AMC ENTERTAINMENT HOLDINGS, INC.

INDEX

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements. (Unaudited)

AMC ENTERTAINMENT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended

Nine Months Ended
(In millions, except share and per share amounts)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018

(unaudited)

(unaudited)
Revenues

Admissions

$
797.3

$
751.4

$
2,424.3

$
2,522.7
Food and beverage

420.0

384.8

1,281.3

1,236.4
Other theatre

99.5

85.2

317.7

288.4
Total revenues

1,316.8

1,221.4

4,023.3

4,047.5
Operating costs and expenses

Film exhibition costs

416.8

378.8

1,264.6

1,276.7
Food and beverage costs

67.2

63.6

205.1

202.0
Operating expense, excluding depreciation and amortization below

419.0

400.5

1,259.2

1,236.9
Rent

238.7

203.7

726.6

593.1
General and administrative:

Merger, acquisition and other costs

4.7

18.1

11.2

27.1
Other, excluding depreciation and amortization below

37.5

48.4

126.9

135.6
Depreciation and amortization

112.1

130.2

337.1

398.4
Operating costs and expenses

1,296.0

1,243.3

3,930.7

3,869.8
Operating income (loss)

20.8

(21.9)

92.6

177.7
Other expense (income):

Other expense (income)

(1.3)

54.1

5.1

57.5
Interest expense:

Corporate borrowings

73.2

64.3

218.7

188.2
Capital and financing lease obligations

1.8

9.4

6.0

29.5
Non-cash NCM exhibitor services agreement

10.1

10.3

30.4

31.2
Equity in earnings of non-consolidated entities

(7.5)

(70.0)

(24.2)

(74.0)
Investment income

(0.5)

(0.7)

(18.7)

(7.4)
Total other expense

75.8

67.4

217.3

225.0
Loss before income taxes

(55.0)

(89.3)

(124.7)

(47.3)
Income tax provision (benefit)

(0.2)

11.1

10.9

13.2
Net loss

$
(54.8)

$
(100.4)

$
(135.6)

$
(60.5)
Loss per share:

Basic

$
(0.53)

$
(0.82)

$
(1.31)

$
(0.48)
Diluted

$
(0.53)

$
(0.82)

$
(1.31)

$
(0.48)
Average shares outstanding:

Basic (in thousands)

103,850

123,126

103,826

126,386
Diluted (in thousands)

103,850

123,126

103,826

126,386


	Three Months Ended				Six Months Ended
(In millions, except share and per share amounts)	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019

	(unaudited)				(unaudited)
Revenues
Admissions	$	0.9	$	895.5	$	568.9	$	1,627.0
Food and beverage		0.4		492.5		288.5		861.3
Other theatre		17.6		118.1		103.0		218.2
Total revenues		18.9		1,506.1		960.4		2,706.5
Operating costs and expenses
Film exhibition costs		0.2		482.5		271.9		847.8
Food and beverage costs		4.5		76.4		57.9		137.9
Operating expense, excluding depreciation and amortization below		114.8		437.4		471.7		840.2
Rent		224.1		245.9		461.9		487.9
General and administrative:
Merger, acquisition and other costs		1.8		3.2		2.0		6.5
Other, excluding depreciation and amortization below		25.4		43.2		58.6		89.4
Depreciation and amortization		119.7		112.0		242.2		225.0
Impairment of long-lived assets, indefinite-lived intangible assets and goodwill		—		—		1,851.9		—
Operating costs and expenses		490.5		1,400.6		3,418.1		2,634.7
Operating income (loss)		(471.6)		105.5		(2,457.7)		71.8
Other expense (income):
Other expense (income):		(6.6)		(23.4)		20.3		6.4
Interest expense:
Corporate borrowings		79.6		74.2		150.9		145.5
Finance lease obligations		1.5		2.1		3.1		4.2
Non-cash NCM exhibitor services agreement		10.1		10.1		20.0		20.3
Equity in (earnings) loss of non-consolidated entities		12.4		(10.2)		15.3		(16.7)
Investment expense (income)		(1.3)		(2.1)		8.1		(18.2)
Total other expense, net		95.7		50.7		217.7		141.5
Earnings (loss) before income taxes		(567.3)		54.8		(2,675.4)		(69.7)
Income tax provision (benefit)		(6.1)		5.4		62.1		11.1
Net earnings (loss)	$	(561.2)	$	49.4	$	(2,737.5)	$	(80.8)
Earnings (loss) per share:
Basic	$	(5.38)	$	0.48	$	(26.25)	$	(0.78)
Diluted	$	(5.38)	$	0.17	$	(26.25)	$	(0.78)
Average shares outstanding:
Basic (in thousands)		104,319		103,845		104,282		103,814
Diluted (in thousands)		104,319		135,528		104,282		103,814

See Notes to Condensed Consolidated Financial Statements.

AMC ENTERTAINMENT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE ~~LOSS~~INCOME (LOSS)

Three Months Ended

Nine Months Ended
(In millions)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
Net loss

$
(54.8)

$
(100.4)

$
(135.6)

$
(60.5)
Other comprehensive income (loss):

Unrealized foreign currency translation adjustment, net of tax

(68.2)

(5.7)

(102.9)

(101.6)
Realized loss on foreign currency transactions reclassified into other expense, net of tax

—

—

0.6

1.0
Pension and other benefit adjustments:

Net gain (loss) arising during the period, net of tax

0.1

0.1

0.2

(1.3)
Equity method investee's cash flow hedge:

Unrealized net holding gain (loss) arising during the period, net of tax

��
—

—

(0.1)

0.2
Realized net gain reclassified into equity in earnings of non-consolidated entities, net of tax

—

(1.9)

—

(2.2)
Other comprehensive loss

(68.1)

(7.5)

(102.2)

(103.9)
Total comprehensive loss

$
(122.9)

$
(107.9)

$
(237.8)

$
(164.4)


	Three Months Ended				Six Months Ended
(In millions)	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019

	(unaudited)				(unaudited)
Net earnings (loss)	$	(561.2)	$	49.4	$	(2,737.5)	$	(80.8)
Other comprehensive income (loss):
Unrealized foreign currency translation adjustments		55.4		(9.3)		(38.2)		(34.7)
Realized loss on foreign currency transactions reclassified into other expense		—		0.1		—		0.6
Pension adjustments:
Realized net loss reclassified into other expense, net of tax		0.6		0.1		0.7		0.1
Equity method investee's cash flow hedge:
Unrealized net holding loss arising during the period		—		(0.1)		—		(0.1)
Other comprehensive income (loss)		56.0		(9.2)		(37.5)		(34.1)
Total comprehensive income (loss)	$	(505.2)	$	40.2	$	(2,775.0)	$	(114.9)

See Notes to Condensed Consolidated Financial Statements.

AMC ENTERTAINMENT HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(In millions, except share data)		September 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents		$	100.4	$	313.3	$	498.0	$	265.0
Restricted cash			10.2		10.7		10.4		10.5
Receivables, net			157.9		259.5		70.7		254.2
Other current assets			180.2		197.8		100.6		143.4
Total current assets			448.7		781.3		679.7		673.1
Property, net			2,581.4		3,039.6		2,417.5		2,649.2
Operating lease right-of-use assets, net			4,794.9		—		4,555.3		4,796.0
Intangible assets, net			193.9		352.1		174.3		195.3
Goodwill			4,693.8		4,788.7		2,988.4		4,789.1
Deferred tax asset, net			30.7		28.6		0.6		70.1
Other long-term assets			537.9		505.5		455.8		503.0
Total assets		$	13,281.3	$	9,495.8	$	11,271.6	$	13,675.8
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	361.6	$	452.6	$	436.1	$	543.3
Accrued expenses and other liabilities	��		338.6		378.5		257.5		324.6
Deferred revenues and income			347.5		414.8		406.1		449.2
Current maturities of corporate borrowings			21.4		15.2		20.0		20.0
Current maturities of finance lease liabilities			10.0		—		10.0		10.3
Current maturities of operating lease liabilities			568.1		—		581.5		585.8
Current maturities of capital and financing lease obligations			—		67.0
Total current liabilities			1,647.2		1,328.1		1,711.2		1,933.2
Corporate borrowings			4,710.1		4,707.8		5,498.0		4,733.4
Finance lease liabilities			89.5		493.2		83.9		89.6
Operating lease liabilities			4,857.6		—		4,744.4		4,913.8
Exhibitor services agreement			553.8		564.0		546.3		549.7
Deferred tax liability, net			49.8		41.6		43.2		46.0
Other long-term liabilities			190.0		963.1		220.0		195.9
Total liabilities			12,098.0		8,097.8		12,847.0		12,461.6
Commitments and contingencies
Class A common stock (temporary equity) ($.01 par value, 0 shares issued; 0 shares outstanding as of September 30, 2019 and 75,712 shares issued; 38,943 shares outstanding as of December 31, 2018)			—		0.4
Stockholders’ equity:
Class A common stock ($.01 par value, 524,173,073 shares authorized; 55,812,702 shares issued and 52,080,077 outstanding as of September 30, 2019; 55,401,325 shares issued and 51,705,469 outstanding as of December 31, 2018)			0.5		0.5
Class B common stock ($.01 par value, 75,826,927 shares authorized; 51,769,784 shares issued and outstanding as of September 30, 2019 and December 31, 2018)			0.5		0.5
Class A common stock ($.01 par value, 524,173,073 shares authorized; 56,282,218 shares issued and 52,549,593 outstanding as of June 30, 2020; 55,812,702 shares issued and 52,080,077 outstanding as of December 31, 2019)							0.5		0.5
Class B common stock ($.01 par value, 51,769,784 shares authorized, issued and outstanding as of June 30, 2020 and December 31, 2019)							0.5		0.5
Additional paid-in capital			2,008.9		1,998.4		2,007.3		2,001.9
Treasury stock (3,732,625 shares as of September 30, 2019 and December 31, 2018, at cost)			(56.4)		(56.4)
Accumulated other comprehensive income (loss)			(96.7)		5.5
Treasury stock (3,732,625 shares as of June 30, 2020 and December 31, 2019, at cost)							(56.4)		(56.4)
Accumulated other comprehensive loss							(63.6)		(26.1)
Accumulated deficit			(673.5)		(550.9)		(3,463.7)		(706.2)
Total stockholders’ equity			1,183.3		1,397.6
Total stockholders’ equity (deficit)							(1,575.4)		1,214.2
Total liabilities and stockholders’ equity		$	13,281.3	$	9,495.8	$	11,271.6	$	13,675.8

See Notes to Condensed Consolidated Financial Statements.

AMC ENTERTAINMENT HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended				Six Months Ended
(In millions)	September 30, 2019		September 30, 2018		June 30, 2020		June 30, 2019

Cash flows from operating activities:	(Unaudited)				(unaudited)
Net loss	$	(135.6)	$	(60.5)	$	(2,737.5)	$	(80.8)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		337.1		398.4		242.2		225.0
Deferred income taxes		7.0		(3.5)		65.4		8.9
Amortization of net discount (premium) on corporate borrowings		8.1		(2.1)
Impairment of long-lived assets, indefinite-lived intangible assets and goodwill						1,851.9		—
Amortization of net discount on corporate borrowings						6.6		5.0
Amortization of deferred charges to interest expense		11.8		11.5		8.4		7.8
Non-cash portion of stock-based compensation		11.5		10.9		6.4		9.4
Gain on dispositions		(16.0)		(2.9)		(2.4)		(16.0)
Gain on disposition of NCM		—		(30.0)
(Gain) loss on derivative asset and derivative liability		(15.4)		54.1		13.2		(12.6)
Loss on repayment of indebtedness		16.6		—		—		16.6
Equity in earnings from non-consolidated entities, net of distributions		(10.2)		(32.4)
NCM held-for-sale impairment loss		—		16.0
Equity in (earnings) loss from non-consolidated entities, net of distributions						29.6		(7.8)
Landlord contributions		89.0		100.1		24.9		64.8
Non-cash rent - purchase accounting		19.5		—
Other non-cash rent						(1.5)		13.4
Deferred rent		(45.3)		(81.3)		(25.8)		(29.4)
Net periodic benefit cost		1.3		0.5		0.6		0.6
Change in assets and liabilities, excluding acquisitions:
Change in assets and liabilities:
Receivables		93.8		117.1		177.3		32.0
Other assets		(3.2)		8.9		49.6		18.6
Accounts payable		(101.2)		(191.0)		(55.0)		(35.7)
Accrued expenses and other liabilities		(55.4)		(13.5)		(99.3)		(64.0)
Other, net		(3.2)		(1.5)		29.5		(2.2)
Net cash provided by operating activities		210.2		298.8
Net cash provided by (used in) operating activities						(415.9)		153.6
Cash flows from investing activities:
Capital expenditures		(348.2)		(374.9)		(126.7)		(229.9)
Proceeds from sale leaseback transactions		—		50.1
Proceeds from disposition of NCM		—		162.5
Proceeds from Screenvision merger		—		45.8
Acquisition of theatre assets		(11.8)		—		—		(11.8)
Proceeds from disposition of long-term assets		21.4		13.9		3.7		21.3
Investments in non-consolidated entities, net		(9.5)		(11.0)		(9.3)		(0.1)
Other, net		(0.3)		(0.7)		0.8		(0.8)
Net cash used in investing activities		(348.4)		(114.3)		(131.5)		(221.3)
Cash flows from financing activities:
Proceeds from issuance of Term Loan due 2026		1,990.0		—		—		1,990.0
Payment of principal Senior Secured Notes due 2023		(230.0)		—		—		(230.0)
Payment of principal Senior Subordinated Notes due 2022		(375.0)		—		—		(375.0)
Call premiums paid for Senior Secured Notes due 2023 and Senior Subordinated Notes due 2022		(15.9)		—		—		(15.9)
Principal payment of Term Loans due 2022 and 2023		(1,338.5)		—		—		(1,338.5)
Proceeds from issuance of Senior Unsecured Convertible Notes due 2024		—		600.0
Proceeds from issuance of First Lien Notes due 2025						490.0		—
Borrowings (repayments) under revolving credit facilities		(1.7)		6.6		322.8		(12.0)
Scheduled principal payments under Term Loans		(16.9)		(10.3)		(10.0)		(11.9)
Principal payments under capital and financing lease obligations		(8.5)		(53.5)
Cash used to pay for debt financing costs		(11.7)		(14.3)
Principal payments under finance lease obligations						(2.3)		(6.1)
Cash used to pay for deferred financing costs						(9.3)		(11.2)
Cash used to pay dividends		(63.4)		(237.4)		(4.3)		(42.6)
Taxes paid for restricted unit withholdings		(1.3)		(1.7)		(1.0)		(1.3)
Retirement of Class B common stock		—		(422.9)
Purchase of treasury stock		—		(21.8)
Net cash provided by (used in) financing activities						785.9		(54.5)
Effect of exchange rate changes on cash and cash equivalents and restricted cash						(5.6)		(0.6)
Net increase (decrease) in cash and cash equivalents and restricted cash						232.9		(122.8)

Net cash used in financing activities		(72.9)		(155.3)
Effect of exchange rate changes on cash and cash equivalents and restricted cash		(2.3)		(3.2)
Net increase (decrease) in cash and cash equivalents and restricted cash		(213.4)		26.0
Cash and cash equivalents and restricted cash at beginning of period		324.0		318.3		275.5		324.0
Cash and cash equivalents and restricted cash at end of period	$	110.6	$	344.3	$	508.4	$	201.2
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (including amounts capitalized of $0.6 million and $0.4 million)	$	184.1	$	175.1
Income taxes paid, net	$	0.1	$	9.9
Interest (including amounts capitalized of $0.5 million and $0.4 million)					$	105.7	$	146.2
Income taxes received, net					$	(8.7)	$	(2.0)
Schedule of non-cash activities:
Investment in NCM (See Note 5—Investments)	$	1.6	$	(6.3)
Investment in NCM					$	4.1	$	1.3
Construction payables at period end	$	89.1	$	102.3	$	35.3	$	87.4

See Notes to Condensed Consolidated Financial Statements.

AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~September~~June 30, ~~2019~~2020

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

AMC Entertainment Holdings, Inc. (“Holdings”), through its direct and indirect subsidiaries, including American Multi-Cinema, Inc. and its subsidiaries, (collectively with Holdings, unless the context otherwise requires, the “Company” or “AMC”), is principally involved in the theatrical exhibition business and owns, operates or has interests in theatres located in the United States and Europe. Holdings is an indirect subsidiary of Dalian Wanda Group Co., Ltd. (“Wanda”), a Chinese private conglomerate.

