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 ~~March 26, 2020~~April 1, 2021


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

For the transition period from to .

Commission file number: 001-33296

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~~

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:



Common Stock, par value $0.01 per share	NCMI	The 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 filer

x☒

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 May ~~1, 2020, 79,625,789~~7, 2021, 80,835,165 shares of the registrant’s common stock (including unvested restricted shares), par value of $0.01 per share, were outstanding.

TABLE OF CONTENTS

PART I

Item 1. Financial Statements

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)

(UNAUDITED)


								As of
	March 26, 2020			December 26, 2019				April 1, 2021		December 31, 2020
ASSETS							ASSETS
CURRENT ASSETS:							CURRENT ASSETS:
Cash and cash equivalents	$	193.2		$	55.9		Cash and cash equivalents	$	190.7	$	180.3
Short-term marketable securities	16.8			17.5			Short-term marketable securities	0.3		0.3
Receivables, net of allowance of $3.5 and $6.2, respectively	113.7			170.8
Amounts due from founding members, net	—			6.6
Prepaid expenses and other current assets	3.5			3.5
Receivables, net of allowance of $1.9 and $2.3, respectively							Receivables, net of allowance of $1.9 and $2.3, respectively	7.5		16.2

Other current assets and prepaid expenses							Other current assets and prepaid expenses	14.2		3.1
Total current assets	327.2			254.3			Total current assets	212.7		199.9
NON-CURRENT ASSETS:							NON-CURRENT ASSETS:
Property and equipment, net of accumulated depreciation of $73.8 and $70.7, respectively	32.8			33.2
Intangible assets, net of accumulated amortization of $205.0 and $198.9, respectively	646.7			643.7
Deferred tax assets, net of valuation allowance of $73.7 and $81.6, respectively	162.7			162.1
Other investments	1.1			1.0
Property and equipment, net of accumulated depreciation of $55.3 and $77.7, respectively							Property and equipment, net of accumulated depreciation of $55.3 and $77.7, respectively	25.2		27.5
Intangible assets, net of accumulated amortization of $229.2 and $223.0, respectively							Intangible assets, net of accumulated amortization of $229.2 and $223.0, respectively	626.5		627.8
Deferred tax assets, net of valuation allowance of $217.6 and $212.0, respectively							Deferred tax assets, net of valuation allowance of $217.6 and $212.0, respectively	0		0
Long-term marketable securities	5.3			7.5			Long-term marketable securities	1.2		1.2
Debt issuance costs, net	3.6			3.9			Debt issuance costs, net	4.0		3.3
Other assets	25.2			24.3			Other assets	25.4		26.5
Total non-current assets	877.4			875.7			Total non-current assets	682.3		686.3
TOTAL ASSETS	$	1,204.6		$	1,130.0		TOTAL ASSETS	$	895.0	$	886.2
LIABILITIES AND EQUITY/(DEFICIT)							LIABILITIES AND EQUITY/(DEFICIT)
CURRENT LIABILITIES:							CURRENT LIABILITIES:
Amounts due to founding members, net	$	10.2		$	36.8		Amounts due to founding members, net	$	1.0	$	2.0
Payable to founding members under tax receivable agreement (including payables to related parties of $10.1 and $10.3, respectively)	14.2			14.2
Payable to founding members under tax receivable agreement (including payables to related parties of $0.0 and $0.6, respectively)							Payable to founding members under tax receivable agreement (including payables to related parties of $0.0 and $0.6, respectively)	0		0.9
Accrued expenses	24.7			22.1			Accrued expenses	20.3		19.0
Accrued payroll and related expenses	6.5			13.8			Accrued payroll and related expenses	6.3		4.8
Accounts payable	12.7			20.7			Accounts payable	9.4		13.7
Deferred revenue	7.5			7.6			Deferred revenue	4.9		5.1
Short-term debt	2.7			2.7			Short-term debt	3.2		2.7
Other current liabilities	1.7			1.6			Other current liabilities	1.8		1.8
Total current liabilities	80.2			119.5			Total current liabilities	46.9		50.0
NON-CURRENT LIABILITIES:							NON-CURRENT LIABILITIES:
Long-term debt, net of debt issuance costs of $8.7 and $9.0, respectively	1,051.6			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
Long-term debt, net of debt issuance costs of $10.0 and $8.0, respectively							Long-term debt, net of debt issuance costs of $10.0 and $8.0, respectively	1,094.1		1,049.6
Payable to founding members under tax receivable agreement (including payables to related parties of $22.6 and $23.7, respectively)							Payable to founding members under tax receivable agreement (including payables to related parties of $22.6 and $23.7, respectively)	31.1		32.6
Other liabilities	24.1			24.0			Other liabilities	22.2		22.6
Total non-current liabilities	1,260.7			1,131.7			Total non-current liabilities	1,147.4		1,104.8
Total liabilities	1,340.9			1,251.2			Total liabilities	1,194.3		1,154.8
COMMITMENTS AND CONTINGENCIES (NOTE 8)							COMMITMENTS AND CONTINGENCIES (NOTE 8)
EQUITY/(DEFICIT):							EQUITY/(DEFICIT):
NCM, Inc. Stockholders’ Equity/(Deficit):							NCM, Inc. Stockholders’ Equity/(Deficit):
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding, respectively	—			—			Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding, respectively	0		0
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
Common stock, $0.01 par value; 175,000,000 shares authorized, 80,017,551 and 78,040,818 issued and outstanding, respectively							Common stock, $0.01 par value; 175,000,000 shares authorized, 80,017,551 and 78,040,818 issued and outstanding, respectively	0.8		0.8
Additional paid in capital/(deficit)	(209.1		)	(209.2		)	Additional paid in capital/(deficit)	(198.9)		(207.5)
Retained earnings (distributions in excess of earnings)	(188.3		)	(171.1		)	Retained earnings (distributions in excess of earnings)	(290.3)		(266.4)
Total NCM, Inc. stockholders’ equity/(deficit)	(396.6		)	(379.5		)	Total NCM, Inc. stockholders’ equity/(deficit)	(488.4)		(473.1)
Noncontrolling interests	260.3			258.3			Noncontrolling interests	189.1		204.5
Total equity/(deficit)	(136.3		)	(121.2		)	Total equity/(deficit)	(299.3)		(268.6)
TOTAL LIABILITIES AND EQUITY/(DEFICIT)	$	1,204.6		$	1,130.0		TOTAL LIABILITIES AND EQUITY/(DEFICIT)	$	895.0	$	886.2

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
	Three Months Ended							April 1, 2021		March 26, 2020
	March 26, 2020			March 28, 2019
REVENUE (including revenue from related parties of $4.3 and $5.3, respectively)	$	64.7		$	76.9
REVENUE (including revenue from related parties of $0.4 and $4.3, respectively)							REVENUE (including revenue from related parties of $0.4 and $4.3, respectively)	$	5.4	$	64.7
OPERATING EXPENSES:							OPERATING EXPENSES:
Advertising operating costs	6.2			7.3			Advertising operating costs	1.5		6.2
Network costs	2.9			3.5			Network costs	1.8		2.9
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
Theater access fees and revenue share to founding members (including fees to related parties of $1.3 and $12.5, respectively)							Theater access fees and revenue share to founding members (including fees to related parties of $1.3 and $12.5, respectively)	3.1		17.7
Selling and marketing costs	13.9			15.2			Selling and marketing costs	7.7		13.9
Administrative and other costs	9.8			10.7			Administrative and other costs	10.2		9.8
Depreciation expense	3.2			3.3			Depreciation expense	3.3		3.2
Amortization of intangibles recorded for network theater screen leases	6.1			6.9			Amortization of intangibles recorded for network theater screen leases	6.1		6.1
Total	59.8			66.0			Total	33.7		59.8
OPERATING INCOME	4.9			10.9
OPERATING (LOSS) INCOME							OPERATING (LOSS) INCOME	(28.3)		4.9
NON-OPERATING EXPENSES:							NON-OPERATING EXPENSES:
Interest on borrowings	13.6			14.4			Interest on borrowings	14.7		13.6
Interest income	(0.2		)	(0.5		)	Interest income	0		(0.2)
Gain on early retirement of debt, net	—			(0.3		)
Loss on re-measurement of the payable to founding members under the tax receivable agreement	0.2			0.7
Other non-operating income	(0.1		)	(0.2		)
Loss on modification and retirement of debt, net							Loss on modification and retirement of debt, net	0.4		0
(Gain) loss on re-measurement of the payable to founding members under the tax receivable agreement							(Gain) loss on re-measurement of the payable to founding members under the tax receivable agreement	(1.5)		0.2
Other non-operating expense (income)							Other non-operating expense (income)	0.1		(0.1)
Total	13.5			14.1			Total	13.7		13.5
LOSS BEFORE INCOME TAXES	(8.6		)	(3.2		)	LOSS BEFORE INCOME TAXES	(42.0)		(8.6)
Income tax benefit	(0.4		)	(0.6		)	Income tax benefit	0		(0.4)
CONSOLIDATED NET LOSS	(8.2		)	(2.6		)	CONSOLIDATED NET LOSS	(42.0)		(8.2)
Less: Net loss attributable to noncontrolling interests	(4.5		)	(1.5		)	Less: Net loss attributable to noncontrolling interests	(22.6)		(4.5)
NET LOSS ATTRIBUTABLE TO NCM, INC.	$	(3.7	)	$	(1.1	)	NET LOSS ATTRIBUTABLE TO NCM, INC.	$	(19.4)	$	(3.7)
COMPREHENSIVE LOSS ATTRIBUTABLE TO NCM, INC.	$	(3.7	)	$	(1.1	)	COMPREHENSIVE LOSS ATTRIBUTABLE TO NCM, INC.	$	(19.4)	$	(3.7)

NET LOSS PER NCM, INC. COMMON SHARE:							NET LOSS PER NCM, INC. COMMON SHARE:
Basic	$	(0.05	)	$	(0.01	)	Basic	$	(0.25)	$	(0.05)
Diluted	$	(0.05	)	$	(0.01	)	Diluted	$	(0.25)	$	(0.05)
WEIGHTED AVERAGE SHARES OUTSTANDING:							WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic	77,763,967			77,179,777			Basic	78,481,355		77,763,967
Diluted	77,763,967			77,179,777			Diluted	78,481,355		77,763,967

See accompanying notes to the unaudited Condensed Consolidated Financial Statements.

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) (UNAUDITED)


	Three Months Ended							Three Months Ended
	March 26, 2020			March 28, 2019				April 1, 2021		March 26, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:							CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net loss	$	(8.2	)	$	(2.6	)	Consolidated net loss	$	(42.0)	$	(8.2)
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:
Adjustments to reconcile consolidated net loss to net cash (used in) provided by operating activities:							Adjustments to reconcile consolidated net loss to net cash (used in) provided by operating activities:
Deferred income tax benefit	(0.4		)	(0.7		)	Deferred income tax benefit	0		(0.4)
Depreciation expense	3.2			3.3			Depreciation expense	3.3		3.2
Amortization of intangibles recorded for network theater screen leases	6.1			6.9			Amortization of intangibles recorded for network theater screen leases	6.1		6.1
Non-cash share-based compensation	0.2			0.8			Non-cash share-based compensation	2.7		0.2

Amortization of debt issuance costs	0.6			0.6			Amortization of debt issuance costs	0.7		0.6
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	(1.3		)	(0.9		)
Founding member integration and encumbered theater payments (including payments from related parties of $0.1 and $0.4, respectively)	8.5			8.1
Loss on modification and retirement of debt, net							Loss on modification and retirement of debt, net	0.4		0
Non-cash (gain) loss on re-measurement of the payable to founding members under the tax receivable agreement							Non-cash (gain) loss on re-measurement of the payable to founding members under the tax receivable agreement	(1.5)		0.2

Founding member integration and other encumbered theater payments (including payments from related parties of $0.0 and $0.1, respectively)							Founding member integration and other encumbered theater payments (including payments from related parties of $0.0 and $0.1, respectively)	0		8.5
Payment to the founding members under tax receivable agreement (including payments to related parties of $0.6 and $0.0, respectively)							Payment to the founding members under tax receivable agreement (including payments to related parties of $0.6 and $0.0, respectively)	(0.9)		0
Other cash flows from operating activities							Other cash flows from operating activities	0.1		(1.3)
Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Receivables, net	60.5			44.3			Receivables, net	8.8		60.5
Accounts payable and accrued expenses	(11.1		)	(11.5		)	Accounts payable and accrued expenses	(0.2)		(11.1)
Amounts due to/from founding members, net	0.8			0.3			Amounts due to/from founding members, net	(1.1)		0.8
Deferred revenue	(0.2		)	(0.5		)	Deferred revenue	(0.2)		(0.2)
Other, net	(0.8		)	(2.5		)	Other, net	(1.2)		(0.8)
Net cash provided by operating activities	58.1			46.0
Net cash (used in) provided by operating activities							Net cash (used in) provided by operating activities	(25.0)		58.1
CASH FLOWS FROM INVESTING ACTIVITIES:							CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(3.3		)	(2.9		)	Purchases of property and equipment	(2.0)		(3.3)
Purchases of marketable securities	(7.2		)	(2.9		)	Purchases of marketable securities	0		(7.2)
Proceeds from sale and maturities of marketable securities	11.3			19.4			Proceeds from sale and maturities of marketable securities	0		11.3
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 activities	0.8			15.0

Net cash (used in) provided by investing activities							Net cash (used in) provided by investing activities	(2.0)		0.8
CASH FLOWS FROM FINANCING ACTIVITIES:							CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of dividends	(15.5		)	(14.0		)	Payment of dividends	(4.8)		(15.5)
Proceeds from revolving credit facility	210.0			62.0			Proceeds from revolving credit facility	0		210.0
Repayments of revolving credit facility	(82.0		)	(52.0		)	Repayments of revolving credit facility	0		(82.0)
Issuance of term loans							Issuance of term loans	50.0		0
Repayment of term loan facility	(0.7		)	(0.7		)	Repayment of term loan facility	(0.7)		(0.7)
Repayment of Senior Notes due 2026	—			(4.6		)
Payment of debt issuance costs	(0.1		)	—			Payment of debt issuance costs	(6.0)		(0.1)
Distributions to founding members	(32.4		)	(27.9		)	Distributions to founding members	0		(32.4)
Repurchase of stock for restricted stock tax withholding	(0.9		)	(1.2		)	Repurchase of stock for restricted stock tax withholding	(1.1)		(0.9)
Net cash provided by (used in) financing activities	78.4			(38.4		)
Net cash provided by financing activities							Net cash provided by financing activities	37.4		78.4
CHANGE IN CASH AND CASH EQUIVALENTS:	137.3			22.6			CHANGE IN CASH AND CASH EQUIVALENTS:	10.4		137.3
Cash and cash equivalents at beginning of period	55.9			41.4			Cash and cash equivalents at beginning of period	180.3		55.9
Cash and cash equivalents at end of period	$	193.2		$	64.0		Cash and cash equivalents at end of period	$	190.7	$	193.2

