable
   to founding members under the tax receivable
   agreement
(0.5) 3.2
 (3.7) (115.6)%
Other non-operating income (expense)—
 (0.1) 0.1
 (100.0)%
Total non-operating expenses$12.9
 $16.9
 $(4.0) (23.7)%
The decrease in non-operating expense was primarily due to a $3.2 million loss on the re-measurement of the payable to founding members under the tax receivable agreement for the third quarter of 2018 as compared to a $0.5 million gain on the re-measurement of the payable for the third quarter of 2019 primarily due to a change in the state tax rates in 2018. The decrease was also due to a $0.6 million decrease in interest on borrowings due to a decrease in the amount of debt outstanding for the third quarter of 2019, compared to the third quarter of 2018. These decreases were partially offset by the absence of a $0.3 million gain on the extinguishment of debt related to the repurchase of some of our Notes due 2026 during the third quarter of 2018.
Income Tax Expense (Benefit). Income tax expense (benefit) increased $4.6 million from $0.3 million of income tax benefit in the third quarter of 2018 to $4.3 million of income tax expense in the third quarter of 2019. The increase was due primarily to an increase in the deferred tax rate in the third quarter of 2018 related to revised state tax apportionment rates following the completion of the 2017 tax return.
Net Income. Net income decreased $2.0 million from $11.2 million for the third quarter of 2018 to $9.2 million for the third quarter of 2019. The decrease in net income was due to a $4.6 million increase in income tax expense and a $2.3 million decrease in operating income. These decreases were partially offset by a decrease of $4.0 million in non-operating expenses and a $0.9 million decrease in net income attributable to noncontrolling interests.
Nine months ended September 26, 2019 and September 27, 2018
Revenue. Total revenue decreased 2.1%, from $304.0 million for the nine months ended September 27, 2018 to $297.6 million for the nine months ended September 26, 2019.  The following is a summary of revenue by category (in millions):
 Nine Months Ended $ Change % Change
 September 26, 2019 September 27, 2018 YTD 2019 to YTD 2018 YTD 2019 to YTD 2018
National advertising revenue$213.9
 $214.4
 $(0.5) (0.2)%
Local advertising revenue47.3
 49.0
 (1.7) (3.5)%
Regional advertising revenue14.2
 16.6
 (2.4) (14.5)%
Founding member advertising revenue from
   beverage concessionaire agreements		22.2
 24.0
 (1.8) (7.5)%
Total revenue$297.6
 $304.0
 $(6.4) (2.1)%
The following table shows data on theater attendance and revenue per attendee for the nine months ended September 26, 2019 and September 27, 2018:

 Nine Months Ended % Change
 September 26, 2019 September 27, 2018 YTD 2019 to YTD 2018
National advertising revenue per attendee$0.430
 $0.400
 7.5 %
Local advertising revenue per attendee$0.095
 $0.091
 4.4 %
Regional advertising revenue per attendee$0.029
 $0.031
 (6.5)%
Total advertising revenue (excluding founding
   member beverage revenue) per attendee		$0.554
 $0.523
 5.9 %
Total advertising revenue per attendee$0.598
 $0.567
 5.5 %
Total theater attendance (in millions) (1)
497.4
 535.8
 (7.2)%

(1)Represents the total attendance within our advertising network, excluding screens and attendance associated with certain AMC Carmike, AMC Rave and Cinemark Rave theaters that are currently part of another cinema advertising network for all periods presented.
National advertising revenue. The $0.5 million, or 0.2%, decrease in national advertising revenue (excluding beverage revenue from the founding members) was due primarily to a 4.8% decrease in national advertising CPMs (excluding beverage), partially offset by a $9.4 million increase in other revenue not included in the inventory measured by impressions sold and CPMs. The decrease in national advertising CPMs (excluding beverage) was driven by a decrease in scatter market demand in the first nine months of 2019, compared to the first nine months of 2018. The scatter market represents inventory not included within an upfront or content partner commitment sold closer to the advertisement air date for typically higher CPMs. The increase in other revenue was primarily driven by higher sales of advertiser branded content segments within our Noovie pre-show, lobby promotions, and online and mobile advertisements. Impressions sold remained relatively flat with a 0.8% decrease related to a 7.2% decrease in network attendance, partially offset by an increase in national advertising utilization from 109.1% in the first nine months of 2018 to 116.7% in the first nine months of 2019 due in part to the placement of more of the make good balance that existed at the end of 2018, compared to the same period in 2018. Inventory utilization is calculated as utilized impressions divided by total advertising impressions, which is based on eleven 30-second salable national advertising units in our Noovie pre-show, which can be expanded, should market demand dictate.
Local advertising revenue. The $1.7 million, or 3.5%, decrease in local advertising revenue was primarily due to a 10.4% decrease in the volume of contracts. This decrease was partially offset by an increase in local digital sales revenue driven by an increase in the number of integrated on-screen and digital sales and a 4.1% increase in the average on-screen contract value driven by contracts under $100,000 in the first nine months of 2019, compared to the first nine months of 2018.
Regional advertising revenue. The $2.4 million, or 14.5%, decrease in regional advertising revenue was primarily due to the shift of a handful of clients from regional advertising to national advertising during the first nine months of 2019, compared to the first nine months of 2018, partially offset by an increase in the volume of contracts under $100,000 in the first nine months of 2019, compared to the first nine months of 2018.
Founding member beverage revenue. The $1.8 million, or 7.5%, decrease in national advertising revenue from the founding members’ beverage concessionaire agreements was primarily due to a 6.7% decrease in founding member attendance, partially offset by a 0.7% increase in beverage revenue CPMs, in the first nine months of 2019, compared to the first nine months of 2018. The 2019 beverage revenue CPM is based on the change in CPM during segment one of our pre-show from 2017 to 2018, which increased 0.7%. 
Operating expenses. Total operating expenses decreased$1.5 million, or 0.7%, from $210.5 million for the nine months ended September 27, 2018 to $209.0 million for the nine months ended September 26, 2019.  The following table shows the changes in operating expense for the nine months ended September 26, 2019 and September 27, 2018 (in millions):

 Nine Months Ended $ Change % Change
 September 26, 2019 September 27, 2018 YTD 2019 to YTD 2018 YTD 2019 to YTD 2018
Advertising operating costs$26.8
 $26.5
 $0.3
 1.1 %
Network costs10.1
 10.0
 0.1
 1.0 %
Theater access fees—founding members60.8
 61.8
 (1.0) (1.6)%
Selling and marketing costs48.4
 48.0
 0.4
 0.8 %
Administrative and other costs32.2
 34.7
 (2.5) (7.2)%
Depreciation expense10.0
 9.0
 1.0
 11.1 %
Amortization expense—
 20.5
 (20.5) (100.0)%
Amortization of intangibles recorded for
network theater screen leases		20.7
 —
 20.7
 100.0 %
Total operating expenses$209.0
 $210.5
 $(1.5) (0.7)%
Advertising operating costs. Advertising operating costs increased $0.3 million, or 1.1%, from $26.5 million for the nine months ended September 27, 2018 to $26.8 million for the nine months ended September 26, 2019. The increase was primarily related to a $0.3 million increase in production costs associated with content produced for national advertisers.
Network costs. Network costs remained relatively consistent and increased $0.1 million, or 1.0%, from $10.0 million for the nine months ended September 27, 2018 to $10.1 million for the nine months ended September 26, 2019.
Theater access fees—founding members. Theater access fees decreased $1.0 million, or 1.6%, from $61.8 million in the nine months ended September 27, 2018 to $60.8 million for the nine months ended September 26, 2019.2020. The decrease was due to a $2.4$1.1 million net decrease in the expense associated with founding member attendance due to a 6.7% decrease in attendance at founding members’ theaters. The decrease was partially offset by a $1.4 million increase in the expense associated with the founding member digital screens that are connected to the DCN (nearly 100% of our screens as of SeptemberDecember 26, 2019), including higher quality digital cinema projectors and related equipment, due to the annual 5% rate increase specifiedtemporary closure of the founding members theaters as of March 26, 2020 and a $2.0 million decrease in the ESAs.expense associated with the founding members’ attendance due to a 19.4% decrease in attendance at founding members’ theaters. These decreases were partially offset by $1.6 million of payments in the first quarter of 2020 to Cinemark and Regal as compensation for post-showtime advertising in accordance with the 2019 ESA Amendments.
Selling and marketing costs. Selling and marketing costs increased $0.4decreased $1.3 million, or 0.8%8.6%, from $48.0$15.2 million for the nine months ended September 27, 2018first quarter of 2019 to $48.4$13.9 million for the nine months ended September 26, 2019. The increasefirst quarter of 2020. This decrease was due to 1) a $2.0 million non-cash impairment charge realized in the first nine months of 2019, compared to $0.4 million realized in the first nine months of 2018primarily related to investments obtained in prior years in exchange for advertising services, 2) a $0.8 million increase in digital advertising expense driven partly by the increase in digital advertising sales and 3) a $0.6 million increase in company advertising expense associated with online and social media platforms to promote our Noovie products in the first nine months of 2019, compared to the first nine months of 2018. These increases were partially offset by a $2.6$1.5 million decrease in personnel related expenses driven by lower salaries and commissions due to a reduction in sales force in late 2018 and lower non-cash share-based compensation expense dueprimarily related to a decrease in commissions and bonus expense accrued following an update to the volumeCompany's projected performance against internal bonus and performance based restricted stock targets during the first quarter of awards granted in 2019,2020, compared to 2018.the first quarter of 2019 and a $0.3 million decrease in barter expense due to timing. These decreases were partially offset by a $0.7 million increase in bad debt expense due to an expected increase in accounts receivable write offs due to the adverse impact of the COVID-19 Pandemic on certain of the Company's customers.
Administrative and other costs. Administrative and other costs decreased $2.5$0.9 million, or 7.2%8.4%, from $34.7$10.7 million forin the nine months ended September 27, 2018first quarter of 2019 to $32.2$9.8 million forin the nine months ended September 26, 2019. This decrease wasfirst quarter of 2020. Administrative and other costs decreased primarily relateddue to a $1.6$1.1 million decrease in personnel relatedperformance-based compensation expense accrued following an update to the projected performance against internal bonus and performance based restricted stock targets during the first quarter of 2020, compared to the first quarter of 2019, $0.6 million decrease in legal and professional expenses, primarily due to 1) a $1.5$0.4 million increase in capitalized personnel costs driven by the nature of the work being performed by our information technology

department in 2019,during the first quarter of 2020 as compared to 2018the first quarter of 2019 and 2) a $1.8$0.3 million decrease in compensation expense due to the absence of a CEO during a portion of 2019.consulting services. These decreases were partially offset by a $1.6 million increase in personnel related costs for our digital service offerings. Administrative and other costs also decreasedsalary expense primarily due to a $2.1 million decreaseseverance expense related to the previously announced retirement of our CFO in legal and professional services partially due tothe first quarter of 2020, the absence of professional fees incurred related to the negotiation of the settlement agreement with a large shareholder during the second quarter of 2018. These decreases were partially offset by a $0.7 million increase in consulting services and a $0.4 million increase in CEO transition fees related to costs incurred in the first nine monthsquarter of 2019, and an increase in head count of our digital team in the first quarter of 2020 as compared to 2019.
Depreciation expense. Depreciation expense increased $1.0decreased $0.1 million, or 11.1%3.0%, from $9.0$3.3 million for the nine months ended September 27, 2018first quarter of 2019 to $10.0$3.2 million for the nine months ended September 26, 2019, primarily due to new fixed assets placed into service during the fourthfirst quarter of 2018.2020.