As of ~~September~~June 30, ~~2019,~~2020, Wanda owned approximately ~~49.85%~~49.63% of Holdings’ outstanding common stock and ~~74.89%~~74.72% of the combined voting power of Holdings’ outstanding common stock and has the power to control Holdings’ affairs and policies, including with respect to the election of directors (and, through the election of directors, the appointment of management), entering into mergers, sales of substantially all of the Company’s assets and other ~~extraordinary~~ transactions.

Temporarily Suspended Operations. As of or before March 17, 2020, the Company temporarily suspended all theatre operations in its U.S. markets and International markets in compliance with local, state, and federal governmental restrictions and recommendations on social gatherings to prevent the spread of COVID-19 and as a precaution to help ensure the health and safety of the Company’s guests and theatre staff. As a result of these temporarily suspended operations, the Company’s revenues and expenses for the three and six months ended June 30, 2020 are significantly lower than the revenues and expenses for the three and six months ended June 30, 2019. The theatre operations in the U.S. markets remained suspended for the entire second quarter of 2020. The Company resumed limited operations in the International markets in early June. As of June 30, 2020, the Company had resumed operations at 37 theatres in 9 countries in the International markets and recorded attendance of 100,000 guests during the three months ended June 30, 2020. On July 23, 2020, the Company announced it is currently planning to reopen its U.S. movie theatres in mid to late August 2020. In International markets, as of the end of July 2020, the Company has already resumed operations in more than 130 theatres in all of the countries the Company serves in Europe and the Middle East.

Liquidity. In response to the COVID-19 pandemic, the Company has taken and is continuing to take significant steps to preserve cash by eliminating non-essential costs, including reductions to executive compensation and elements of its fixed cost structure:

●

Suspended non-essential operating expenditures, including marketing & promotional and travel and entertainment expenses; and where possible, for example: utilities, reduced essential operating expenditures to minimum levels necessary while theatres are closed.

●

Terminated or deferred all non-essential capital expenditures to minimum levels necessary while theatres are closed.

●

Implemented measures to reduce corporate-level employment costs, including full or partial furloughs of all corporate-level Company employees, including senior executives, with individual work load and salary reductions ranging from 20% to 100%; cancellation of pending annual merit pay increases; and elimination or reduction of non-healthcare benefits.

●

All domestic theatre-level crew members have been fully furloughed and theatre-level management has been reduced to the minimum level necessary to begin resumption of operations when permitted. Similar efforts to reduce theatre-level and corporate employment costs are being undertaken internationally consistent with applicable laws across the jurisdictions in which the Company operates.

●

Working with the Company’s landlords, vendors, and other business partners to manage, defer, and/or abate the related rent expenses and operating expenses during the disruptions caused by the COVID-19 pandemic.

●

Introduced an active cash management process, which, among other things, requires senior management approval of all outgoing payments.

●

Since April 24, 2020, the Company has been prohibited from making dividend payments in accordance with the covenant suspension conditions in its Senior Secured Credit Agreement. The Company had also previously

elected to decrease the dividend paid in the first quarter of 2020 by $0.17 per share when compared to the first quarter of 2019. The cash savings as a result of the prior decrease and current prohibition on making dividend payments was $38.3 million during the six months ended June 30, 2020 in comparison to the six months ended June 30, 2019.

●

The Company is prohibited from making purchases under its recently authorized stock repurchase program in accordance with the covenant suspension conditions in its Senior Secured Credit Agreement.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act provides opportunities for additional liquidity, loan guarantees, and other government programs to support companies affected by the COVID-19 pandemic and their employees. Based on the Company’s preliminary analysis of the CARES Act, the Company expects to recognize the following benefits:

●

Approximately $17.4 million of cash tax refunds from overpayments and refundable alternative minimum tax credits with the filing of the Company’s 2019 federal tax return, amending 2018 state tax returns and filing 2019 state tax returns in which the Company expects a refund.

●

Deferral of social security payroll tax matches that would otherwise be required in 2020.

●

Receipt of a payroll tax credit in 2020 for expenses related to paying wages and health benefits to employees who are not working as a result of temporarily suspended operations and reduced receipts associated with COVID-19.

The Company intends to seek any available potential benefits under the CARES Act, including loans, investments or guarantees, and any other such current or future government programs for which the Company qualifies domestically and internationally, including those described above. The Company cannot predict the manner in which such benefits will be allocated or administered, and the Company cannot assure the reader that it will be able to access such benefits in a timely manner or at all.

The Company believes its cash balance as of June 30, 2020, cash generated from operating activities, the proceeds from the issuance on July 31, 2020 of $300.0 million, prior to deducting discounts and cash premiums based on contract assumptions and estimates of $36 million, of new 10.5% Senior Secured Notes due 2026 (the “First Lien Notes due 2026”) and the closing of the exchange offer on July 31, 2020 (the “Exchange Offers”) (which allowed the Company to extend maturities on approximately $1.7 billion of debt to 2026, most of which was maturing in 2024 and 2025 previously, with interest due for the coming 12 to 18 months on the exchanged senior subordinated notes expected to be paid all or in part on an in-kind basis pursuant to the terms of the 10%/12% Cash/PIK Toggle Second Lien Subordinated Secured Notes due 2026 (the “Second Lien Notes due 2026”), thereby generating a further near-term cash savings for the Company of between approximately $120 million to $180 million) may provide sufficient liquidity to fund operations and essential capital expenditures for the next 12 months. Further, as discussed in Note 6—Corporate Borrowings, the Company’s lenders have granted relief from the maintenance covenants in the revolving credit agreements and the Company believes it will maintain compliance with all financial debt covenants for the next 12 months. Therefore, the Company believes it has the cash resources to reopen its theatres and resume operations this summer or later. The Company’s liquidity needs thereafter will depend, among other things, on the timing of a full resumption of operations, the timing of movie releases and its ability to generate revenues. See Note 14—Subsequent Events, for information regarding the exchange offer and the incremental 10.5% First Lien Notes due 2026 in new funding.

While the Company has used its best estimates based on currently available information, the Company cannot assure the reader that its assumptions used to estimate its liquidity requirements will be correct—including but not limited to attendance, food and beverage revenues, rent relief, cost savings, and capital expenditures—because the Company has never previously experienced a complete cessation of its operations, and as a consequence, its ability to be predictive is uncertain. If the Company does not recommence operations within its estimated timeline, the Company will require additional capital and may also require additional financing if, for example, its operations do not generate the expected revenues or a recurrence of COVID-19 were to cause another suspension of operations. Such additional financing may not be available on favorable terms or at all. Due to these factors, substantial doubt exists about the Company’s ability to continue as a going concern for a reasonable period of time.

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

Principles of ~~Consolidation:~~Consolidation. The accompanying unaudited condensed consolidated financial statements include the accounts of AMC, as discussed above, and should be read in conjunction with the Company’s Annual Report on Form 10–K for the year ended December 31, ~~2018.~~2019. The accompanying condensed consolidated balance sheet as of December 31, ~~2018,~~2019, which was derived from audited financial statements, and the unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10–Q. Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, these interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the Company’s financial position and results of operations. All significant intercompany balances and transactions have been eliminated in consolidation. There are 0 noncontrolling interests in the Company’s consolidated subsidiaries; consequently, all of its stockholders’ equity, net earnings (loss) and total comprehensive income (loss) for the periods presented are attributable to controlling interests. Due to the seasonal nature of the Company’s business and the suspension of operations at all the Company’s theatres due to the COVID-19 pandemic, results for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2019.~~2020. The Company manages its business under 2 reportable segments for its theatrical exhibition operations, U.S. ~~Markets~~markets and International ~~Markets.~~markets.

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


			Pension and
	Foreign		Other
(In millions)	Currency		Benefits		Total
Balance December 31, 2019	$	(8.8)	$	(17.3)	$	(26.1)
Other comprehensive loss before reclassifications		(38.2)		—		(38.2)
Amounts reclassified from accumulated other comprehensive loss		—		0.7		0.7
Balance June 30, 2020	$	(47.0)	$	(16.6)	$	(63.6)

Accumulated depreciation and ~~amortization:~~amortization. Accumulated depreciation was ~~$1,708.1~~$2,028.7 million and ~~$1,697.1~~$1,820.1 million at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively, related to property. Accumulated amortization of intangible assets was ~~$21.3~~$33.4 million and ~~$72.9~~$22.8 million at ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

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


	Three Months Ended				Six Months Ended
(In millions)	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Derivative liability fair value adjustment for embedded conversion feature in the Convertible Notes due 2024	$	—	$	(33.9)	$	(0.5)	$	(20.6)
Derivative asset fair value adjustment for contingent call option related to the Class B common stock purchase and cancellation agreement		(6.4)		(7.1)		13.7		8.0
Credit losses related to contingent lease guarantees		3.9		—		9.2		—
International governmental assistance due to COVID-19		(4.4)		—		(4.4)		—
Loss on Pound sterling forward contract		—		0.7		—		1.0
Foreign currency transactions losses		(2.1)		0.1		(0.1)		0.6
Non-operating components of net periodic benefit cost		0.1		0.4		0.1		0.5
Loss on repayment of indebtedness		—		16.6		—		16.6
Financing fees related to modification of debt agreements		2.8		—		2.8		—
Other		(0.5)		(0.2)		(0.5)		0.3
Total other expense (income)	$	(6.6)	$	(23.4)	$	20.3	$	6.4

810

~~Other expense (income):~~ Impairments.The following table ~~sets forth~~summarizes the ~~components of other expense (income):~~Company’s assets that were impaired:

Three Months Ended

Nine Months Ended
(In thousands)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
Derivative liability fair value adjustment for embedded conversion feature in the Convertible Notes due 2024

$
5.7

$
54.1

$
(14.9)

$
54.1
Derivative asset fair value adjustment for contingent call option related to the Class B common stock purchase and cancellation agreement

(8.5)

—

(0.5)

—
Loss on Pound sterling forward contract

0.7

—

1.7

0.4
Foreign currency transactions losses

0.1

—

0.7

1.1
Non-operating components of net periodic benefit cost

0.3

—

0.8

0.1
Loss on repayment of indebtedness

—

—

16.6

—
Fees related to modification of term loans

—

0.4

—

0.4
Other

0.4

(0.4)

0.7

1.4
Total other expense (income)

$
(1.3)

$
54.1

$
5.1

$
57.5


	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(In millions)	2020		2019		2020		2019
Impairment of long-lived assets	$	—	$	—	$	91.3	$	—
Impairment of indefinite-lived intangible assets		—		—		8.3		—
Impairment of definite-lived intangible assets		—		—		8.0		—
Impairment of goodwill (1)		—		—		1,744.3		—
Investment expense		—		—		7.2		—
Total impairment loss	$	—	$	—	$	1,859.1	$	—

(1)

See Note 4—Goodwill for information regarding goodwill impairment.

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

During the three and six months ended June 30, 2020, the Company recorded non-cash impairment of long-lived assets of $0 and $81.4 million on 57 theatres in the U.S. markets with 658 screens (in Alabama, Arkansas, California, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming), respectively, and $0 and $9.9 million on 23 theatres in the International markets with 213 screens (in Germany, Italy, Spain, UK and Sweden), respectively. During the three and six months ended June 30, 2020, the Company recorded impairment losses related to definite-lived intangible assets of $0 and $8.0 million, respectively. In addition, in the three and six months ended June 30, 2020, the Company recorded an impairment loss of $0 and $7.2 million, respectively within investment expense (income), related to equity interest investments without a readily determinable fair value accounted for under the cost method.

At March 31, 2020, the Company performed a quantitative impairment evaluation of its indefinite-lived intangible assets related to the AMC, Odeon and Nordic tradenames. The Company recorded impairment charges of $0 and $5.9 million related to Odeon tradenames and $0 and $2.4 million related to Nordic tradenames for the three and six months ended June 30, 2020, respectively. To estimate fair value of the Company’s indefinite-lived trade names, the Company employed a derivation of the Income Approach known as the Royalty Savings.

Accounting Pronouncements Recently Adopted

Financial Instruments.

~~Leases.~~ In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which provides new guidance regarding the measurement and recognition of credit impairment for certain financial assets. Such guidance impacts how the Company determines its allowance for estimated uncollectible receivables and also contingent lease guarantees, where the Company remains contingently liable for lease payments under certain leases of theatres that it previously divested, in the event that such assignees are unable to fulfill their future lease payment obligations. ASU 2016-13 was effective for the Company in the first quarter of 2020. The Company ~~adopted~~recognized the ~~guidance~~cumulative effect upon adoption of ~~ASU No. 2016-02, Leases (“ASC 842”)~~the new standard related to credit losses for contingent lease guarantees of $16.9 million. See Note 11—Commitments and Contingencies for further information regarding contingent lease guarantees. The adoption impact on the Company’s allowance for estimated uncollectible receivables was immaterial as of January 1, ~~2019 using~~2020 and June 30, 2020. The cumulative effect of adoption was recorded to accumulated deficit under the modified retrospective ~~transition approach with~~adoption method.

Fair Value Measurement. In August 2018, the ~~cumulative effect recognized at~~FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the ~~date~~Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which eliminates, adds, and modifies certain disclosure requirements for fair value measurements as part of ~~initial application.~~its disclosure framework project. Entities are no longer required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but are required to disclose the range and weighted average used to develop significant observable inputs for Level 3 fair value measurements. The ~~comparative information~~fair value measurement disclosure requirements of ASU 2018-13 was effective for the Company in the prior year has not been adjusted and continues to be reported under ASC 840, Leases, which was the accounting standard in effect for that period. ASC 842 requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. The new standard establishes a right-of-use (“ROU”) model that requires a lessee to recognize a ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classificationfirst quarter of ~~expense recognition in the condensed consolidated statements of operations.~~2020. See Note 2—~~Leases~~9—Fair Value Measurements for the required disclosures ~~of the nature, amount, timing, and uncertainty of cash flows arising from leases.~~

for Level 3 fair value measurements.

Cloud Computing Arrangement. In August 2018, the FASB issued ASU 2018-15, Intangibles–Goodwill and

Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 requires a customer in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation, setup, and other upfront costs to capitalize as assets or expense as incurred. ASU 2018-15 was effective for the Company in the first quarter of 2020. Entities have the option to apply the guidance prospectively to all implementation costs incurred after the date of adoption or retrospectively in accordance with ASC 250-10-45. The Company adopted ASU 2018-15 prospectively and the adoption of ASU 2018-15 did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Accounting Pronouncements Issued Not Yet Adopted

~~Financial Instruments.~~Income Taxes. In ~~June 2016,~~December 2019, the FASB issued ASU ~~2016-13, Financial Instruments – Credit Losses~~2019-12, Income Taxes (Topic ~~326): Measurement of Credit Losses on Financial Instruments~~740) Simplifying the Accounting for Income Taxes (“ASU ~~2016-13”~~2019-12”), which ~~provides~~is intended to improve consistency and simplify several areas of existing guidance. ASU 2019-12 removes certain exceptions to the general principles related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance ~~regarding~~also clarifies the ~~measurement and recognition of credit impairment~~accounting for ~~certain financial assets. Such guidance will impact how~~transactions that result in a step-up in the ~~Company determines its allowance~~tax basis for ~~estimated uncollectible receivables and evaluates its available-for-sale investments for impairment.~~goodwill. ASU ~~2016-13~~2019-12 is effective for the Company in the first quarter of ~~2020.~~2021. Early adoption is permitted. The Company is currently evaluating the effect that ASU ~~2016-13~~2019-12 will have on its consolidated financial ~~statements and related disclosures.~~

~~Fair Value Measurement.~~ In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which eliminates, adds, and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for the Company in the first quarter of 2020. Early adoption is permitted. The Company plans to adopt ASU 2018-13 in the first quarter of 2020.

~~Cloud Computing Arrangement.~~ In August 2018, the FASB issued ASU 2018-15, Intangibles–Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). ASU 2018-15 requires a customer in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation, setup, and other upfront costs to capitalize as assets or expense as incurred. ASU 2018-15 is effective for the Company in the first quarter of 2020. Early adoption is permitted. Entities

have the option to apply the guidance prospectively to all implementation costs incurred after the date of adoption or retrospectively in accordance with ASC 250-10-45. The Company expects to adopt prospectively and is currently evaluating the effect that ASU 2018-15 will have on its consolidated financial statements and related disclosures.

statements.