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)


	Three Months Ended						Three Months Ended
	March 26, 2020			March 28, 2019			April 1, 2021		March 26, 2020
Supplemental disclosure of non-cash financing and investing activity:						Supplemental disclosure of non-cash financing and investing activity:
Purchase of an intangible asset with NCM LLC equity	$	10.5		$	7.6	Purchase of an intangible asset with NCM LLC equity	$	14.1	$	10.5
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
Accrued distributions to founding members (including accrued distributions to related parties of $0.0 and $4.3, respectively)						Accrued distributions to founding members (including accrued distributions to related parties of $0.0 and $4.3, respectively)	$	0	$	4.4
Accrued integration and other encumbered theater payments due from founding members						Accrued integration and other encumbered theater payments due from founding members	$	0	$	1.2

Purchase of subsidiary equity with NCM, Inc. equity						Purchase of subsidiary equity with NCM, Inc. equity	$	6.6	$	0
Increase (decrease) in dividend equivalent accrual not requiring cash in the period						Increase (decrease) in dividend equivalent accrual not requiring cash in the period	$	0.5	$	(0.1)
Supplemental disclosure of cash flow information:						Supplemental disclosure of cash flow information:
Cash paid for interest	$	10.4		$	10.9	Cash paid for interest	$	10.9	$	10.4
Cash paid for income taxes, net of refunds	$	0.3		$	—
Cash (refunds) payments for income taxes						Cash (refunds) payments for income taxes	$	(0.1)	$	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)


			NCM, Inc.
						Additional Paid in Capital (Deficit)		Retained Earnings (Distribution in Excess of Earnings)		Noncontrolling Interest
			Common Stock
	Consolidated		Shares	Amount
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 tax	2.8		—	—		—		1.2		1.6
Distributions to founding members	(4.4)		—	—		—		—		(4.4)
NCM LLC equity issued for purchase of intangible asset	10.5		—	—		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/capitalized	0.2		—	—		0		—		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

Balance—December 31, 2020	$	(268.6)	78,040,818	$	0.8	$	(207.5)	$	(266.4)	$	204.5

NCM LLC equity issued for purchase of intangible asset	14.1		—	—		6.8		—		7.3
Income tax and other impacts of NCM LLC ownership changes	(0.1)		—	—		0.7		—		(0.8)
Issuance of shares	6.6		1,390,567	—		6.6		—		—
NCM LLC common membership unit redemption	(6.6)		—	—		(6.6)		—		—
Comprehensive loss, net of tax	(42.0)		—	—		—		(19.4)		(22.6)
Share-based compensation issued	(1.1)		586,166	—		(1.1)		—		—
Share-based compensation expensed/capitalized	2.9		—	—		2.2		—		0.7
Cash dividends declared $0.05 per share	(4.5)		—	—		—		(4.5)		—
Balance—April 1, 2021	$	(299.3)	80,017,551	$	0.8	$	(198.9)	$	(290.3)	$	189.1

NCM, Inc.
Additional
Paid in Capital (Deficit) Retained
Earnings
(Distribution in Excess of Earnings) Noncontrolling Interest
Common Stock
Consolidated Shares Amount
Balance—December 27, 2018 $ (89.2 ) 76,976,398
$ 0.8
$ (215.2 ) $ (153.6 ) $ 278.8
Distributions to founding members (6.1 ) —
—
—
—
(6.1 )
NCM LLC equity issued for purchase of intangible asset 7.6
—
—
3.7
—
3.9
Income tax and other impacts of NCM LLC ownership changes (0.7 ) —
—
(1.4 ) —
0.7
Comprehensive income, net of tax (2.6 ) —
—
—
(1.1 ) (1.5 )
Share-based compensation issued (1.2 ) 342,573
—
(1.2 ) —
—
Share-based compensation expensed/capitalized 0.8
—
—
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 tax 2.8
—
—
—
1.2
1.6
Distributions to founding members (4.4 ) —
—
—
—
(4.4 )
NCM LLC equity issued for purchase of intangible asset 10.5
—
—
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/capitalized 0.2
—
—
—
—
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”), and 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. On March 23, 2021 American Multi-Cinema, Inc., a wholly owned subsidiary of AMC Entertainment, Inc. (“AMC”) redeemed 1,390,567 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 NCM, Inc. common stock, reducing AMC’s ownership to 0.0% as of April 1, 2021. AMC, Regal, Cinemark and their affiliates are referred to in this document as “founding members”.

The Company operates the largest cinema advertising network reaching movie audiences in the U.S., allowing NCM LLC to sell advertising under long-term exhibitor ~~services~~service agreements (“ESAs”) with the founding members and certain third-party ~~theater circuits, referred to in this document as “network affiliates”~~network affiliates, under long-term network affiliate agreements. AsIn March 2020, each of ~~March 26, 2020,~~the Company’s founding members and all of its network affiliates announced that their theaters would be temporarily closed to address the COVID-19 Pandemic and almost all of the theaters within the ~~Company's~~Company’s network ~~have been temporarily~~remained closed ~~to address the COVID-19 Pandemic.~~until late August 2020. The Company ~~is unable to advertise in the theaters, and thus will not generate any in theater~~generated no in-theater advertising revenue for the ~~duration of time~~period that the theaters were closed. On September 4, 2020, the Company resumed advertising within the theaters that were open in its network, however, in-theater advertising revenue continues to be adversely impacted as attendance remains lower than historical levels due to government restrictions, including mandated patron capacity limitations and a continued lack of new major motion picture releases. As of April 1, 2021, approximately 60.0% of the theaters within the Company’s network were open. These developments are ~~closed.~~referred to as the “COVID-19 Pandemic.”

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)~~upon pre-COVID-19 attendance levels) of approximately ~~19.5~~18.5 years as of ~~March 26, 2020.~~April 1, 2021. The network affiliate agreements expire at various dates between ~~September 2020~~May 2021 and ~~July 2031.~~December 2037. The weighted average remaining term ~~(based on attendance)~~ of the ESAs and the network affiliate agreements together is ~~17.1~~20.9 years as of ~~March 26, 2020.~~April 1, 2021 (based upon pre-COVID-19 attendance levels).

As of ~~March 26, 2020,~~April 1, 2021, NCM LLC had ~~162,504,976~~166,205,895 common membership units outstanding, of which ~~77,973,648 (48.0%~~80,017,551 (48.1%) were owned by NCM, Inc., ~~42,290,694~~43,026,794 (25.9%) were owned by Regal and 43,161,550 (26.0%) were owned by ~~Regal, 40,850,068 (25.1%) were owned by Cinemark and 1,390,566 (0.9%) were owned by AMC.~~Cinemark. The membership units held by the founding members are exchangeable into NCM, Inc. common stock on a ~~one-for-one~~1-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 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 ~~26, 2019~~31, 2020 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 ~~26, 2019.~~31, 2020.

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~~Historically, the Company’s business ishas been seasonal and for this and other reasons operating results for interim periods ~~may~~have not bebeen indicative of the Company’s full year results or future performance. Given the impact of the COVID-19 Pandemic during 2021, management expects the Company's 2021 quarterly results to vary from historical trends. 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~~1 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

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 ~~26, 2019~~31, 2020 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 and out-of-home locations owned by NCM LLC and other companies. Revenue is recognized over time as the customer receives the benefits provided by NCM LLC’s advertising services and the Company has the right to payment for performance to date. The Company considers the terms of each arrangement to determine the appropriate accounting treatment.

Concentration of Credit Risk and Significant Customers—The risk of credit loss related to the Company's trade receivables and unbilled receivables balances is accounted for through the allowance for doubtful accounts, a contra asset account which reduces the net receivables balance. The allowance for doubtful accounts balance is determined by pooling the Company's receivables with similar risk characteristics, specifically by type of customer (national or local/ regional) and then age of receivable, and applying historical write off percentages to these pools in order to determine the amount of expected credit losses as of the balance sheet date. National receivables are with large advertising agencies with strong reputations in the advertising industry and clients with stable financial positions and good credit ratings, represent larger receivables balances per customer and have significantly lower historical and expected credit loss patterns. Local and regional receivables are with ~~much~~ smaller companies sometimes with ~~limited~~less credit ~~information available,~~history and represent smaller receivable balances per customer and higher historical and expected credit loss patterns. The Company has smaller contracts with ~~thousands of~~many local clients that are not individually significant. The Company also considers current economic conditions and trends to determine whether adjustments to historical loss rates are necessary. As of March 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 26, 2019, there were no advertising~~The Company had 1 agency ~~groups or individual customers~~ through which the Company ~~sources~~sourced advertising revenue ~~representing more than 10%~~that accounted for 16.6% and 10.1% of the ~~Company’s~~Company's gross outstanding ~~gross~~ receivable ~~balance.~~balance as of April 1, 2021 and December 31, 2020, respectively. During the three months ended April 1, 2021, the Company had 1 customer that accounted for 14.0% of the Company's revenue. During the three months ended March 26, 2020, ~~and March 28, 2019,~~ the Company had no0 customers that accounted for more than 10% of revenue.

Long-lived Assets—The Company assesses impairment of long-lived assets pursuant to ASC 360 – Property, Plant and Equipment. This includes determining whether certain triggering events have occurred that could affect the value of an asset.

Share-Based Compensation—The Company has issued stock options, ~~and~~ restricted stock, ~~to certain employees~~ and restricted stock units to certain employees and its independent directors. The restricted stock and restricted stock unit grants for Company management vest upon the achievement of Company performance measures and/or service conditions, while non-management grants vest only upon the achievement of service conditions. Compensation expense of restricted stock and restricted stock units that ~~vests~~vest upon the achievement of Company performance measures is based on management’s financial projections and the probability of achieving the projections, which require considerable judgment. A cumulative adjustment is recorded to share-based compensation expense in periods that management changes its estimate of the number of shares of restricted stock and restricted stock units expected to vest. Ultimately, the Company adjusts the expense recognized to reflect the actual vested shares following the resolution of the performance conditions. Dividends are accrued when declared on unvested restricted stock and restricted stock units that isare expected to vest and are only paid with respect to shares that actually vest. On February 28, 2021 and March 2, 2021, the Company’s Board of Directors approved certain modifications to equity awards awarded under the Company’s 2016 Equity Incentive Plan to adjust performance metrics, vesting amount and future goals performance goals in light of the COVID-19 Pandemic resulting in incremental share-based compensation expense of $1.3 million for the three months ended April 1, 2021. During the three months ended April 1, 2021 and March 26, 2020, 843,729 and ~~March 28, 2019,~~ 524,303 ~~and 511,996~~ 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
March 26,
2020 March 28,
2019
Net income attributable to NCM, Inc. $ (3.7 ) $ (1.1 )
NCM LLC equity issued for purchase of intangible asset 5.0
3.7
Income tax and other impacts of subsidiary ownership changes (4.0 ) (1.4 )
Change from net income attributable to NCM, Inc. and transfers from noncontrolling interests $ (2.7 ) $ 1.2

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


	Three Months Ended
	April 1, 2021		March 26, 2020
Net loss attributable to NCM, Inc.	$	(19.4)	$	(3.7)
NCM LLC equity issued for purchase of intangible asset	6.8		5.0
Income tax and other impacts of subsidiary ownership changes	0.7		(4.0)
Issuance of shares to founding members	6.6		0
Change from net loss income attributable to NCM, Inc. and transfers from noncontrolling interests	$	(5.3)	$	(2.7)

Recently Adopted Accounting Pronouncements

During the first quarter of ~~2020,~~2021, the Company adopted ~~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 on 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 credit losses related to trade and unbilled accounts receivable reducing the allowance to $3.0 million as of the adoption date. The Company also recorded a corresponding $0.4 million reduction to the corresponding 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 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.

~~During the first 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. The Company’s adoption of ASU 2019-12 ~~is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, with early adoption permitted. The Company does~~did not ~~expect the adoption of this guidance to~~ have a material impact on the unaudited Condensed Consolidated Financial Statements or notes thereto.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update No. 2020-04, Reference Rate Reform (“ASU 2020-04”), which provides temporary optional guidance to companies impacted by the transition away from the London Interbank Offered Rate (“LIBOR”). The guidance provides certain expedients and exceptions to applying GAAP in order to lessen the potential accounting burden when contracts, hedging relationships, and other transactions that reference LIBOR as a benchmark rate are modified. This guidance is effective upon issuance and expires on December 31, 2022. The Company is currently assessing the impact of the LIBOR transition and ~~this~~ ASU 2020-04 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~~Noovie®, the Company’s cinema advertising and entertainment pre-show. The Company also sells advertising through the LEN, a series of strategically placed screens located in movie theater lobbies, as well as other forms of advertising and promotions in theater lobbies. In addition, the Company sells online and mobile advertising through ~~Cinema~~Noovie Audience Accelerator and NCM's digital gaming products including Noovie Trivia, Noovie ARcade,~~Fantasy Movie League,~~ Name That Movie and Noovie Shuffle, which can be played on the mobile apps or at ~~Noovie.com~~.Noovie.com. Further the Company sells advertising in a variety of complementary out of home venues, including restaurants, retail locations, convenience stores and office and residential buildings. 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 ~~March 26, 2020~~April 1, 2021 and December ~~26, 2019,~~31, 2020, the Company had a make-good provision of ~~$8.6~~$4.5 million and ~~$8.7~~$7.1 million, respectively.

The Company does not have any contracts with customers with terms in excess of one year that are ~~noncancelable~~noncancellable as of ~~March 26, 2020.~~April 1, 2021. 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~~cancellable are not included within this disclosure.