Amortization expense and Amortization of intangibles recorded for network theater screen leases. Amortization of the ESA and affiliate intangibles was $20.7 million for the nine months ended September 26, 2019 up from the $20.5 million of amortization expense for the nine months ended September 27, 2018. Following the adoption of ASC 842, as discussed within Note 1 to the unaudited Condensed Consolidated Financial Statements included elsewhere in this document, amortization of the ESA and affiliate intangible balances is considered a form of lease expense and has been reclassified from amortization expense to amortization of intangibles recorded for network theater screen leases asdecreased $0.8 million, or 11.6%, from $6.9 million for the first quarter of 2019, to $6.1 million for the first quarter of 2020, primarily due to the four year extension of the adoption date, December 28, 2018. The Company adopted ASC 842 prospectivelycontractual life of the intangible assets for Cinemark and thus, prior period balances remain within amortization expense. The $0.2 million increase was due to an increase inRegal following the underlying intangible asset balances following our annual common unit adjustment.2019 ESA Amendments during the third quarter of 2019.
Non-operating expenses. Total non-operating expenses increased $3.9decreased $0.6 million, or 10.4%4.3%, from $37.5$14.1 million for the nine months ended September 27, 2018first quarter of 2019 to $41.4$13.5 million for the nine months ended September 26, 2019.first quarter of 2020. The following table shows the changes in non-operating expense for the nine months ended September 26,first quarter of 2020 and the first quarter of 2019 and September 27, 2018 (in millions): 
   $ Change % Change
 Q1 2020 Q1 2019 Q1 2020 to Q1 2019 Q1 2020 to Q1 2019
Interest on borrowings$13.6
 $14.4
 $(0.8) (5.6)%
Interest income(0.2) (0.5) 0.3
 (60.0)%
Gain on extinguishment of debt—
 (0.3) 0.3
 (100.0)%
Loss on the re-measurement of the payable
   to founding members under the tax receivable
   agreement
0.2
 0.7
 (0.5) (71.4)%
Other non-operating income(0.1) (0.2) 0.1
 (50.0)%
Total non-operating expenses$13.5
 $14.1
 $(0.6) (4.3)%
 Nine Months Ended $ Change % Change
 September 26, 2019 September 27, 2018 YTD 2019 to YTD 2018 YTD 2019 to YTD 2018
Interest on borrowings$42.4
 $42.3
 $0.1
 0.2 %
Interest income(1.4) (1.0) (0.4) 40.0 %
(Gain) loss on early retirement of debt, net(0.3) 0.9
 (1.2) (133.3)%
Loss (gain) on re-measurement of the
   payable to founding members under the
   tax receivable agreement		1.0
 (4.6) 5.6
 (121.7)%
Other non-operating income(0.3) (0.1) (0.2) NM
Total non-operating expenses$41.4
 $37.5
 $3.9
 10.4 %
The increasedecrease in non-operating expense was primarily due to a $4.6decrease of $0.8 million gainin interest on borrowings due to a 0.5% decrease in the weighted average interest rate for the first quarter of 2020, as compared to the first quarter of 2019 and a $0.5 million decrease in the loss on the re-measurement of the payable to founding members under the TRA due to a smaller increase in the state blended tax receivable agreement forrate in the nine months ended September 27, 2018first quarter of 2020 as compared to a $1.0 million loss on the re-measurement of the payable for the nine months ended September 26, 2019 due to a change in the deferred tax rate related to a change in state tax law regarding sales sourcing during the first nine monthsquarter of 2018. This increase was2019. These decreases were partially offset by a $0.3 million gaindecrease in interest income on early retirement of our debt duringthe Company's marketable securities in the first nine monthsquarter of 20192020 as compared to the first quarter of 2019, and the absence of a $0.9$0.3 million loss ongain from the extinguishment of debt related to the refinancing of the senior secured credit facilitythat occurred in the secondfirst quarter of 2018.
Income Tax Expense. Income tax expense decreased $10.7 million from $16.7 million for the nine months ended September 27, 2018 to $6.0 million for the nine months ended September 26, 2019. The decrease was primarily due to a decrease in deferred tax expense for the first nine months of 2019, compared to the first nine monthsquarter of 2018 related2020.
Income Tax Benefit. Income tax benefit decreased $0.2 million from $0.6 million for the first quarter of 2019 to $0.4 million for the Company's re-measurementfirst quarter of its deferred2020. The decrease in income tax assets as a result of a 2018 state tax law change. The remaining decreasebenefit was primarily due to lowersmaller tax benefit recognized in the first quarter of 2020, compared to the first quarter of 2019 related to state effective tax rate changes, partially offset by an increase in income tax benefit driven by the increase in the loss before income taxes for the first nine monthsquarter of 2019,2020, compared to the first nine monthsquarter of 2018.2019.
Net IncomeLoss. Net incomeloss increased $3.5$2.6 million from $13.5$1.1 million for the nine months ended September 27, 2018first quarter of 2019 to $17.0$3.7 million for the nine months ended September 26, 2019.first quarter of 2020. The increase in net incomeloss was due to a $10.7$6.0 million decrease in operating income and a $0.2 million decrease in income tax expense andbenefit, partially offset by a $1.6$3.0 million decrease in net incomeloss attributable to noncontrolling interests partially offset by a $4.9 million decrease in operating income related to lower revenue and a $3.9$0.6 million increasedecrease in non-operating expenses.
Known Trends and Uncertainties
COVID-19—As discussed within the 'Recent Developments' section, due to the COVID-19 Pandemic, the Company is unable to advertise in the theaters, and thus generate the majority of its revenue, for the duration of time that the theaters are closed. The Company's theater access fees, network affiliate payments and Platinum Spot revenue share payments are driven by attendance, active screens and revenue and will not be incurred for the duration the theaters are closed.
Due to the rapidly changing business environment, unprecedented market volatility, and other circumstances resulting from the COVID-19 Pandemic, we are currently unable to fully determine the extent of COVID-19’s impact on our business in future periods.  However, we are monitoring the rapidly evolving situation and its potential impacts on our financial position, results of operations, liquidity and cash flows.

CARES Act—On March 27, 2020, the U.S. Government enacted various relief and stimulus measures in response to the unprecedented adverse economic impacts of the COVID-19 Pandemic commonly referred to as the CARES Act. The impacts of this legislation have not been incorporated within our financial statements as of March 26, 2020 as the CARES Act enactment occurred in our second quarter of 2020. The CARES Act makes changes to the U.S. tax code that will affect our fiscal year ending December 31, 2020, including, but not limited to, (1) reducing the limitation on deductible interest expense, (2) changing uses and limitations of net operating losses generated in tax years 2018, 2019, and 2020, (3) deferring the payment of the 6.2% FICA portion of Company's payroll taxes beginning on the enactment date through December 31, 2020 until the end of 2021 for one-half of the tax and the remaining half to the end of 2022 and (4) creating the Employee Retention Payroll Tax Credit for the Company's portion of the 6.2% FICA payroll tax for certain qualifying employees from March 13, 2020 through December 31, 2020. The Company is also evaluating the other provisions of the CARES Act to determine the impact to the Company.
Beverage Revenue—Under the ESAs, up to 90 seconds of the Noovie pre-show program can be sold to the founding members to satisfy their on-screen advertising commitments under their beverage concessionaire agreements. For the first three and nine months of 20192020 and 2018,2019, two of the founding members purchased 60 seconds of on-screen advertising time and one founding member purchased 30 seconds to satisfy their obligations under their beverage concessionaire agreements.  The founding members’ current long-term contracts with their beverage suppliers require the 30 or 60 seconds of beverage advertising, although such commitments could change in the future. Should the amount of time required as part of these beverage concessionaire agreements decline, this premium time will be available for sale to other clients. Historically, theThe time sold to the founding member beverage supplier has beenfor AMC is priced equal to the advertising CPM for the previous year charged by NCM LLC to unaffiliated third parties during segment one (closest to showtime) of the Noovie pre-show, limited to the highest advertising CPM being then-charged by NCM LLC, pursuant to the ESAs. Due to a 0.7% increasewhich in segment one CPMs in

2018,2019 decreased 0.3%. Thus, the CPM on our beverage concessionaire revenue increased during the first three and nine months of 2019related to AMC in 2020 will decrease by 0.7% and the remainder of 2019 will increase by an equivalent percentage.
0.3% compared to 2019. Beginning in 2020 and in accordance with the 2019 ESA Amendments, the price for the time sold to Cinemark and Regal's beverage suppliers instead increased at a fixed rate of 2.0%. The Company will instead increase 2% each year. Thenot recognize any beverage revenue for the period of time soldthat theaters are closed due to AMC’sthe COVID-19 Pandemic. Further, attendance may be lower than historical levels following the re-opening of theaters which could reduce the Company’s beverage supplier will continue to be priced based upon the annual increase in CPMs as outlined above to be calculated at the end of 2019. revenue.
Theater Access Fees—In consideration for NCM LLC’s access to the founding members’ theater attendees for on-screen advertising and use of lobbies and other space within the founding members’ theaters for the LEN and lobby promotions, the founding members receive a monthly theater access fee under the ESAs. The theater access fee is composed of a fixed payment per patron and a fixed payment per digital screen (connected to the DCN). The payment per theater patron increases by 8% every five years, with the next increase occurring in fiscal year 2022. Pursuant to the ESAs, the payment per digital screen increases annually by 5%. Pursuant to the 2019 ESA Amendments, Cinemark and Regal will each receive an additional monthly theater access fee beginning November 1, 2019 in consideration for NCM LLC's access to certain on-screen advertising inventory after the advertised showtime of a feature film. These fees are also based upon a fixed payment per patron beginning at $0.025 per patron on November 1, 2019, (ii) $0.0375 per patron beginning on November 1, 2020, (iii) $0.05 per patron beginning on November 1, 2021, (iv) $0.052 per patron beginning on November 1, 2022 and (v) increasing 8% every five years beginning November 1, 2027. The Company does not owe the founding members any theater access fees when the theaters are not displaying the Company's pre-show or when the Company does not have access to the theaters. As such, the Company will not owe these fees during the duration a founding member's theaters are closed in connection with the COVID-19 Pandemic. The digital screen fee is calculated based upon average screens in use during each month. No digital screen fees will be incurred for months where no screens are in use and fees will be reduced for months where screens are in use for only part of the month.
Platinum Spot—In consideration for the utilization of the theaters post-showtime for Platinum Spots, Cinemark and Regal will be entitled to receive 25% of all revenue generated for the actual display of Platinum Spots in their applicable theaters, subject to a specified minimum. If NCM LLC runs advertising in more than one concurrent advertisers’ Platinum Spot for any portion of the network over a period of time, then NCM LLC will be required to satisfy a minimum average CPM for that period of time.
Financial Condition and Liquidity
Liquidity and Capital Resources
Our cash balances can fluctuate due to the seasonality of our business and related timing of collections of accounts receivable balances and operating expenditure payments, as well as available cash payments (as defined in the NCM LLC Operating Agreement) to NCM LLC’s founding members, interest or principal payments on our term loan and the Notes due 20222026 and Notes due 2026,2028, income tax payments, TRA payments to NCM LLC’s founding members and amount of quarterly dividends to NCM, Inc.’s common stockholders.

As a result of the COVID-19 Pandemic discussed within the 'Recent Developments' section above, we cannot generate revenue, other than revenue associated with our digital service offerings. With the exception of collecting accounts receivable balances outstanding as of March 26, 2020, the Company will have limited cash receipts until after the theaters reopen. Further, once theaters re-open, there will be a lag between when revenue is generated at those theaters and when the Company ultimately collects the associated accounts receivable balance. The Company will also have reduced cash payments during the period the theaters are closed as expenses related to theater attendance will not be incurred (i.e. theater access fees, Platinum Spot revenue share and network affiliate revenue share payments). The Company also implemented a number of cost-saving measures in order to preserve cash as further outlined within the 'Recent Developments' section above. The Company is also strategically working with vendors and landlords to delay payments where possible. In March 2020, we drew down an additional $110.0 million on our revolving credit facility increasing our cash and marketable securities balance to $215.3 million as of March 26, 2020 ($132.2 million at NCM LLC). The $132.2 million of cash at NCM LLC will be used to fund operations during the period of expected reduced cash flows. Cash at NCM, Inc. cannot be used to fund operations at NCM LLC and is held for future payment of dividends to NCM, Inc. shareholders, income tax payments, income tax receivable payments to NCM LLC’s founding members and other obligations. Further, as of March 26, 2020, we had approximately $113.7 million of trade accounts receivable outstanding from customers, of which we have collected approximately $66.7 million as of May 4, 2020.
In accordance with the Credit Agreement Amendment entered into in order to obtain a waiver of the financial covenants for the period beginning in the second quarter of 2020 through the second quarter of 2021, NCM LLC must maintain a total balance of $55.0 million of a combination of unrestricted cash on hand and availability under NCM LLC's revolving credit facility. Management believes that cash on hand following the additional draw down on the revolving credit facility, collection of the $113.7 million accounts receivable balance at March 26, 2020, as well as future funds generated from NCM LLC’s operations once theaters re-open should be sufficient to fund working capital requirements, NCM LLC’s debt service requirements and capital expenditures through the next twelve months.
A summary of our financial liquidity is as follows (in millions):
As of $ Change $ ChangeAs of $ Change $ Change
September 26, 2019 December 27, 2018 September 27, 2018 Q3 2019 to YE 2018 Q3 2019 to Q3 2018March 26, 2020 December 26, 2019 March 28, 2019 Q1 2020 to YE 2019 Q1 2020 to Q1 2019
Cash, cash equivalents and marketable securities (1)
$62.9
 $75.6
 $66.7
 $(12.7) $(3.8)$215.3
 $80.9
 $82.4
 $134.4
 $132.9
NCM LLC revolver availability (2)
164.2
 143.2
 156.2
 21.0
 8.0
4.4
 132.4
 133.2
 (128.0) (128.8)
Total liquidity$227.1
 $218.8
 $222.9
 $8.3
 $4.2
$219.7
 $213.3
 $215.6
 $6.4
 $4.1
_________________________
(1)Included in cash, cash equivalents and marketable securities as of SeptemberMarch 26, 2020, December 26, 2019 December 27, 2018 and September 27, 2018,March 28, 2019, was $2.0$132.2 million, $7.2$11.4 million and $4.4$4.7 million, respectively, of cash and marketable securities held by NCM LLC that is not available to satisfy dividends declared by NCM, Inc.’s dividend,, income tax, tax receivable payments to NCM LLC’s founding members and other obligations.
(2)The revolving credit facility portion of NCM LLC’s total borrowings is available, subject to certain conditions, for general corporate purposes of NCM LLC in the ordinary course of business and for other transactions permitted under the senior secured credit facility, and a portion is available for letters of credit. NCM LLC’s total capacity under the revolving credit facility was $175.0 million as of SeptemberMarch 26, 2020, December 26, 2019 December 27, 2018 and September 27, 2018.March 28, 2019. As of SeptemberMarch 26, 2020, December 26, 2019 December 27, 2018 and September 27, 2018,March 28, 2019, the amount available under the NCM LLC revolving credit facility in the table above, was net of the amount outstanding under the revolving credit facility of $6.0$167.0 million, $27.0$39.0 million and $14.0$37.0 million, respectively, and net letters of credit of $3.6 million, $3.6 million and $4.8 million, in each respective period.respectively.
As of SeptemberMarch 26, 2019,2020, the weighted average remaining maturity of our debt was 4.66.2 years. As of SeptemberMarch 26, 2019,2020, approximately 70%59% of our total borrowings bear interest at fixed rates.  The remaining 30%41% of our borrowings bear interest at variable rates and as such, our net income and earnings per share could fluctuate with market interest rate

fluctuations that could increase or decrease the interest paid on our borrowings. See “Recent Developments—Refinancing of Notes due 2022” for discussion surrounding the refinancing of the Notes due 2022 subsequent to the end of the third quarter of 2019.