NOTE 2—LEASES

The Company adopted ASC 842 on January 1, 2019 using the modified retrospective transition method; and therefore, the comparative information has not been adjusted for the three months and nine months ended September 30, 2018 or as of December 31, 2018. Upon transition to the new standard, the Company elected the package of practical expedients, which permitted the Company not to reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs.

~~The Company~~ leases theatres and equipment under operating and finance leases. The majority of the Company’s operations are conducted in premises occupied under lease agreements with initial base terms ranging generally from 12 to 15 years, with certain leases containing options to extend the leases for up to an additional 20 years. The Company typically does not believe that exercise of the renewal options is reasonably ~~assured~~certain at the ~~inception of the~~ lease ~~agreements~~commencement and, therefore, considers the initial base term as the lease term. Lease terms vary but generally the leases provide for fixed and escalating rentals, contingent escalating rentals based on the Consumer Price Index and other indexes not to exceed certain specified amounts and variable rentals based on a percentage of revenues. The Company often receives contributions from landlords for renovations at existing locations. The Company records the amounts received from landlords as an adjustment to the right-of-use asset and amortizes the balance as a reduction to rent expense over the base term of the lease agreement.

Operating lease right-of-use assets and lease liabilities were recognized at commencement date based on the present value of minimum lease payments over the remaining lease term. The minimum lease payments include base rent and other fixed payments, including fixed maintenance costs. The Company’s leases have remaining lease terms of approximately 1 year to 25 years, which may include the option to extend the lease when it is reasonably certain the Company will exercise that option. The present value of the lease payments is calculated using the incremental borrowing rate for operating leases, which was determined using a portfolio approach based on the rate of interest that the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. Operating lease expense is recognized on a straight-line basis over the lease term.

The Company elected the practical expedient to not separate lease and non-lease components and also elected the short-term practical expedient for all leases that qualify. As a result, the Company will not recognize right-of-use assets or liabilities for short-term leases that qualify for the short-term practical expedient, but instead will recognize the lease payments as lease cost on a straight-line basis over the lease term. The Company’s lease agreements do not contain residual value guarantees. Short-term leases and sublease arrangements are immaterial. Equipment leases primarily consist of digital projectors and food and beverage equipment.

AsThe Company received, or is in process of negotiating, rent concessions provided by the lessors that aided, or will aid, in mitigating the economic effects of COVID-19. These concessions primarily consist of rent abatements and the deferral of rent payments. In instances where there were no substantive changes to the lease terms, i.e., modifications that resulted in total payments of the modified lease being substantially the same or less than the total payments of the existing lease, the Company elected the relief as provided by the FASB staff related to the accounting for certain lease concessions. The Company elected not to account for these concessions as a ~~result~~lease modification, and therefore the Company has remeasured the related lease liability and right of ~~adopting ASC 842,~~use asset but did not reassess the lease classification or change the discount rate to the current rate in effect upon the remeasurement. The deferred payment amounts have been recorded in the Company’s ~~condensed consolidated balance sheet includes additional operating ROU assets~~lease liabilities to reflect the change in the timing of payments. As of June 30, 2020, approximately $6.4 million of lease liabilities were deferred and ~~total~~included in current maturities of operating lease liabilities ~~of $4,794.9~~and approximately $9.7 million ~~and $5,425.7 million, respectively, at September 30, 2019. The difference between the ROU assets and total~~of lease liabilities ~~upon initial measurement at January 1, 2019 was primarily due to~~were deferred and included in long-term operating lease liabilities, which are reflected in the ~~reclassification of: (i) deferred rent, landlord allowances, unfavorable lease balances, and theatre closure liabilities previously recorded in other long-term liabilities; (ii) current portions~~condensed consolidated statements of ~~theatre closure liabilities previously recorded~~cash flows as part of the change in accrued expenses and other ~~liabilities; (iii) favorable~~liabilities. Those leases that did not meet the criteria for treatment under the FASB relief were evaluated as lease ~~balances previously~~modifications. The Company recorded $194.8 million in ~~intangible assets;~~accounts payable for contractual rent amounts due and ~~(iv) prepaid rents recorded in other current assets within the condensed consolidated balance sheets as an offset or addition to the opening ROU asset balances, as required by ASC 842.~~

~~The following table provides the operating and finance ROU assets and lease liabilities:~~

(In millions)

Balance Sheet Classification

September 30, 2019
Assets

Operating lease right-of-use assets (1)

Operating lease right-of-use assets

$
4,794.9
Finance lease right-of-use assets (2)

Property, net

72.4
Total leased assets

$
4,867.3

Liabilities

Current

Operating lease liabilities (1)

Current maturities of operating lease liabilities

$
568.1
Finance lease liabilities (2)

Current maturities of finance lease liabilities

10.0
Noncurrent

Operating lease liabilities (1)

Operating lease liabilities

4,857.6
Finance lease liabilities (2)

Finance lease liabilities

89.5
Total lease liabilities

$
5,525.2

~~(1)Included~~not paid, which is reflected in the operating lease right-of-use assets and operating lease liabilities are assets and liabilities for leases related to previous build-to-suit failed sale leaseback transactions, that were derecognized and recordedstatement of cash flows as ~~a cumulative effect adjustment to accumulated deficit upon adoption~~part of ~~ASC 842. These leases were classified and remeasured at January 1, 2019 as operating right-of-use assets and operating lease liabilities.~~

~~(2)Corresponding~~the change in accounts payable. The Company is in the process of negotiating or finalizing rent concessions or deferral of payments with the adoption of ASC 842, the Company renamed previously classified capital lease assets and capital lease obligations under ASC 840 as finance lease right-of-use assets and finance lease liabilities, respectively. The Company recognized the finance lease right-of-use assets and finance lease liabilities on January 1, 2019 at the carrying amount of the capital lease asset and capital lease obligation as of December 31, 2018.

~~The cumulative effect adjustment~~lessors with respect to ~~accumulated deficit at January 1, 2019 is as follows:~~


	~~Accumulated~~
~~(In millions)~~	~~Deficit~~
~~Balance as of December 31, 2018~~	$	~~(550.9)~~
~~Derecognition of existing assets for certain sale leaseback transactions previously recorded in property, net~~		~~(405.9)~~
~~Derecognition of existing liabilities for certain sale leaseback transactions previously recorded in current maturities of corporate borrowings and capital and financing lease obligations~~		~~427.5~~
~~Derecognition of deferred gains from the sale leaseback transactions previously recorded in other long-term liabilities~~		~~102.4~~
~~Difference in fair value compared to the basis of the right-of-use assets for previously impaired asset groups~~		~~(49.0)~~
~~Deferred taxes~~		~~1.2~~
~~Cumulative effect adjustment to accumulated deficit~~		~~76.2~~
~~Balance as of January 1, 2019~~	$	~~(474.7)~~

~~The following is the impact of the adoption of ASC 842 on the Company’s condensed consolidated statement of operations for the three months ended September 30, 2019:~~

Three Months Ended September 30, 2019

Without Adoption of

U.S. Markets

International Markets

(In millions)

ASC 842

Adjustments

Adjustments

As Reported
Operating costs and expenses

Rent (1)(2)(4)

$
209.9

$
17.4

$
11.4

$
238.7
Depreciation and amortization (2)(3)

136.1

(13.4)

(10.6)

112.1
Operating costs and expenses

1,291.2

4.0

0.8

1,296.0
Operating income

25.6

(4.0)

(0.8)

20.8

Other expense (income)

Interest expense:

Capital and financing lease obligations (1)

8.7

(3.3)

(3.6)

1.8
Net loss

(56.9)

(0.7)

2.8

(54.8)

~~(1)Cash~~these rent payments for build-to-suit failed sale leasebacks of $11.0 million and $9.9 million for U.S. Markets and International Markets, respectively, are accounted for as operating leases under ASC 842 that were previously accounted for as financing leases under ASC 840.

~~(2)~~Non-cash amortization expense for favorable lease terms of $4.6 million and $1.5 million, for U.S. Markets and International Markets, respectively, reclassified to rent expense and amortized over the shorter base lease term under ASC 842.

~~(3)Depreciation on build-to-suit failed sale leaseback buildings that are eliminated upon adoption of ASC 842.~~

~~(4)Amortization of deferred gains on sale leaseback transactions of $1.8 million for U.S. Markets is eliminated upon adoption of ASC 842.~~

~~The following is the impact of the adoption of ASC 842 on the Company’s condensed consolidated statement of operations for the nine months ended September 30, 2019:~~

Nine Months Ended September 30, 2019

Without Adoption of

U.S. Markets

International Markets

(In millions)

ASC 842

Adjustments

Adjustments

As Reported
Operating costs and expenses

Rent (1)(2)(4)

$
639.0

$
52.1

$
35.5

$
726.6
Depreciation and amortization (2)(3)

409.1

(40.2)

(31.8)

337.1
Operating costs and expenses

3,915.1

11.9

3.7

3,930.7
Operating income

108.2

(11.9)

(3.7)

92.6

Other expense (income)

Interest expense:

Capital and financing lease obligations (1)

26.7

(9.9)

(10.8)

6.0
Net loss

(140.7)

(2.0)

7.1

(135.6)

~~(1)~~

Cash rent payments for build-to-suit failed sale leasebacks of $33.0 million and $29.7 million for U.S. Markets and International Markets, respectively, are accounted for as operating leases under ASC 842 that were previously accounted for as financing leases under ASC 840.

~~(2)~~

Non-cash amortization expense for favorable lease terms of $13.7 million and $5.8 million, for U.S. Markets and International Markets, respectively, reclassified to rent expense and amortized over the shorter base lease term under ASC 842.

~~(3)~~

~~Depreciation on build-to-suit failed sale leaseback buildings that are eliminated upon adoption of ASC 842.~~

~~(4)~~

~~Amortization of deferred gains on sale leaseback transactions of $5.4 million for U.S. markets is eliminated upon adoption of ASC 842.~~

payables.

The following table reflects the lease costs for the three and ~~nine~~six months ended ~~September~~June 30, 2020 and June 30, 2019:


							Three Months Ended				Six Months Ended
	Condensed Consolidated	Three Months Ended		Nine Months Ended		Consolidated Statement	June 30,		June 30,		June 30,		June 30,
(In millions)	Statement of Operations	September 30, 2019		September 30, 2019		of Operations	2020		2019		2020		2019
Operating lease cost
Theatre properties	Rent	$	219.0	$	658.6	Rent	$	203.9	$	220.7	$	420.8	$	439.6
Theatre properties	Operating expense		1.6		4.5	Operating expense		0.1		1.2		2.3		2.9
Equipment	Operating expense		3.5		10.5	Operating expense		3.8		3.5		7.7		7.0
Office and other	General and administrative: other		1.4		4.1	General and administrative: other		1.3		1.4		2.6		2.7
Finance lease cost
Amortization of finance lease assets	Depreciation and amortization		2.1		7.3	Depreciation and amortization		1.7		2.5		3.6		5.2
Interest on lease liabilities	Finance lease liabilities		1.8		6.0
Interest expense on lease liabilities						Finance lease obligations		1.5		2.1		3.1		4.2
Variable lease cost
Theatre properties	Rent		19.7		68.0	Rent		20.2		25.2		41.1		48.3
Equipment	Operating expense		7.4		37.2	Operating expense		(0.5)		19.1		6.5		29.8
Total lease cost		$	256.5	$	796.2		$	232.0	$	275.7	$	487.7	$	539.7

Cash flow and supplemental information is presented below:


	Six Months Ended
(In millions)	2020		2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows used in finance leases	$	(3.1)	$	(4.2)
Operating cash flows used in operating leases		(249.8)		(468.2)
Financing cash flows used in finance leases		(2.3)		(6.1)

Landlord contributions:
Operating cashflows provided by operating leases		24.9		64.8
Supplemental disclosure of noncash leasing activities:
Right-of-use assets obtained in exchange for new operating lease liabilities (1)		133.7		115.5

(1)

Includes lease extensions and option exercises.

The following table represents the weighted-average remaining lease term and discount rate as of ~~September~~June 30, ~~2019:~~2020:

As of September 30, 2019

Weighted Average

Weighted Average

Remaining

Discount
Lease Term and Discount Rate

Lease Term (years)

Rate
Operating leases

10.2

7.2%
Finance leases

12.9

6.5%

~~Cash flow and supplemental information is presented below:~~


	~~Nine Months Ended~~
~~(In millions)~~	~~September 30, 2019~~
~~Cash paid for amounts included in the measurement of lease liabilities:~~
~~Operating cash flows used in finance leases~~	$	~~(6.0)~~
~~Operating cash flows used in operating leases~~		~~(703.5)~~
~~Financing cash flows used in finance leases~~		~~(8.5)~~

~~Landlord contributions:~~
~~Operating cashflows provided by operating leases~~		~~89.0~~
~~Supplemental disclosure of noncash leasing activities:~~
~~Right-of-use assets obtained in exchange for new operating lease liabilities (1)~~		~~304.4~~

~~(1)~~

~~Includes lease extensions and an option exercise.~~


	As of June 30, 2020
	Weighted Average		Weighted Average
	Remaining		Discount
Lease Term and Discount Rate	Lease Term (years)		Rate
Operating leases		9.9		7.5%
Finance leases		12.8		6.5%

Minimum annual payments required under existing operating and finance lease liabilities (net present value thereof), as of ~~September~~June 30, ~~2019~~2020, are as follows:

Operating Lease

Financing Lease
(In millions)

Payments (1)(2)

Payments
Three months ending December 31, 2019

$
234.1

$
4.0
2020

927.3

16.1
2021

872.1

15.1
2022

811.4

14.6
2023

720.8

11.5
2024

644.5

10.3
Thereafter

3,550.8

77.2
Total lease payments

7,761.0

148.8
Less imputed interest

(2,335.3)

(49.3)
Total

$
5,425.7

$
99.5

~~(1)~~Included in this column upon adoption of ASC 842 are liabilities for leases that were previously classified as build-to-suit failed sale leaseback transactions that were included in the capital and finance lease obligations columns in the prior year.

~~(2)~~Included in this column upon adoption of ASC 842 are fixed executory costs that were previously excluded as part of the minimum lease payments. Fixed executory costs, which primarily consist of common area maintenance, insurance and taxes that meet the classification of fixed payments are included as part of the minimum lease payments.


	Operating Lease		Financing Lease
(In millions)	Payments		Payments
Six months ending December 31, 2020	$	470.0	$	7.7
2021		931.8		16.1
2022		866.2		15.6
2023		771.6		11.7
2024		694.9		9.9
2025		645.4		9.3
Thereafter		3,185.3		68.6
Total lease payments		7,565.2		138.9
Less imputed interest		(2,239.3)		(45.0)
Total	$	5,325.9	$	93.9

As of ~~September~~June 30, ~~2019,~~2020, the Company had signed additional operating lease agreements for 149 theatres that have not yet commenced of approximately ~~$308.1~~$198.3 million, which are expected to commence between ~~2019~~2020 and ~~2022,~~2024, and carry lease terms of approximately 5 to 25 years. The timing of lease commencement is dependent on the landlord providing the Company with control and access to the related facility.

Minimum annual payments required under operating lease liabilities and capital and failed sale leaseback, finance lease obligations, (net present value thereof) that have initial or remaining non-cancelable terms in excess of one year as of December 31, 2018 were as follows:

Capital and Finance Lease Obligations

Minimum Operating

Minimum Lease

(In millions)

Lease Payments

Payments

Less Interest

Principal
2019

$
810.2

$
100.7

$
33.7

$
67.0
2020

801.9

96.6

29.4

67.2
2021

748.9

87.8

25.2

62.6
2022

687.5

82.7

21.1

61.6
2023

597.1

70.4

17.3

53.1
Thereafter

3,367.6

331.5

82.7

248.8
Total minimum payments required

$
7,013.2

$
769.7

$
209.4

$
560.3

During the nine months ended September 30, 2018, the Company modified the terms of an existing operating lease to reduce the lease term. The Company received a $35.0 million incentive from the landlord to enter into the new lease agreement. The Company has recorded amortization of the lease incentive as a reduction to rent expense on a straight-line basis over the remaining lease term which reduced rent expense by $0 and $35.0 million during the three and nine months ended September 30, 2018.