Disaggregation of Revenue

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The Company disaggregates revenue based upon the type of customer: national and regional, 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 months ended April 1, 2021 and March 26, 2020 ~~and March 28, 2019~~ (in millions):


	Three Months Ended					Three Months Ended
	March 26, 2020		March 28, 2019			April 1, 2021		March 26, 2020
National and regional advertising revenue	$	49.8	$	57.4	National and regional advertising revenue	$	3.7	$	49.8
Local advertising revenue	9.4		12.8		Local advertising revenue	1.2		9.4
Founding member advertising revenue from beverage concessionaire agreements	5.5		6.7		Founding member advertising revenue from beverage concessionaire agreements	0.5		5.5
Total revenue	$	64.7	$	76.9	Total revenue	$	5.4	$	64.7

Deferred Revenue and Unbilled Accounts Receivable

The changes in deferred revenue for the three months ended ~~March 26, 2020~~April 1, 2021 were as follows (in millions):

Three Months Ended
March 26,
2020
Balance at beginning of period $ (7.6 )
Performance obligations satisfied 5.4
New contract liabilities (5.3 )
Balance at end of period $ (7.5 )


	Three Months Ended
	April 1, 2021
Balance at beginning of period	$	(5.1)
New contract liabilities	(1.2)
Performance obligations satisfied	1.4
Balance at end of period	$	(4.9)

As of ~~March 26, 2020~~April 1, 2021 and December ~~26, 2019,~~31, 2020, the Company had ~~$7.3~~$2.1 million and ~~$8.0~~$2.5 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~~April 1, 2021 were as follows (in millions):


	Three Months Ended
	April 1, 2021
	Allowance for National Customer Receivables		Allowance for Local/ Regional Customer Receivables
Balance at beginning of period	$	0.2	$	2.1
Provision for bad debt	0		(0.3)
Write-offs, net	0		(0.1)
Balance at end of period	$	0.2	$	1.7

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)~~

3. LOSS PER SHARE

Basic loss per share is computed on the basis of the weighted average number of common shares outstanding. Diluted loss per share is computed on the basis of the weighted average number of common shares outstanding plus the effect of potentially dilutive common stock options, restricted stock and restricted stock units using the treasury stock method. The components of basic and diluted loss per NCM, Inc. share are as follows:

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


	Three Months Ended							Three Months Ended
	March 26, 2020			March 28, 2019				April 1, 2021		March 26, 2020
Net loss attributable to NCM, Inc. (in millions)	$	(3.7	)	$	(1.1	)	Net loss attributable to NCM, Inc. (in millions)	$	(19.4)	$	(3.7)

Weighted average shares outstanding:							Weighted average shares outstanding:
Basic	77,763,967			77,179,777			Basic	78,481,355		77,763,967
Add: Dilutive effect of stock options, restricted stock and exchangeable membership units	—			—			Add: Dilutive effect of stock options, restricted stock and exchangeable membership units	0		0
Diluted	77,763,967			77,179,777			Diluted	78,481,355		77,763,967
Loss per NCM, Inc. share:
(Loss) earnings per NCM, Inc. share:							(Loss) earnings per NCM, Inc. share:
Basic	$	(0.05	)	$	(0.01	)	Basic	$	(0.25)	$	(0.05)
Diluted	$	(0.05	)	$	(0.01	)	Diluted	$	(0.25)	$	(0.05)

The effect of ~~81,973,440~~84,427,289 and ~~80,821,540~~81,973,440 weighted average exchangeable NCM LLC common units held by the founding members for the three months ended April 1, 2021 and March 26, 2020, ~~and 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. NCM LLC common units do not participate in dividends paid on NCM, Inc.’s common stock. In addition, there were ~~3,821,388~~5,523,285 and ~~3,718,641~~3,821,388, stock options and non-vested (restricted) shares for the three months ended April 1, 2021 and March 26, 2020, ~~and March 28, 2019,~~ 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 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~~During 2020, the Company determined that recent adverse changes in macroeconomic trends, reduced cash flows as a consequence of the temporary closure of the theaters within the Company's network in response to the outbreak 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~~NCM, Inc.'s common stock ~~as of March 26, 2020~~ constituted a triggering event for its intangible assets under Accounting Standards Certification No. 360, Impairment and Disposal of Long-Lived Assets. ~~However,~~ Management considered possible scenarios in a probability-weighted estimated future undiscounted cash flow analysis, including the potential of further delays in major motion picture releases, a recurrence of the temporary theater closures and other potential adverse impacts to NCM LLC's founding members' and affiliates' financial liquidity related to the COVID-19 Pandemic. The estimated future cash flows from the affiliate agreements and ESAs calculated within the probability-weighted analyses were in excess of the net book value of these intangible assets and ~~thus,~~ no impairment charges were recorded ~~for~~in the ~~three months~~year ended ~~March 26,~~December 31, 2020. Such analysis required management to make estimates and assumptions based on historical data and consideration of future market conditions. Given the uncertainty inherent in any projection, heightened by the possibility of unforeseen additional effects of the COVID-19 Pandemic, including potential adverse impacts to NCM LLC's founding members' and affiliates' financial liquidity, actual results may differ from the estimates and assumptions used, or conditions may change, which could result in impairment charges in the 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 the event a founding member does not have sufficient common membership units to return, the adjustment is satisfied in cash in an amount calculated pursuant to NCM LLC’s Common Unit Adjustment Agreement. In addition, NCM LLC’s Common Unit Adjustment Agreement requires that a Common Unit Adjustment occur for 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~~2 percent of the annual total attendance at the prior adjustment date.

During the first quarter of 2021, NCM LLC issued 3,047,582 common membership units to two founding members for the rights to exclusive access to the theater screens and attendees added, net of dispositions, to NCM LLC’s network during the 2020 fiscal year and calculated a negative common membership unit adjustment for one founding member resulting in a

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

receivable included within “Other assets and prepaid expenses” on the unaudited Consolidated Balance Sheet. The net impact as a result of the Common Unit Adjustment to the intangible asset was $4.8 million during the first quarter of 2021.

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.

Integration Payments and Other Encumbered Theater Payments—If an existing on-screen advertising agreement with an alternative provider is in place with respect to any acquired theaters (“encumbered theaters”), the founding members may elect to receive common membership units related to those encumbered theaters in connection with the Common Unit Adjustment. 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.~~assets. During the three months ended April 1, 2021 and March 26, 2020, ~~and March 28, 2019,~~ the Company recorded a reduction to net intangible assets of ~~$1.4~~$0.0 million and ~~$2.5~~$1.4 million, respectively, related to integration and other encumbered theater payments. No integrations payments were earned for the three months ended April 1, 2021 because the Company generated negative Adjusted Operating Income Before Depreciation and Amortization (“Adjusted OIBDA”) during this period. During the three months ended April 1, 2021 and March 26, 2020, ~~and March 28, 2019,~~ AMC and Cinemark paid a total of ~~$8.5~~$0.0 million and ~~$8.1~~$8.5 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 primarily relate to AMC's acquisition of theaters from Carmike. The payments received during the three months ended March 28, 2019 relate to AMC's acquisitions of theaters from Carmike and Rave Cinemas and from Cinemark related primarily to its acquisition of theaters from Rave Cinemas. 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,~~initial public offering (“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 ~~March 26, 2020,~~April 1, 2021, AMC is no longer a related party. AMC remains a party to the ESA, Common Unit Adjustment Agreement, Tax Receivable Agreement (“TRA”) and certain other original agreements and is a member under the terms of the NCM LLC Operating Agreement, subject to fulfilling the requirements of Section 3.1 of the NCM LLC Operating Agreement. 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. As of April 1, 2021, AMC’s ownership was 0.0%.

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~~Noovie® pre-show, use of the LEN and rights to sell and display certain lobby promotions. Further, 30 seconds 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

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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):


	Three Months Ended					Three Months Ended
Included in the unaudited Condensed Consolidated Statements of Income:	March 26, 2020		March 28, 2019		Included in the unaudited Condensed Consolidated Statements of Income:	April 1, 2021		March 26, 2020
Revenue:					Revenue:
Beverage concessionaire revenue (included in advertising revenue) (1)	$	4.3	$	5.3	Beverage concessionaire revenue (included in advertising revenue) (1)	$	0.4	$	4.3
Operating expenses:					Operating expenses:
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) (3)	0.1		0.1
Non-operating expenses:
Interest income from notes receivable (included in interest income) (4)	—		0.1
Theater access fee and revenue share to founding members (2)					Theater access fee and revenue share to founding members (2)	$	1.3	$	12.5
Selling and marketing costs (3)					Selling and marketing costs (3)	$	0	$	0.1
Advertising operating costs (3)					Advertising operating costs (3)	$	0.1	$	0


~~(1)~~	(1)For the three months ended April 1, 2021 and March 26, 2020, ~~and March 28, 2019,~~ Cinemark and Regal purchased 60 seconds of on-screen advertising time from ~~NCM LLC to satisfy their obligations under their beverage concessionaire agreements at a 30 seconds equivalent CPM rate specified by the ESA.~~

~~(2)~~

Comprised of payments per theater attendee, payments per digital screen with respect to the founding member theaters included in the Company’s network and payments for access to higher quality digital cinema equipment. 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”).~~


~~(3)~~	~~Used primarily for marketing to NCM LLC’s advertising clients.~~

~~(4)On December 26, 2013,~~ NCM LLC ~~sold its Fathom Events business~~ to satisfy their obligations under their beverage concessionaire agreements at a ~~newly formed~~30 seconds equivalent CPM rate specified by the ESA. No beverage revenue was generated for the period of time that the theaters within NCM LLC's network were temporarily closed as there were no attendees upon which beverage revenue is generated and limited ~~liability company (AC JV, LLC) owned 32% by each~~for periods of reduced attendance due to the COVID-19 Pandemic.

(2)Comprised of payments per theater attendee, payments per digital screen with respect to the founding member theaters included in the Company’s network and payments for access to higher quality digital cinema equipment. Following the 2019 ESA Amendments this also includes payments to Cinemark and Regal for their share of the revenue from the sale of an additional single unit that is either 30 or 60 seconds of the Noovie pre-show in the trailer position directly prior to the “attached” trailers preceding the feature film (the “Platinum Spot”). There was no theater access fee or revenue share expense for the period of time that the theaters within NCM LLC's network were temporarily closed and reduced fees for periods of reduced attendance due to the COVID-19 Pandemic.

(3)Includes purchase of movie tickets, concession products, rental of theater space primarily for marketing to NCM LLC’s advertising clients and other payments made to the founding members ~~and 4% by NCM LLC. In consideration for~~in the ~~sale, NCM LLC received a total~~ordinary course 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 were due annually in six equal installments commencing on the first anniversary of the closing and ended on December 26, 2019.business.

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


	As of
Included in the unaudited Condensed Consolidated Balance Sheets:	April 1, 2021		December 31, 2020

Common unit adjustments and ESA extension costs, net of amortization and integration payments (included in intangible assets) (1)	$	607.5	$	608.1
Current payable to founding members under tax receivable agreement (2)	$	0	$	0.6
Long-term payable to founding members under tax receivable agreement (2)	$	22.6	$	23.7
Other payables to founding members (3)	$	0.6	$	0.6

(1)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.

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
(2)The Company paid Cinemark and Regal $0.2 million and $0.4 million during 2021 and $3.2 million and $5.8 million during 2020, respectively, in payments pursuant to the TRA which were for the 2019 tax year.

(3)Includes other payments made to the founding members in the ordinary course of business.


~~(1)~~	~~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.

~~(2)~~

The Company paid Cinemark and Regal $3.7 million and $6.7 million, respectively, in payments pursuant to the TRA during 2019 which was for the 2018 tax year. On March 21, 2020, a Treasury Department Notice postponed the due date for the Company's U.S. federal income tax return to July 15, 2020 from April 15, 2020. As such, the date the 2019 TRA payment will begin accruing interest was also delayed until July 15, 2020.

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 months ended April 1, 2021 and March 26, 2020 ~~and March 28, 2019~~ were as follows (in millions):


	Three Months Ended
	April 1, 2021		March 26, 2020
Cinemark	$	0	$	2.1
Regal	0		2.2
Total distributions to related parties	0		4.3
NCM, Inc.	0		4.1
Total	$	0	$	8.4

Three Months Ended
March 26,
2020 March 28,
2019
Cinemark $ 2.1
$ 3.0
Regal 2.2
3.1
Total distributions to related parties 4.3
6.1
NCM, Inc. 4.1
5.8
Total $ 8.4
$ 11.9

~~The~~Due to the temporary closure of the theaters within NCM LLC's network during a portion of the three months ended April 1, 2021, the mandatory distributions of available cash by NCM LLC to ~~Cinemark~~its related party founding members and ~~Regal~~NCM, Inc. for the three months ended ~~March 26, 2020 of $4.3~~April 1, 2021 were calculated as negative $30.9 million ~~are included in amounts due to founding members, net on the unaudited Condensed Consolidated Balance Sheets as of March 26, 2020~~(including negative $8.0 million for Cinemark, negative $8.0 million for Regal and negative $14.9 million for NCM, Inc.). Therefore, there will be no payment made infor the ~~second~~first quarter of ~~2020. The mandatory~~2021. Under the terms of the NCM LLC Operating Agreement, these negative amounts will be netted against future positive available cash distributions toafter the extended covenant waiver holiday, contingent upon the Company's compliance with the covenants outlined within the Credit Agreement Second Amendment defined within Note 6—Borrowings and in accordance with the NCM ~~Inc. are eliminated in consolidation.~~LLC Operating Agreement.

Amounts due to related party founding members, net, as of ~~March 26, 2020~~April 1, 2021 were comprised of the following (in millions):


	Cinemark		Regal		Total			Cinemark		Regal		Total
Theater access fees and revenue share, net of beverage revenues and other encumbered theater payments	$	2.0	$	2.7	$	4.7	Theater access fees and revenue share, net of beverage revenues and other encumbered theater payments	$	0.6	$	0	$	0.6
Distributions payable to founding members	2.1		2.2		4.3

Cost and other reimbursement							Cost and other reimbursement	0		(0.1)		(0.1)
Total amounts due to founding members, net	$	4.1	$	4.9	$	9.0	Total amounts due to founding members, net	$	0.6	$	(0.1)	$	0.5

Amounts due to related party founding members, net as of December ~~26, 2019~~31, 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	$	0.6	$	0.9	$	1.5

Integration payments due from founding members	(0.1)		(0.1)		(0.2)
Total amounts due to founding members, net	$	0.5	$	0.8	$	1.3

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 members 15.8
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)

~~Network Affiliate Transactions~~—NCM LLC paid a network affiliate owned by a family member of a director on the Company's Board of Directors $0.2 million and $0.1 million in circuit share payments during the three months ended March 26, 2020 and 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 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~~$0.7 million and ~~$0.9~~$0.7 million as of ~~March 26, 2020~~April 1, 2021 and December ~~26, 2019,~~31, 2020, respectively. Equity in (losses) earnings from AC JV, LLC of ~~$0.1~~$(0.1) million and ~~$0.2~~$0.1 million for the three months ended April 1, 2021 and March 26, 2020, ~~and March 28, 2019,~~ respectively, is included in “Other non-operating income” in the unaudited Condensed Consolidated Statements of Income.