We have generated and used cash as follows (in millions):
Nine Months EndedThree Months Ended
September 26, 2019 September 27, 2018March 26, 2020 March 28, 2019
Operating cash flow$113.6
 $118.8
$58.1
 $46.0
Investing cash flow10.0
 (20.0)0.8
 15.0
Financing cash flow(118.7) (101.7)78.4
 (38.4)
Operating Activities. The $5.2$12.1 million decreaseincrease in cash provided by operating activities for the first nine monthsquarter of 20192020, compared to the first nine monthsquarter of 20182019 was primarily due primarily to a $16.2 million larger decrease in the change in accounts receivable of $18.2 million related to timing of collections inbalance during the first nine monthsquarter of 2019,2020 as compared to the first nine monthsquarter of 2018 and a $5.0 million2019 related to the decrease in deferred income tax expense net of the increaserevenue in the loss on re-measurementfirst quarter of 2020 as compared to the payable to founding members under the TRA due to a change in the deferred tax rate related to a change in state tax law regarding sales sourcing during the first nine monthsfourth quarter of 2018. These decreases were2019. This increase was partially offset by a $16.3$5.6 million increase in cash provided by operating activities due to the reclassification in the current period of founding member integration and other encumbered theater payments from cash flows from financing activities upon adoption of ASC 842, as further discussed within Note 1 to the unaudited Condensed Consolidated Financial Statements included elsewhere in this document and a $2.0 million non-cash impairment charge realized in the first nine months of 2019, compared to $0.4 million realized in the first nine months of 2018 related to investments obtained in prior years in exchange for advertising services,consolidated net loss.     
Investing Activities. The $30.0$14.2 million increasedecrease in cash provided by investing activities for the first nine monthsquarter of 2019,2020, compared to the first nine monthsquarter of 20182019 was primarily due primarily to aan $8.1 million decrease in purchasesproceeds from the sale of marketable securities, net of proceeds, of $28.4a $4.3 million increase in the cash used to purchase marketable securities, and a $1.4 million increasedecrease in the proceeds from thefounding member notes receivable from the founding members for the first nine months of 2019, compared to the first nine months of 2018.receivable.
Financing Activities. The $17.0$116.8 million increase in cash used inprovided by financing activities duringfor the first nine monthsquarter of 2019,2020, compared to the first nine months 2018quarter of 2019 was primarily due primarily to a $21.7$118.0 million decreaseincrease in proceeds from borrowings,our revolving credit facility, net of repayments, and a $17.2 million decrease in order to fund operations during the period of expected reduced cash inflows from financing activitiesflows due to the reclassificationtemporary closure of the theaters within NCM LLC's network to address the COVID-19 Pandemic. The increase was also due to a $4.6 million repurchase of the retired Notes due 2026 that occurred in the current periodfirst quarter of founding member integration and other encumbered theater payments from cash flows from financing activities upon adoption of ASC 842, as further discussed within Note 1 to the unaudited Condensed Consolidated Financial Statements included elsewhere in this document.2019. These increases in cash used were partially offset by a $13.6$4.5 million decreaseincrease in distributions to founding members period over period, and a decrease of $6.6 million in the paymentfirst quarter of debt issuance costs related2020, compared to the refinancing of the senior secured credit facility in the secondfirst quarter of 2018.2019.
Sources of Capital and Capital Requirements.
NCM, Inc.’s primary source of liquidity and capital resources is the quarterly available cash distributions from NCM LLC as well as its existing cash balances and marketable securities, which as of SeptemberMarch 26, 20192020 were $60.9$83.1 million (excluding NCM LLC). NCM LLC’s primary sources of liquidity and capital resources are its cash provided by operating activities, availability under its revolving credit facility and cash on hand.
NCM LLC drew down an additional $110.0 million of its revolving credit facility in March 2020 in order to supplement the anticipated decrease in cash provided by operating activities during the period our network theaters are closed. The $132.2 million of cash at NCM LLC will be used to fund operations during the period of expected reduced cash flows. Cash at NCM, Inc. cannot be used to fund operations of NCM LLC and is used to fund income taxes, payments associated with the TRA with the founding members and for future payment of dividends to NCM, Inc. shareholders. Further, as of March 26, 2020, we had approximately $113.7 million of trade accounts receivable from customers, of which we have collected approximately $66.7 million as of May 4, 2020. Management believes that cash on hand following the additional draw down on the revolving credit facility, collection of the $113.7 million accounts receivable balance at March 26, 2020, as well as future funds generated from NCM LLC’s operations and cash on handonce theaters re-open should be sufficient to fund working capital requirements, NCM LLC’s debt service requirements opportunistic debt repurchases, and capital expenditures through the next twelve months.
On April 30, 2020, NCM LLC entered into the Credit Agreement Amendment to allow for the automatic waiver of any non-compliance with its Consolidated Net Senior Secured Leverage Ratio and Consolidated Total Leverage Ratio financial covenants occurring from the quarter ending June 25, 2020 until and including the quarter ending July 1, 2021. The Credit Agreement Amendment requires that, until the fiscal quarter ending July 1, 2021, NCM LLC must not permit the sum of unrestricted cash on hand at NCM LLC and availability under its Revolving Credit Facility to be less than $55.0 million. Further, NCM LLC can make available cash distributions to its members (AMC, Cinemark, Regal and NCM, Inc.) during the Covenant Holiday Period only if trailing 12-month Consolidated EBITDA (as defined in the Credit Agreement) equals or exceeds $277.0 million and outstanding loans under the Revolving Credit Facility are equal to or less than $39.0 million. NCM LLC can make available cash distributions to its members outside of the Covenant Holiday Period so long as NCM LLC’s Consolidated Net Senior Secured Leverage Ratio is equal to or less than 5.00 to 1.00 and no default or event of default under the Credit Agreement has occurred and is continuing.
Cash flows generated by NCM LLC’s distributions to NCM, Inc. and the founding members canwill be impacted by the seasonalitytemporary closure of advertising sales, interestour network theaters and repayments on borrowings under our credit agreements andmay even be deferred for the quarter ending June 25, 2020 through the quarter ending July 1, 2021 until at least August 2021 due to a lesser extent theater attendance.the limitations instituted by the amendment to the Company's Senior Secured Credit Facility. NCM LLC is required pursuant to the terms of the NCM LLC Operating Agreement to distribute its

available cash, as defined in the operating agreement and unless prohibited by NCM LLC's Credit Agreement, quarterly to its members (Regal, Cinemark, AMC and NCM, Inc.). The available cash distribution to the members of NCM LLC for the three months ended SeptemberMarch 26, 20192020 was approximately $43.7$8.5 million, of which approximately $21.3$4.1 million waswill be distributed to NCM, Inc. 
NCM, Inc. expects to use its cash balances and cash received from future available cash distributions and its cash balances(as allowed for under the Amended Credit Agreement) to fund income taxes, payments associated with the TRA with the founding members, and current and future dividends as declared by the Board of Directors, including a dividend declared on November 4, 2019May 5, 2020 of $0.17$0.07 per share (approximately $13.2$5.4 million) on

each share of the Company’s common stock (not including outstanding restricted stock) to stockholders of record on November 14, 2019May 18, 2020 to be paid on November 29, 2019. NCM LLC will also continue to evaluate discretionary use of cash based on future expected leverage levels, NCM LLC investment opportunities and NCM, Inc. dividend policy. Distributions from NCM LLC and NCM, Inc. cash balancesJune 1, 2020. These items should be sufficient to fund payments associated with the TRA with NCM LLC’sthe founding members, income taxes and regular dividendsits quarterly dividend for the foreseeable future at the discretion of the Board of Directors. The declaration, payment, timing and amount of any future dividends payable will be at the sole discretion of the Board of Directors who will take into account general economic and advertising market business conditions, NCM, Inc.’s financial condition, available cash, current and anticipated cash needs, and any other factors that the Board of Directors considers relevant. The Company intends to pay a regular quarterly dividend for the foreseeable future at the discretion of the Board of Directors consistent with the Company’s intention to distribute over time a substantial portion ofsubstantially all its free cash flow. flow to stockholders through its quarterly dividend. The declaration, payment, timing and amount of any future dividends payable will be at the sole discretion of the Board of Directors who will consider general economic and advertising market business conditions, the Company’s financial condition, available cash, current and anticipated cash needs and any other factors that the Board of Directors considers relevant, which includes short-term and long-term impacts to the Company related to the temporary theater closures for the COVID-19 Pandemic and restrictions under the NCM LLC Credit Agreement.
Critical Accounting Policies
For a discussion of accounting policies that we consider critical to our business operations and understanding of our results of operations, and that affect the more significant judgments and estimates used in the preparation of our unaudited Condensed Consolidated Financial Statements, see Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Operations—Critical Accounting Policies” contained in our annual report on Form 10-K filed for the fiscal year ended December 27, 201826, 2019 and incorporated by reference herein.  As of SeptemberMarch 26, 2019,2020, there were no significant changes in those critical accounting policies except for the change in leasesallowance for doubtful accounts upon the adoption of ASC 842326 in the first quarter of 20192020 and discussed further within Note 8—1—Commitments and ContingenciesThe Company, to the unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see the information provided under Note 1—The Company to the unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.
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.
Related Party Transactions
For a discussion of related party transactions, see the information provided under Note 5—Related Party Transactions to the unaudited Condensed Consolidated Financial Statements in Part I, Item 1 of this Form 10-Q.
Off-Balance Sheet Arrangements
We do not believe the Company has any off-balance sheet arrangements that are material to our current or future financial condition, results of operations, liquidity, capital resources or capital expenditures.
Contractual and Other Obligations
See Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Contractual and Other Obligations” contained in our annual report on Form 10-K for the fiscal year ended December 27, 201826, 2019 and incorporated by reference herein. There were no material changes to our contractual obligations during the ninethree months ended SeptemberMarch 26, 2019.2020.

Seasonality
Our revenue and operating results are seasonal in nature, coinciding with the timing of marketing expenditures by our advertising clients and to a lesser extent the attendance patterns within the film exhibition industry. Both advertising expenditures and theater attendance tend to be higher during the second, third, and fourth fiscal quarters. Advertising revenue is primarily correlated with advertising clients' new product releases, advertising client marketing priorities and economic cycles and to a lesser extent theater attendance levels. Seasonal demand during the summer is driven by the absence of alternative attractive advertising mediums and during the winter holiday season due to high client demand across all advertising mediums. The actual quarterly results for each quarter could differ materially depending on these factors or other risks and uncertainties. Based on our historical experience, our first quarter typically has less revenue than the other quarters of a given year due primarily to lower advertising client demand and increased inventory availability in competitive advertising mediums. Given the temporary closure of our theaters, we expect our 2020 quarterly results to vary from the historical trend. Accordingly, there can be no assurances that seasonal variations will not materially affect our results of operations in the future.
The following table reflects the quarterly percentage of total revenue for the fiscal years ended 2016, 2017, 2018 and 2018.