NOTE 3—REVENUE RECOGNITION

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


	Three Months Ended		Three Months Ended		Three Months Ended				Six Months Ended
(In millions)	September 30, 2019		September 30, 2018		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Major revenue types
Admissions	$	797.3	$	751.4	$	0.9	$	895.5	$	568.9	$	1,627.0
Food and beverage		420.0		384.8		0.4		492.5		288.5		861.3
Other theatre:
Advertising		32.1		31.2		14.3		35.7		44.0		70.2
Other theatre		67.4		54.0		3.3		82.4		59.0		148.0
Other theatre		99.5		85.2		17.6		118.1		103.0		218.2
Total revenues	$	1,316.8	$	1,221.4	$	18.9	$	1,506.1	$	960.4	$	2,706.5


	Three Months Ended		Three Months Ended		Three Months Ended				Six Months Ended
(In millions)	September 30, 2019		September 30, 2018		June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Timing of revenue recognition
Products and services transferred at a point in time	$	1,215.2	$	1,162.4	$	3.6	$	1,410.2	$	855.4	$	2,520.2
Products and services transferred over time (1)		101.6		59.0		15.3		95.9		105.0		186.3
Total revenues	$	1,316.8	$	1,221.4	$	18.9	$	1,506.1	$	960.4	$	2,706.5

(1)Amounts primarily include subscription and advertising revenues.

Nine Months Ended

Nine Months Ended
(In millions)

September 30, 2019

September 30, 2018
Major revenue types

Admissions

$
2,424.3

$
2,522.7
Food and beverage

1,281.3

1,236.4
Other theatre:

Advertising

102.3

102.5
Other theatre

215.4

185.9
Other theatre

317.7

288.4
Total revenues

$
4,023.3

$
4,047.5

Nine Months Ended

Nine Months Ended
(In millions)

September 30, 2019

September 30, 2018
Timing of revenue recognition

Products and services transferred at a point in time

$
3,735.4

$
3,891.8
Products and services transferred over time (1)

287.9

155.7
Total revenues

$
4,023.3

$
4,047.5
~~(1)~~ ~~Amounts primarily include subscription and advertising revenues.~~

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

(In millions)

September 30, 2019

December 31, 2018
Current assets:

Receivables related to contracts with customers

$
62.1

$
183.2
Miscellaneous receivables

95.8

76.3
Receivables, net

$
157.9

$
259.5

(In millions)

June 30, 2020

December 31, 2019
Current assets:

Receivables related to contracts with customers

$
12.6

$
160.3
Miscellaneous receivables

58.1

93.9
Receivables, net

$
70.7

$
254.2

1514

(In millions)

September 30, 2019

December 31, 2018

June 30, 2020

December 31, 2019
Current liabilities:

Deferred revenue related to contracts with customers

$
345.7

$
412.8

$
401.0

$
447.1
Miscellaneous deferred income

1.8

2.0

5.1

2.1
Deferred revenue and income

$
347.5

$
414.8

$
406.1

$
449.2

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

Deferred Revenues

Deferred Revenues

Related to Contracts

Related to Contracts
(In millions)

with Customers

with Customers
Balance as of December 31, 2018

$
412.8
Balance December 31, 2019

$
447.1
Cash received in advance (1)

253.6

74.4
Customer loyalty rewards accumulated, net of expirations:

Admission revenues (2)

22.7

4.8
Food and beverage (2)

49.5

12.5
Other theatre (2)

2.1

(0.2)
Reclassification to revenue as the result of performance obligations satisfied:

Admission revenues (3)

(250.5)

(88.3)
Food and beverage (3)

(73.0)

(25.1)
Other theatre (4)

(68.0)

(22.2)
Disposition of Austria theatres

(1.5)
Foreign currency translation adjustment

(2.0)

(2.0)
Balance as of September 30, 2019

$
345.7
Balance June 30, 2020

$
401.0

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

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

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

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

The Company suspended the recognition of deferred revenues related to certain loyalty programs, gift cards, and exchange tickets during the period in which its operations are temporarily suspended.
The significant changes to contract liabilities included in the exhibitor services agreement, classified as long-term liabilities in the condensed consolidated balance sheets, are as follows:

Exhibitor Services

Exhibitor Services
(In millions)

Agreement

Agreement
Balance as of December 31, 2018
$
564.0
Balance December 31, 2019
Balance December 31, 2019
$
549.7
Common Unit Adjustment–additions of common units (1)

1.4

4.8
Reclassification of the beginning balance to other theatre revenue, as the result of performance obligations satisfied

(11.6)

(8.2)
Balance as of September 30, 2019
$
553.8
Balance June 30, 2020
Balance June 30, 2020
$
546.3
(1)Represents the fair value amount of the National CineMedia, LLC (“NCM”) common units that were received under the annual Common Unit Adjustment (“CUA”). Such amount will increase the deferred revenues that are being amortized to other theatre revenues over the remainder of the 30-year term of the Exhibitor Service Agreement (“ESA”) ending in February 2037. ~~See Note 5—Investments for further information.~~

~~Transaction Price Allocated to the Remaining Performance Obligations:~~ The following table includes the amount of NCM ESA, included in exhibitor services agreement in the Company’s condensed consolidated balance sheets, that is expected to be recognized as revenues in the future related to performance obligations that are unsatisfied as of September 30, 2019:

(In millions)

Exhibitor services agreement
Three Months ending December 31, 2019

$
4.1
Year Ended 2020

16.9
Year Ended 2021

18.1
Year Ended 2022

19.5
Year Ended 2023

20.9
Year Ended 2024

22.5
Years Ended 2025 through February 2037

451.8
Total

$
553.8

Gift cards and exchange tickets.The total amount of non-redeemed gifts cards and exchange tickets included in deferred revenues and income as of ~~September~~June 30, ~~2019~~2020 was ~~$257.8~~$317.4 million. This will be recognized as revenues as the gift cards and exchange tickets are redeemed or as the non-redeemed gift card and exchange ticket revenues are recognized in proportion to the pattern of actual redemptions, which is estimated to occur over the next 24 months.

Loyalty programs.As of ~~September~~June 30, ~~2019,~~2020, the amount of deferred revenue allocated to the ~~AMC Stubs~~^® loyalty programs included in deferred revenues and income was ~~$56.2~~$69.3 million. The earned points will be recognized as revenue as the points are redeemed, which is estimated to occur over the next 24 months. The AMC Stubs^®annual membership fee is recognized ratably over the one-year membership period.

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

NOTE 4—GOODWILL

The following table summarizes the changes in goodwill by reporting unit for the ~~nine~~six months ended ~~September~~June 30, ~~2019:~~2020:

(In millions)

Domestic Theatres

International Theatres

Total

Domestic Theatres

International Theatres

Total
Balance as of December 31, 2018

$
3,072.6

$
1,716.1

$
4,788.7
Balance December 31, 2019

$
3,072.6

$
1,716.5

$
4,789.1
Impairment adjustment

(1,124.9)

(619.4)

(1,744.3)
Currency translation adjustment

—

(94.9)

(94.9)

—

(56.4)

(56.4)
Balance as of September 30, 2019

$
3,072.6

$
1,621.2

$
4,693.8
Balance June 30, 2020

$
1,947.7

$
1,040.7

$
2,988.4

The Company evaluates goodwill recorded at the Company’s 2 reporting units (Domestic Theatres and International Theatres) for impairment annually as of the beginning of the fourth fiscal quarter and any time an event occurs or circumstances change that would more likely than not reduce the fair value for a reporting unit below its carrying amount. The impairment test for goodwill involves estimating the fair value of the reporting unit and comparing that value to its carrying value. If the estimated fair value of the reporting unit is less than its carrying value, the difference is recorded as goodwill impairment charge, not to exceed the total amount of goodwill allocated to that reporting unit.

Prior to January 1, 2019, the Company had 3 reporting units, Domestic Theatres, Odeon Theatres and Nordic Theatres. Effective January 1, 2019, the Company combined the Odeon Theatres and Nordic Theatres into a single reporting unit, International Theatres, to reflect how the international business is now managed. The Company tested goodwill for impairment both prior to and subsequent to the combining of these reporting units into the single reporting unit.

A decline in the common stock price and prices of the Company’s corporate borrowings and the resulting impact on market capitalization ~~is one~~are two of several factors considered when making this evaluation. Based on ~~recent~~ sustained declines during the first quarter of 2020 in the ~~trading price~~Company’s enterprise market capitalization and the temporary suspension of operations at all the Company’s ~~Class A common stock,~~theatres on or before March 17, 2020 due to the COVID-19 pandemic, the Company performed a Step 1 quantitative goodwill impairment test of the Domestic and International reporting units as of ~~September 30, 2019.~~
March 31, 2020.
In performing the Step 1 quantitative goodwill impairment test as of ~~September 30, 2019,~~March 31, 2020, the Company used an

enterprise value approach to measure fair value of the reporting ~~units, as compared to an equity value approach used previously. This change in estimate is preferable due to the impact~~units. See Note 9—Fair Value Measurements for a discussion of the change in the capital structure of the Domestic Theatres reporting unit late in the third quarter of 2018 as a result of the issuance of $600 million of the Company’s Senior Unsecured Notes due 2024, the negative equity value carrying amount for the Domestic Theatres reporting unit, and the decline in the market capitalization since May 2019, which has increased the Company’s leverage ratio. See additional discussion in Note 6—~~Corporate Borrowings.~~

valuation methodology. The enterprise fair values of the Domestic Theatres and International Theatres reporting units ~~exceeded~~were less than their carrying values ~~by approximately 9.9%~~ and ~~11.8%, respectively. Accordingly, there was no~~ goodwill impairment charges of $1,124.9 million and $619.4 million was recorded as of ~~September 30, 2019. The~~March 31, 2020 for the Company’s Domestic Theatres and International Theatres reporting ~~unit~~units, respectively.

In accordance with ASC 350-20-35-30, the Company performed an assessment to ~~which $3.1 billion of goodwill is allocated had a negative equity value carrying amount~~determine whether there were any events or changes in circumstances that would warrant an interim ASC 350 impairment analysis as of ~~September~~June 30, ~~2019.~~2020. Given the temporary suspension of operations during the second quarter of 2020, the Company performed a qualitative impairment test to evaluate whether it is more likely than not that the fair value of the Company’s 2 reporting units is less than their respective carrying amounts as of June 30, 2020. The Company concluded that it is not more likely than not that the fair value of its 2 reporting units has been reduced below their respective carrying amounts. As a result, the Company concluded than an interim quantitative impairment test as of June 30, 2020 was not required.

NOTE 5—INVESTMENTS

Investments in non-consolidated affiliates and certain other investments accounted for under the equity method generally include all entities in which the Company or its subsidiaries have significant influence, but not more than 50% voting control, and are recorded in the condensed consolidated balance sheets in other long-term assets. Investments in non-consolidated affiliates as of ~~September~~June 30, ~~2019~~2020 include interests in Digital Cinema Implementation Partners, LLC (“DCIP”) of 29.0%, Digital Cinema Distribution Coalition, LLC (“DCDC”) of 14.6%, AC JV, LLC (“AC JV”) owner of Fathom Events, of 32.0%, SV Holdco LLC, owner of Screenvision, 18.2%, Digital Cinema Media Ltd. (“DCM”) of 50.0%, and Saudi Cinema Company LLC (“SCC”) of 10.0%. The Company also has partnership interests in 4 U.S. motion picture theatres (“Theatre Partnerships”) and approximately 50.0% interest in 58 theatres in Europe (“Nordic theatre JVs”) acquired in the Odeon and UCI Cinemas Holdings Limited (“Odeon”) and Nordic Cinema Group Holding AB (“Nordic”) acquisitions. Indebtedness held by equity method investees is non-recourse to the Company.

~~NCM Transaction.~~ In March 2019, the NCM CUA resulted in a positive adjustment of 197,118 common units for the Company. The Company received the units and recorded the common units as an addition to deferred revenues for the ESA at fair value of $1.3 million, based upon a price per share of National CineMedia, Inc. (“NCM, Inc.”) of $7.24 ~~on March 14, 2019. The Company does not have significant influence over this entity and the investment is recorded at fair value each period.~~

~~Equity in Earnings of Non-Consolidated Entities~~

~~Aggregated condensed financial information of the Company’s significant non-consolidated equity method investment (DCIP) is shown below:~~

Three Months Ended

Nine Months Ended
(In millions)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
Revenues

$
40.1

$
43.4

$
125.8

$
127.0
Operating costs and expenses

17.8

19.1

56.5

59.0
Net earnings

$
22.3

$
24.3

$
69.3

$
68.0

~~The components of the Company’s recorded equity in earnings of non-consolidated entities are as follows:~~

Three Months Ended

Nine Months Ended
(In millions)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
NCM and NCM, Inc.

$
—

$
28.9

$
—

$
17.3
DCIP

6.5

7.4

21.1

20.9
Screenvision

—

30.1

—

30.5
Other

1.0

3.6

3.1

5.3
The Company’s recorded equity in earnings

$
7.5

$
70.0

$
24.2

$
74.0

1816

Fathom Events, of 32.0%, SV Holdco LLC (“SV Holdco”), owner of Screenvision, 18.3%, Digital Cinema Media Ltd. (“DCM”) of 50.0%, and Saudi Cinema Company LLC (“SCC”) of 10.0%. The Company also has partnership interests in 4 U.S. motion picture theatres (“Theatre Partnerships”) and approximately 50.0% interest in 55 theatres in Europe. Indebtedness held by equity method investees is non-recourse to the Company.
Equity in Earnings (Loss) of Non-Consolidated Entities

Aggregated condensed financial information of the Company’s significant non-consolidated equity method investment (DCIP) is shown below:

Three Months Ended

Six Months Ended
(In millions)

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
Revenues

$
(6.4)

$
48.0

$
19.7

$
85.7
Operating costs and expenses

31.6

19.5

68.8

38.7
Net earnings (loss)

$
(38.0)

$
28.5

$
(49.1)

$
47.0

The components of the Company’s recorded equity in earnings (loss) of non-consolidated entities are as follows:

Three Months Ended

Six Months Ended
(In millions)

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
DCIP

$
(9.7)

$
9.0

$
(11.6)

$
14.6
Other

(2.7)

1.2

(3.7)

2.1
The Company’s recorded equity in earnings (loss)

$
(12.4)

$
10.2

$
(15.3)

$
16.7

Related Party Transactions

The Company recorded the following related party transactions with equity method investees:

As of

As of

As of

As of
(In millions)

September 30, 2019

December 31, 2018

June 30, 2020

December 31, 2019
Due from DCM for on-screen advertising revenue

$
2.0

$
2.8

$
—

$
4.2
Loan receivable from DCM

0.7

0.6

0.7

0.7
Due from DCIP for warranty expenditures

3.5

3.4

—

3.5
Deferred rent liability for digital projectors related to DCIP

—

(7.8)
Due to AC JV for Fathom Events programming

(1.6)

(2.5)

(1.0)

(0.8)
Due from Screenvision for on-screen advertising revenue

1.9

2.7

—

3.4
Due from Nordic JVs

1.6

2.6

2.3

2.5
Due to Nordic JVs for management services

(1.6)

(1.7)

(2.0)

(1.6)
Due from SCC related to the joint venture

6.3

—

0.4

8.3
Due to U.S. theatre partnerships

(0.6)

(1.0)

Three Months Ended

Nine Months Ended
(In millions)

Condensed Consolidated Statement of Operations

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
DCM screen advertising revenues

Other revenues

$
5.5

$
4.2

$
14.7

$
13.4
DCIP equipment rental expense (1)

Operating expense

0.8

1.4

2.7

4.4
Gross exhibition cost on AC JV Fathom Events programming

Film exhibition costs

2.9

3.5

13.0

8.5
Screenvision screen advertising revenues

Other revenues

3.8

3.8

11.5

11.3
~~(1)~~ ~~The Company pays equipment rent monthly and records the equipment rental expense on a straight-line basis over 12 years.~~

Three Months Ended

Six Months Ended
(In millions)

Condensed Consolidated Statement of Operations

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
DCM screen advertising revenues

Other revenues

$
—

$
5.3

$
3.6

$
9.2
DCIP equipment rental expense

Operating expense

(0.4)

0.8

0.9

1.9
Gross exhibition cost on AC JV Fathom Events programming

Film exhibition costs

—

2.8

3.2

10.1
Screenvision screen advertising revenues

Other revenues

—

4.2

2.1

7.7

1917

NOTE 6—CORPORATE BORROWINGS

A summary of the carrying value of corporate borrowings and ~~capital and~~ finance lease obligations is as follows:

(In millions)

September 30, 2019

December 31, 2018

June 30, 2020

December 31, 2019
Odeon Revolving Credit Facility Due 2022 (2.5% + Base Rate of 0.75% as of September 30, 2019)

$
10.0

$
11.9
Senior Secured Credit Facility-Term Loan due 2026 (5.23% as of September 30, 2019)

1,990.0

—
Senior Secured Credit Facility-Term Loan due 2022

—

854.2
Senior Secured Credit Facility-Term Loan due 2023

—

491.2
6.0% Senior Secured Notes due 2023

—

230.0
Senior Secured Credit Facility-Term Loan due 2026 (4.08% as of June 30, 2020)

$
1,975.0

$
1,985.0
Revolving Credit Facility Due 2024 (range of 2.36% to 2.87% as of June 30, 2020)

213.2

—
10.5% First Lien Notes due 2025

500.0

—
Odeon Revolving Credit Facility Due 2022 (3.17% as of June 30, 2020)

84.4

—
Odeon Revolving Credit Facility Due 2022 (2.6% as of June 30, 2020)

24.4

—
2.95% Senior Unsecured Convertible Notes due 2024

600.0

600.0

600.0

600.0
5.0% Promissory Note payable to NCM due 2019

1.3

1.3
5.875% Senior Subordinated Notes due 2022

—

375.0
6.375% Senior Subordinated Notes due 2024 (£500 million par value)

614.9

634.1

614.4

655.8
5.75% Senior Subordinated Notes due 2025

600.0

600.0

600.0

600.0
5.875% Senior Subordinated Notes due 2026

595.0

595.0

595.0

595.0
6.125% Senior Subordinated Notes due 2027

475.0

475.0

475.0

475.0

$
5,681.4

$
4,910.8
Finance lease obligations

99.5

560.3

93.9

99.9
Debt issuance costs

(90.7)

(104.4)

(90.0)

(88.8)
Net discounts

(73.1)

(64.4)

(73.4)

(69.1)
Derivative liability

9.1

24.0

—

0.5

4,831.0

5,283.2

$
5,611.9

$
4,853.3
Less:

Current maturities corporate borrowings

(21.4)

(15.2)

(20.0)

(20.0)
Current maturities finance lease obligations

(10.0)

—

(10.0)

(10.3)
Current maturities capital and financing lease obligations

—

(67.0)

$
4,799.6

$
5,201.0

$
5,581.9

$
4,823.0

The following table provides the principal payments required and maturities of corporate borrowings as of June 30, 2020:

Principal

Amount of

Corporate
(In millions)

Borrowings
Six months ended December 31, 2020

$
10.0
2021

20.0
2022

128.8
2023

20.0
2024

1,447.6
2025

1,120.0
Thereafter

2,935.0
Total

$
5,681.4

The Company recorded other expense related to financing fees of $2.8 million and $0 million during the three months ended June 30, 2020 and June 30, 2019, respectively, and other expense of $2.8 million and $0 million during the six months ended June 30, 2020 and June 2019, respectively.
Senior Secured Credit Facility ~~– Term Loan due 2026~~

On April ~~22, 2019,~~23, 2020, the Company entered into the ~~Sixth~~Seventh Amendment to the Senior Secured Credit ~~Agreement~~Facility with the lenders from time to time party thereto and Citicorp North America, Inc., as administrative agent (the ~~“Sixth~~“Senior Secured Credit Facility Amendment”) amending the Credit Agreement dated April 30, 2013, byas amended, pursuant to which the requisite lenders thereunder granted a waiver of the maintenance covenant thereunder for the period from and ~~among~~after the effective date of the Senior Secured Credit Facility Amendment to and including the earlier of (a) March 31, 2021 and (b) the day immediately preceding the last day of the Test Period (as defined in the Senior Secured Credit Facility Agreement) during which the Company ~~each lender party thereto and Citicorp North America, Inc. (“Citi”), as administrative agent. After giving effect~~has delivered a Financial Covenant Election (as defined in the Senior Secured Credit Facility Agreement) to the ~~Sixth~~administrative agent under the Senior Secured Credit Facility Agreement (such period, the “Covenant Suspension Period”). During the Covenant Suspension Period, the Company will not, and

will not permit any of its restricted subsidiaries to, make certain restricted payments and shall maintain Liquidity (as defined in the Senior Secured Credit Facility Amendment) of no less than $50.0 million on the last day of each Test Period. In addition, the Senior Secured Credit Facility Amendment ~~the Credit Agreement~~ provides for ~~senior secured financing~~certain changes to the covenants limiting indebtedness, liens and restricted payments that are intended to match corresponding restrictions under the 10.5% first lien notes due 2025 (the “First Lien Notes due 2025”) and to ensure that the terms and conditions of ~~$2,225.0~~the First Lien Notes due 2025 (subject to certain exceptions) are not materially more favorable (when taken as a whole) to the noteholders than the terms and conditions of the Senior Secured Credit Facility Agreement (when taken as a whole) are to the lenders. Pursuant to the terms of the Senior Secured Credit Facility Agreement, these more restrictive terms will be operative until the repayment, satisfaction, defeasance or other discharge of the obligations under the First Lien Notes due 2025 or an effective amendment of, other consent or waiver with respect to, or covenant defeasance pursuant to the Indenture as result of which the covenants limiting indebtedness, liens and restricted payments thereunder are of no further force or effect.

Odeon Revolving Credit Facility

On April 24, 2020, Odeon Cinemas Group Limited entered into an amendment to the Odeon Revolving Credit Facility with Lloyds Bank PLC as agent (the “Odeon Amendment”), pursuant to the requisite lenders thereunder granted a waiver of the maintenance covenant thereunder for the period from and after the effective date of the Odeon Amendment to and including the earlier of (a) March 31, 2021 and (b) the day immediately preceding the last day of the Relevant Period (as defined in the Odeon Amendment) during which Odeon Cinemas Group Limited has delivered a Financial Covenant Election (as defined in the Odeon Amendment) to the agent (the “Odeon Covenant Suspension Period”). During the Odeon Covenant Suspension Period, Odeon Cinemas Group Limited will not, and will not permit any of its subsidiaries to, make certain restricted payments including payment on shareholder loans, provided that cash payments of interest with respect to shareholder loans will be permitted. Additionally, lenders granted a waiver such that certain events or circumstances resulting from COVID-19 virus occurring prior to the Odeon Amendment and continuing will be deemed not to constitute an event of default under the Odeon Revolving Credit Facility.

First Lien Notes due 2025

On April 24, 2020, the Company issued $500.0 million ~~in aggregate, consisting of (1) $2,000.0 million in~~ aggregate principal amount of its 10.5% First Lien Notes due 2025, in a private offering, pursuant to an indenture, dated as of April 24, 2020 (the “First Lien Notes Indenture”), among the Company, the guarantors named therein and U.S. Bank National Association, as trustee and collateral agent. The Company used the net proceeds from the First Lien Notes due 2025 private offering for general corporate purposes, including further increasing the Company’s liquidity. The First Lien Notes due 2025 were issued with a discount of $10.0 million and bear interest at a rate of 10.5% per annum, payable semi-annually on April 15 and October 15 each year, commencing October 15, 2020. The First Lien Notes due 2025 will mature on April 15, 2025. The Company recorded debt issuance costs of approximately $8.9 million related to the issuance of the First Lien Notes due 2025 and will amortize those costs to interest expense under the effective interest method over the term of the First Lien Notes due 2025.

The First Lien Notes due 2025 are general senior secured ~~tranche B loans maturing April 22, 2026 (the “Term Loan Facility”)~~obligations of the Company and ~~(2)~~are fully and unconditionally guaranteed on a ~~$225.0 million~~joint and several senior secured revolving credit facility (which includes borrowing capacity available for letters of credit) maturing April 22, 2024 (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Credit Facilities”). The loans were used to repaybasis by all of the Company’s existing ~~term loans in an aggregate principal amount of approximately $1,338.5 million~~ and ~~to fund~~future subsidiaries that guarantee the ~~redemptions~~Company’s other indebtedness, including the Company’s Senior Secured Credit Facility. The First Lien Notes due 2025 are secured, on a pari passu basis with the Senior Secured Credit Facility, on a first-priority basis by substantially all of the ~~5.875% Senior Subordinated Notes due 2022~~tangible and intangible assets owned by the ~~6.0% Senior Secured Notes due 2023. The~~ Company ~~recorded a loss of $16.6 million related to these transactions, comprised of $14.1 million of extinguishment losses~~ and ~~$2.5 million of third party costs related to the modification of the Term Loans~~guarantors that secure obligations under the Senior Secured Credit ~~Facility.~~

~~All obligations under~~Facility including pledges of capital stock of certain of the ~~Credit Agreement are guaranteed by,~~Company’s and the guarantor’s wholly-owned material subsidiaries (but limited to 65% of the voting stock of any foreign subsidiary), subject to certain thresholds, exceptions ~~each of the Company’s current~~ and ~~future wholly-owned material domestic restricted subsidiaries. All obligations under the Credit Agreement, and the guarantees of those obligations, are secured by substantially~~permitted liens.

The Company may redeem some or all of the ~~assets~~First Lien Notes due 2025 at any time on or after April 15, 2022, at the redemption prices set forth in the First Lien Notes Indenture. In addition, the Company may redeem up to 35% of the aggregate principal amount of the First Lien Notes due 2025 using net proceeds from certain equity offerings on or prior to April 15, 2022 at a redemption price equal to 110.5% of their aggregate principal amount and accrued and unpaid interest to, but not including, the date of redemption. The Company may redeem some or all of the First Lien Notes due 2025 at any time prior to April 15, 2022 at a redemption price equal to 100% of their aggregate principal amount and ~~each guarantor, subject~~accrued and unpaid interest to, ~~customary exceptions, including:~~

●

a pledge of 100% of the equity interests directly held by the Company and each guarantor in any wholly-owned material subsidiary of the Company or any guarantor (which pledge, in the case of any non-U.S. subsidiary of a U.S. subsidiary, will not include more than 65% of the voting stock of such non-U.S. subsidiary), subject to certain exceptions; and

but not including, the date of redemption, plus an applicable make-whole premium. In addition, the Company may, at any time prior to 120 days after the issue date, redeem up to 35% of the aggregate principal amount of the First Lien Notes due 2025 using net proceeds of any loan received pursuant to a Regulatory Debt Facility (as defined in the First Lien Notes Indenture) at a redemption price equal to 105.25% of their

2019

● ~~a security interest in substantially all other tangible and intangible assets of the Company and each guarantor, subject to certain exceptions.~~
aggregate principal amount and accrued and unpaid interest to, but not including, the date of redemption.
The ~~Credit Facilities will require the Company to prepay outstanding term loans, subject to certain exceptions, with:~~

● ~~50% (which percentage will be reduced to 0% if the Company attains a certain secured net leverage ratio) of the Company’s annual excess cash flow;~~

● 100% of the net cash proceeds of certain non-ordinary course asset sales by the Company and its restricted subsidiaries (including casualty and condemnation events, subject to de minimis thresholds), and subject to the right to reinvest 100% of such proceeds, subject to certain qualifications; and

● ~~100% of the net proceeds of any issuance or incurrence of debt by the Company or any of its restricted subsidiaries, other than certain debt permitted under the Credit Agreement.~~

The foregoing mandatory prepayments will be used to reduce the installments of principal on the Term Loan Facility. The Company may voluntarily repay outstanding loans under the Credit Facilities at any time without premium or penalty, except (1) for customary “breakage” costs with respect to LIBOR loans under the Credit Facilities and (2) during the six months following the Amendment Closing Date, with respect to certain voluntary prepayments or refinancings of the Term Loan FacilityFirst Lien Notes Indenture contains covenants that ~~reduce the effective yield of the Term Loan Facility, which will be subject to a 1.00% prepayment premium.~~

~~Borrowings under the Term Loan Facility will bear interest at a rate per annum equal to, at~~limit the Company’s ~~option, either (1) an applicable margin plus a base rate determined by reference~~ability to, ~~the highest~~among other things: (i) incur additional indebtedness, including additional senior indebtedness; (ii) pay dividends on or make other distributions in respect of ~~(a) 0.50% per annum plus the Federal Funds Effective Rate, (b) the prime rate of Citi and (c) LIBOR determined by reference to the~~ ~~cost of funds for U.S. dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00%~~its capital stock; (iii) purchase or (2) an applicable margin plus LIBOR determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs. Borrowings under the Revolving Credit Facility will bear interest at a rate per annum equal to an applicable margin based upon a leverage-based pricing grid, plus, at the Company’s option, either (1) a base rate determined by reference to the highest of (a) 0.50% per annum plus the Federal Funds Effective Rate, (b) the prime rate of Citi and (c) LIBOR determined by reference to the cost of funds for U.S. dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00%redeem capital stock or (2) LIBOR determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs. As of the date hereof, the applicable margins for LIBOR borrowings under the Term Loan Facility and the Revolving Credit Facility are 3.00% and 2.25%, respectively.

The Credit Agreement contains other customary terms, including (1) representations, warranties and affirmative covenants, (2) negative covenants, including limitations on indebtedness, liens, mergers and acquisitions, asset sales, investments, distributions, prepayments ofprepay subordinated debt ~~and transactions~~or other junior securities; (iv) create liens ranking pari passu in right of payment with ~~affiliates,~~or subordinated in ~~each case subject~~right of payment to ~~baskets, thresholds and other exceptions, and (3) customary events of default.~~

~~The availability of certain baskets and the ability to~~First Lien Notes due 2025; (v) enter into certain transactions ~~will also be~~with its affiliates; and (vi) merge or consolidate with other companies or transfer all or substantially all of its assets. These covenants are subject to ~~compliance with certain financial ratios. In addition,~~a number of important limitations and exceptions. The First Lien Notes Indenture also provides for events of default, which, if any of them occurs, would permit or require the ~~Revolving Credit Facility includes a maintenance covenant that requires, in certain circumstances, compliance with a certain secured leverage ratio.~~
principal, premium, if any, interest and any other monetary obligations on all the then outstanding First Lien Notes due 2025 to be due and payable immediately.
Senior Unsecured Convertible Notes due 2024

~~Carrying~~The table below sets forth the carrying value ~~(in millions) as~~ of ~~September 30, 2019:~~the Senior Unsecured Convertible Notes due 2024:

Carrying Value

Increase

Carrying Value

as of

to Expense

as of
(In millions)

December 31, 2019

(Income)

June 30, 2020
Principal balance

$
600.0

$
—

$
600.0
Discount

(73.7)

6.8

(66.9)
Debt issuance costs

(11.2)

0.9

(10.3)
Derivative liability

0.5

(0.5)

—
Carrying value

$
515.6

$
7.2

$
522.8

Carrying Value

Carrying Value

as of

Increase to

as of

December 31, 2018

Expense (Income)

September 30, 2019
Principal balance

$
600.0

$
—

$
600.0
Discount

(86.7)

9.6

(77.1)
Debt issuance costs

(13.0)

1.4

(11.6)
Derivative liability

24.0

(14.9)

9.1
Carrying Value

$
524.3

$
(3.9)

$
520.4

On September 14, 2018, the Company issued $600.0 million aggregate principal amount of its 2.95% Senior Unsecured Convertible Notes due 2024 (the "Convertible Notes due 2024"). The Convertible Notes due 2024 mature on September 15, 2024, subject to earlier conversion by the holders thereof, repurchase by the Company at the option of the holders or redemption by the Company upon the occurrence of certain contingencies, as discussed below. Upon maturity, the $600.0 million principal amount of the Convertible Notes due 2024 will be payable in cash. ~~The~~

On April 24, 2020, the Company ~~will pay interest in cash on~~entered into a supplemental indenture (the “Supplemental Indenture”) to the Convertible Notes due 2024 ~~at 2.95% per annum, semi-annually in arrears on~~indenture, dated as of September ~~15th and March 15th, commencing on March 15, 2019.~~14, 2018. The ~~Company used~~Supplemental Indenture amended the ~~net proceeds from the sale of~~debt covenant under the Convertible Notes Indenture to permit the Company to issue the First Lien Notes due 2024 to repurchase and retire 24,057,143 shares of Class B common stock held by Wanda for $17.50 per share or approximately $421.0 million, associated legal fees of $2.6 million, and to pay a special dividend of $1.55 per share of Class A common stock and Class B common stock, or approximately $160.5 million on September 28, 2018 to shareholders of record on September 25, 2018.