6. BORROWINGS

The following table summarizes NCM LLC’s total outstanding debt as of ~~March 26, 2020~~April 1, 2021 and December ~~26, 2019~~31, 2020 and the significant terms of its borrowing arrangements (in millions):


	Outstanding Balance as of									Outstanding Balance as of
Borrowings	March 26, 2020			December 26, 2019			Maturity Date	Interest Rate	Borrowings	April 1, 2021		December 31, 2020		Maturity Date	Interest Rate
Revolving credit facility	$	167.0		$	39.0		June 20, 2023	(1)	Revolving credit facility	$	167.0	$	167.0	June 20, 2023	(1)
Term loans	266.0			266.6			June 20, 2025	(1)
Term loans - first tranche									Term loans - first tranche	262.6		263.3		June 20, 2025	(1)
Term loans - second tranche									Term loans - second tranche	50.0		0		December 20, 2024	(1)
Senior unsecured notes due 2026	230.0			230.0			August 15, 2026	5.750%	Senior unsecured notes due 2026	230.0		230.0		August 15, 2026	5.750%
Senior secured notes due 2028	400.0			400.0			April 15, 2028	5.875%	Senior secured notes due 2028	400.0		400.0		April 15, 2028	5.875%
Total borrowings	1,063.0			935.6					Total borrowings	1,109.6		1,060.3
Less: debt issuance costs related to term loans and senior notes	(8.7		)	(9.0		)
Less: debt issuance costs and debt discounts related to term loans and senior notes									Less: debt issuance costs and debt discounts related to term loans and senior notes	(12.3)		(8.0)
Total borrowings, net	1,054.3			926.6					Total borrowings, net	1,097.3		1,052.3
Less: current portion of debt	(2.7		)	(2.7		)			Less: current portion of debt	(3.2)		(2.7)
Carrying value of long-term debt	$	1,051.6		$	923.9				Carrying value of long-term debt	$	1,094.1	$	1,049.6

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


~~(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~~LLC’s credit agreement ~~to replace NCM LLC's senior secured credit facility, dated as of February 13, 2007, as amended~~ (the ~~“previous facility”~~“Credit Agreement”)~~. Consistent with the structure of the previous facility, the agreement~~ consists of a term loan facility and a revolving credit facility. As of ~~March 26, 2020,~~April 1, 2021, NCM LLC’s senior secured credit facility consisted of a $175.0 million revolving credit facility, a $262.6 million term loan (first tranche) and a ~~$266.0~~$50.0 million term ~~loan.~~loan (second tranche). The obligations under the senior secured credit facility are secured by a lien on substantially all of the assets of NCM LLC.

On March 8, 2021, NCM LLC entered into an amendment to its Credit Agreement (“Credit Agreement Second Amendment”). Among other things, the Credit Agreement Second Amendment provides for certain modifications to the negative covenants, with respect to NCM LLC’s audited financial statements for the fiscal year ended December 31, 2020, a waiver of the requirement to deliver such financial statements without a “going concern” or like qualification or exception, additional waivers and term changes outlined below and grants security interests in certain assets of NCM LLC and other potential loan parties that are not currently pledged to the lenders. In addition, pursuant to the Credit Agreement Second Amendment, NCM LLC incurred a second tranche of the term loans in an aggregate principal amount of $50.0 million, the net proceeds of $43.8 million will be used for general corporate purposes. Upon execution of the Credit Agreement Second Amendment, the Company recorded $2.3 million as a discount, $3.5 million as debt issuance costs and $0.4 million within “Loss on modification and retirement of debt, net”.

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

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Pandemic. As of ~~March 26, 2020,~~April 1, 2021, NCM LLC’s total availability under the $175.0 million revolving credit facility was ~~$4.4~~$5.6 million, net of $167.0 million outstanding and ~~$3.6~~$2.4 million in letters of credit. The unused line fee is 0.50% per annum which is consistent with the previous facility. ~~Borrowings under~~Following the ~~revolvingcredit facility bear interest at NCM LLC’s option of either~~Credit Agreement Second Amendment effective March 8, 2021, the applicable margin for the LIBOR index ~~plus an applicable margin ranging~~increased from a range of 1.75% to 2.25% orto a range of 2.75% to 3.25% and the applicable margin for the base rate ~~plus an applicable margin ranging~~increased from a range of 0.75% to 1.25% to a range of 1.75% to 2.25%. 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 ~~March 26, 2020~~April 1, 2021 was ~~2.80%~~4.50%.

Term Loans—First Tranche—The interest rate on the initial tranche of term loans iswas originally a rate chosen at NCM LLC’s option of either the LIBOR index plus 3.00% or the base rate plus 2.00%. Following the Credit Agreement Second Amendment effective March 8, 2021, the rate is either the LIBOR index plus 4.00% or the base rate plus 3.00%. The interest rate on the term loans as of ~~March 26, 2020~~April 1, 2021 was ~~4.63%~~5.00%. The term loans amortize at a rate equal to 1.00% annually, to be paid in equal quarterly installments. As of ~~March 26, 2020,~~April 1, 2021, NCM LLC has paid principal of ~~$4.0~~$7.4 million, reducing the outstanding balance to ~~$266.0~~$262.6 million.

Term Loans—Second Tranche—The interest rate on the second tranche of term loans is the LIBOR index plus 8.00%. The interest rate on the term loans as of April 1, 2021 was 9.00%. The term loans ~~will mature on June 20, 2025.~~amortize at a rate equal to 1.00% annually, to be paid in equal quarterly installments.

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,~~Following the Credit Agreement Second Amendment, the Company has a waiver of non-compliance with the consolidated Net Total Leverage and Consolidated Net Senior Secured Leverage financial covenants through the quarter ending June 30, 2022 (“Extended Covenant Waiver Holiday”) and the Consolidated Net Total Leverage Ratio and Consolidated Net Senior Secured Leverage Ratio financial covenants to be set to 6.75 to 1.00 and 5.50 to 1.00, respectively, for the quarter ending on or about September 29, 2022. Under the Credit Agreement, 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. Pursuant to the terms of the Credit Agreement Second Amendment, NCM LLC is restricted from making available cash distributions until after NCM LLC delivers a compliance certificate for the quarter ending on or about September 29, 2022, and, thereafter, NCM LLC may only make available cash distributions if: (i) no default or event of default under the Credit Agreement has occurred and is continuing; (ii) the senior secured financial covenant leverage ratio is equal to or less than 4.00 to 1.00; and (iii) the aggregate principal amount of all outstanding revolving loans under the Credit Agreement is $39.0 million or less. As of ~~March 26, 2020,~~April 1, 2021, NCM ~~LLC’s consolidated net senior secured leverage ratio~~LLC was ~~3.28 times (versus~~in compliance with the ~~dividend payment restriction~~requirements of ~~5.50 times~~the Credit Agreement Second Amendment described above and the ~~covenant of 4.50 times) and NCM LLC's consolidated net total leverage ratio~~noncompliance with the financial covenants was ~~4.31 times (versus the covenant of 6.25 times).~~automatically waived.

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~~$20.0 million of the Notes due 2026 during 2019 and 2018, respectively, reducing the principal amount to $230.0 million as of March 26, 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 $0.0 million and $0.3 million during the three months ended March 26, 2020 and March 28, 2019, respectively.April 1, 2021.

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 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~~Company recorded an income tax ~~rate decreased from 34.4%~~benefit of $0.0 million for the three months ended ~~March 28, 2019~~April 1, 2021 compared to ~~8.8%~~$0.4 million for the three months ended March 26, 2020 resulting in an income tax benefit of $0.4 million for the three months ended March 26, 2020 compared to an income tax benefit of $0.6 million for the three months ended March 28, 2019. The decrease in income tax benefit was primarily due to the impact of incremental unfavorable permanent tax adjustments recognized in the three months ended March 26, 2020, compared to the three months ended March 28, 2019, and state tax 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 (net of federal benefit) was 24.4% as of both March 26, 2020 and March 28, 2019.effective

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

tax rate of 0.0% for the three months ended April 1, 2021 as compared to 8.8% for the three months ended March 26, 2020. The Company recorded a full valuation allowance on its net deferred tax assets as of December 31, 2020 following the determination it was more-likely-than-not that the Company will not be able to realize the benefit of those assets. The Company maintained a full valuation allowance as of April 1, 2021, reducing deferred tax expense to $0.0 million for the three months ended April 1, 2021 and the Company’s effective tax rate to 0.0%. The Company's current blended state and federal rate (net of federal benefit) was 24.6% as of April 1, 2021 and 24.4% as of March 26, 2020.

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 ~~$21.8~~$20.1 million and short-term and long-term lease liabilities of ~~$1.7~~$1.8 million and ~~$24.1~~$22.2 million, respectively, on the balance sheet as of ~~March 26, 2020~~April 1, 2021 for all material leases with terms longer than twelve months. These balances are included within “Other assets”, “Other current liabilities” and “Other liabilities”, respectively, on the unaudited Condensed Consolidated Balance Sheets. As of ~~March 26, 2020,~~April 1, 2021, the Company had a weighted average remaining lease term of ~~9.9~~8.9 years on these leases. When measuring the ROU assets and lease liabilities recorded, the Company utilized its incremental borrowing rate in order to determine the present value of the lease payments as the leases do not provide an implicit rate. The Company used the rate of interest that it would have paid to borrow on a collateralized basis over a similar term for an amount equal to the lease payments in a similar economic environment. As of ~~March 26, 2020,~~April 1, 2021, 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 April 1, 2021 and 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.


	Three Months Ended					Three Months Ended
	March 26, 2020		March 28, 2019			April 1, 2021		March 26, 2020
Operating lease cost	$	0.9	$	0.8	Operating lease cost	$	0.9	$	0.9
Short-term lease cost	—		0.1

Variable lease cost	0.1		0.1		Variable lease cost	0.1		0.1
Total lease cost	$	1.0	$	1.0	Total lease cost	$	1.0	$	1.0

The Company made total lease payments of $0.9 million and ~~$0.8~~$0.9 million during the three months ended April 1, 2021 and 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 is presented within “Amortization of intangibles recorded for network theater screen 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

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 ~~March 26, 2020~~April 1, 2021 and December ~~26, 2019,~~31, 2020, the Company had no0 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 receive an additional monthly theater access fee that began on November 1, 2019 in consideration for NCM LLC's access to certain on-screen advertising inventory after the advertised showtime of a feature film. These fees are also based upon a fixed payment per ~~patron~~patron: (i) 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 is entitled to display the Platinum Spot, an additional single unit that is either 30 or 60 seconds of the ~~Noovie~~Noovie® pre-show in the trailer position directly prior to the “attached” trailers preceding the feature 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 or more trailers. In consideration for the utilization of the theaters for the Platinum Spots, Cinemark and Regal are entitled to receive 25% of all revenue generated for the actual display of Platinum Spots in their applicable theaters, subject to a specified minimum. If NCM LLC runs advertising in more than one concurrent advertisers’ Platinum Spot for any portion of the network over a period of time, then NCM LLC will be required to satisfy a minimum average CPM for that period of time. The Company does not owe the founding members any theater access fees or any Platinum Spot revenue share when the theaters are not displaying the Company's pre-show or when the Company does not have access to the theaters. As such, the Company did not and will not owe these fees ~~during~~for the ~~duration a~~period of time the founding ~~member's~~members' theaters ~~are~~were temporarily closed ~~in connection with~~due to the COVID-19 ~~Pandemic.~~Pandemic and future fees will be reduced if attendance remains lower than historical levels. The digital screen fee is calculated based upon average screens in use during each month. No digital screen fees were or will be incurred for ~~months where no screens are in use~~the period of time the founding member's theaters were temporarily closed due to the COVID-19 Pandemic and future 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 ~~March 26, 2020,~~April 1, 2021, the maximum potential amount of future payments the Company could be required to make pursuant to the minimum revenue guarantees is ~~$77.7~~$113.3 million over the remaining terms of the network affiliate agreements. These minimum guarantees relate to various affiliate agreements ranging in term from ~~one~~three years to twenty years, prior to any renewal periods of which some are at the option of the Company. The Company accrued ~~$0.5~~$0.0 million and ~~$0.5~~$0.0 million related to affiliate agreements with guaranteed minimums in excess of the revenue share agreement as of ~~March 26, 2020~~April 1, 2021 and December ~~26, 2019,~~31, 2020, respectively. As the guaranteed minimums are based upon agreed upon minimum attendance or affiliate revenue levels, the Company ~~will~~did not incur minimum revenue share fees during the period of time the respective affiliate's theaters were temporarily closed due to the COVID-19 Pandemic and will not for the remaining 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

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.

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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—The Company regularly reviews long-lived assets (primarily property, plant and equipment), intangible assets and investments accounted for under the cost or equity method for impairment whenever certain qualitative factors, events or changes in circumstances indicate that the carrying amounts of the

~~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 of					As of
	March 26, 2020		December 26, 2019			April 1, 2021		December 31, 2020
Investment in AC JV, LLC (1)	$	1.0	$	0.9	Investment in AC JV, LLC (1)	$	0.7	$	0.7
Other investments	0.1		0.1		Other investments	0.1		0.1
Total	$	1.1	$	1.0	Total	$	0.8	$	0.8


~~(1)~~	~~Refer to Note 5—Related Party Transactions. This investment is accounted for utilizing the equity method.~~ (1)Refer to Note 5—Related Party Transactions. This investment is accounted for utilizing the equity method.

As of ~~March 26, 2020,~~April 1, 2021, no observable price changes or impairments have been recorded as a result of the Company’s qualitative assessment of identified events or changes in the circumstances of the remaining investments. The investment in AC JV, LLC was initially valued using comparative market multiples. 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.