2019.
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
First
Quarter
 
Second
Quarter
 
Third
Quarter
 
Fourth
Quarter
FY 201617.0% 25.8% 25.4% 31.8%
FY 201716.9% 22.8% 27.3% 33.0%16.9% 22.8% 27.3% 33.0%
FY 201818.2% 25.8% 24.9% 31.1%18.2% 25.8% 24.9% 31.1%
FY 201917.3% 24.8% 24.8% 33.1%
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
The primary market risk to which we are exposed is interest rate risk.  The Notes due 2022, the Notes due 2026 and the Notes due 2028 are at fixed rates, and therefore are not subject to market risk.  As of SeptemberMarch 26, 2019,2020, the only interest rate risk that we are exposed to is related to our $175.0 million revolving credit facility and our term loan. A 100-basis point fluctuation in market interest rates underlying our term loan and revolving credit facility would have the effect of increasing or decreasing our cash interest expense by approximately $2.7$4.3 million for an annual period on the $6.0$167.0 million revolving credit balance and $267.3$266.0 million term loan outstanding as of SeptemberMarch 26, 2019.  For a discussion2020.  
In response to the COVID-19 Pandemic, the government lowered the federal reserve interest rate leading to historically low interest rates as of March 26, 2020 that has had the effect of reducing the Company's interest rate risk. The COVID-19 Pandemic has also resulted in reduced liquidity within the debt markets which may impact companies' abilities to refinance their debt. As the Company's next tranche of debt is not due until 2023, this increased market risks, see Item 7A. “Quantitative and Qualitative Disclosures About Market Risk” contained in our annual report on Form 10-K forrisk is not expected to adversely impact the fiscal year ended December 27, 2018 and incorporated by reference herein.Company.
Item 4.  Controls and Procedures
The Company maintains disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that are designed to ensure that information required to be disclosed in the Company's reports filed under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial and accounting officer), as appropriate, to allow timely decisions regarding required disclosure.
Management, with the participation of the Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the Company’s disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) of the Exchange Act as of SeptemberMarch 26, 2019,2020, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures as of SeptemberMarch 26, 20192020 were effective.
In designing and evaluating our disclosure controls and procedures, management recognizes that any control, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting that occurred during the quarter ended SeptemberMarch 26, 20192020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II—OTHER INFORMATION
Item 1.  Legal Proceedings
We are sometimes involved in legal proceedings arising in the ordinary course of business. We are not aware of any other litigation currently pending that would have a material adverse effect on our operating results or financial condition.
Item 1A.  Risk Factors
The following description ofExcluding the risk factors includes anyoutlined below, there have been no material changes to, and supersedes the description of,from risk factors associated with the Company’s businessas previously disclosed in our annual report on Form 10-K filed with the SEC on February 22, 201920, 2020 for the fiscal year ended December 27, 2018.26, 2019.
OwnershipPandemics, epidemics or disease outbreaks, such as the novel coronavirus (COVID-19 virus), have disrupted and may continue to disrupt our business and the business of our founding members and network affiliates, which has and could continue to materially affect our operations and results of operations.
Pandemics or disease outbreaks such as the novel coronavirus (COVID-19 virus) have and may continue to disrupt our business and the business of our founding member and network affiliates’ theaters. Following the World Health Organization’s declaration of the common stockCOVID-19 virus as a pandemic, the United States’ government and other securitiesstate and local governments issued precautionary restrictions on travel, public gatherings and other events. In response to these restrictions, each of our founding members announced that their theaters would be temporarily closed to address this pandemic and by the beginning of April all of our network affiliate’s theaters had also temporarily closed. Certain of our founding members have announced that they do not expect to open their theaters until late June or early July, and some of our other affiliates started to or have indicated that they will begin opening theaters as legal restrictions ease. However, we cannot predict when all of our theaters will reopen, what type of restrictions may be in place once theaters reopen, when large audiences will feel comfortable returning to movie theaters or if theaters will eventually need to close again in connection with further social distancing guidelines.
Several major motion picture releases were delayed until later in 2020 or 2021 and a few studios shortened the “release window” between the release of motion pictures in theaters and an alternative delivery method or released motion pictures directly to alternative delivery methods bypassing the theater entirely. The COVID-19 Pandemic has also impacted film production and may impact the pipeline of feature films available in the short or long term.
In response to the COVID-19 Pandemic, we implemented a number of cost-saving measures, including furloughing approximately 30% of our staff and reducing the pay of the Company involvesremaining employees by up to 50%, suspending non-essential operating expenditures, including marketing, employee travel, implementing a hiring freeze, suspending the Company’s 401k employee match program, terminating or deferring certain risks. Holdersnon-essential capital expenditures, strategically working with our landlords, vendors and other business partners to manage costs, and implementing an active cash management process.
The impact, extent and duration of the Company’s securitiesgovernment-imposed restrictions on travel, public gatherings, other events and prospective investors should consider carefullybusiness generally, as well as the followingoverall effect of the COVID-19 virus is currently unknown but has had and could continue to have a material risksadverse impact on our business, liquidity, financial conditions and/or results of operations. Even when the COVID-19 Pandemic subsides, we cannot guarantee that we will recover as rapidly as other industries as advertising expenditures may remain decreased due to an economic slowdown and consumers may be hesitant to return to theaters. We cannot predict when the effects of the COVID-19 Pandemic will subside when theaters will reopen and patrons are comfortable attending, or when our business will return to normal levels. The longer and more severe the pandemic, including repeat or cyclical outbreaks beyond the one we are currently experiencing, the more severe the adverse effects will be on our business, liquidity, financial conditions and/or results of operations. Significant impacts on our business caused by the COVID-19 Pandemic and other pandemics include and are likely to continue to include among others:
decreased attendance in theaters after they reopen, including due to (i) continued safety and health concerns and social distancing requirements or (ii) a change in consumer behavior in favor of alternative forms of entertainment;
advertisers’ perception of cinema advertising may change based on future attendance, shortened theatrical windows, and potential impacts of film production;
advertisers may be less willing to invest in advertising in the future and may prioritize other types of investment;
the bankruptcy or restructuring of our founding members or other network affiliates in which the agreement with that party may be rejected, renegotiated or deemed unenforceable;
an inability to collect accounts receivable from small business advertisers that have been temporarily or permanently closed;


reductions and delays associated with planned operating and capital expenditures;
increased risk related to employee matters, including increased turnover and litigation and claims relating to furloughs or pay reductions;
potential impairment charges;
our ability to implement business continuity plans in a fast-moving emergency, which could have an adverse effect on our internal controls (potentially giving rise to significant deficiencies or material weaknesses) and also increase our vulnerability to information technology and other systems disruptions;
our inability to generate significant cash flow from operations, which could lead to a substantial increase in this document,indebtedness and negatively impact our ability to comply with the financial covenants, if applicable, in our debt agreements;
our inability to access lending, capital markets and other sources of liquidity, if needed, on reasonable terms, or at all, or obtain amendments, extensions and waivers;
our inability to effectively meet our short- and long-term obligations; and
our inability to service our existing and future indebtedness.
The spread of COVID-19 has developed into a worldwide health crisis and may have broader macro-economic implications. The United States has experienced significantly increased rates of unemployment and these deteriorating economic conditions, including our historical financial statementsreduced levels of economic growth and possibly a recession, may extend well beyond the time the spread of infection is contained. Consumers and advertisers may also change their long-term behavior related notes included herein. The material risksto perceived risk of infection or health risk, other pandemic fears, quarantines and uncertainties described in this documentother restrictions. Even if measures are not implemented and a virus or other disease does not spread significantly, the only ones facing us. Additional risks and uncertainties that we do not presently know aboutperceived risk of infection or that we currently believe are not materialhealth risk may also adversely affect our business. If any of the risks and uncertainties described in this document actually occur, our business, liquidity, financial condition and results of operations couldoperations.
Additionally, although we are reviewing and intend to seek any available benefits under the CARES Act, we cannot predict the manner in which such benefits will be adversely


affectedallocated or administered and we cannot assure you that we will be able to access such benefits in a material way. This could causetimely manner or at all. Certain of the trading pricebenefits we seek to access under the CARES Act have not previously been administered on the present scale or at all. Government or third-party program administrators may be unable to cope with the volume of applications in the near term and any benefits we receive may not be as extensive as we currently estimate, may impose additional conditions and restrictions on our common stockoperations or may otherwise provide less relief than we contemplate. Accessing these benefits and our response to decline, perhaps significantly,the COVID-19 Pandemic have required our management team to devote extensive resources and you may lose part or all of your investment.are likely to continue to do so in the near future, which negatively affects our ability to implement our business plan and respond to opportunities.
Risks related toTo the extent the COVID-19 Pandemic adversely affects our business and industryfinancial results, it may also have the effect of heightening many of the other risks described in the “Risk Factors” section of our annual report on Form 10-K for the fiscal year ended December 26, 2019, including but not limited to those relating to NCM LLC’s high level of indebtedness, the risks associated with the loss of major content partners or advertising clients, and reductions in spending on advertising.
Significant declines in theater attendance could reduce the attractiveness of cinema advertising and could reduce our revenue.
Our business is affected by the level of attendance at the founding members’ theaters and to a lesser extent our network affiliates,affiliates’ theaters, who operate in a highly competitive industry and whose attendance is reliant on the presence of motion pictures that attract audiences. Over the last 2010 years, theater attendance has fluctuated from year to year but on average has remained relatively flat. The value of our advertising business could be adversely affected by a decline in theater attendance or even the perception by media buyers that our network is no longer relevant to their marketing plan due to the decreases in attendance and geographic coverage. Factors that could reduce attendance at our network theaters include the following:
if NCM LLC’s network theater circuits cannot compete with other out-of-home entertainment due to an increase in the use of alternative film delivery methods (and the shortening of the “release window” between the release of major motion pictures to the alternative delivery methods)methods or releasing motion pictures directly to alternative delivery methods bypassing the theater entirely), including network, syndicated cable and satellite television and DVDs, as well as video-on-demand, pay-per-view services, video streaming and downloads via the Internet;Internet, which may be accelerated by the actions of major film distributors taken in response to the COVID-19 Pandemic;
theater circuits in NCM LLC’s network continue to renovate auditoriums in certain of their theaters to install new larger, more comfortable seating, which reduces the number of seats in a theater auditorium. This renovation has been viewed favorably by patrons and many theater circuits have noted an intent to continue such renovations;
changes in theater operating policies, including the number and length of trailers for upcoming films that are played prior to the start of the feature film, which if the length of trailers increases, may result in most or all of the Nooviepre-show starting further out from the actual start of the feature film;


any reduction in consumer confidence or disposable income in general that reduces the demand for motion pictures or adversely affects the motion picture production industry;
the success of first-run motion pictures, which depends upon the production and marketing efforts of the major studios and the attractiveness and value proposition of the movies to consumers compared to other forms of entertainment;entertainment, which may be impacted by the COVID-19 Pandemic;
if political events, such as terrorist attacks, or health-related epidemics, such as flu outbreaks, and pandemics, such as the COVID-19 Pandemic, cause consumers to avoid movie theaters or other places where large crowds are in attendance and or governments to prohibit the operation of and attendance at theaters;
regulations, theater operating policies or consumer behavior that require higher levels of social distancing as a response to the COVID-19 Pandemic;
if the theaters in our network fail to maintain their theaters and provide amenities that consumers prefer;
if studios begin to reduce the number of feature films produced for theater exhibition and their investments in those films or reduce the investments made to market those films;
if future theater attendance declines significantly over an extended time period, such as a result of prolonged closures resulting from the COVID-19 Pandemic, one or more of the founding members or network affiliates may face financial difficulties and could be forced to sell or close theaters or reduce the number of screens it builds or upgrades or increase ticket prices; and
NCM LLC’s network theater circuits also may not successfully compete for licenses to exhibit quality films and are not assured a consistent supply of motion pictures sinceif they do not have long-term arrangements with major film distributors.
Any of these circumstances could reduce our revenue because our national and regional advertising revenue, and local advertising to a lesser extent, depends on the number of theater patrons who attend movies. Additionally, if attendance declines significantly, the Company will be required to provide additional advertising time (makegoods) to national advertisers to reach agreed-on audience delivery thresholds. Certain of these circumstances can also lead to volatility within our utilization. We have also experienced volatility inhistorically seen our utilization over the years, with annual national inventory utilization ranging from 113.5% to 128.3% from 2014 through 2018. Wevary more than 10% on an annual basis and we experience even more substantial volatility quarter-to-quarter.
Changes in theater patron behavior could result in declines in the viewership of our Nooviepreshow which could reduce the attractiveness of cinema advertising and our revenues.
The value of our national and regional on-screen advertising and to a lesser extent our local advertising is based on the number of theater patrons that are in their seats and thus have the opportunity to view the Noovie pre-show. Trends in patron behavior that could reduce viewership of our Noovie pre-show include the following:
theater patrons are increasingly purchasing tickets ahead of time via on-line ticketing mediums and when available reserving a seat in the theater (offered in approximately 54.2% of our network as of December 27, 2018), which could affect how early patrons arrive to the theater and reduce the number of patrons that are in a theater seat to view most or all of the Noovie pre-show; and
changes in theater patron amenities, including, online ticketing, bars and entertainment within exhibitor lobbies causing increased dwell time of patrons.