2025, among other changes.

The Company bifurcated the conversion feature from the principal balance of the Convertible Notes due 2024 as a derivative liability because (1) a conversion feature is not clearly and closely related to the debt instrument and the reset of the conversion price discussed in the following paragraph causes the conversion feature to not be considered indexed to the Company’s equity, (2) the conversion feature standing alone meets the definition of a derivative, and (3) the Convertible Notes due 2024 are not remeasured at fair value each reporting period with changes in fair value recorded in the condensed consolidated statement of operations. The initial derivative liability of $90.4 million is offset by a discount to the principal balance and is amortized to interest expense resulting in an effective rate of 5.98% over the term of the Convertible Notes due 2024. The Company also recorded debt issuance costs of approximately $13.6 million related to the issuance of the Convertible Notes due 2024 and will amortize those costs to interest expense under the effective interest method over the term of the Convertible Notes due 2024. The Company recorded interest expense for the three ~~and nine~~ months ended ~~September~~June 30, 2020 and June 30, 2019 of ~~$8.2~~$8.3 million and ~~$24.2~~$8.0 million, respectively, and interest expense for the six months ended June 30, 2020 and June 30, 2019 of $16.6 million and $16.0 million, respectively.

The derivative liability is remeasured at fair value each reporting period with changes in fair value recorded in the condensed consolidated ~~statement~~statements of operations as other expense or income. See Note 9—Fair Value Measurements for a discussion of the valuation methodology. For the three ~~and nine~~ months ended ~~September~~June 30, 2020 and June 30, 2019, this resulted in other ~~(expense)~~ income of ~~$(5.7)~~$0 million and ~~$14.9~~$33.9 million, respectively, and for the six months ended June 30, 2020 and June 30, 2019, this resulted in other income of $0.5 million and $20.6 million, respectively. The if-converted value of the Convertible Notes due 2024 is less than the principal balance by approximately ~~$261.2~~$464.2 million as of ~~September~~June 30, ~~2019~~2020 based on the closing price per share of the Company’s common stock of ~~$10.70~~$4.29 per share.

Upon conversion by a holder of the Convertible Notes due 2024, the Company shall deliver, at its election, either cash, shares of the Company’s Class A common stock or a combination of cash and shares of the Company’s Class A common stock at a conversion rate of 52.7704 per $1,000 principal amount of the Convertible Notes due 2024 ~~(which~~

(which represents an initial conversion price of $18.95), in each case subject to customary anti-dilution adjustments. As of ~~September~~June 30, ~~2019,~~2020, the $600.0 million principal balance of the Convertible Notes due 2024 would be convertible into 31,662,269 shares of Class A common stock. In addition to typical anti-dilution adjustments, in the event that the then-applicable conversion price is greater than 120% of the average of the volume-weighted average price of the Company’s Class A common stock for the 10ten days prior to the second anniversary of issuance (the “Reset Conversion Price”), the conversion price for the Convertible Notes due 2024 is subject to a reset provision that would adjust the conversion price downward to such Reset Conversion Price. However, this conversion price reset provision is subject to a conversion price floor such that the shares of the Company’s Class A common stock issuable upon conversion would not exceed 30% of the Company’s then outstanding fully-diluted share capital after giving effect to the conversion. In addition, a trigger of the reset provision would result in up to 5,666,000 shares of the Company’s Class B common stock held by Wanda becoming subject to forfeiture and retirement by the Company at no additional cost pursuant to the stock repurchase agreement between the Company and Wanda discussed in Note 7—Stockholders’ Equity. This cancellation agreement is a contingent call option for the forfeiture shares, which is a freestanding derivative measured at fair value on a recurring basis. The feature is contingent on the same reset of the conversion price which is part of the conversion feature. The initial derivative asset of $10.7 million is offset by a credit to stockholders’ equity related to the Class B common stock purchase and cancellation. The forfeiture shares feature is not clearly and closely related to the Convertible Notes due 2024 host and it is bifurcated and accounted for as a derivative asset measured at fair value through earnings each reporting period with changes in fair value recorded in the condensed consolidated statement of operations as other expense or income. See Note 9—Fair Value Measurements for a discussion of the valuation methodology. For the three ~~and nine~~ months ended ~~September~~June 30, 2020 and June 30, 2019, this resulted in other income of ~~$8.5~~$6.4 million and ~~$0.5~~$7.1 million, respectively, and other expense of $13.7 million and $8.0 million for the six months ended June 30, 2020 and June 30, 2019, respectively. Additionally, the conversion rate will be adjusted if any cash dividend or distribution is made to all or substantially all holders of the Company’s common stock (other than the special dividend referenced above and a regular, quarterly cash dividend that does not exceed $0.20 per share until the second anniversary of issuance and $0.10 per share thereafter). Any Convertible Notes due 2024 that are converted in connection with a Make-Whole Fundamental Change (as defined in the Indenture (the “Indenture”) governing the Convertible Notes due 2024) are,

Table of the Convertible Notes due 2024, the Company entered into an investment agreement (the “Investment Agreement”) providing for, among other things, registration rights with respect to the Convertible Notes due 2024 and the shares of Class A common stock underlying the Convertible Notes due 2024. Subject to the terms of the Investment Agreement, the Company was required to file a registration statement with the SEC not later than three months from the issuance date of the Convertible Notes in order to provide for resales of the Convertible Notes due 2024 and the shares of Class A common stock underlying the Convertible Notes to be made on a delayed or continuous basis pursuant to Rule 415 under the Securities Act. The Company filed a registration statement with the SEC on December 14, 2018 to fulfill this requirement.Contents

under certain circumstances, entitled to an increase in the conversion rate.

The Company has the option to redeem the Convertible Notes due 2024 for cash on or after the fifth anniversary of issuance at par if the price for the Company’s Class A common stock is equal to or greater than 150% of the then applicable conversion price for 20 or more trading days out of a consecutive 30 day trading period (including the final three trading days), at which time the holders have the option to convert. The Company also has the option to redeem the Convertible Notes due 2024, between the second and third anniversary of issuance, if the reset provision described above is triggered at a redemption price in cash that would result in the noteholders realizing a 15% internal rate of return from the date of issuance regardless of when any particular noteholder acquired its Convertible Notes due 2024. The Company also bifurcated this redemption feature from the principal balance of the Convertible Notes due 2024 and considered it as a part of the overall fair value of the derivative liability. For the three and nine months ended September 30, 2019, the Company recorded other expense (income) of $5.7 million and $(14.9) million, respectively, related to the decrease in fair value of its derivative liability for the Convertible Notes due 2024.

With certain exceptions, upon a change of control of the Company or if the Company’s Class A common stock is not listed for trading on The New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market, the holders of the Convertible Notes due 2024 may require that the Company repurchase in cash all or part of the principal amount of the Convertible Notes due 2024 at a purchase price equal to the principal amount plus accrued and unpaid interest up to, but excluding, the date of repurchase. The Indenture includes restrictive covenants that, subject to specified exceptions and parameters, limit the ability of the Company to incur additional debt and limit the ability of the Company to incur liens with respect to the Company’s senior subordinated notes or any debt incurred to refinance the Company’s senior subordinated notes. The Indenture also includes customary events of default, which may result in the acceleration of the maturity of the Convertible Notes due 2024 under the Indenture.

The Convertible Notes due 2024 are general unsecured senior obligations of the Company and are fully and unconditionally guaranteed on a joint and several senior unsecured basis by all the Company’s existing and future domestic restricted subsidiaries that guarantee its other indebtedness.

~~On September 14, 2018, in connection with the issuance~~21

NOTE 7—STOCKHOLDERS’ EQUITY

Dividends

The following is a summary of dividends and dividend equivalents ~~paid~~declared to stockholders during the three and ~~nine~~six months ended ~~September~~June 30, ~~2019:~~2020:

Amount per

Total Amount

Amount per

Total Amount






Share of

Declared





Share of

Declared
Declaration Date

Record Date

Date Paid

Common Stock

(In millions)

Record Date

Date Paid

Common Stock

(In millions)
February 15, 2019

March 11, 2019

March 25, 2019

$
0.20

$
21.3
May 3, 2019

June 10, 2019

June 24, 2019

0.20

21.3
August 2, 2019

September 9, 2019

September 23, 2019

0.20

21.3
February 26, 2020

March 9, 2020

March 23, 2020

$
0.03

$
3.2

On October 24, 2019, the Holdings’ Board of Directors declared a cash dividend in the amount of $0.20 per share on its Class A and Class B common stock, payable on December 16, 2019 to stockholders of record on December 2, 2019.

Related Party Transactions

As of ~~September~~June 30, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company recorded a receivable due from Wanda of ~~$0.6~~$0.5 million and ~~$0.9~~$0.8 million, respectively, for reimbursement of general administrative and other expense incurred on behalf of Wanda. For the three ~~and nine~~ months ended ~~September~~June 30, 2020 and June 30, 2019, the Company recorded ~~less than~~approximately $0.1 million in both periods of cost reductions for general and administrative services provided on behalf of Wanda. For the six months ended June 30, 2020 and June 30, 2019, the Company recorded approximately $0.2 million ~~respectively,~~in both periods, of cost reductions for general and administrative services provided on behalf of Wanda. Wanda owns Legendary Entertainment, a motion picture production company. The Company will occasionally play Legendary’s films in its theatres as a result of transactions with independent film distributors.

On September 14, 2018, the Company entered into the Investment Agreement with Silver Lake Alpine, L.P., an affiliate of Silver Lake Group, L.L.C. (“Silver Lake”), relating to the issuance to Silver Lake (or its designated affiliates) of $600.0 million principal amount of the Convertible Notes due 2024. See Note 6—Corporate Borrowings - Senior Unsecured Convertible Notes due 2024 for more information.

On September 14, 2018, the Company, Silver Lake and Wanda entered into a Right of First Refusal Agreement (the “ ROFR Agreement ”), which provides Silver Lake certain rights to purchase shares of the Company’s common stock that Wanda proposes to sell during a period of two years from the date of execution of the ROFR Agreement or, if earlier, until such time that Wanda and its affiliates cease to beneficially own at least 50.1% of the total voting power of the Company’s voting stock. The right of first refusal applies to both registered and unregistered transfers of shares. Under the ROFR Agreement, in the event that Wanda and its affiliates cease to beneficially own at least 50.1% of the total voting power of the Company’s voting stock, then the Company will have the same right of first refusal over sales of the Company’s common stock by Wanda as described above until the expiration of the two-year period beginning on the date of execution of the ROFR Agreement. In such event, the Company may exercise such right to purchase shares from Wanda from time to time pursuant to the ROFR Agreement in its sole discretion, subject to approval by the disinterested directors of the Board. If the Company determines to exercise its right to purchase shares from Wanda pursuant to the ROFR Agreement, it will have the obligation under the Investment Agreement to offer to sell to Silver Lake a like number of shares of the Company’s Class A Common Stock, at the same per share price at which it purchased the Wanda shares.

On September 14, 2018, the Company used the proceeds from the Convertible Notes due 2024, and pursuant to a stock repurchase agreement between the Company and Wanda, repurchased 24,057,143 shares of Class B common stock at a price of $17.50 per share or $421.0 million and associated legal fees of $2.6 million. As of ~~September~~June 30, ~~2019,~~2020, Wanda owns ~~49.85%~~49.63% of AMC through its 51,769,784 shares of Class B common stock. With the ~~three-to-one~~three-to-one voting ratio between the Company’s Class B and Class A common stock, Wanda retains voting control of AMC with ~~74.89%~~74.72% of the voting power of the Company’s common stock. As discussed in Note 6—Corporate Borrowings up to 5,666,000 shares of Class B common stock are subject to forfeiture for no consideration in connection with the reset provision contained in the Indenture.

~~Temporary Equity~~

Certain members of management had the right to require Holdings to repurchase the Class A common stock held by them under certain limited circumstances pursuant to the terms of a stockholders’ agreement. Beginning on January 1, 2016 (or upon the termination of a management stockholder’s employment by the Company without cause, by the management stockholder for good reason, or due to the management stockholder’s death or disability) management stockholders had the right, in limited circumstances, to require Holdings to purchase shares that were not fully and freely tradeable at a price equal to the price per share paid by such management stockholder with appropriate adjustments for any subsequent events such as dividends, splits, or combinations. The shares of Class A common stock, subject to the stockholder agreement, were classified as temporary equity, apart from permanent equity, as a result of the contingent redemption feature contained in the stockholder agreement. The Company determined the amount reflected in temporary equity for the Class A common stock based on the price paid per share by the management stockholders and Wanda on August 30, 2012, the date Wanda acquired Holdings.

As of January 1, 2019, the temporary equity program expired and management employees who held 75,712 shares relinquished their put rights, therefore the related share amount of $0.4 million was reclassified to additional paid in capital, a component of stockholders’ equity.

2422

~~Stock-Based Compensation~~

~~Holdings adopted a stock-based compensation plan in December of 2013.~~

For the three and nine months ended September 30, 2019, the Company recognized stock-based compensation expense of $2.1 million and $11.5 million, respectively, within general and administrative: other. For the three and nine months ended September 30, 2018, the Company recognized stock-based compensation expense of $4.2 million and $10.9 million, respectively, within general and administrative: other.

~~The components of the Company’s recorded and unrecognized stock-based compensation expense are as follows:~~

Additional

Amount Recognized

Amount Recognized

Amount

Expected to

Expected to

Expected to

Three Months Ended

Nine Months Ended

Unrecognized

Recognize

Recognize

Recognize
Grant Tranche

September 30, 2019

September 30, 2019

September 30, 2019

2019

2020

2021
2019 Board of Directors

$
—

$
0.5

$
—

$
—

$
—

$
—
2019 RSU awards

1.0

2.5

8.2

1.1

3.6

3.5
2019 PSU awards (1)

(0.1)

2.5

—

—

—

—
2018 RSU awards

0.7

2.4

3.9

0.8

3.1

—
2018 PSU awards (1)

(0.2)

1.3

—

—

—

—
2017 RSU awards

0.4

1.3

0.4

0.4

—

—
2017 RSU NEO awards

0.3

1.0

0.3

0.3

—

—
2017 PSU awards (2)

—

—

—

—

—

—

$
2.1

$
11.5

$
12.8

$
2.6

$
6.7

$
3.5
~~(1)~~ During the three months ended September 30, 2019, the Company determined that achieving the three-year net profit performance thresholds of the 2018 and 2019 Performance Stock Units was no longer probable and ceased accruing any additional expense on these units. If the Company later determines that achieving the performance thresholds is improbable, the Company would reverse all previously recorded expense. If the Company later determines that the performance thresholds are probable, then historical expense would be reinstated, and the Company would resume recognizing expense.
~~(2)~~ During the year ended December 31, 2017, the Company determined that achieving the three-year performance thresholds of the 2017 Performance Stock Units was improbable and reversed all previously recorded expense and ceased accruing any additional expense on these units. If the Company later determines that the performance thresholds are probable, then historical expense would be reinstated, and the Company would resume recognizing expense.

~~Awards Granted in 2019~~

The Company’s Board of Directors approved awards of stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”) to certain of the Company’s employees and directors under the Plan. The fair value of the stock at the grant date of March 6, 2019 was $15.13 per share and was based on the closing price of Holdings’ stock.

~~The award agreements generally had the following features:~~

● ~~Stock Award:~~ On March 6, 2019, 5 members of Holdings’ Board of Directors were granted awards of 25,703 fully vested shares of Class A common stock in the aggregate. On May 7, 2019 1 member of Holdings’ Board of Directors was granted an award of 3,096 vested shares of Class A common stock and on July 8, 2019 1 member of Holdings’ Board of Directors was granted an award of 3,665 restricted shares of Class A common stock. The Company recognized approximately $0.5 million of expense in general and administrative: other expense during the nine months ended September 30, 2019, in connection with these share grants.

● ~~Restricted Stock Unit Awards:~~ On March 6, 2019, RSU awards of 730,167 units were granted to certain members of management and executive officers. The grant date fair value was approximately $11.0 million based on a stock price of $15.13 on March 6, 2019. Each RSU represents the right to receive 1 share of Class A common stock at a future date. The RSUs vest over 3 years with 1/3 vesting on each of January 2, 2020, 2021, and 2022. The RSUs will be settled within 30 days of vesting. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the RSUs began to accrue with respect to the RSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the RSUs.