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 April 1, 2021				As of December 31, 2020
	As of March 26, 2020				As of December 26, 2019					Carrying Value		Fair Value (1)		Carrying Value		Fair Value (1)
	Carrying Value		Fair Value (1)		Carrying Value		Fair Value (1)
Term loans	$	266.0	$	192.9	$	266.6	$	266.9
Term loans - first tranche									Term loans - first tranche	$	262.6	$	246.8	$	263.3	$	217.2
Term loans - second tranche									Term loans - second tranche	50.0		50.0		—		—
Notes due 2026	230.0		157.6		230.0		226.2		Notes due 2026	230.0		200.7		230.0		160.7
Notes due 2028	400.0		268.9		400.0		426.7		Notes due 2028	400.0		375.0		400.0		337.5


~~(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.~~

(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 Disclosuresare as follows (in millions):


			Fair Value Measurements at Reporting Date Using
	Fair Value as of April 1, 2021		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)	$	49.8	$	49.8	$	0	$	0
Short-term marketable securities (2)	0.3		0		0.3		0
Long-term marketable securities (2)	1.2		0		1.2		0
Total assets	$	51.3	$	49.8	$	1.5	$	0

Fair Value Measurements at Reporting Date Using
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)
$ 31.9
$ 19.9
$ 12.0
$ —
Short-term marketable securities (2)
16.8
—
16.8
—
Long-term marketable securities (2)
5.3
—
5.3
—
Total assets $ 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 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 December 31, 2020		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
ASSETS:									ASSETS:
Cash equivalents (1)	$	28.8	$	16.8	$	12.0	$	—	Cash equivalents (1)	$	52.8	$	52.8	$	0	$	0
Short-term marketable securities (2)	17.5		—		17.5		—		Short-term marketable securities (2)	0.3		0		0.3		0
Long-term marketable securities (2)	7.5		—		7.5		—		Long-term marketable securities (2)	1.2		0		1.2		0
Total assets	$	53.8	$	16.8	$	37.0	$	—	Total assets	$	54.3	$	52.8	$	1.5	$	0

~~(1)~~

~~Cash Equivalents~~—The Company’s cash equivalents are carried at estimated fair value following the Company's election of the fair value option. Cash equivalents consist of money market accounts which the Company has classified as Level 1 given the active market for these accounts and commercial paper with original maturities of three months or less, which are classified as Level 2 and are valued as described below.

(1)Cash Equivalents—The Company’s cash equivalents are carried at estimated fair value following the Company's election of the fair value option. Cash equivalents consist of money market accounts which the Company has classified as Level 1 given the active market for these accounts and commercial paper with original maturities of three months or less, which are classified as Level 2 and are valued as described below.

(2)Short-Term and Long-Term Marketable Securities—The carrying amount and fair value of the marketable securities are equivalent since the Company accounts for these instruments at fair value. The Company’s government agency bonds, commercial paper and certificates of deposit are valued using third party broker quotes. The value of the Company’s government agency bonds is derived from quoted market information. The inputs in the valuation are classified as Level 1 if there is an active market for these securities; however, if an active market does not exist, the inputs are recorded at a lower level in the fair value hierarchy. The value of commercial paper and certificates of deposit is derived from pricing models using inputs based upon market information, including contractual terms, market prices and yield curves. The inputs to the valuation pricing models are observable in the market, and as such are generally classified as Level 2 in the fair value hierarchy. As of April 1, 2021 and December 31, 2020, there were $0.0 million and $1.3 million, respectively, of available-for-sale debt securities in unrealized loss positions without an allowance for credit losses. The Company has not recorded an allowance for credit losses for the marketable securities balance as of April 1, 2021 or December 31, 2020 given the immaterial difference between the amortized cost basis and the aggregate fair value of the Company's securities.

~~(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 months ended March 26, 2020 and 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 March 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.

The amortized cost basis, aggregate fair value and maturities of the marketable securities the Company held as of ~~March 26, 2020~~April 1, 2021 and December ~~26, 2019~~31, 2020 were as follows:


	As of April 1, 2021
	Amortized Cost Basis (in millions)		Aggregate Fair Value (in millions)		Maturities (1) (in years)
MARKETABLE SECURITIES:





Short-term certificates of deposit	$	0.3	$	0.3	0.4
Total short-term marketable securities	0.3		0.3


Long-term certificates of deposit	1.3		1.2		2.6
Total long-term marketable securities	1.3		1.2
Total marketable securities	$	1.6	$	1.5

NATIONAL CINEMEDIA, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

As of March 26, 2020
Amortized Cost
Basis
(in millions) Aggregate Fair
Value
(in millions)
Maturities (1)
(in years)
MARKETABLE SECURITIES:
Short-term U.S. government agency bonds $ 0.5
$ 0.5
0.5
Short-term commercial paper:
Industrial 8.0
8.0
0.1
Financial 6.0
6.0
0.1
Short-term municipal bonds 1.2
1.2
0.3
Short-term certificates of deposit 1.1
1.1
0.6
Total short-term marketable securities 16.8
16.8

Long-term U.S. government agency bonds 2.7
2.8
3.7
Long-term certificates of deposit 2.5
2.5
3.5
Total long-term marketable securities 5.2
5.3

Total marketable securities $ 22.0
$ 22.1


							As of December 31, 2020
							Amortized Cost Basis (in millions)		Aggregate Fair Value (in millions)		Maturities (1) (in years)
MARKETABLE SECURITIES:						MARKETABLE SECURITIES:

Short-term certificates of deposit						Short-term certificates of deposit	0.3		0.3		0.6

	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 deposit	0.9		0.9		0.8
Short-term certificates of deposit	1.2		1.2		0.5
Short-term commercial paper:
Financial	8.0		7.9		0.3
Industrial	4.0		4.0		0.2
Total short-term marketable securities	17.6		17.5			Total short-term marketable securities	0.3		0.3

Long-term U.S. government agency bonds	4.5		4.5		2.2

Long-term certificates of deposit	3.0		3.0		3.6	Long-term certificates of deposit	1.3		1.2		2.8
Total long-term marketable securities	7.5		7.5			Total long-term marketable securities	1.3		1.2
Total marketable securities	$	25.1	$	25.0		Total marketable securities	$	1.6	$	1.5

~~(1)~~

(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.

~~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~~EVENT

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 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.

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 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 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.

On May ~~5, 2020,~~10, 2021, the Company declared a cash dividend of ~~$0.07~~$0.05 per share (approximately ~~$5.4~~$4.0 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 May ~~18, 2020~~21, 2021 to be paid on June ~~1, 2020.~~7, 2021.

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 ofFinancial 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” and statements related to the impact of the current COVID-19 Pandemic on our business and results of operations, 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 ~~26, 2019.~~31, 2020. 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 ~~26, 2019.~~31, 2020. 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 largest cinema advertising network in the U.S., we unite brands with the power of movies and engage movie fans anytime and anywhere. We currently derive revenue principally from the sale of advertising to national, regional and local businesses in ~~Noovie~~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~~We present two different formats of our Noovie pre-show depending on the theater circuit in which it runs. In Regal and Cinemark and 1415 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,~~April 1, 2021, theaters presenting the new Noovie format with Post-Showtime Inventory made up approximately ~~58%~~59% of our ~~network based upon attendance.~~network. All other NCM network theater circuits, which make up the remaining ~~42%~~41% 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 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~~Noovie Audience Accelerator, ~~and~~ across our suite of Noovie digital properties, including Noovie.com, Noovie Shuffle, Name That Movie, andNoovie Arcade,,as well as a variety of complementary out of home venues, including restaurants, retail locations, convenience stores and ~~Fantasy Movie League~~,office and residential buildings, in order to reach entertainment audiences beyond the theater. As of ~~March 26, 2020,~~April 1, 2021, approximately ~~4.2~~5.2 million moviegoers have downloaded our mobile apps. These downloads and the acquisition of second party data have resulted in first- and second-party data sets of over ~~146~~183.7million as of ~~March 26, 2020.~~April 1, 2021. We have long-term ESAs (approximately ~~19.5~~18.5weighted average years remaining based on pre-COVID-19 attendance ~~as of March 26, 2020)~~levels) with the founding members and multi-year agreements with our network affiliates, which expire at various dates between ~~September 2020~~ May 2021and ~~July 2031.~~December 2037. The weighted average remaining term ~~(based on attendance)~~ of the ESAs and the network affiliate agreements is ~~17.1~~20.9 years as of ~~March 26, 2020.~~April 1, 2021. 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 99% of the aggregate founding member and~~digital content 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 (96% digital cinema projectors and 4% LCD projectors) as of March 26, 2020.~~“DCN”.

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.

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 annual report on Form 10-K filed with the SEC on ~~February 20, 2020~~March 8, 2021 for our fiscal year ended December ~~26, 2019.~~31, 2020.

Recent Developments

COVID-19—Following the World Health Organization’s declaration of the COVID-19 virus as a pandemic in March 2020, the United States’ government and other 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 our founding members and all of our network affiliates announced that their theaters would be temporarily closed and almost all of the theaters within our network remained closed until late August 2020, with Regal temporarily re-closing its theaters again in October 2020. As of April 1, 2021, approximately 60.0% of the theaters within our network had reopened. Many of the open theaters are operating at reduced hours and offering a limited number of movie showtimes and attendance at open theaters has not returned to ~~address this pandemic. Several major~~historical levels. Major motion picture releases expected to occur during the temporary closure period were delayed until ~~later in 2020~~2021 or ~~2021 and some other studios shortened the “release window” between the release of motion pictures in theaters and an alternative delivery method or~~have been released ~~motion pictures~~ directly to alternative delivery methods bypassing the theater entirely. As of May 7, 2021, approximately 77.0% of the theaters within our network have reopened.

The Company generated no in-theater advertising revenue for the approximate six months that the theaters were closed and on September 4, 2020 the Company resumed advertising within the theaters that were open in our network; however, in-theater advertising revenue continues to be adversely impacted as attendance at the reopened theaters has been significantly less than normal given COVID-19 restrictions around patron capacity limitations and a continued lack of new major motion picture releases. The results of operations for the ~~first quarter of 2020~~three months ended April 1, 2021 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~~COVID-19 Pandemic.~~” As of the date of this filing, almost all theaters remain closed across the United States~~.

~~We are unable~~The Company's ability to advertise inhas been and will continue to be limited due to the portion of our network that is closed, reduced movie schedules and patron capacities at many network theaters and ~~thus we will not generate any in theater revenue, for~~ the ~~duration~~timing and frequency of ~~time that~~major motion picture releases as compared to prior years due to the ~~theaters are closed.~~COVID-19 Pandemic. Our theater access fees, network affiliate payments and Platinum Spot revenue share payments are driven by attendance, active screens ~~and~~and/or in-theater advertising revenue, and therefore, ~~will~~were not be incurred for the duration of time that the theaters were closed and attendance-based fees will continue to be reduced for the period of time that attendance is lower than historical levels. Even though our ability to generate in-theater advertising revenue will be negatively impacted by government mandated capacity restrictions and the limited new content currently available, we are ~~closed.~~still required to pay these screen-based fees when theaters are open, which may be reduced for months where screens are in use for only part of the month. 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%~~Given the limited attendance levels and delay in new movie releases, during the three months ended April 1, 2021, over 75% of our ~~staff~~current employee base continued to be furloughed or had salary reductions of up to 50% (“Temporary Salary and ~~temporarily reduced~~Wage Reductions”). Further, since the ~~pay~~start of the ~~remaining employees~~COVID-19 Pandemic our total headcount has been reduced by ~~up to 50%, which in aggregate reduced our wage expense by 50%;~~almost 30% from pre-COVID-19 Pandemic headcount levels.

Since the start of the COVID-19 Pandemic and during the three months ended April 1, 2021, we have also taken the following cash preservation actions that the Company anticipates continuing until the Company’s operations normalize:

•Temporarily reduced cash compensation of the Company's Board of Directors by 20%; and offered the option for the Board to receive the cash retainers for the first and second quarter in equivalent value of the Company’s common stock in lieu of cash;

•Suspended certain 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~~worked with our ~~landlords,~~ vendors, and other 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 for the first three quarters of 2020 and to $0.05 for the fourth quarter of 2020 and first quarter of 2021 from $0.19 per share in the fourth quarter of 2019. When compared to the ~~fourth~~first quarter of ~~2019~~2020 this results in ~~quarterly~~a cash savings of ~~$9.4~~$11.2 million in the first quarter of 2021 and cash savings of $41.6 million for NCM, Inc.; since the beginning of the pandemic; and

•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 marketable securities balance~~The Company's ability 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~~normalize operations ~~during~~is dependent upon 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. Management believes that cash on hand following the additional draw down on the revolving credit facility, collection of accounts 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 compliance with these 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 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 outsidereopening 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~~remaining theaters within our network, the release of default under the Credit Agreement has occurred and 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~~major motion pictures to the ~~extension~~theaters, and the attendance of theater patrons. As of the filing date, multiple COVID-19 vaccines have been developed and immunizations are under way throughout the ~~date the 2019 TRA payment will begin 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 the unprecedented adverse economic impacts~~United States. Because of this, cases of the COVID-19 ~~Pandemic commonly referred~~virus have decreased from the peak numbers experienced in late 2020 and government restrictions have lessened allowing theaters in key markets to asreopen. Regal also began a phased reopening of its theaters within our network beginning in April 2021 and multiple major motion picture releases are scheduled beginning in May 2021. However, there can be no assurance that the ~~CARES Act. Based on our preliminary analysis~~cases of the ~~CARES Act, we expect~~COVID-19 virus will continue to ~~recognize~~decline, when theaters within our network will return to normal operations, that the ~~following benefits:~~

Deferral of 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 halftheaters which have reopened will remain open or that patrons will return to the ~~end of 2022; and~~

~~A refundable 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 and intends to seek any available potential benefits that would positively impact the Company.~~theaters at historical levels.

We believe that the exhibition industry has historically fared well during ~~recessions,~~periods of economic stress, and we remain optimistic, though cannot guarantee, that our founding members and network affiliates will rebound and attendance figures will benefit from pent-up social demand as ~~home sheltering subsides~~state and local restrictions or other social distancing orders subside and people seek togetherness with a return to normalcy. However, the ultimate significance of the COVID-19 Pandemic, including the extent of the adverse impact on our financial and operational results, will be dictated by the currently unknowable duration ~~and~~of the pandemic, the effect of the pandemic on the overall economy and ofthe advertising market and responsive governmental regulations, including ~~shelter-in-place orders and~~ mandated business ~~closures.~~closures which could recur after a reopening causing subsequent closure periods, social distancing guidelines, theater capacity restrictions, shifting movie slates, voluntary theater closures and the level of theater attendance. Our business also could be significantly affected should the disruptions caused by the COVID-19 Pandemic lead to changes in consumer behavior (such as the movie audience’s willingness to return to the movie theaters and the impacts of social ~~distancing)~~distancing, facemask requirements and other measures on the movie going experience), ~~which we believe will be temporary,~~ or further reductions or impacts 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, particularly over the near to medium term. We are monitoring the rapidly evolving situation and its potential impacts on our financial position, results of operations, liquidity and cash flows.

On March 8, 2021, NCM LLC entered into the Credit Agreement Second Amendment. Among other things, the Credit Agreement Second Amendment provides for certain modifications to the negative covenants, with respect to NCM LLC’s audited financial statements for the fiscal year ended December 31, 2020, a waiver of the requirement to deliver such financial statements without a “going concern” or like qualification or exception, additional waivers and term changes outlined below and grants security interests in certain assets of NCM LLC and other potential loan parties that are not currently pledged to the lenders. In addition, pursuant to the Credit Agreement Second Amendment, NCM LLC incurred a second tranche of the term loans in an aggregate principal amount of $50.0 million, the net proceeds of $43.8 million will be used for general corporate purposes. Upon execution of the Credit Agreement Second Amendment, the Company recorded $2.3 million as a discount, $3.5 million as debt issuance costs and $0.4 million within “Loss on modification and retirement of debt, net”.