National advertising sales and rates are dependent on the methodology used to measure audience impressions. If a change is made to this methodology that reflects fewer audience impressions available during the pre-show, this could adversely affect the Company’s revenue and results of operations.
We may not realize the anticipated benefits of the 2019 ESA Amendments.
On September 17, 2019, NCM LLC entered into the 2019 ESA Amendments with affiliates of each of Cinemark and Regal. Among other things, the 2019 ESA Amendments provide that, beginning November 1, 2019, NCM LLC is entitled to display up to five minutes of the Noovie pre-show after the scheduled showtime of a feature film and a Platinum Spot 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.
We expect the 2019 ESA Amendments to result in an increase in average CPM, revenues and Adjusted OIBDA, however we may not realize any or all such benefits. Potential difficulties and uncertainties that may impair the full realization of the anticipated benefits include, among others:
the behavior of theater patrons may change in response to the display of a portion of the Noovie pre-show after the advertised showtime, resulting in a reduction to the number of patrons that are in a theater seat to view most or all of the Noovie pre-show;
exhibitors may encounter issues in displaying a portion of the Noovie pre-show after the advertised showtime because of technical issues, access issues with their content providers, or other issues that may arise in the future;
potential advertisers may not view the Platinum Spot or Post-Showtime Inventory as a premium advertising opportunity and the average CPMs for the Noovie pre-show may not increase as much as anticipated, or at all;
NCM LLC may not satisfy the minimum average CPM which is required by the 2019 ESA Amendments for it to have the right to display the Platinum Spot for more than one concurrent advertiser;
the extended length of time between the advertised showtime and the beginning of the feature film may decrease the average CPM for that portion of the Noovie pre-show appearing before the advertised showtime, which may partially or fully offset any increase in average CPM for the Platinum Spot or Post-Showtime Inventory; and
the increased theater access fees payable to Cinemark and Regal in connection with the Post-Showtime Inventory and revenue share applicable to the Platinum Spot may exceed the increase, if any, in revenue resulting from the 2019 ESA Amendments.
The anticipated benefits we expect to receive as a result of the 2019 ESA Amendments are subject to factors that we do not and cannot control. Failure to realize the anticipated benefits could result in decreases in revenue and Adjusted OIBDA and diversion of management’s time and energy, and could adversely affect our business, financial condition and operating results.
We may not be successful in increasing the number of theaters in which NCM LLC has the right to display Post-Showtime Inventory or a Platinum Spot.
As a result of the 2019 ESA Amendments, NCM LLC is entitled to display up to five minutes of the Noovie pre-show after the scheduled showtime of a feature film and a Platinum Spot 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. However, at this time NCM LLC only has the right to display Post-Showtime Inventory and a Platinum Spot in Cinemark and Regal theaters, which constituted approximately 54% of the attendance in our network during the first half of 2019. While we intend to seek to enter into agreements that provide similar access to inventory as the 2019 ESA Amendments with our other network affiliates, there can be no assurance that we will be successful in increasing the number of theaters in which NCM LLC has the right to display Post-Showtime Inventory or a Platinum Spot. AMC, which constituted approximately 29% of the attendance in our network during the first half of 2019, has recently announced that it has no plans to introduce commercial advertising close to the start of a feature film’s commencement. In addition, any agreements with other network affiliates may be on terms less favorable to us than the 2019 ESA Amendments. If we are unable to expand the number of theaters displaying a portion of the Noovie pre-show after the advertised showtime, we will only experience the benefits of post-showtime advertising, if any, in Cinemark and Regal theaters.
Our plans for developing additional revenue opportunities may not be implemented and may not be achieved.
We have invested significant resources in pursuing potential opportunities for revenue growth, which we describe in our annual report on Form 10-K under “Business-Our strategy.” The development of our online and mobile advertising network and mobile apps and our ability to collect and leverage our first party movie audience data from these products remains at an early stage, is under increasing competitive pressure and may not deliver the future benefits that we are expecting. If we are unable to execute on products relevant to the marketplace or integrate these digital marketing products with our core on-screen and theater lobby products, and if these offerings do not continue to provide relevant first party data or to grow in importance to


advertising clients and agencies, they may not provide a way to help expand our cinema advertising business as it matures and begins to compete with new or improved advertising platforms including online and mobile video services. As such, there can be no assurance that we will recoup our investments made pursuing additional revenue opportunities.
The markets for advertising are competitive and we may be unable to compete successfully.
The market for advertising is very competitive. Cinema advertising is a small component of video advertising in the U.S. and thus, we must compete with established, larger and better known national and local media platforms such as cable, broadcast and satellite television networks and other video media platforms including those distributed on the internet and mobile networks. In addition to these video advertising platforms, we compete for advertising directly with several additional media platforms, including radio, various local print media and billboards. We also compete with several other local and national cinema advertising companies. We expect all of these competitors to devote significant effort to maintaining and growing their business at our expense. We also expect existing competitors and new entrants to the advertising business, most notably the online and mobile advertising companies, to constantly revise and improve their business models to meet expectations of advertising clients. In addition, the pricing and volume of advertising may be affected by shifts in spending toward online and mobile offerings from more traditional media, or toward new ways of purchasing advertising, such as through automated purchasing, dynamic advertising insertion, third parties selling local advertising posts and advertising exchanges, some or all of which may not be as advantageous to the Company as current advertising methods. Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions, as well as budgeting and buying patterns. A decline in the economic prospects of advertisers or the economy in general could alter current or prospective advertisers’ spending priorities. If we cannot respond effectively to changes in the media marketplace in response to new entrants or advances by our existing competitors, our business may be adversely affected.
Additionally, the mix of film ratings of the available motion pictures, such as a higher proportion of G and PG rated films, could cause advertisers to reduce their spending with us as the theater patrons for these films do not represent those advertisers’ target markets.
Advertising demand also impacts the price (CPM) we are able to charge our customers. Due to increased competition from other national video networks, including online and mobile advertising platforms, television networks and other out-of-home video, combined with seasonal marketplace supply and demand characteristics, we have experienced volatility in our pricing (CPMs) over the years, with annual national CPM increases (decreases) ranging from (16.4%) to 9.6% from 2014 to 2018.
If we do not continue to upgrade our technology, our business could fail to grow and revenue and operating margins could decline.
Failure to successfully or cost-effectively implement upgrades to our in-theater advertising network and proposal and inventory control, audience targeting and other management systems could limit our ability to offer our clients innovative unique, integrated and targeted marketing products, which could limit our future revenue growth. New advertising platforms such as online and mobile networks, and traditional mediums including television networks are beginning to use new digital technology to reach a broader audience with more targeted marketing products, and failure by us to upgrade our technology could hurt our ability to compete with those companies. Under the ESAs, the founding members are required to provide technology that is consistent with that in place at the signing of the ESA. We may request that the founding members upgrade the equipment or software installed in their theaters, but we must negotiate with the founding members as to the terms of such upgrade, including cost sharing terms, if any. If we are not able to come to an agreement on a future upgrade request, we may elect to pay for the upgrades requested which could result in our incurring significant capital expenditures, which could adversely affect our results.
We also have many internally developed systems which support our operations due to the unique nature of our business model. The failure to continue to develop or the failure of the system to meet our needs may require us to make significant additional investments in our infrastructure or seek alternative technology which may impact our costs and prevent our growth. The failure or delay in implementation of the system or problems with the integration with our other systems and software could cause operational difficulties and slow or prevent the growth of our business in the future. In addition, the failure or delay in implementation of such upgrades or problems with the integration of our systems and software could slow or prevent the growth of our business.


Economic uncertainty or deterioration in economic conditions may adversely impact our business, operating results or financial condition.
The financial markets have experienced extreme disruption and volatility at times. A decline in consumer confidence in the U.S. may lead to decreased demand for our services or delay in payments by our advertising customers. As a result, our results of operations and financial condition could be adversely affected. These challenging economic conditions also may result in:
increased competition for fewer advertising and entertainment programming dollars;
pricing pressure that may adversely affect revenue and gross margin;
declining attendance and thus a decline in the impressions available for our pre-show;
reduced credit availability and/or access to capital markets;
difficulty forecasting, budgeting and planning due to limited visibility into the spending plans of current or prospective customers; or
customer financial difficulty and increased risk of uncollectible accounts.

Our Adjusted OIBDA is derived from high margin advertising revenue. The reduction in spending by or loss of a national or group of local advertisers or failure to grow our advertising revenue in line with the growth of our contractual costs could have a meaningful adverse effect on our business.
We generated all of our Adjusted OIBDA from our high margin advertising business. A substantial portion of our advertising revenue relates to contracts with terms of a month or less. Advertisers will not continue to do business with us if they believe our advertising medium is ineffective or overly expensive. In addition, large advertisers generally have set advertising budgets, most of which are focused on traditional media platforms like television and, increasingly, online and mobile networks. Reductions in the size of advertisers’ budgets due to local or national economic trends, a shift in spending to new advertising mediums like the internet and mobile platforms or other factors could result in lower spending on cinema advertising. Because of the high incremental margins on our individual advertising contracts, if we are unable to remain competitive and provide value to our advertising clients, they may reduce their advertising purchases or stop placing advertisements with us. Even the loss of a small number of clients on large contracts would negatively affect our Adjusted OIBDA. In addition, the ESAs and certain of our network affiliate agreements include automatic annual cost or fee increases, and if we are unable to grow our high margin advertising revenue at a similar rate, our Adjusted OIBDA could be negatively affected.
The loss of any major content partner or advertising customer could significantly reduce our revenue.
We derive a significant portion of our revenue from our contracts with our content partners, public service announcement (“PSAs”) and NCM LLC’s founding members’ agreements to purchase on-screen advertising for their beverage concessionaires. We are not direct parties to the agreements between the founding members’ and their beverage concessionaires but do not expect these agreements to expire in the foreseeable future. None of these companies individually accounted for over 10% of our total revenue during the year ended December 27, 2018. However, the agreements with the content partners, PSAs and beverage advertising with the founding members in aggregate accounted for approximately 26%, 30% and 30% of our total revenue during the years ended December 27, 2018, December 28, 2017 and December 29, 2016, respectively. Because we derive a significant percentage of our total revenue from a relatively small number of large companies, the loss of one or more of them as a customer could decrease our revenue and adversely affect current and future operating results.
We depend upon our senior management and our business may be adversely affected if we cannot retain or replace them.
Our success depends in part upon the retention of our experienced senior management with specialized industry, sales and technical knowledge and/or industry relationships. In November 2017, our former General Counsel resigned and a new General Counsel was appointed in February 2018. In November 2018, our Chief Executive Officer stepped down and a new Chief Executive Officer was appointed in August 2019. If we are not able to find qualified internal or external replacements for critical members of our senior management team, the loss of these key employees could have a material adverse effect on our ability to effectively pursue our business strategy and our relationships with advertisers and content partners. We do not have key-man life insurance covering any of our employees.
Changes in the ESAs with, or lack of support by, the founding members could adversely affect our revenue, growth and profitability.
The ESAs with the founding members are critical to our business. The ESA with AMC has an initial term of 30 years and the ESAs with each of Cinemark and Regal (as amended by the 2019 ESA Amendments) have an initial term of 34 years, each