● ~~Performance Stock Unit Award:~~ On March 6, 2019, PSU awards of 730,167 were granted to certain members of management and executive officers, with three-year cumulative adjusted EBITDA, diluted earnings per share, and net profit performance target conditions and service conditions, covering a performance period beginning January 1, 2019 and ending on December 31, 2021. The PSUs will vest based on achieving 80% to 120% of the performance targets with the corresponding vested unit amount ranging from 30% to 200%. If the performance target is met at 100%, the PSU awards granted on March 6, 2019, will vest at 730,167 units in the aggregate. NaN PSUs will vest if Holdings does not achieve 80% of the three-year cumulative adjusted EBITDA, diluted earnings per share, and net profit performance target. Additionally, unvested PSU’s shall be ratably forfeited upon termination of service prior to December 31, 2021. If service terminates prior to January 2, 2020, all unvested PSU’s shall be forfeited, if service terminates prior to January 2, 2021, 2/3 of unvested PSU’s shall be forfeited and if service terminates prior to January 4, 2022, 1/3 of unvested PSU’s shall be forfeited. The vested PSUs will be settled within 30 days of vesting which will occur upon certification of performance results by the Compensation Committee of the Board of Directors. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the PSUs began to accrue with respect to the PSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the PSUs.

~~The following table represents~~Condensed Consolidated Statements of Stockholders’ Equity
For the ~~nonvested RSU and PSU activity for the nine months ended September~~Six Months Ended June 30, ~~2019:~~2020




Weighted

Average

Shares of RSU

Grant Date

and PSU

Fair Value
Beginning balance at January 1, 2019

1,934,447

$
21.50
Granted

1,460,334

15.13
Vested

(303,201)

21.76
Forfeited

(153,871)

16.94
Cancelled (1)

(100,840)

21.46
Nonvested at September 30, 2019

2,836,869

$
17.62
~~(1)~~ ~~Represents vested RSUs surrendered in lieu of taxes and returned to the 2013 Equity Incentive Plan.~~

Accumulated

Class A Voting

Class B Voting

Additional

Other

Accumulated

Total

Common Stock

Common Stock

Paid-in

Treasury Stock

Comprehensive

Earnings

Stockholders’
(In millions, except share and per share data)

Shares

Amount

Shares

Amount

Capital

Shares

Amount

Income (Loss)

(Deficit)

Equity (Deficit)
Balances December 31, 2019

52,080,077

$
0.5

51,769,784

$
0.5

$
2,001.9

3,732,625

$
(56.4)

$
(26.1)

$
(706.2)

$
1,214.2
Cumulative effect adjustment for the adoption of new accounting principle (ASU 2016-13)

—

—

—

—

—

—

—

—

(16.9)

(16.9)
Net loss

—

—

—

—

—

—

—

—

(2,176.3)

(2,176.3)
Other comprehensive loss

—

—

—

—

—

—

—

(93.5)

—

(93.5)
Dividends declared:

Class A common stock, $0.20/share, net of forfeitures

—

—

—

—

—

—

—

—

(1.6)

(1.6)
Class B common stock, $0.20/share

—

—

—

—

—

—

—

—

(1.6)

(1.6)
Taxes paid for restricted unit withholdings

—

—

—

—

(1.0)

—

—

—

—

(1.0)
Stock-based compensation

469,516

—

—

—

2.7

—

—

—

—

2.7
Balances March 31, 2020

52,549,593

$
0.5

51,769,784

$
0.5

$
2,003.6

3,732,625

$
(56.4)

$
(119.6)

$
(2,902.6)

$
(1,074.0)
Net loss

—

—

—

—

—

—

—

—

(561.2)

(561.2)
Other comprehensive income

—

—

—

—

—

—

—

56.0

—

56.0
Dividends declared:

Class A common stock, $0.20/share, net of forfeitures

—

—

—

—

—

—

—

—

0.1

0.1
Stock-based compensation

—

—

—

—

3.7

—

—

—

—

3.7
Balances June 30, 2020

52,549,593

$
0.5

51,769,784

$
0.5

$
2,007.3

3,732,625

$
(56.4)

$
(63.6)

$
(3,463.7)

$
(1,575.4)

2623

Condensed Consolidated Statements of Stockholders’ Equity
For the ~~Nine~~Six Months Ended ~~September~~June 30, 2019

Accumulated

Accumulated

Class A Voting

Class B Voting

Additional

Other

Accumulated

Total

Class A Voting

Class B Voting

Additional

Other

Accumulated

Total

Common Stock

Common Stock

Paid-in

Treasury Stock

Comprehensive

Earnings

Stockholders’

Common Stock

Common Stock

Paid-in

Treasury Stock

Comprehensive

Earnings

Stockholders’
(In millions, except share and per share data)

Shares

Amount

Shares

Amount

Capital

Shares

Amount

Income (Loss)

(Deficit)

Equity

Shares

Amount

Shares

Amount

Capital

Shares

Amount

Income (Loss)

(Deficit)

Equity
Balances December 31, 2018

55,401,325

$
0.5

51,769,784

$
0.5

$
1,998.4

3,732,625

$
(56.4)

$
5.5

$
(550.9)

$
1,397.6

55,401,325

$
0.5

51,769,784

$
0.5

$
1,998.4

3,732,625

$
(56.4)

$
5.5

$
(550.9)

$
1,397.6
Cumulative effect adjustments for the adoption of new accounting principles (ASU 842)

—

—

—

—

—

—

—

—

78.8

78.8
Cumulative effect adjustments for the adoption of new accounting principle (ASU 842)

—

—

—

—

—

—

—

—

78.8

78.8
Net loss

—

—

—

—

—

—

—

—

(130.2)

(130.2)

—

—

—

—

—

—

—

—

(130.2)

(130.2)
Other comprehensive loss

—

—

—

—

—

—

—

(24.9)

—

(24.9)

—

—

—

—

—

—

—

(24.9)

—

(24.9)
Dividends declared:

Class A common stock, $0.20/share, net of forfeitures

—

—

—

—

—

—

—

—

(10.7)

(10.7)
Class A common stock, $0.20/share

—

—

—

—

—

—

—

—

(10.7)

(10.7)
Class B common stock, $0.20/share

—

—

—

—

—

—

—

—

(10.4)

(10.4)

—

—

—

—

—

—

—

—

(10.4)

(10.4)
Taxes paid for restricted unit withholdings

—

—

—

—

(1.1)

—

—

—

—

(1.1)

—

—

—

—

(1.1)

—

—

—

—

(1.1)
Reclassification from temporary equity

75,712

—

—

—

0.4

—

—

—

—

0.4

75,712

—

—

—

0.4

—

—

—

—

0.4
Stock-based compensation

328,904

—

—

—

4.0

—

—

—

—

4.0

328,904

—

—

—

4.0

—

—

—

—

4.0
Balances March 31, 2019

55,805,941

$
0.5

51,769,784

$
0.5

$
2,001.7

3,732,625

$
(56.4)

$
(19.4)

$
(623.4)

$
1,303.5

55,805,941

$
0.5

51,769,784

$
0.5

$
2,001.7

3,732,625

$
(56.4)

$
(19.4)

$
(623.4)

$
1,303.5
Cumulative effect adjustments for the adoption of new accounting principles (ASU 842)

—

—

—

—

—

—

—

—

(2.6)

(2.6)
Cumulative effect adjustments for the adoption of new accounting principle (ASU 842)

—

—

—

—

—

—

—

—

(2.6)

(2.6)
Net earnings

—

—

—

—

—

—

—

—

49.4

49.4

—

—

—

—

—

—

—

—

49.4

49.4
Other comprehensive loss

—

—

—

—

—

—

—

(9.2)

—

(9.2)

—

—

—

—

—

—

—

(9.2)

—

(9.2)
Dividends declared:

Class A common stock, $0.20/share, net of forfeitures

—

—

—

—

—

—

—

—

(10.7)

(10.7)

—

—

—

—

—

—

—

—

(10.7)

(10.7)
Class B common stock, $0.20/share

—

—

—

—

—

—

—

—

(10.4)

(10.4)

—

—

—

—

—

—

—

—

(10.4)

(10.4)
Taxes paid for restricted unit withholdings

—

—

—

—

(0.3)

—

—

—

—

(0.3)

—

—

—

—

(0.3)

—

—

—

—

(0.3)
Stock-based compensation

3,096

—

—

—

5.4

—

—

—

—

5.4

3,096

—

—

—

5.4

—

—

—

—

5.4
Balances June 30, 2019

55,809,037

$
0.5

51,769,784

$
0.5

$
2,006.8

3,732,625

$
(56.4)

$
(28.6)

$
(597.7)

$
1,325.1

55,809,037

$
0.5

51,769,784

$
0.5

$
2,006.8

3,732,625

$
(56.4)

$
(28.6)

$
(597.7)

$
1,325.1
Net loss

—

—

—

—

—

—

—

—

(54.8)

(54.8)
Other comprehensive loss

—

—

—

—

—

—

—

(68.1)

—

(68.1)
Dividends declared:

Class A common stock, $0.20/share, net of forfeitures

—

—

—

—

—

—

—

—

(10.6)

(10.6)
Class B common stock, $0.20/share

—

—

—

—

—

—

—

—

(10.4)

(10.4)
Stock-based compensation

3,665

—

—

—

2.1

—

—

—

—

2.1
Balances September 30, 2019

55,812,702

$
0.5

51,769,784

$
0.5

$
2,008.9

3,732,625

$
(56.4)

$
(96.7)

$
(673.5)

$
1,183.3

NOTE 8—INCOME TAXES
The Company’s worldwide effective income tax rate is based on actual income (loss), statutory rates, valuation allowances against deferred tax assets and tax planning opportunities available in the various jurisdictions in which it operates. The Company is using a discrete income tax calculation for the three and six months ended June 30, 2020 due to the inability to determine reliable annual estimates of taxable income (loss) due to COVID-19. Historically, for interim financial reporting, the Company estimates the worldwide annual income tax rate based on projected taxable income (loss) for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate, adjusted for discrete items, if any. The Company will return to the historic approach of computing quarterly tax expense based on an annual effective rate in the future interim period when more reliable estimates of annual income become available. The Company recognizes income tax-related interest expense and penalties as income tax expense and general and administrative expense, respectively.
The Company evaluates its deferred tax assets each period to determine if a valuation allowance is required based on whether it is “more likely than not” that some portion of the deferred tax assets would not be realized. The ultimate realization of these deferred tax assets is dependent upon the generation of sufficient taxable income during future periods on a federal, state and foreign jurisdiction basis. The Company conducts its evaluation by considering all available positive and negative evidence, including historical operating results, forecasts of future profitability, the duration of statutory carryforward periods, and the outlooks for the U.S. motion picture and broader economy, among others.
During the first quarter of 2020, the severe impact of COVID-19 on operations in Germany and Spain caused the Company to conclude the realizability of deferred tax assets held in those jurisdictions does not meet the more likely than not standard. As such, a charge of $33.1 million and $40.1 million was recorded for Germany and Spain, respectively. During the fourth quarter of 2017, the Company determined that it was appropriate to record a valuation allowance against U.S. deferred tax assets. In addition, several other international jurisdictions carried valuation allowances against their deferred tax assets at the beginning of 2020.
As a result, the effective tax rate for the six months ended June 30, 2020 reflects the impact of these valuation allowances against U.S. and international deferred tax assets generated during the six month period. The actual effective rate for the six months ended June 30, 2020 was (2.3)%. The Company’s consolidated tax rate for the six months ended June 30, 2020 differs from the U.S. statutory tax rate primarily due to the valuation allowances in U.S. and foreign jurisdictions, foreign tax rate differences, federal and state tax credits, partially offset by state income taxes, permanent differences related to goodwill impairments, interest, compensation, and other discrete items. No tax impact was recorded on the $1,744.3 million goodwill impairment charge incurred during the six months ended June 30, 2020, as the portion impaired was permanently non-deductible. At June 30, 2020 and December 31, 2019, the Company has recorded net deferred tax liabilities of $42.6 million and net deferred tax assets of $24.1 million, respectively.
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”). The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property, as well as loans to certain qualifying businesses. The Company continues to examine the impacts that the CARES Act may have on its business. While the Company may take advantage of certain CARES Act’s cash deferral provisions, many of the provisions are not applicable to the Company. Additionally, as of the date of this filing, the Company has not participated in CARES Act loans.

NOTE 9—FAIR VALUE MEASUREMENTS

Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts business. The inputs used to develop these fair value measurements are established in a hierarchy, which ranks the quality and reliability of the information used to determine the fair values. The fair value classification is based on levels of inputs. Assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:
Level 1:
Quoted market prices in active markets for identical assets or liabilities.

~~Condensed Consolidated Statements of Stockholders’ Equity~~
~~For the Nine Months Ended September 30, 2018~~

Accumulated

Class A Voting

Class B Voting

Additional

Other

Accumulated

Total

Common Stock

Common Stock

Paid-in

Treasury Stock

Comprehensive

Earnings

Stockholders’
(In millions, except share and per share data)

Shares

Amount

Shares

Amount

Capital

Shares

Amount

Income (Loss)

(Deficit)

Equity
Balances December 31, 2017

55,010,160

$
0.5

75,826,927

$
0.8

$
2,241.6

3,232,625

$
(48.2)

$
125.6

$
(207.9)

$
2,112.4
Cumulative effect adjustments for the adoption of new accounting principles (ASU 606, ASU 2016-01 and ASU 2018-02)

—

—

—

—

—

—

—

4.4

(36.2)

(31.8)
Net earnings

—

—

—

—

—

—

—

—

17.7

17.7
Other comprehensive income

—

—

—

—

—

—

—

10.7

—

10.7
Dividends declared:

Class A common stock, $0.20/share

—

—

—

—

—

—

—

—

(10.8)

(10.8)
Class B common stock, $0.20/share

—

—

—

—

—

—

—

—

(15.2)

(15.2)
Reversed dividend accrual for nonvested PSU's

—

—

—

—

—

—

—

—

0.7

0.7
RSUs surrendered to pay for payroll taxes

—

—

—

—

(1.8)

—

—

—

—

(1.8)
Reclassification from temporary equity

27,195

—

—

—

0.3

—

—

—

—

0.3
Stock-based compensation

354,060

—

—

—

2.8

—

—

—

—

2.8
Balances March 31, 2018

55,391,415

$
0.5

75,826,927

$
0.8

$
2,242.9

3,232,625

$
(48.2)

$
140.7

$
(251.7)

$
2,085.0
Net earnings

—

—

—

—

—

—

—

—

22.2

22.2
Other comprehensive loss

—

—

—

—

—

—

—

(107.2)

—

(107.2)
Dividends declared:

Class A common stock, $0.20/share

—

—

—

—

—

—

—

—

(10.8)

(10.8)
Class B common stock, $0.20/share

—

—

—

—

—

—

—

—

(15.2)

(15.2)
Reclassification from temporary equity

9,910

—

—

—

0.1

—

—

—

—

0.1
Stock-based compensation

—

—

—

—

4.0

—

—

—

—

4.0
Class A common stock repurchases

—

—

—

—

—

500,000

(8.2)

—

—

(8.2)
Balances June 30, 2018

55,401,325

$
0.5

75,826,927

$
0.8

$
2,247.0

3,732,625

$
(56.4)

$
33.5

$
(255.5)

$
1,969.9
Net loss

—

—

—

—

—

—

—

—

(100.4)

(100.4)
Other comprehensive loss

—

—

—

—

—

—

—

(7.5)

—

(7.5)
Dividends declared:

Class A common stock, $0.20/share

—

—

—

—

—

—

—

—

(10.6)

(10.6)
Class B common stock, $0.20/share

—

—

—

—

—

—

—

—

(15.3)

(15.3)
Special dividend declared:

Class A common stock, $1.55/share

—

—

—

—

—

—

—

—

(82.7)

(82.7)
Class B common stock, $1.55/share

—

—

—

—

—

—

—

—

(80.2)

(80.2)
Stock-based compensation

—

—

—

—

4.2

—

—

—

—

4.2
Class B common stock repurchase and cancellation

—

—

(24,057,143)

(0.3)

(256.7)

—

—

—

(165.9)

(422.9)
Balances September 30, 2018

55,401,325

$
0.5

51,769,784

$
0.5

$
1,994.5

3,732,625

$
(56.4)

$
26.0

$
(710.6)

$
1,254.5

~~NOTE 8—INCOME TAXES~~

The Company’s worldwide effective income tax rate is based on expected income, statutory rates, valuation allowances against deferred tax assets and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the worldwide annual income tax rate based on projected taxable income (loss) for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate, adjusted for discrete items, if any. The Company refines the estimates of the year’s taxable income (loss) as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected worldwide effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate. The Company recognizes income tax-related interest expense and penalties as income tax expense and general and administrative expense, respectively.