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
Q1 2020 Q1 2019 Q1 2020 to Q1 2019
Revenue $ 64.7
$ 76.9
(15.9 )%
Operating expenses:
Advertising 36.8
39.2
(6.1 )%
Network, administrative and unallocated costs 23.0
26.8
(14.2 )%
Total operating expenses 59.8
66.0
(9.4 )%
Operating income 4.9
10.9
(55.0 )%
Non-operating expenses 13.5
14.1
(4.3 )%
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 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 $ 14.4
$ 22.1
(34.8 )%
Adjusted OIBDA margin 22.3 % 28.8 % (6.5 )%
Total theater attendance (in millions) (1)
120.4
148.7
(19.0 )%


							% Change
	Q1 2021			Q1 2020			Q1 2021 to Q1 2020
Revenue	$	5.4		$	64.7		(91.7)	%
Operating expenses:
Advertising	10.5			36.8			(71.5)	%
Network, administrative and unallocated costs	23.2			23.0			0.9	%
Total operating expenses	33.7			59.8			(43.6)	%
Operating (loss) income	(28.3)			4.9			(677.6)	%
Non-operating expenses	13.7			13.5			1.5	%
Income tax benefit	—			(0.4)			(100.0)	%
Net loss attributable to noncontrolling interests	(22.6)			(4.5)			402.2	%
Net loss attributable to NCM, Inc.	$	(19.4)		$	(3.7)		424.3	%

Net loss per NCM, Inc. basic share	$	(0.25)		$	(0.05)		400.0	%
Net loss per NCM, Inc. diluted share	$	(0.25)		$	(0.05)		400.0	%

Adjusted OIBDA	$	(16.2)		$	14.4		(212.5)	%
Adjusted OIBDA margin	(300.0)		%	22.3		%	(322.3)	%
Total theater attendance (in millions) (1)	13.8			120.4			(88.5)	%

_________________________


~~(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.

(1)Represents the total attendance within our advertising network, excluding screens and attendance associated with certain AMC Carmike 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 expense adjusted to also exclude amortization of intangibles recorded for network theater screen leases and 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 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 share-based payment ~~costs or costs associated with the resignation of the Company’s former Chief Executive Officer.~~costs. 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):


								Q1 2021			Q1 2020
	Q1 2020			Q1 2019
Operating income	$	4.9		$	10.9
Operating (loss) income							Operating (loss) income	$	(28.3)		$	4.9
Depreciation expense	3.2			3.3			Depreciation expense	3.3			3.2
Amortization of intangibles recorded for network theater screen leases	6.1			6.9			Amortization of intangibles recorded for network theater screen leases	6.1			6.1
Share-based compensation costs (1)	0.2			0.8			Share-based compensation costs (1)	2.7			0.2
CEO transition costs (2)	—			0.2
Adjusted OIBDA	$	14.4		$	22.1		Adjusted OIBDA	$	(16.2)		$	14.4
Total revenue	$	64.7		$	76.9		Total revenue	$	5.4		$	64.7
Adjusted OIBDA margin	22.3		%	28.8		%	Adjusted OIBDA margin	(300.0)		%	22.3		%


~~(1)~~	~~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.~~

(1)Share-based compensation costs are included in network operations, selling and marketing and administrative expense in the accompanying unaudited Condensed Consolidated Financial Statements.

Our Network—The change in the number of screens in our network by the founding members and network affiliates during the three months ended ~~March 26, 2020~~April 1, 2021 was as follows.

Number of screens
Founding Members Network Affiliates Total
Balance as of December 26, 2019 16,880
4,328
21,208
Lost affiliates, net of new affiliates (1)
—
(175 ) (175 )
Openings, net of closures (2)
93
(24 ) 69
Balance as of March 26, 2020 16,973
4,129
21,102


	Number of screens
	Founding Members	Network Affiliates	Total
Balance as of December 31, 2020	16,515	3,935	20,450
New affiliates, net of lost affiliates (1)	—	340	340
Closures, net of openings (2)	(81)	(51)	(132)
Balance as of April 1, 2021	16,434	4,224	20,658


~~(1)~~	Represents the loss of two of our affiliates that did not renew their contracts as of the end of the first quarter of 2020 resulting in a reduction of 185 affiliate screens to our network, offset by the addition of two new affiliates which added 10 new screens to our network during the three months ended March 26, 2020.


~~(2)~~	~~Excludes the temporary theater closures in response to the COVID-19 Pandemic.~~

(1)Represents the addition of one new affiliate which added 363 new screens to our network, offset by the loss of one of our affiliates that closed as of the end of the first three months of 2021 resulting in a reduction of 23 affiliate screens to our network during the three months ended April 1, 2021.

(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~~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 April 1, 2021 (first quarter of 2021) and March 26, 2020 (first quarter of 2020) ~~and March 28, 2019 (first quarter of 2019)~~ 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

First Quarter of ~~2020~~2021 and First Quarter of ~~2019~~2020

Revenue. Total revenue decreased ~~15.9%~~91.7%, from ~~$76.9~~$64.7 million for the first quarter of ~~2019~~2020 to ~~$64.7~~$5.4million for the first quarter of ~~2020.~~2021. The following is a summary of revenue by category (in millions):


					$ Change			% Change							$ Change		% Change
	Q1 2020		Q1 2019		Q1 2020 to Q1 2019			Q1 2020 to Q1 2019			Q1 2021		Q1 2020		Q1 2021 to Q1 2020		Q1 2021 to Q1 2020
National and regional advertising revenue	$	49.8	$	57.4	$	(7.6	)	(13.2	)%	National and regional advertising revenue	$	3.7	$	49.8	$	(46.1)	(92.6)	%
Local advertising revenue	9.4		12.8		(3.4		)	(26.6	)%	Local advertising revenue	1.2		9.4		(8.2)		(87.2)	%
Founding member advertising revenue from beverage concessionaire agreements	5.5		6.7		(1.2		)	(17.9	)%	Founding member advertising revenue from beverage concessionaire agreements	0.5		5.5		(5.0)		(90.9)	%
Total revenue	$	64.7	$	76.9	$	(12.2	)	(15.9	)%	Total revenue	$	5.4	$	64.7	$	(59.3)	(91.7)	%

The following table shows data on theater attendance and revenue per attendee for the ~~first quarter~~three months ended April 1, 2021 and March 26, 2020:


					% Change
	Q1 2021		Q1 2020		Q1 2021 to Q1 2020
National and regional advertising revenue per attendee	$	0.268	$	0.414	(35.3)	%
Local advertising revenue per attendee	$	0.087	$	0.078	11.5	%
Total advertising revenue (excluding founding member beverage revenue) per attendee	$	0.355	$	0.492	(27.8)	%
Total advertising revenue per attendee	$	0.391	$	0.537	(27.2)	%
Total theater attendance (in millions) (1)	13.8		120.4		(88.5)	%

________________________________________________________

(1)Represents the total attendance within our advertising network, excluding screens and attendance associated with certain AMC Carmike theaters that were part of ~~2020 and the first quarter of 2019:~~another cinema advertising network for certain periods presented.

% Change
Q1 2020 Q1 2019 Q1 2020 to Q1 2019
National and regional advertising revenue per attendee $ 0.414
$ 0.386
7.3 %
Local advertising revenue per attendee $ 0.078
$ 0.086
(9.3 )%
Total advertising revenue (excluding founding
member beverage revenue) per attendee
$ 0.492
$ 0.472
4.2 %
Total advertising revenue per attendee $ 0.537
$ 0.517
3.9 %
Total theater attendance (in millions) (1)
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 ~~$7.6~~$46.1 million, or ~~13.2%~~92.6%, decrease in national and regional advertising revenue (excluding beverage revenue from founding members) was ~~primarily~~ due to ~~a 9.4%~~an 95.4% decrease in impressions sold ~~and an 8.7% decrease~~due to the continued temporary closure of approximately 40% of the theaters within our network in ~~national advertising CPMs (excluding beverage). The decrease in impressions sold was primarily related~~response 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~~significant decrease in ~~the temporary closure of our network's~~attendance from historical levels at open 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~~during 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 CPMs in the first 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 first quarter of 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.2021.

Local advertising revenue. The ~~$3.4~~$8.2 million, or ~~26.6%~~87.2%, decrease in local advertising revenue was ~~primarily~~ due to ~~a 14.9% decrease~~the continued temporary closure of approximately 40% the theaters within our network in response to the ~~volume of contracts~~COVID-19 Pandemic and ~~a 16.5% decrease in~~ the ~~average contract value primarily related to a~~ 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 customer churn for~~attendance from historical levels at open theaters during the first quarter of 2020, compared to the first quarter of 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 2020.2021.

Founding member beverage revenue. The ~~$1.2~~$5.0 million, or ~~17.9%~~90.9%, decrease in national advertising revenue from the founding members’ beverage concessionaire agreements was primarily due to ~~a 19.4%~~an 89.7% decrease in founding member attendance ~~partially offset by a net 1.7% increase in beverage revenue CPMs in~~for the first quarter of 2021, as compared to the first quarter of 2020, ~~compared~~due to the continued temporary theater closures described above related to the COVID-19 Pandemic.

the first quarter of 2019. The 2020 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 2018 to 2019 for AMC, which decreased 0.3%.

Operating expenses. Total operating expenses decreased$~~6.2~~26.1million, or ~~9.4%~~43.6%, from ~~$66.0~~$59.8 million for the first quarter of ~~2019~~2020 to ~~$59.8~~$33.7million for the first quarter of ~~2020.~~2021. The following table shows the changes in operating expense for the first quarter of ~~2020 and the first quarter of 2019~~2021 (in millions):


					$ Change		% Change
	Q1 2021		Q1 2020		Q1 2021 to Q1 2020		Q1 2021 to Q1 2020
Advertising operating costs	$	1.5	$	6.2	$	(4.7)	(75.8)	%
Network costs	1.8		2.9		(1.1)		(37.9)	%
Theater access fees and revenue share—founding members	3.1		17.7		(14.6)		(82.5)	%
Selling and marketing costs	7.7		13.9		(6.2)		(44.6)	%
Administrative and other costs	10.2		9.8		0.4		4.1	%
Depreciation expense	3.3		3.2		0.1		3.1	%
Amortization of intangibles recorded for network theater screen leases	6.1		6.1		—		—	%
Total operating expenses	$	33.7	$	59.8	$	(26.1)	(43.6)	%

$ Change % Change
Q1 2020 Q1 2019 Q1 2020 to Q1 2019 Q1 2020 to Q1 2019
Advertising operating costs $ 6.2
$ 7.3
$ (1.1 ) (15.1 )%
Network costs 2.9
3.5
(0.6 ) (17.1 )%
Theater access fees and revenue share—founding members 17.7
19.1
(1.4 ) (7.3 )%
Selling and marketing costs 13.9
15.2
(1.3 ) (8.6 )%
Administrative and other costs 9.8
10.7
(0.9 ) (8.4 )%
Depreciation expense 3.2
3.3
(0.1 ) (3.0 )%
Amortization of intangibles recorded for
network theater screen leases
6.1
6.9
(0.8 ) (11.6 )%
Total operating expenses $ 59.8
$ 66.0
$ (6.2 ) (9.4 )%

Advertising operating costs. Advertising operating costs decreased ~~$1.1~~$4.7 million, or ~~15.1%~~75.8%, from ~~$7.3 million for the first quarter of 2019 to~~ $6.2 million for the first quarter of ~~2020.~~2020 to $1.5 million for the first quarter of 2021. The decrease was due primarily to a $4.0 million decrease in advertising affiliate expense due to lower revenue in the first quarter of 2021 as compared to the first quarter of 2020 due to the COVID-19 Pandemic, and a $0.4 million decrease in personnel related expenses due to the Temporary Salary and Wage Reductions in place during the first quarter of 2021 in response to the COVID-19 Pandemic.

Network costs. Network costs decreased $1.1 million, or 37.9%, from $2.9 million for the first quarter of 2020 to $1.8 million for the first quarter of 2021. The decrease was primarily related to a ~~$1.3~~$0.9 million decrease in ~~affiliate advertising payments~~personnel related expenses related to the Temporary Salary and Wage Reductions in place during the first quarter of 2021 in response to the COVID-19 Pandemic and a $0.1 million decrease related to non-essential operating expenditures, including employee travel that was suspended as part of the measures taken to reduce expenses and preserve cash during the COVID-19 Pandemic.

Theater access fees and revenue share—founding members. Theater access fees and revenue share decreased $14.6 million, or 82.5%, from $17.7 million in the first quarter of 2020 to $3.1 million in the first quarter of 2021. The decrease was due to ~~a 17.3%~~an 89.7% decrease in ~~network affiliate~~founding member attendance for the first quarter of ~~2020~~2021, as compared to first quarter of 2020, and fewer active founding member screens during the first quarter of ~~2019~~2021 due ~~primarily~~to the temporary closure of certain founding member theaters in response to the COVID-19 Pandemic. ~~The decrease was also due to a 2.0%, or 88 screens, decrease in the number of average affiliate screens as of the first quarter of 2020, compared to the first quarter of 2019.~~

~~Network~~Selling and marketing costs. ~~Network~~ Selling and marketing costs decreased ~~$0.6~~$6.2 million, or ~~17.1%~~44.6%, from ~~$3.5~~$13.9 million for the first quarter of ~~2019~~2020 to ~~$2.9~~$7.7 million for the first quarter of ~~2020. The~~2021. This decrease was primarily related to a ~~$0.5~~$2.9 million decrease in personnel related expenses primarily due to a decrease in ~~performance-based compensation~~commission expense ~~accrued following an update to~~driven by the ~~Company's projected performance against internal bonus and performance based restricted stock targets~~revenue declines during the first quarter of 2021, as compared to the first quarter of 2020, ~~primarily caused by~~as well as other lower personnel related expenses related to the ~~adverse impact~~Temporary Salary and Wage Reductions in place during the first quarter of 2021 in response to the COVID-19 Pandemic, a $2.3 million decrease related to non-essential operating expenditures, including marketing, training, research, consulting and employee travel that were suspended as part of the measures taken to reduce expenses and preserve cash during the COVID-19 ~~Pandemic.~~

~~Theater access fees~~Pandemic and ~~revenue share—founding members.~~ ~~Theater access fees~~a $1.5 million decrease in bad debt expense and ~~revenue share decreased $1.4 million, or 7.3%,~~production and royalty related costs resulting from ~~$19.1 million~~lower revenue in the first quarter of ~~2019~~2021, compared to ~~$17.7 million in~~ the first quarter of 2020. The decrease was due to a $1.1 million net decrease in the expense associated with the founding member digital screens that are connected to the DCN (nearly 100% of our screens as of December 26, 2019), including higher quality digital cinema projectors and related equipment, due to the temporary closure of the founding members theaters as of March 26, 2020 and a $2.0 million decrease in the 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~~a $0.5 million increase in expense associated with our Noovie® Audience Accelerator service offering in 2021, compared to 2020 due to higher digital revenue and a change in the mix of ~~payments~~digital products sold.