such term beginning February 13, 2007. Each ESA provides NCM LLC with a five-year right of first refusal for the services that it provides to the founding members, which begins one year prior to the end of the term of each respective ESA. The founding members’ theaters represent approximately 79.2% of the screens and approximately 82.4% of the attendance in our network as of December 27, 2018 and approximately 80.0% of the screens and approximately 83.0% of the attendance in our network as of September 26, 2019. If any one of the ESAs was terminated, not renewed at its expiration or found to be unenforceable, it would have a material adverse effect on our revenue, profitability and financial condition.
The ESAs require the continuing cooperation, investment and support of the founding members, the absence of which could adversely affect us. Pursuant to the ESAs, the founding members must make investments to replace digital network equipment within their theaters and equip newly constructed theaters with digital network equipment. If the founding members do not have adequate financial resources or operational strength, and if they do not replace equipment or equip new theaters to maintain the level of operating functionality that we have today, or if such equipment becomes obsolete, we may have to make additional capital expenditures or our advertising revenue and operating margins may decline. In addition, the ESAs give the founding members the right to object to certain content in our Noovie pre-show, including content that competes with us or the applicable founding member. If the founding members do not agree with our decisions on what content is permitted under the ESAs, we may lose clients and the resulting revenue, which would harm our business. In March 2018, Regal was acquired by a U.K.-based cinema operator and we are uncertain how this new ownership of Regal may affect its financial resources or its cooperation with us under the ESA or otherwise. In July 2018 AMC closed on the sale of all of the NCM LLC membership units held by AMC at the time to Cinemark and Regal. On October 24, 2019, AMC redeemed 197,118 membership units, which were issued to AMC in accordance with the terms of the common unit adjustment agreement with the founding members, in exchange for shares of our common stock. AMC is eligible to be issued additional shares pursuant to the terms of the common unit adjustment agreement. We are uncertain how AMC’s significantly reduced ownership interest in NCM LLC may affect its cooperation with us under its ESA or otherwise going forward.
If the non-competition provisions of the ESAs are deemed unenforceable, the founding members could compete against us and our business could be adversely affected.
With certain limited exceptions, each of the ESAs prohibits the applicable founding member from engaging in any of the business activities that we provide in the founding member’s theaters under the amended ESAs, and from owning interests in other entities that compete with us. These provisions are intended to prevent the founding members from harming our business by providing cinema advertising services directly to their theaters or by entering into agreements with third-party cinema advertising providers. However, under state and federal law, a court may determine that a non-competition covenant is unenforceable, in whole or in part, for reasons including, but not limited to, the court’s determination that the covenant:
is not necessary to protect a legitimate business interest of the party seeking enforcement;
unreasonably restrains the party against whom enforcement is sought; or
is contrary to the public interest.
Enforceability of a non-competition covenant is determined by a court based on all of the facts and circumstances of the specific case at the time enforcement is sought. For this reason, it is not possible for us to predict whether, or to what extent, a court would enforce the non-competition provisions contained in the ESAs. If a court were to determine that the non-competition provisions are unenforceable, the founding members could compete directly against us or enter into an agreement with another cinema advertising provider that competes against us. Any inability to enforce the non-competition provisions, in whole or in part, could cause our revenue to decline.
If one of the founding members declared bankruptcy, the ESA with that founding member may be rejected, renegotiated or deemed unenforceable.
Each of the founding members currently has a significant amount of indebtedness. In 2000 and 2001, several major motion picture exhibition companies filed for bankruptcy including United Artists, Edwards Theatres and Regal Cinemas (which are predecessor companies topart of Regal), and General Cinemas and Loews Cineplex (which are predecessor companies topart of AMC). The industry-wide construction of larger, more expensive megaplexes featuring stadium seating in the late 1990s that rendered existing, smaller, sloped-floor theaters under long-term leases obsolete and unprofitable, were significant contributing factors to these bankruptcies. As a result of the COVID-19 Pandemic, each of the founding members closed all of their theaters in the United States and furloughed the vast majority of their employees, and various media outlets began reporting that certain of our founding members were in financial distress as a result of the COVID-19 Pandemic. During April 2020, certain of our founding members also completed significant capital raising transactions to increase available liquidity and, as of the date hereof, we are not aware that any of our founding members is insolvent or intends to file for restructuring proceedings. If a bankruptcy case were commenced by or against a founding member, it is possible that all or part of the ESA with that founding member could be rejected by a trustee in the bankruptcy case pursuant to Section 365 or Section 1123 of the United States Bankruptcy Code, or by the founding member, and thus not be enforceable. Alternatively, the founding member could seek to renegotiate the ESA in a manner less favorable to us than the existing agreement. Should the founding member seek to sell or otherwise dispose of theaters or remove theaters from our network through bankruptcy or for other business reasons, if the acquirer did not agree to continue to allow us to sell advertising in the acquired theaters the number of theaters in our advertising networks would be reduced which in turn would reduce the number of advertising impressions available to us and thus could reduce our advertising revenue.

We depend upon our senior management and our business may be adversely affected if we cannot retain or replace them.

The ESAs allowOur success depends in part upon the founding members to engage in activities that might compete with certain elementsretention of our business, which could reduceexperienced senior management with specialized industry, sales and technical knowledge and/or industry relationships. In November 2018, our revenueChief Executive Officer stepped down and growth potential.
The ESAs contain certain limited exceptions to our exclusive right to usea new Chief Executive Officer was appointed in August 2019. Our Chief Financial Officer retired on March 12, 2020 and the founding members’ theaters for our advertising business. The founding members have the right to enter intoCompany has engaged a limited number of strategic cross-marketing relationships with third-party, unaffiliated businesses for the purpose of generating increased attendance or revenue (other than revenue from the sale of advertising). These strategic marketing relationships can include the use of one minute on the lobby network (“LEN”) per 30 minute cyclenational search firm and certain types of lobby promotions and can be provided at no cost, but only for the purpose of promoting the products or services of those businesses while at the same time promoting the theater circuit or the movie-going experience. The use of LEN or lobby promotions by the founding members for these advertisements and programs could resultis in the founding members creating relationships with advertisers that could adversely affect our current LEN and lobby promotions advertising revenue and profitability, as well as the potential we have to grow that advertising revenue in the future. The LEN and lobby promotions represented approximately 4%process of our total advertising revenue for the year ended December 27, 2018. The founding members do not have the right to use their movie screens (including the Noovie pre-show or otherwise) for promoting these cross-marketing relationships, and thus we will have the exclusive rights to advertise on the movie screens, except for limited advertising related to theater operations.
The founding members also have the right to installidentifying a second network of video monitors in the theater lobbies in excess of those required to be installed for the LEN, and the founding members have exercised this right to install a significant number of video monitors in their theater lobbies. This additional lobby video network, which we refer to as the founding members’ lobby network, may be used by the founding members to promote products or services related to operating the theaters, such as concessions, bars and dining operations, online ticketing partner promotions, gift card and loyalty programs, and special events. The presence of the founding members’ lobby network within the lobby areas could reduce the effectiveness of our LEN, thereby reducing our current LEN advertising revenue and profitability and adversely affecting future revenue potential associated with that marketing platform.
The founding members and our network affiliates are subject to substantial government regulation, which could slow their future growth of locations and screens and in turn slow our growth prospects.
The founding members and our network affiliates are subject to various federal, state and local laws, regulations and administrative practices affecting their movie theater business, including provisions regulating antitrust, health and sanitation standards, access for those with disabilities, environmental, and licensing. Some of these laws and regulations also apply directly to us and NCM LLC. Changes in existing laws or implementation of new laws, regulations and practices could have a significant impact on the founding members, our network affiliates’ and our respective businesses. For example, to the extent that antitrust laws, regulation and enforcement policy restrict the ability of the founding members or the network affiliates to acquire additional theaters, it may slow the future growth of those founding members or network affiliates and in turn the growth of our network.
We may be unable to effectively manage changes to our business strategy to continue the growth of our advertising inventory and network.
If we do not effectively implement the changes within our strategy, we may not be able to continue our historical growth. To effectively execute on our strategy to expand our digital offerings and continue to grow our inventory, we will need to develop additional products. These enhancements and improvements could require an additional allocation of financial and management resources and acquisition of talent. High turnover, loss of specialized talent or insufficient capital could also place significant demands on management, the success of the organization, and our strategic outlook.
The amount of inventory we have to sell is limited by the length of the Noovie pre-show. In order to maintain in-theater growth we will need to expand the number of theaters and screens in our network. Considering our current market share, we may not be able to continue to expand our network which could negatively affect our ability to add new advertising clients. If we are unable to maintain the size of our network, or grow our network, our revenue and operating results could be adversely impacted.
Our business relies heavily on our technology systems, and any failures or disruptions may materially and adversely affect our operations.
In order to conduct our business, we rely on information technology networks and systems, some of which are managed by third parties, to process, transmit and store electronic information and manage and support a variety of business processes and activities. The temporary or permanent loss of our computer equipment and software systems through cyber and other security threats, operating malfunction, software virus, human error, natural disaster, power loss, terrorist attacks or other catastrophicChief Financial Officer.


events could disruptIf we are not able to find qualified internal or external replacements for critical members of our operations and cause a material adverse impact. These problems may arise in both internally developed systems andsenior management team, the systems of third-party service providers. We devote significant resources to maintaining a disaster recovery location separate from our operations, network security and other measures to protect our network from unauthorized access and misuse. However, depending on the nature and scope of a disruption, if our technology systems were to fail and we were unable to recover in a timely way through our disaster recovery site, we would be unable to fulfill critical business functions, which could lead to a loss of customers and could harm our reputation. Technological breakdown could also interfere with our ability to comply with financial reporting and other regulatory requirements.
Our business, services, or technology may infringe on intellectual property rights owned by others, which may interfere with our ability to provide services or expose us to increased liability or expense.
Intellectual property rights of our business include the copyrights, trademarks, trade secrets and patents of our in-theater, online, and mobile services, including the websites we operate at ncm.com and Noovie.com, our digital gaming products including Noovie Arcade, Fantasy Movie League, Name That Movie and Noovie Shuffle, and the features and functionality, content, and software we make available through those websites and apps. We rely on our own intellectual property rights as well as intellectual property rights obtained from third parties to conduct our business and provide our in-theater, online, and mobile services. We may discover that our business or the technology we use to provide our in-theater, online, or mobile services infringes patent, copyright, or other intellectual property rights owned by others. In addition, our competitors or others may claim rights in patents, copyrights, or other intellectual property rights that will prevent, limit or interfere with our ability to provide our in-theater, online, or mobile services either in the U.S. or in international markets. Further, the laws of certain foreign countries may not protect our intellectual property rights to the same extent as do the laws of the U.S.
The content we distribute through our in-theater, online or mobile services may expose us to liability.
Our in-theater, online, and mobile services facilitate the distribution of content. This content includes advertising-related content, as well as movie, television, music, gaming and other media content, much of which is obtained from third parties. Our websites and social media channels also include features enabling users to upload or add their own content to the websites and modify certain content on the websites. As a distributor of content, we face potential liability for negligence, copyright, patent or trademark infringement, or other claims based on the content that we distribute. We or entities that we license content from may not be adequately insured or indemnified to cover claims of these types or liability that may be imposed on us.
The user information we collect and maintain through our online and mobile services may expose us to liability.
In order to take advantage of some of the online and mobile services we provide, users may, now or in the future, be required to establish an account on one of our websites. As a result, we may collect and maintain personal identifying information about those users. We also may, now or in the future, collect and maintain information about users who view certain advertising displayed through our online and mobile services and users who enter the theaters in our network. The collection and use of this information is governed by applicable privacy, information security and consumer protection-related laws and regulations. These laws continue to evolve and may be inconsistent from one jurisdiction to another. Compliance with all such laws and regulations may increase our operating costs and adversely impact our ability to interact with users of our online and mobile services. Our collection and use of information, including personal identifying information, regarding users of our online and mobile services could result in legal liability. For example, the failure, or perceived failure, to comply with applicable privacy information security or consumer protection-related laws or regulations or our posted privacy policies could result in actions against us by governmental entities or others. If an actual or perceived breach of our data occurs, the market perception of the effectiveness of our security measures could be harmed, and we could lose users of these services and the associated benefits from gathering such user data.
Changes in regulations relating to the Internet or other areas of our online or mobile services may result in the need to alter our business practices or incur greater operating expenses.
A number of regulations, including those referenced below, may impact our business as a result of our online or mobile services. The Digital Millennium Copyright Act has provisions that limit, but do not necessarily eliminate, liability for posting, or linking to third-party websites that include materials that infringe copyrights or other rights. Portions of the Communications Decency Act are intended to provide statutory protections to online service providers who distribute third-party content. The Child Online Protection Act and the Children’s Online Privacy Protection Act restrict the distribution of materials considered harmful to children and impose additional restrictions on the ability of online services to collect information from minors. The costs of compliance with these regulations, and other regulations relating to our online and mobile services or other areas of our business, may be significant. The manner in which these and other regulations may be interpreted or enforced may subject us to potential liability, which in turn could have an adverse effect on our business, results of operations, or financial condition. Changes to these and other regulations may impose additional burdens on us or otherwise