Administrative and other costs. Administrative and other costs increased $0.4 million, or 4.1%, from $9.8 million 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 decreased $1.3 million, or 8.6%, from $15.2 million for the first quarter of 2019 to $13.9 million for the first quarter of 2020. This decrease was primarily related to a $1.5 million decrease in personnel related expenses primarily related to a decrease in commissions and bonus 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, compared to 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 $0.9 million, or 8.4%, from $10.7~~$10.2 million in the first quarter of ~~2019~~2021. This increase was primarily due to ~~$9.8~~a $3.2 million increase in performance-based compensation expense following the modification of certain of the Company’s performance-based stock grants during the first quarter of ~~2020. Administrative~~2021, issuance of retention related stock grants and ~~other costs decreased primarily due to a $1.1 million decrease in performance-based compensation expense accrued following an update to the~~higher projected performance against internal bonus targets, partially offset by a $1.9 million decrease in salary and ~~performance based restricted stock targets~~other personnel related expenses related to the Temporary Salary and Wage Reductions in place during the first quarter of ~~2020, compared~~2021 in response to the ~~first quarter of 2019,~~COVID-19 Pandemic, a $0.6 million decrease in legal and professional ~~expenses, a $0.4 million increase in capitalized personnel costs driven by the nature of the work being performed by our information technology~~

~~department during~~fees for the first quarter of ~~2020~~2021, as compared to the first quarter of ~~2019~~2020 and a $0.3 million decrease ~~in consulting services. These decreases were partially offset by a $1.6 million increase in salary expense primarily due to severance expense~~ related to non-essential operating expenditures, including employee travel that was suspended as part of the ~~previously announced retirement of our CFO in~~measures taken to reduce expenses and preserve cash during the ~~first quarter of 2020, the absence of a CEO in the first quarter of 2019, and an increase in head count of our digital team in the first quarter of 2020 as compared to 2019.~~COVID-19 Pandemic.

Depreciation expense. Depreciation expense ~~decreased~~increased $0.1 million, or ~~3.0%~~3.1%, from ~~$3.3 million for the first quarter of 2019 to~~ $3.2 million for the first quarter of ~~2020.~~2020 to $3.3 million in the first quarter of 2021.

Amortization of intangibles recorded for network theater screen leases. Amortization of intangibles recorded for network theater screen leases ~~decreased $0.8 million, or 11.6%, from $6.9 million for the first quarter of 2019, to~~remained consistent at $6.1 million for the first quarter of ~~2020, primarily due to the four year extension of the contractual life of the intangible assets for Cinemark~~2021 and ~~Regal following the 2019 ESA Amendments during the third quarter of 2019.~~2020.

Non-operating expenses. Total non-operating expenses ~~decreased $0.6~~increased $0.2 million, or ~~4.3%~~1.5%, from ~~$14.1 million for the first quarter of 2019 to~~ $13.5 million for the first quarter of ~~2020.~~2020 to $13.7 million for the first quarter of 2021. The following table shows the changes in non-operating expense for the first quarter of ~~2020~~2021 and the first quarter of ~~2019~~2020 (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 )%


					$ Change		% Change
	Q1 2021		Q1 2020		Q1 2021 to Q1 2020		Q1 2021 to Q1 2020
Interest on borrowings	$	14.7	$	13.6	$	1.1	8.1	%
Interest income	—		(0.2)		0.2		(100.0)	%
Loss on modification and retirement of debt, net	0.4		—		0.4		(100.0)	%
(Gain) loss on the re-measurement of the payable to founding members under the tax receivable agreement	(1.5)		0.2		(1.7)		(850.0)	%
Other non-operating expense (income)	0.1		(0.1)		0.2		(200.0)	%
Total non-operating expenses	$	13.7	$	13.5	$	0.2	1.5	%

The ~~decrease~~increase in non-operating expense was primarily due to a ~~decrease of $0.8~~$1.1 million increase in interest on borrowings primarily due to ~~a 0.5% decrease~~the increase in debt outstanding following the ~~weighted average interest rate for~~$110.0 million draw down on the ~~first quarter~~revolving credit facility in late March 2020 and issuance of ~~2020, as compared to~~ the ~~first quarter~~second tranche of ~~2019~~the terms loans under the Credit Agreement Second Amendment entered into on March 8, 2021 and a ~~$0.5~~$0.4 million ~~decrease~~increase in the loss on modification and retirement of debt, net related to certain third party fees incurred in conjunction with the Credit Agreement Second Amendment, partially offset by a $1.7 million increase in the gain on the re-measurement of the payable to founding members under the ~~TRA~~Tax Receivable Agreement (“TRA”) due to a ~~smaller increase~~reduction in the ~~state blended~~payable to the founding members under the TRA following the recognition of certain deferred tax ~~rate~~assets related to cancellation of debt income recognized for tax purposes in the first quarter of ~~2020 as compared~~2021 related to the first quarter of 2019. These decreases were partially offset by a $0.3 million decrease in interest income on the Company's marketable securities in the first quarter of 2020 as compared to the first quarter of 2019, and the absence of a $0.3 million gain from the extinguishment of debt that occurred in the first quarter of 2019, compared to the first quarter of 2020.Credit Agreement Second Amendment.

Income Tax Benefit. Income tax benefit decreased ~~$0.2 million~~ from ~~$0.6 million for the first quarter~~income tax benefit of ~~2019 to~~ $0.4 million for the first quarter of ~~2020.~~2020 to $0.0 million of income tax benefit for the first quarter of 2021. The decrease in income tax benefit was primarily due to ~~smaller~~the full valuation allowance recorded against the Company’s deferred tax ~~benefit recognized in the first quarter~~assets as of ~~2020, compared~~April 1, 2021 which reduced deferred tax expense 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~~$0.0 million for the ~~first quarter of 2020, compared to the first quarter of 2019.~~three months ended April 1, 2021.

Net Loss. Net loss increased ~~$2.6~~$15.7 million from ~~$1.1 million for the first quarter~~net loss of ~~2019 to~~ $3.7 million for the first quarter of ~~2020.~~2020 to $19.4 million for the first quarter of 2021. The increase in net loss was due to a ~~$6.0~~$33.2 million ~~decrease~~increase in operating ~~income and~~loss, a ~~$0.2~~$0.4 million decrease in income tax benefit and a $0.2 million increase in non-operating expense, partially offset by ~~a $3.0~~an $18.1 million ~~decrease~~increase in net loss attributable to noncontrolling ~~interests and a $0.6 million decrease in non-operating expenses.~~interests.

Known Trends and Uncertainties

COVID-19—As discussed within the '‘Recent Developments'’ section, due to the COVID-19 Pandemic, approximately 40% of the ~~Company is unable~~theaters within the Company’s network remained temporarily closed as of April 1, 2021 and the Company's ability to advertise inwithin the opened theaters has been and will continue to be limited due to reduced movie schedules and patron capacities at many network theaters and ~~thus generate~~ the ~~majority~~timing and frequency of ~~its revenue, for~~new major motion picture releases as compared to prior years due to the ~~duration of time that the theaters are closed. The Company's~~COVID-19 Pandemic. Our theater access fees, network affiliate payments and Platinum Spot revenue share payments are driven by attendance, active screens ~~and~~and/or revenue, and therefore, are not incurred when theaters are closed and attendance-based fees will ~~not~~ be ~~incurred~~reduced for the ~~duration the theaters are closed.~~period of time that attendance is lower than historical levels.

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~~the COVID-19 Pandemic’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~~made 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 resulting in the deferral of $1.3 million in qualifying payments in the year ended December 31, 2020 for the Company 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~~will continue to monitor the ~~other~~ provisions of the CARES Act and associated regulations and any other government action and intends to ~~determine the~~seek available potential benefits that would positively impact to the Company.

Beverage Revenue—Under the ESAs, up to 90 seconds of the~~Noovie~~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 months of ~~2020~~2021 and ~~2019,~~2020, 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. ~~The~~Per the ESA with AMC, the time sold to the founding member beverage supplier ~~for AMC~~ is priced equal to the greater of (1) the advertising CPM charged by NCM LLC in the previous year for the time sold to the founding member beverage supplier and (2) the advertising CPM for the previous year charged by NCM LLC to unaffiliated third parties during segment one (closest to showtime) of theNooviepre-show in the founding member’s theaters, limited to the highest advertising CPM being then-charged by NCM ~~LLC, which in 2019 decreased 0.3%. Thus, the~~LLC. The CPM on our beverage concessionaire revenue related to AMC in ~~2020 will decrease by 0.3%~~2021 did not change compared to ~~2019.~~2020. 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 not recognize any beverage revenue for the period of time that theaters are closed due~~Founding member attendance has been and may continue to ~~the COVID-19 Pandemic. Further, attendance may~~ be lower than historical levels following the re-opening of theaters due to the COVID-19 Pandemic which could reduce the Company’s beverage 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 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~~patron: (i) 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.closed. The digital screen fee is calculated based upon ~~average~~ screens in use during each month. No digital screen fees will be incurred for the months where ~~no screens are~~a screen is not in use and fees ~~will~~may be reduced for months where screens are in use for only part of the month. Further, founding member attendance has been and may continue to be lower than historical levels following the re-opening of theaters which could reduce the Company’s theater access fees.

Platinum Spot—In consideration for the utilization of the theaters post-showtime for Platinum Spots, Cinemark and Regal 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~~loans and the Notes due 2026 and Notes due 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~~discussed within the ‘Recent Developments’ section, due to the COVID-19 Pandemic, ~~discussed~~approximately 40% of the theaters 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 outstandingCompany’s network remained temporarily closed as of ~~March 26, 2020,~~April 1, 2021 and the Company's ability to advertise within the reopened theaters has been and will continue to be limited due to reduced movie schedules and patron capacities at many network theaters and the timing and frequency of major motion picture releases as compared to prior years due to the COVID-19 Pandemic. The Company will have limited cash receipts until ~~after~~the full network of theaters reopen, major motion pictures are released and theater patrons feel comfortable returning to the theaters ~~reopen.~~allowing attendance levels to normalize. Further, once ~~theaters re-open,~~the above conditions are met 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~~has reduced cash payments during the period theaters within the ~~theaters~~Company's network are closed or attendance levels are low as expenses related to theater attendance ~~will~~are either not be incurred or incurred at lower levels (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'~~ ‘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~~in March 2021 we received $43.8 million ~~as of March 26, 2020 ($132.2 million at NCM LLC).~~in proceeds under incremental term loans that

mature on December 20, 2024. The ~~$132.2~~$139.4 million of cash at NCM LLC as of April 1, 2021 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~~amendment entered into ~~in order to obtain a waiver of~~ on April 30, 2020 (“the ~~financial covenants~~Credit Agreement First Amendment”) and the Credit Agreement Second Amendment, for the period beginning in the second quarter of 2020 through the ~~second~~date that NCM LLC delivers a compliance certificate for the third quarter of ~~2021,~~2022, 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. As of April 1, 2021, NCM LLC was in compliance with the requirements of the Credit Agreement, as amended. Management believes ~~that cash on hand~~the Company can meet its obligations, including all interest and debt service payments within the twelve months following the ~~additional draw down~~date of issuance of these financial statements, based on ~~the revolving credit facility, collection of the $113.7 million accounts receivable balance at March 26, 2020, as well as~~its current financial position and liquidity sources, including current cash balances, and forecasted 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.cash flows.

A summary of our financial liquidity is as follows (in millions):


	As of						$ Change			$ Change				As of						$ Change		$ Change
	March 26, 2020		December 26, 2019		March 28, 2019		Q1 2020 to YE 2019			Q1 2020 to Q1 2019				April 1, 2021		December 31, 2020		March 26, 2020		Q1 2021 to YE 2020		Q1 2021 to Q1 2020
Cash, cash equivalents and marketable securities (1)	$	215.3	$	80.9	$	82.4	$	134.4		$	132.9		Cash, cash equivalents and marketable securities (1)	$	192.2	$	181.8	$	215.3	$	10.4	$	(23.1)
NCM LLC revolver availability (2)	4.4		132.4		133.2		(128.0		)	(128.8		)	NCM LLC revolver availability (2)	5.6		4.4		4.4		1.2		1.2
Total liquidity	$	219.7	$	213.3	$	215.6	$	6.4		$	4.1		Total liquidity	$	197.8	$	186.2	$	219.7	$	11.6	$	(21.9)

_________________________


~~(1)~~	Included in cash, cash equivalents and marketable securities as of March 26, 2020, December 26, 2019 and March 28, 2019, was $132.2 million, $11.4 million and $4.7 million, respectively, of cash held by NCM LLC that is not available to satisfy dividends declared by NCM, Inc., 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 March 26, 2020, December 26, 2019 and March 28, 2019. As of March 26, 2020, December 26, 2019 and 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 $167.0 million, $39.0 million and $37.0 million, respectively, and net letters of credit of $3.6 million, $3.6 million and $4.8 million, respectively.

(1)Included in cash, cash equivalents and marketable securities as of April 1, 2021, December 31, 2020 and March 26, 2020, was $139.4 million, $123.9 million and $132.2 million, respectively, of cash held by NCM LLC that is not available to satisfy dividends declared by NCM, Inc., 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 April 1, 2021, December 31, 2020 and March 26, 2020. As of April 1, 2021, December 31, 2020 and March 26, 2020, 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 $167.0 million, $167.0 million and $167.0 million, respectively, and net letters of credit of $2.4 million, $3.6 million and $3.6 million, respectively.

As of ~~March 26, 2020,~~April 1, 2021, the weighted average remaining maturity of our debt was ~~6.2~~5.2 years. As of ~~March 26, 2020,~~April 1, 2021, approximately ~~59%~~57% of our total borrowings bear interest at fixed rates. The remaining ~~41%~~43% 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.