adversely affect our business and financial results because of, for example, increased costs relating to legal compliance, defense against adverse claims or damages, or the reduction or elimination of features, functionality or content from our online or mobile services. Likewise, any failure on our part to comply with these and other regulations may subject us to additional liabilities.
Our revenue and Adjusted OIBDA fluctuate from quarter to quarter and may be unpredictable, which could increase the volatility of our stock price.
A weak advertising market or the shift in spending of a major client from one quarter to another, the performance of films released in a given quarter, a disruption in the release schedule of films or changes in the television scatter market could significantly affect quarter-to-quarter results or even affect results for the entire fiscal year. In addition, our revenue and operating results are seasonal in nature, coinciding with the timing of marketing expenditures by our advertising clients and, to a lesser extent, the attendance patterns within the film exhibition industry. Advertising expenditures tend be higher during the second, third, and fourth fiscal quarters. Because our results may vary from quarter to quarter and may be unpredictable, our financial results for one quarter cannot necessarily be compared to another quarter or the same quarter in prior years and may not be indicative of our financial performance in subsequent quarters. These variations in our financial results could contribute to volatility in our stock price.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud, and as a result, stockholders could lose confidence in our financial and other public reporting, which would harm our business and the trading price of our common stock.
Effective internal controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required controls, or difficulties encountered in implementing new or improved controls, could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection with Section 404 of the Sarbanes-Oxley Act, or the subsequent testing by our independent registered public accounting firm, may reveal deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive changes to our financial statements or identify other areas for further attention or improvement. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
Risks related to our corporate structure
We are a holding company with no operations of our own, and we depend on distributions and payments under the NCM LLC operating and management services agreements from NCM LLC to meet our ongoing obligations and to pay cash dividends on our common stock.
We are a holding company with no operations of our own and have no independent ability to generate cash flow other than interest income on cash balances. Consequently, our ability to obtain operating funds primarily depends upon distributions from NCM LLC. The distribution of cash flows and other transfers of funds by NCM LLC to us are subject to statutory and contractual restrictions based upon NCM LLC’s financial performance, including NCM LLC’s compliance with the covenants in its senior secured credit facility and indentures, and the NCM LLC operating agreement. The NCM LLC senior secured credit facility and indentures limit NCM LLC’s ability to distribute cash to its members, including us, based upon certain leverage tests, with exceptions for, among other things, payment of our income taxes and a management fee to NCM, Inc. pursuant to the terms of the management services agreement (incorporated in the ESA). Refer to the information provided under Note 6 to the unaudited Condensed Consolidated Financial Statements included elsewhere in this document for leverage discussion. The declaration of future dividends on our common stock will be at the discretion of our Board of Directors and will depend upon many factors, including NCM LLC’s results of operations, financial condition, earnings, capital requirements, limitations in NCM LLC’s debt agreements and legal requirements. In the event NCM LLC fails to comply with these covenants and is unable to distribute cash to us quarterly, once NCM, Inc. cash balances and investments are extinguished, we will be unable to pay dividends to our stockholders or pay other expenses outside the ordinary course of business.
Pursuant to the management services agreement between us and NCM LLC, NCM LLC makes payments to us to fund our day-to-day operating expenses, such as payroll. However, if NCM LLC has insufficient cash flow to make the payments pursuant to the management services agreement, we may be unable to cover these expenses.
As a member of NCM LLC, we incur income taxes on our proportionate share of any net taxable income of NCM LLC. We have structured the NCM LLC senior secured credit facility and indentures to allow NCM LLC to distribute cash to its members (including us and NCM LLC’s other members) in amounts sufficient to cover their tax liabilities and management


fees, if any. To the extent that NCM LLC has insufficient cash flow to make such payments, itkey employees could have a material adverse effect on our business, financial condition, results of operations or prospects.
NCM LLC’s substantial debt obligations could impair our financial condition or prevent us from achievingability to effectively pursue our business goals.
NCM LLC is partystrategy and our relationships with advertisers and content partners. In response to substantial debt obligations. The senior secured credit facilitythe COVID-19 Pandemic, the Company instituted a temporary pay reduction for all employees of up to 50% and indentures contain restrictive covenants that limit NCM LLC’s abilityeach of our named executive officers agreed to take specified actions and prescribe minimum financial maintenance requirements that NCM LLC must meet. Because NCM LLC is our only operating subsidiary, complying witha 20% reduction of their base salary. If these restrictions may prevent NCM LLC from taking actions thattemporary salary reductions continue for an extended period of time, we believe would help us to grow our business. For example, NCM LLC may be unablesubject to make acquisitions, investments or capital expenditures as a resulthigher rate of such covenants. Moreover, if NCM LLC violates those restrictive covenants or fails to meetturnover of our senior management. Additionally, the minimum financial requirements, it would be in default, which could, in turn, result in defaults under other obligations of NCM LLC. Any such defaults could materially impair our financial condition and liquidity. For further information, refer to Note 6 to the unaudited Condensed Consolidated Financial Statements included elsewhere in this document.
If NCM LLCCompany is unable to meet its debt service obligations, it could be forced to restructure or refinance the obligations, seek additional equity financing or sell assets. NCM LLC may be unable to restructure or refinance these obligations, obtain additional equity financing, sell assets on satisfactory terms or at all or make cash distributions. In addition, NCM LLC’s indebtedness could have other negative consequences for us, including without limitation:
•limiting NCM LLC’s ability to obtain financing in the future;
•requiring muchprocess of identifying a new Chief Financial Officer and other members of our cash flow to be dedicated to interest obligations and making it unavailable for other purposes, including payments to its members (including NCM, Inc.);
•limiting NCM LLC’s liquidity and operational flexibility in changing economic, business and competitive conditions which could require NCM LLC to consider deferring planned capital expenditures, reducing discretionary spending, selling assets, restructuring existing debt or deferring acquisitions or other strategic opportunities; and
•making NCM LLC more vulnerable to an increase in interest rates, a downturn in operating performance or decline in general economic conditions.

Despite NCM LLC’s current levels of debt, it or NCM, Inc. may still incur substantially more debt, including secured debt, which would increase the risks associated with NCM LLC’s level of debt
The agreements relating to NCM LLC’s debt, including the Notes due 2022, Notes due 2026, Notes due 2028senior management, and the senior secured credit facility, limit butuncertainty caused by the COVID-19 Pandemic, hiring freeze and salary reductions, may make it more difficult for the Company to find experienced replacements. We do not prohibit NCM LLC’s ability to incur additional debt, and do not place any restrictions on NCM, Inc.’s ability to incur debt. Accordingly, NCM, Inc. or NCM LLC could incur additional debt in the future, including additional debt under the senior secured credit facility, additional senior or senior subordinated notes and additional secured debt. If new debt is added to current debt levels, the related risks that we now face, including those described above under “—NCM LLC’s substantial debt obligations could impair our financial condition or prevent us from achieving our business goals,” could intensify.

NCM LLC’s other founding members or their affiliates may have interests that differ from those of our public stockholders and they may be able to influence our affairs.
So long as either Cinemark or Regal owns at least 5% of NCM LLC’s issued and outstanding common membership units, if the two directors appointed by Cinemark or the two directors appointed by Regal to our Board of Directors (except that if either Cinemark or Regal has only appointed one director, and such director qualifies as an “independent director” under the applicable rules of the Nasdaq Stock Market LLC, then such director) vote against any of the corporate actions listed below, we and NCM, LLC. will be prohibited from taking any such actions:
assign, transfer, sell or pledge all or a portion of the membership units of NCM LLC beneficially owned by NCM, Inc.;
acquire, dispose, lease or license assets with an aggregate value exceeding 20% of the fair market value of the business of NCM LLC operating as a going concern;
merge, reorganize, recapitalize, reclassify, consolidate, dissolve, liquidate or enter into a similar transaction;
incur any funded indebtedness or repay, before due, any funded indebtedness with a fixed term in an aggregate amount in excess of $15.0 million per year;


issue, grant or sell shares of NCM, Inc. common stock, preferred stock or rights with respect to common or preferred stock, or NCM LLC membership units or rights with respect to membership units, except under specified circumstances;
amend, modify, restate or repeal any provision of NCM, Inc.’s certificate of incorporation or bylaws or the NCM LLC operating agreement;
enter into, modify or terminate certain material contracts not in the ordinary course of business as defined under applicable securities laws;
except as specifically set forth in the NCM LLC operating agreement, declare, set aside or pay any redemption of, or dividends with respect to membership interests;
amend any material terms or provisions (as defined in the Nasdaq rules) of NCM, Inc.’s equity incentive plan or enter into any new equity incentive compensation plan;
make any change in the current business purpose of NCM, Inc. to serve solely as the manager of NCM LLC or any change in the current business purpose of NCM LLC to provide the services as set forth in the ESAs; and
approve any actions relating to NCM LLC that could reasonably be expected to have a material adverse tax effect on NCM LLC’s founding members.
Pursuant to a director designation agreement, so long as Cinemark or Regal owns at least 5% of NCM LLC’s issued and outstanding common membership units, such NCM LLC founding member will have the right to designate a total of two nominees to our Board of Directors who will be voted upon by our stockholders. One such designee by each of Cinemark and Regal must meet the independence requirements of the stock exchange on which our common stock is listed. If, at any time, Cinemark or Regal owns less than 5% of NCM LLC’s then issued and outstanding common membership units, then such NCM LLC founding member shall cease to have any rights of designation. AMC no longer has seats on our Board of Directors or the right to nominate any person to serve on our Board of Directors.
If any director designee to our board designated by Cinemark or Regal is not appointed to our board, nominated by us or elected by our stockholders, as applicable, then Cinemark and Regal (so long as such they each continue to own at least 5% of NCM LLC’s issued and outstanding common membership units) will be entitled to approve specified actions of NCM LLC.
For purposes of calculating the 5% ownership threshold for the director veto rights and director designation agreement provisions discussed above, shares of our common stock held by a founding member and received upon redemption of NCM LLC common membership units will be counted toward the threshold. Common membership units issued to NCM, Inc. in connection with the redemption of common membership units by an NCM LLC founding member will be excluded, so long as such NCM LLC founding member continues to hold the common stock acquired through such redemption or such NCM LLC founding member has disposed of such shares of common stock to another NCM LLC founding member. Shares of our common stock otherwise acquired by NCM LLC’s founding members will also be excluded, unless such shares of common stock were transferred by one founding member to another and were originally received by the transferring NCM LLC founding member upon redemption of NCM LLC common membership units.
Under these circumstances, our corporate governance documents allow NCM LLC’s other members and their affiliates to exercise a greater degree of influence in the operation of our business and that of NCM LLC and the management of our affairs and those of NCM LLC than is typically available to stockholders of a publicly-traded company. Even if NCM LLC’s other members or their affiliates own a minority economic interest (but not less than 5%) in NCM LLC, they may be able to continue exerting such degree of influence over us and NCM LLC.
Different interests among the founding members or between the founding members and us could prevent us from achieving our business goals.
For the foreseeable future, we expect that our Board of Directors will include directors and certain executive officers of Cinemark and Regal and other directors who may have commercial or other relationships with Cinemark and Regal. The majority of NCM LLC’s outstanding membership interests also are owned by Cinemark and Regal. Such members compete with each other in the operation of their respective businesses and could have individual business interests that may conflict. Their differing interests could make it difficult for us to pursue strategic initiatives that require consensus among NCM LLC’s current members. In addition, to the extent the founding members sell some or all their NCM LLC membership units, such as was the case for AMC during 2017 and 2018, the founding members could have increasingly different interests because they no longer mutually benefit from an increase in NCM LLC’s revenues or the value of the NCM, Inc. common stock into which the NCM LLC membership units are convertible.
In addition, the structural relationship we have with NCM LLC’s founding members could create conflicts of interest among NCM LLC’s founding members, or between NCM LLC’s founding members and us, in a number of areas relating to our past and ongoing relationships. These conflicts of interests could also increase upon the sale of NCM LLC membership


units by a founding member because the founding member would have little incentive to agree to changes that may result in higher revenue for NCM LLC or a higher price for our common stock. There is not any formal dispute resolution procedure in place to resolve conflicts between us and an NCM LLC founding member or between NCM LLC founding members. We may not be able to resolve any potential conflicts between us and an NCM LLC founding member and, even if we do, the resolution may be less favorable to us than if we were negotiating with an unaffiliated party.
The corporate opportunity provisions in our certificate of incorporation could enable NCM LLC’s members to benefit from corporate opportunities that might otherwise be available to us.
Our certificate of incorporation contains provisions related to corporate opportunities that may be of interest to NCM LLC’s other members and us. It provides that if a corporate opportunity is offered to us, NCM LLC or one or more of the officers, directors or stockholders (both direct and indirect) of NCM, Inc. or a member of NCM LLC that relates to the provision of services to motion picture theaters, use of theaters for any purpose, sale of advertising and promotional services in and around theaters and any other business related to the motion picture theater business (except services as provided in the ESAs as from time to time amended and except as may be offered to one of our officers in his capacity as an officer), no such person shall be liable to us orkey-man life insurance covering any of our stockholders (or any affiliate thereof) for breach of any fiduciary or other duty by reason of the fact that such person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to us. This provision applies even if the business opportunity is one that we might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so.
In addition, our certificate of incorporation and the NCM LLC operating agreement expressly provide that NCM LLC’s founding members may have other business interests and may engage in any other businesses not specifically prohibited by the terms of the certificate of incorporation, including the exclusivity provisions of the ESAs. The parent companies of NCM LLC’s founding members could develop new media platforms that could compete for advertising dollars with our services. Further, we may also compete with NCM LLC’s founding members or their affiliates in the area of employee recruiting and retention. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations or prospects if attractive corporate opportunities are allocated by NCM LLC’s founding members to themselves or their other affiliates or we lose key personnel to them.
The agreements between us and NCM LLC’s founding members were made in the context of an affiliated relationship and may contain different terms than comparable agreements with unaffiliated third parties.
The ESAs and the other contractual agreements that we have with NCM LLC’s founding members were originally negotiated in the context of an affiliated relationship in which representatives of NCM LLC’s founding members and their affiliates comprised our entire Board of Directors. As a result, the financial provisions and the other terms of these agreements, such as covenants, contractual obligations on our part and on the part of NCM LLC’s founding members and termination and default provisions may be less favorable to us than terms that we might have obtained in negotiations with unaffiliated third parties in similar circumstances.
Our certificate of incorporation and bylaws contain anti-takeover protections that may discourage or prevent strategic transactions, including a takeover of our company, even if such a transaction would be beneficial to our stockholders.
Provisions contained in our certificate of incorporation and bylaws, the NCM LLC operating agreement, and provisions of the Delaware General Corporation Law (“DGCL”), could delay or prevent a third party from entering into a strategic transaction with us, even if such a transaction would benefit our stockholders. For example, our certificate of incorporation and bylaws:
provide veto rights to the directors designated by Cinemark and Regal over certain actions specified in our certificate of incorporation;
authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares, making a takeover more difficult and expensive;
prohibit stockholder action by written consent; and
do not permit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates.