We have ~~generated~~used and ~~used~~generated cash as follows (in millions):


	Three Months Ended						Three Months Ended
	March 26, 2020		March 28, 2019				April 1, 2021		March 26, 2020
Operating cash flow	$	58.1	$	46.0		Operating cash flow	$	(25.0)	$	58.1
Investing cash flow	0.8		15.0			Investing cash flow	$	(2.0)	$	0.8
Financing cash flow	78.4		(38.4		)	Financing cash flow	$	37.4	$	78.4

•Operating Activities.The ~~$12.1~~$83.1 million increase in cash ~~provided by~~used in operating activities for the first quarter of ~~2020,~~2021, compared to the first quarter of ~~2019~~2020 was primarily due to a ~~$16.2~~$51.7 million ~~larger~~ decrease in ~~the~~ accounts receivable ~~balance~~collections during the first quarter of ~~2020~~2021, as compared to the first quarter of ~~2019 related~~2020, a $33.8 million increase in consolidated net loss, and a $8.5 million decrease in founding member integration and other encumbered theater payments. These decreases were due to the ~~decrease~~temporary closure of the theaters within our network in ~~revenue in the first quarter of 2020 as compared~~response to the ~~fourth quarter of 2019. This increase was~~COVID-19 Pandemic resulting in significantly decreased revenue and negative Adjusted OIBDA, from which integration payments are calculated. These decreased cash inflows were partially offset by a ~~$5.6~~$10.9 million decrease in accounts payable and accrued expenses payments due to the cash preservation actions taken by the Company to mitigate the impact of the COVID-19 Pandemic.

•Investing Activities. The $2.8 million increase in ~~the consolidated net loss.~~

~~Investing Activities.~~ ~~The $14.2 million decrease~~cash used in ~~cash provided by~~ investing activities for the first quarter of ~~2020,~~2021, compared to the first quarter of ~~2019~~2020 was primarily due to ~~an $8.1~~a $4.1 million decrease in proceeds from the sale of

marketable securities, net of purchases. This decrease was partially offset by a ~~$4.3 million increase in the cash used to purchase marketable securities, and a $1.4~~$1.3 million decrease in ~~proceeds from founding member notes receivable.~~

purchases of property and equipment in 2021, compared to 2020 due to the cash preservation actions taken by the Company to mitigate the impact of the COVID-19 Pandemic.

•Financing Activities. The ~~$116.8~~$41.0 million ~~increase~~decrease in cash provided by financing activities for the first quarter of ~~2020,~~2021, compared to the first quarter of ~~2019~~2020 was primarily due to a ~~$118.0~~$128.0 million ~~increase~~decrease in proceeds from ~~our~~the revolving credit facility, net of repayments and a $5.9 million increase in ~~order~~the payment of debt issuance costs related to fund operations during the period of expected reduced cash flows due to the temporary 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 occurredCredit Agreement Second Amendment executed in the first quarter of ~~2019.~~2021. These ~~increases~~ were partially offset by a ~~$4.5~~$50.0 million increase in the issuance of term loans, a $32.4 million decrease in distributions to founding members in the first quarter of ~~2020,~~2021, compared to the first quarter of ~~2019.~~

2020, and a $10.7 million decrease in dividends paid related to the decrease in the dividend amounts declared from $0.19 per share during the first quarter of 2020 to $0.05 per share during the first quarter of 2021.

Sources of Capital and Capital ~~Requirements.~~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 ~~March 26, 2020~~April 1, 2021 were ~~$83.1~~$52.8 million (excluding $139.4 million of cash held by 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 and received net proceeds of $43.8 million from incremental terms loans in March 2021 in order to supplement the ~~anticipated~~ decrease in cash provided by operating activities during the period a portion or all of our network theaters are closed. The ~~$132.2~~$139.4 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 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 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 will be impacted by the temporary closure of our network theaters and may ~~even~~ be deferred ~~for the quarter ending June 25, 2020~~ through the quarter ending ~~July 1, 2021 until at least August 2021 due~~September 29, 2022 or longer if NCM LLC is not in compliance with the following limitations: (i) no default or event of default under the Credit Agreement has occurred and is continuing; (ii) the senior secured financial covenant leverage ratio is equal to or less than 4.00 to 1.00; and (iii) the ~~limitations instituted by~~aggregate principal amount of all outstanding revolving loans under the ~~amendment to the Company's Senior Secured~~ Credit ~~Facility.~~Agreement is $39.0 million or less. 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 ~~March 26, 2020~~April 1, 2021 was calculated as approximately ~~$8.5~~negative $30.9 million, of which NCM, Inc.'s share is approximately ~~$4.1~~negative $14.9 million. Further there was $85.9 million of negative available cash generated in during 2020. Pursuant to the NCM LLC Operating Agreement and the Credit Agreement amendments, there will be ~~distributed~~no available cash distributions made for the first quarter of 2021. Negative available cash distributions for the first quarter of 2021 and the negative available cash from 2020 are expected to be netted in accordance with the NCM ~~Inc.~~ LLC Operating Agreement against future positive available cash distributions after the Extended Covenant Waiver Holiday.

NCM, Inc. expects to use its cash balances and cash received from future available cash distributions (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 May ~~5, 2020~~10, 2021 of ~~$0.07~~$0.05 per share (approximately ~~$5.4~~$4.0 million) on each share of the Company’s common stock (not including outstanding restricted stock) to stockholders of record on May ~~18, 2020~~21, 2021 to be paid on June ~~1, 2020.~~7, 2021. These items should be sufficient to fund payments associated with the TRA with the founding members, income taxes and its quarterly dividend for the foreseeable future at the discretion of the Board of Directors. 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 substantially all its free cash 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—Critical Accounting Policies” contained in our annual report on Form 10-K filed for the fiscal year

ended December ~~26, 2019~~31, 2020 and incorporated by reference herein. As of ~~March 26, 2020,~~April 1, 2021, there were no significant changes in those critical accounting ~~policies except for~~policies.

Recent Accounting Pronouncements

For a discussion of recent accounting pronouncements, see the ~~change in allowance for doubtful accounts upon the adoption of ASC 326 in the first quarter of 2020 and discussed further within~~information provided under Note 1—The 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.~~

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 ~~26, 2019~~31, 2020 and incorporated by reference herein. There were no material changes to our contractual obligations during the three months ended ~~March 26, 2020.~~April 1, 2021.

~~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 2017, 2018 and 2019.~~

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter
FY 2017 16.9 % 22.8 % 27.3 % 33.0 %
FY 2018 18.2 % 25.8 % 24.9 % 31.1 %
FY 2019 17.3 % 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 2026 and the Notes due 2028 are at fixed rates, and therefore are not subject to market risk. As of ~~March 26, 2020,~~April 1, 2021, the only interest rate risk that we are exposed to is related to our $175.0 million revolving credit facility and our term ~~loan.~~loans. A 100-basis point fluctuation in market interest rates underlying our term ~~loan~~loans and revolving credit facility would have the effect of increasing or decreasing our cash interest expense by approximately ~~$4.3~~$4.8 million for an annual period on the $167.0 million revolving credit balance, $262.6 million term loan and ~~$266.0~~$50.0 million incremental term loan outstanding as of ~~March 26, 2020.~~April 1, 2021.

In response to the COVID-19 Pandemic, the government lowered the ~~federal reserve~~Federal Reserve interest rate leading to historically low interest rates as of ~~March 26, 2020~~April 1, 2021 that has had the effect of reducing the Company's interest rate risk. ~~The COVID-19 Pandemic has also resulted in reduced liquidity within~~If interest rates increase, this will increase 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 risk is not expected to adversely impact the Company.Company’s interest rate risk.

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 and financial officer), as appropriate, to allow timely decisions regarding required disclosure.

Management, with the participation of the Chief Executive 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 ~~March 26, 2020,~~April 1, 2021, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Company’s Chief Executive Officer concluded that the Company’s disclosure controls and procedures as of ~~March 26, 2020~~April 1, 2021 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

In early 2021, we implemented a new end-to-end order management and scheduling system that impacts reporting of revenue and certain other costs. We have evaluated the impact of this system and designed, implemented and tested internal

control procedures related to this new system where appropriate. There were no changes to our internal control over financial reporting that occurred during the quarter ended ~~March 26, 2020~~April 1, 2021 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

~~Excluding the risk factors outlined below, there~~There have been no material changes from risk factors as previously disclosed in our annual report on Form 10-K filed with the SEC on ~~February 20, 2020~~March 8, 2021 for the fiscal year ended December ~~26, 2019.~~31, 2020.

Pandemics, 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 COVID-19 virus as a pandemic, the United States’ government and other state 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 remaining 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 non-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 government-imposed restrictions on travel, public gatherings, other events and business generally, as well as the overall effect of the COVID-19 virus is currently unknown but has had and could continue to have a material adverse 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 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 reduced 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 to perceived risk of infection or health risk, other pandemic fears, quarantines and other restrictions. Even if measures are not implemented and a virus or other disease does not spread significantly, the perceived risk of infection or health risk may adversely affect our business, liquidity, financial condition and results of operations.

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 allocated or administered and we cannot assure you that we will be able to access such benefits in a timely manner or at all. Certain of the benefits 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 operations or may otherwise provide less relief than we contemplate. Accessing these benefits and our response to the COVID-19 Pandemic have required our management team to devote extensive resources and 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.

To the extent the COVID-19 Pandemic adversely affects our business and financial 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’ 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 10 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 alternative delivery methods or releasing motion pictures directly to alternative delivery methods bypassing the theater entirely), including network, video streaming and downloads via the 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 ~~Noovie~~ ~~pre-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, 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 if 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 historically seen our annual national inventory utilization vary more than 10% on an annual basis and we experience even more substantial volatility quarter-to-quarter.

~~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 part of Regal), and General Cinemas and Loews Cineplex (which are part 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.~~

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 2018, our Chief Executive Officer stepped down and a new Chief Executive Officer was appointed in August 2019. Our Chief Financial Officer retired on March 12, 2020 and the Company has engaged a national search firm and is in the process of identifying a new Chief Financial Officer.

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. In response to the COVID-19 Pandemic, the Company instituted a temporary pay reduction for all employees of up to 50% and each of our named executive officers agreed to a 20% reduction of their base salary. If these temporary salary reductions continue for an extended period of time, we may be subject to a higher rate of turnover of our senior management. Additionally, the Company is in the process of identifying a new Chief Financial Officer and other members of our senior management, and the uncertainty 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 have key-man life insurance covering any of our 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.


Period	Total 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
January 1, 2021 through January 28, 2021	75,582	$	3.58	—	N/A
January 29, 2021 through February 25, 2021	108,323	$	4.38	—	N/A
February 26, 2021 through April 1, 2021	88,854	$	4.50	—	N/A

Period Total 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, 2020 35,168
$ 7.76
—
N/A
January 24, 2020 through February 20, 2020 63,711
$ 7.61
—
N/A
February 21, 2020 through March 26, 2020 20,762
$ 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


Exhibit	Reference	Description

10.1	(1)	First Modification to the 2018 Restricted Stock Agreement
10.2	(2)	First Modification to the 2019 Restricted Stock Agreement
10.3	(3)	First Modification to the 2020 Restricted Stock Agreement
10.4	*	Amendment No. 2 to the Credit Agreement, dated as of March 8, 2021, by and among National CineMedia, LLC, each lender party thereto, and JPMorgan Chase Bank, N.A., as administrative agent.
31.1	*	Rule 13a-14(a) Certification of Chief Executive Officer and Interim PFO.
32.1	**	Certification of Chief Executive Officer and Interim PFO Pursuant to 18 U.S.C. Section 1350.
101.SCH	*	Inline XBRL Taxonomy Extension Schema Document
101.CAL	*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	*	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Exhibit Reference Description

10.1 (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.
31.1 *
Rule 13a-14(a) Certification of Chief Executive Officer and Interim PFO.
32.1 **
Certification of Chief Executive Officer and Interim PFO Pursuant to 18 U.S.C. Section 1350.
101.INS * XBRL Instance Document
101.SCH * XBRL Taxonomy Extension Schema Document
101.CAL * XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF * XBRL Taxonomy Extension Definition Linkbase Document
101.LAB * XBRL Taxonomy Extension Label Linkbase Document
101.PRE * XBRL Taxonomy Extension Presentation Linkbase Document
__________________________________



*			Filed herewith.
**			Furnished herewith.
(1)			Incorporated by reference to ~~Exhibit~~Exhibits 10.1 to the Company’s current report on Form 8-K (File No. 001-33296) filed on ~~May 5, 2020.~~March 4, 2021.
(2)			Incorporated by reference to Exhibits 10.2 to the Company’s current report on Form 8-K (File No. 001-33296) filed on March 4, 2021.
(3)			Incorporated by reference to Exhibits 10.3 to the Company’s current report on Form 8-K (File No. 001-33296) filed on March 4, 2021.

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:	May ~~5, 2020~~10, 2021	/s/ Thomas F. Lesinski
		Thomas F. Lesinski
		Chief Executive Officer and Director
		(Principal Executive Officer and Interim Principal Financial Officer)

4035



		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	2221
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3432
Item 4.	Controls and Procedures	3432

	PART II

Item 1.	Legal Proceedings	3533
Item 1A.	Risk Factors	3533
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3833
Item 3.	Defaults Upon Senior Securities	3833
Item 4.	Mine Safety Disclosures	3833
Item 5.	Other Information	3833
Item 6.	Exhibits	3934

Signatures		4035



			Fair Value Measurements at Reporting Date Using
	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)	$	31.9	$	19.9	$	12.0	$	—
Short-term marketable securities (2)	16.8		—		16.8		—
Long-term marketable securities (2)	5.3		—		5.3		—
Total assets	$	54.0	$	19.9	$	34.1	$	—



	As of March 26, 2020
	Amortized Cost Basis (in millions)		Aggregate Fair Value (in millions)		Maturities (1) (in years)
MARKETABLE SECURITIES:
Short-term U.S. government agency bonds	$	0.5	$	0.5	0.5
Short-term commercial paper:
Industrial	8.0		8.0		0.1
Financial	6.0		6.0		0.1
Short-term municipal bonds	1.2		1.2		0.3
Short-term certificates of deposit	1.1		1.1		0.6
Total short-term marketable securities	16.8		16.8

Long-term U.S. government agency bonds	2.7		2.8		3.7
Long-term certificates of deposit	2.5		2.5		3.5
Total long-term marketable securities	5.2		5.3
Total marketable securities	$	22.0	$	22.1



	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
FY 2017	16.9	%	22.8	%	27.3	%	33.0	%
FY 2018	18.2	%	25.8	%	24.9	%	31.1	%
FY 2019	17.3	%	24.8	%	24.8	%	33.1	%