NCM LLC’s operating agreement also provides that NCM LLC’s other members will be able to exercise a greater degree of influence over the operations of NCM LLC, which may discourage other nominations to our Board of Directors, if any director nominee designated by NCM LLC’s other members is not elected by our stockholders. In addition, we entered into a


letter agreement with Standard General L.P., our largest stockholder, on June 1, 2018, that contains customary standstill provisions that may discourage a third party from seeking to enter into a strategic transaction with us.
These restrictions could keep us from pursuing relationships with strategic partners and from raising additional capital, which could impede our ability to expand our business and strengthen our competitive position. These restrictions could also limit stockholder value by impeding a sale of us or NCM LLC. Further, these restrictions could restrict or limit certain investors from owning our stock.
Any future issuance of membership units by NCM LLC and subsequent redemption of such units for common stock could dilute the voting power of our existing common stockholders and adversely affect the market value of our common stock.
The common unit adjustment agreement and the ESAs provide that NCM LLC will issue common membership units to account for changes in the number of theater screens NCM LLC’s founding members operate and which are made part of our advertising network. Historically, in most years each of NCM LLC’s founding members has increased the number of screens it operates. If this trend continues, NCM LLC may issue additional common membership units to NCM LLC’s founding members to reflect their increase in net screen count. Each common membership unit may be redeemed in exchange for, at our option, shares of our common stock on a one-for-one basis or a cash payment equal to the market price of one share of our common stock. If a significant number of common membership units were issued to NCM LLC’s founding members, NCM LLC’s founding members elected to redeem such units, and we elected to issue common stock rather than cash upon redemption, the voting power of our common stockholders could be diluted. Other than the maximum number of authorized shares of common stock in our certificate of incorporation, there is no limit on the number of shares of our common stock that we may issue upon redemption of an NCM LLC founding member’s common membership units in NCM LLC. For further information, refer to Note 4 to the unaudited Condensed Consolidated Financial Statements included elsewhere in this document.
Our future issuance of preferred stock could dilute the voting power of our common stockholders and adversely affect the market value of our common stock.
The future issuance of shares of preferred stock with voting rights may adversely affect the voting power of the holders of our other classes of voting stock, either by diluting the voting power of our other classes of voting stock if they vote together as a single class, or by giving the holders of any such preferred stock the right to block an action on which they have a separate class vote even if the action were approved by the holders of our other classes of voting stock.
The future issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect the market price for our common stock by making an investment in the common stock less attractive. For example, investors in the common stock may not wish to purchase common stock at a price above the conversion price of a series of convertible preferred stock because the holders of the preferred stock would effectively be entitled to purchase common stock at the lower conversion price causing economic dilution to the holders of common stock.
If we or NCM LLC’s founding members are determined to be an investment company, we would become subject to burdensome regulatory requirements and our business activities could be restricted.
We do not believe that we are an “investment company” under the Investment Company Act of 1940, as amended. As sole manager of NCM LLC, we control NCM LLC, and our interest in NCM LLC is not an “investment security” as that term is used in the Investment Company Act of 1940.  If we were to stop participating in the management of NCM LLC, our interest in NCM LLC could be deemed an “investment security” for purposes of the Investment Company Act of 1940. Generally, a company is an “investment company” if it owns investment securities having a value exceeding 40% of the value of its total assets (excluding U.S. government securities and cash items). Our sole material asset is our equity interest in NCM LLC.  A determination that such asset was an investment security could result in our being considered an investment company under the Investment Company Act of 1940.  As a result, we would become subject to registration and other burdensome requirements of the Investment Company Act.  In addition, the requirements of the Investment Company Act of 1940 could restrict our business activities, including our ability to issue securities.
We and NCM LLC intend to conduct our operations so that we are not deemed an investment company under the Investment Company Act.  However, if anything were to occur that would cause us to be deemed an investment company, we would become subject to restrictions imposed by the Investment Company Act of 1940.  These restrictions, including limitations on our capital structure and our ability to enter into transactions with our affiliates, could make it impractical for us


to continue our business as currently conducted and could have a material adverse effect on our financial performance and operations.
We also rely on representations of NCM LLC’s founding members that they are not investment companies under the Investment Company Act.  If any NCM LLC founding member were deemed an investment company, the restrictions placed upon that NCM LLC founding member might inhibit its ability to fulfill its obligations under its ESA or restrict NCM LLC’s ability to borrow funds.
Our TRA with NCM LLC’s founding members is expected to reduce the amount of overall cash flow that would otherwise be available to us and will increase our potential exposure to the financial condition of NCM LLC’s founding members.
Our initial public offering and related transactions have the effect of reducing the amounts NCM, Inc. would otherwise pay in the future to various tax authorities as a result of an increase in its proportionate share of tax basis in NCM LLC’s tangible and intangible assets. We have agreed in our TRA with NCM LLC’s founding members to pay to NCM LLC’s founding members 90% of the amount by which NCM, Inc.’s tax payments to various tax authorities are reduced as a result of the increase in tax basis. After paying these reduced amounts to tax authorities, if it is determined as a result of an income tax audit or examination that any amount of NCM, Inc.’s claimed tax benefits should not have been available, NCM, Inc. may be required to pay additional taxes and possibly penalties and interest to one or more tax authorities. If this were to occur and if one or more of NCM LLC’s founding members was insolvent or bankrupt or otherwise unable to make payment under its indemnification obligation under the TRA, then NCM, Inc.’s financial condition could be negatively impacted.
The substantial number of shares that are eligible for sale could cause the market price for our common stock to decline or make it difficult for us to sell equity securities in the future.
We cannot predict the effect, if any, that market sales of shares of common stock by Regal, Cinemark, or Standard General will have on the market price of our common stock from time to time. Sales of substantial amounts of shares of our common stock in the public market, or the perception that those sales will occur, could cause the market price of our common stock to decline or make future offerings of our equity securities more difficult. If we are unable to sell equity securities at times and prices that we deem appropriate, we may be unable to fund growth. Cinemark and Regal may receive up to 80.7 million shares of common stock as of September 26, 2019 upon redemption of their outstanding common membership units of NCM LLC. The resale of these shares of common stock has been registered as required by the terms of the registration rights agreement between NCM, Inc. and the founding members. Standard General also owns 15.8 million shares that it may sell at any time. Additionally, once options and restricted stock held by our employees become vested and/or exercisable, as applicable, to the extent that they are not held by one of our affiliates, the shares acquired upon vesting or exercise are freely tradable. Refer to Note 11 to the audited Consolidated Financial Statements included in our annual report on Form 10-K.
The interests of our largest stockholder and NCM LLC’s other members may be different from or conflict with those of our other stockholders.
Standard General beneficially owns 15.8 million shares of our common stock, and as of September 26, 2019, Cinemark and Regal held NCM LLC membership interests that are convertible into another 80.7 million shares of our common stock. As a result, each of Regal, Cinemark and Standard General is in a position to influence or control to some degree the outcome of matters requiring stockholder approval, including the adoption of amendments to our certificate of incorporation or bylaws and the approval of mergers and other significant corporate transactions. Their influence or control of our company and NCM LLC may have the effect of delaying or promoting a change of control of our company and may adversely affect the voting and other rights of other stockholders. In addition, each of Regal, Cinemark and Standard General has the right to designate directors to our Board. These directors have the authority, subject to applicable rules and regulations, to issue additional stock, implement stock repurchase programs, declare dividends and make other decisions.
It is possible that the interests of Regal, Cinemark and Standard General may in some circumstances conflict with our interests and the interests of our other stockholders. For example, Cinemark and Regal may have different tax positions from us, especially in light of the TRA we entered into with founding members that provides for the payment by us to the founding members of 90% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize. This could influence their decisions regarding whether and when we should dispose of assets, and whether and when we or NCM LLC should incur indebtedness. As another example, Standard General is in the business of making investments in companies and may hold, and may from time to time in the future acquire, interests in or provide advice to businesses that directly or indirectly compete with us.employees.
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
The table below provides information about shares delivered to the Company from restricted stock held by Company employees upon vesting for purpose of funding the recipient’s tax withholding obligations.
PeriodTotal Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased under the Plans or Programs
June 28, 2019 through July 25, 2019—
 $—
 —
 N/A
July 26, 2019 through August 29, 20196,130
 $7.19
 —
 N/A
August 30, 2019 through September 26, 2019—
 $—
 —
 N/A
The Company's Second Amended and Restated Certificate of Incorporation and NCM LLC’s Third Amended and Restated Limited Liability Company Operating Agreement, as amended, provide a redemption right to certain of NCM LLC’s members to exchange common membership units of NCM LLC for shares of the Company’s common stock on a one-for-one basis, or at the Company’s option, a cash payment equal to the market price of one share of the Company’s Common Stock.
On October 24, 2019, in response to a notice of redemption delivered by AMC to NCM LLC, the Company contributed 197,118 shares of Common Stock to NCM LLC in exchange for an equal number of common membership units of NCM LLC, which represents all of AMC’s interest in NCM LLC. NCM LLC in turn transferred the shares of Common Stock to AMC.
PeriodTotal Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased under the Plans or Programs
December 27, 2019 through January 23, 202035,168
 $7.76
 —
 N/A
January 24, 2020 through February 20, 202063,711
 $7.61
 —
 N/A
February 21, 2020 through March 26, 202020,762
 $8.94
 —
 N/A
Item 3.  Defaults Upon Senior Securities
None.
Item 4.  Mine Safety Disclosures
Not Applicable.
Item 5.  Other Information
None.



Item 6.  Exhibits 
ExhibitReferenceDescriptionReferenceDescription
  
3.1*
The Bylaws, as amended August 1, 2019.
4.1(1)
Indenture, dated as of October 8, 2019, by and between NCM LLC and Wells Fargo Bank, National Association, as trustee.
4.2(2)
Form of 5.875% Senior Secured Notes due 2028 (included in Exhibit 4.1).
10.1(3)
First Amendment to the Amended and Restated Exhibitor Services Agreement dated as of September 17, 2019, by and between National CineMedia, LLC and Cinemark USA, Inc.
(1)
Amendment No. 1 to the Credit Agreement, dated as of April 30, 2020, by and among National CineMedia, LLC, each lender party thereto, and JPMorgan Chase Bank, N.A., as administrative agent.
10.2(4)
Second Amendment to the Amended and Restated Exhibitor Services Agreement dated as of September 17, 2019, by and between National CineMedia, LLC and Regal Cinemas, Inc.
10.3*
Employment Agreement dated as of August 1, 2019, by and between National CineMedia, Inc. and Thomas F. Lesinski.
10.4*
Form of 2019 Stock Option Agreement.
31.1*
Rule 13a-14(a) Certification of Chief Executive Officer.
*
Rule 13a-14(a) Certification of Chief Executive Officer and Interim PFO.
31.2*
Rule 13a-14(a) Certification of Chief Financial Officer.
32.1**
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350.
**
Certification of Chief Executive Officer and Interim PFO Pursuant to 18 U.S.C. Section 1350.
32.2**
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350.
101.INS*XBRL Instance Document*XBRL Instance Document
101.SCH*XBRL Taxonomy Extension Schema Document*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document*XBRL Taxonomy Extension Presentation Linkbase Document
 

*Filed herewith.
**Furnished herewith.
(1)Incorporated by reference to Exhibit 4.110.1 to the Registrant's Current ReportCompany’s current report on Form 8-K (File No. 001-33296) filed on October 8, 2019.
(2)Incorporated by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K (File No. 001-33296) filed on October 8, 2019.
(3)Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-33296) filed on September 17, 2019.
(4)Incorporated by reference to Exhibit 10.2 to the Registrant's Current Report on Form 8-K (File No. 001-33296) filed on September 17, 2019.May 5, 2020.



SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
   NATIONAL CINEMEDIA, INC.
   (Registrant)
    
Date:November 4, 2019May 5, 2020 /s/ Thomas F. Lesinski
   Thomas F. Lesinski
   Chief Executive Officer and Director
   (Principal Executive Officer and Interim Principal Financial Officer)
Date:November 4, 2019 /s/ Katherine L. Scherping
   Katherine L. Scherping
   
Chief Financial Officer
(Principal Financial and Accounting Officer)

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