At September 30, 2019 and December 31, 2018, the Company has net deferred tax liabilities of $19.1 million and $13.0 million, respectively. During the fourth quarter of 2017, the Company determined that it was appropriate to record a valuation allowance against U.S. deferred tax assets. In addition, several international jurisdictions carry valuation allowances against their deferred tax assets. As a result, the effective tax rate for the nine months ended September 30, 2019 reflects the impact of these valuation allowances against U.S. and international deferred tax assets generated during the nine month period. For the remainder of 2019, the Company anticipates income tax expense will relate to domestic state tax expense, changes in domestic indefinite-lived liabilities, and international tax expense incurred in certain profitable jurisdictions. The Company evaluates its deferred tax assets each period to determine if a valuation allowance is required based on whether it is “more likely than not” that some portion of the deferred tax assets would not be realized. The ultimate realization of these deferred tax assets is dependent upon the generation of sufficient taxable income during future periods on a federal, state and foreign jurisdiction basis. The Company conducts its evaluation by considering all available positive and negative evidence, including historical operating results, forecasts of future profitability, the duration of statutory carryforward periods, and the outlooks for the U.S. motion picture and broader economy, among others.

The projected worldwide effective tax rate based on annual projected earnings for the year ending December 31, 2019 is (8.0)%. The actual effective rate for the nine months ended September 30, 2019 was (8.7)%. The Company’s consolidated tax rate for the nine months ended September 30, 2019 differs from the U.S. statutory tax rate primarily due to the valuation allowances in U.S. and foreign jurisdictions, foreign tax rate differences, federal and state tax credits, partially offset by state income taxes, permanent differences related to interest, compensation, and other discrete items.

Tax contingencies and other income tax liabilities were $25.8 million and $22.0 million as of September 30, 2019 and December 31, 2018, respectively, and are included in other long-term liabilities. The increase relates primarily to state income taxes and state income tax credits. The Company also continues to be subject to examination by the IRS and the fiscal year ended March 29, 2012 (tax year 2011) is currently under extended statute. The Company’s operations in certain jurisdictions outside of the U.S. remain subject to examination for tax years 2012 to 2018, some of which are currently under audit by local tax authorities. The resolutions of these audits are not expected to be material to the Company’s condensed consolidated financial statements. The Company believes its allowances for income tax contingencies are adequate. Based on the information currently available, the Company does not anticipate a material (or significant) increase or decrease to its tax contingencies within the next 12 months.

While the Tax Reform Act provides for a territorial tax system, beginning in 2018, it includes the global intangible low-taxed income (“GILTI”) provisions. The GILTI provisions require the Company to include in its U.S. income tax return foreign subsidiary earnings in excess of an allowable return on the foreign subsidiary’s tangible assets. For 2019, the Company does not anticipate a GILTI inclusion.

~~NOTE 9—FAIR VALUE MEASUREMENTS~~

Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts business. The inputs used to develop these fair value measurements are established in a hierarchy, which ranks the quality and reliability of the information used to determine the fair values. The fair value classification is based on levels of inputs. Assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:

~~Level 1:~~
~~Quoted market prices in active markets for identical assets or liabilities.~~
Level 2:
Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3:
Unobservable inputs that are not corroborated by market data.

Recurring Fair Value Measurements. The following table summarizes the fair value hierarchy of the Company’s financial assets and liabilities carried at fair value on a recurring basis as of ~~September~~June 30, ~~2019:~~2020:

Fair Value Measurements at September 30, 2019 Using

Fair Value Measurements at June 30, 2020 Using

Significant

Significant


Total Carrying

Quoted prices in

Significant other

unobservable

Total Carrying

Quoted prices in

Significant other

unobservable

Value at

active market

observable inputs

inputs

Value at

active market

observable inputs

inputs
(In millions)

September 30, 2019

(Level 1)

(Level 2)

(Level 3)

June 30, 2020

(Level 1)

(Level 2)

(Level 3)
Other long-term assets:

Money market mutual funds

$
0.6

$
0.6

$
—

$
—

$
1.4

$
1.4

$
—

$
—
Derivative asset

56.2

—

—

56.2

24.3

—

—

24.3
Investments measured at net asset value (1)

11.1

—

—

—

10.7

—

—

—
Equity securities, available-for-sale:

Marketable equity securities:

Investment in NCM

1.6

1.6

—

—

4.1

4.1

—

—
Total assets at fair value

$
69.5

$
2.2

$
—

$
56.2

$
40.5

$
5.5

$
—

$
24.3

Corporate Borrowings:

Derivative liability

$
9.1

$
—

$
—

$
9.1
Total liabilities at fair value

$
9.1

$
—

$
—

$
9.1
(1) The investments relate to non-qualified deferred compensation arrangements on behalf of certain members of management. The Company has an equivalent liability for this related-party transaction recorded in other long-term liabilities for the deferred compensation obligation.

Valuation Techniques. The Company’s money market mutual funds are invested in funds that seek to preserve principal, are highly liquid, and therefore are recorded on the balance sheet at the principal amounts deposited, which equals fair value. ~~See Note 10~~—~~Accumulated Other Comprehensive Loss for the unrealized gain on the equity securities recorded in accumulated other comprehensive loss.~~

On September 14, 2018, the Company issued Convertible Notes due 2024 with a conversion feature that gave rise to an embedded derivative instrument and a stock purchase and cancellation agreement that gave rise to a derivative asset, ~~(See~~see Note 6—Corporate ~~Borrowings).~~Borrowings for further information. The derivative features have been valued using a Monte Carlo simulation approach. The Monte Carlo simulation approach consists of simulated common stock prices from the valuation date to the maturity of the Convertible Notes and to September 14, 2020 for the contingent call option for forfeiture shares. ~~Increases or decreases in~~At June 30, 2020, the ~~Company’s~~Company used a share price ~~the~~of $4.29, volatility rate of ~~the share price, the passage of time,~~13%, risk-free interest rate of 0.15%, discount yield of 36.0%, and dividend yield ~~will all impact~~of 0% to the value of the derivative ~~instruments.~~instrument. The Company re-values the derivative instruments at the end of each reporting period and any changes are recorded in other expense (income) in the condensed consolidated statements of operations.
Nonrecurring Fair Value Measurements. The following table summarizes the fair value hierarchy of the Company’s assets that were measured at fair value on a nonrecurring basis:

Fair Value Measurements at March 31, 2020






Significant other

Significant

Total Carrying

Quoted prices in

observable

unobservable

Value at

active market

inputs

inputs

Total
(In millions)

March 31, 2020

(Level 1)

(Level 2)

(Level 3)

Losses
Property, net:

Property net

$
40.5

$
—

$
—

$
40.5

$
30.9
Operating lease right-of-use assets

Operating lease right-of-use assets

124.0

—

—

124.0

60.4
Intangible assets, net

Definite-lived intangible assets

6.6

—

—

6.6

8.0
Indefinite-lived intangible assets

50.3

—

—

50.3

8.3
Goodwill

Goodwill

2,938.0

—

—

2,938.0

1,744.3
Other long-term assets

Cost method investments

—

—

—

—

7.2
Total

$
3,159.4

$
—

$
—

$
3,159.4

1,859.1

Long-lived assets held and used, operating lease right-of-use assets, intangible assets, and cost method investments were considered impaired and were written down to their fair value at March 31, 2020 of $3,159.4 million.

3026

There is considerable management judgment with respect to cash flow estimates and discount rates used in determining fair value, and therefore are classified as Level 3 measurements within the fair value measurement hierarchy.
Valuation Techniques. There are a number of estimates and significant judgments that were made by management in performing these impairment evaluations. Such judgments and estimates include estimates of future attendance, revenues, cash flows, rent relief, cost savings, capital expenditures, and the cost of capital, among others. Attendance is expected to be significantly below historical levels for the first several months following reopening but is expected to increase as customers become more comfortable with the experience. The Company believes it used reasonable and appropriate business judgments. The Company used weighted average cost of capital (discount rate) input for the Domestic Theatres and International Theatres reporting units of 11.5% and 13.0%, respectively, and a long-term growth rate input of 2.0% for both of the reporting units. There is considerable management judgment with respect to cash flow estimates and appropriate discount rates to be used in determining fair value, and, accordingly, actual results could vary significantly from such estimates, which fall under Level 3 within the fair value measurement hierarchy. These estimates determine whether impairments have been incurred, and quantify the amount of any related impairment charge.
Other Fair Value Measurement Disclosures. The Company is required to disclose the fair value of financial instruments that are not recognized at fair value in the statement of financial position for which it is practicable to estimate that value:



Fair Value Measurements at September 30, 2019 Using


Fair Value Measurements at June 30, 2020




Significant other

Significant




Significant other

Significant

Total Carrying

Quoted prices in

observable

unobservable

Total Carrying

Quoted prices in

observable

unobservable

Value at

active market

inputs

inputs

Value at

active market

inputs

inputs
(In millions)

September 30, 2019

(Level 1)

(Level 2)

(Level 3)

June 30, 2020

(Level 1)

(Level 2)

(Level 3)
Current maturities of corporate borrowings

$
21.4

$
—

$
20.3

$
1.4

$
20.0

$
—

$
14.6

$
—
Corporate borrowings

4,710.1

—

4,126.7

521.9

5,498.0

—

2,854.0

180.8

Valuation Technique. Quoted market prices and observable market based inputs were used to estimate fair value for Level 2 inputs. The Level 3 fair value measurement represents the transaction price of the corporate borrowings under market conditions. On September 14, 2018, the Company issued $600.0 million of Convertible Notes due 2024. These notes were issued by private placement, as such there is no observable market for these Convertible Notes. The Company valued these notes at principal value less a discount reflecting a market yield to maturity. See Note 6—Corporate Borrowings for further information.

The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value because of the short maturity of these instruments.

NOTE 10—~~ACCUMULATED OTHER COMPREHENSIVE LOSS~~

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

Unrealized Net

Gain (Loss)

Pension and

from Equity

Foreign

Other

Method Investees’

(In millions)

Currency

Benefits (1)

Cash Flow Hedge

Total

Balance, December 31, 2018

$
7.2

$
(1.8)

$
0.1

$
5.5

Other comprehensive income (loss) before reclassifications

(102.9)

0.2

(0.1)

(102.8)

Amounts reclassified from accumulated other comprehensive income

0.6

—

—

0.6

Balance, September 30, 2019

$
(95.1)

$
(1.6)

$
—

$
(96.7)

~~The tax effects allocated to each component of other comprehensive loss during the three months ended September 30, 2019 and September 30, 2018 are as follows:~~

Three Months Ended

September 30, 2019

September 30, 2018




Tax





Tax


Pre-Tax

(Expense)

Net-of-Tax

Pre-Tax

(Expense)

Net-of-Tax
(In millions)

Amount

Benefit

Amount

Amount

Benefit

Amount
Unrealized foreign currency translation adjustment (1)

$
(68.2)

$
—

$
(68.2)

$
(5.7)

$
—

$
(5.7)
Pension and other benefit adjustments:

Net gain (loss) arising during the period

0.1

—

0.1

0.2

(0.1)

0.1
Equity method investee's cash flow hedge:

Realized net (gain) loss reclassified into equity in earnings of non-consolidated entities

—

—

—

(2.5)

0.6

(1.9)
Other comprehensive income (loss)

$
(68.1)

$
—

$
(68.1)

$
(8.0)

$
0.5

$
(7.5)
~~(1)~~ ~~Deferred tax impacts of foreign currency translation for the international operations have not been recorded due to the Company’s intent to remain permanently invested.~~

~~The tax effects allocated to each component of other comprehensive loss during the nine months ended September 30, 2019 and September 30, 2018 are as follows:~~

Nine Months Ended

September 30, 2019

September 30, 2018




Tax





Tax


Pre-Tax

(Expense)

Net-of-Tax

Pre-Tax

(Expense)

Net-of-Tax
(In millions)

Amount

Benefit

Amount

Amount

Benefit

Amount
Unrealized foreign currency translation adjustment (1)

$
(102.9)

$
—

$
(102.9)

$
(101.7)

$
0.1

$
(101.6)
Realized loss on foreign currency transactions

0.6

—

0.6

1.0

—

1.0
Pension and other benefit adjustments:

Net gain (loss) arising during the period

0.2

—

0.2

(1.5)

0.2

(1.3)
Equity method investee's cash flow hedge:

Unrealized net holding gain (loss) arising during the period

(0.1)

—

(0.1)

0.2

—

0.2
Realized net (gain) loss reclassified into equity in earnings of non-consolidated entities

—

—

—

(2.8)

0.6

(2.2)
Other comprehensive income (loss)

$
(102.2)

$
—

$
(102.2)

$
(104.8)

$
0.9

$
(103.9)
~~(1)~~ ~~Deferred tax impacts of foreign currency translation for the international operations have not been recorded due to the Company’s intent to remain permanently invested.~~

~~NOTE 11—~~OPERATING SEGMENTS

The Company reports information about operating segments in accordance with ASC 280-10, Segment Reporting, which requires financial information to be reported based on the way management organizes segments within a company for making operating decisions and evaluating performance. The Company has identified 2 reportable segments and reporting units for its theatrical exhibition operations, U.S. ~~Markets~~markets and International ~~Markets.~~markets. The International ~~Markets~~markets reportable segment has operations in or partial interest in theatres in the United Kingdom, Germany, Spain, Italy, Ireland, Portugal, Sweden, Finland, Estonia, Latvia, Lithuania, Norway, and Denmark. Each segment’s revenue is derived from admissions, food and beverage sales and other ancillary revenues, primarily screen advertising, AMC Stubs^® membership fees and other loyalty programs, ticket sales, gift card income and exchange ticket income. The measure of segment profit and loss the Company uses to evaluate performance and allocate its resources is Adjusted EBITDA, as defined in the reconciliation table below. The Company does not report asset information by segment because that information is not used to evaluate the performance of or allocate resources between segments.

~~Below is a breakdown of select financial information by reportable operating segment:~~

Three Months Ended

Nine Months Ended
Revenues (In millions)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
U.S. Markets

$
970.7

$
895.6

$
2,999.1

$
3,007.1
International Markets

346.1

325.8

1,024.2


1,040.4
Total revenues

$
1,316.8

$
1,221.4

$
4,023.3

$
4,047.5

Three Months Ended

Nine Months Ended
Adjusted EBITDA (1) (In millions)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
U.S. Markets (2)

$
116.3

$
105.0

$
395.8

$
535.6
International Markets

40.2

37.4

106.5

129.5
Total Adjusted EBITDA

$
156.5

$
142.4

$
502.3

$
665.1
~~(1)~~ The Company presents Adjusted EBITDA as a supplemental measure of its performance. The Company defines Adjusted EBITDA as net earnings (loss) plus (i) income tax provision (benefit), (ii) interest expense and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of its ongoing operating performance and to include attributable

3227

Below is a breakdown of select financial information by reportable operating segment:

Three Months Ended

Six Months Ended
Revenues (In millions)

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
U.S. markets

$
15.7

$
1,161.2

$
677.0

$
2,028.4
International markets

3.2

344.9

283.4


678.1
Total revenues

$
18.9

$
1,506.1

$
960.4

$
2,706.5

Three Months Ended

Six Months Ended
Adjusted EBITDA (1) (In millions)

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
U.S. markets

$
(241.6)

$
202.1

$
(245.4)

$
279.5
International markets

(98.7)

35.5

(91.8)

66.3
Total Adjusted EBITDA

$
(340.3)

$
237.6

$
(337.2)

$
345.8
(1) The Company presents Adjusted EBITDA as a supplemental measure of its performance. The Company defines Adjusted EBITDA as net earnings (loss) plus (i) income tax provision (benefit), (ii) interest expense and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of the Company’s ongoing operating performance and to include attributable EBITDA from equity investments in theatre operations in ~~international~~International markets and any cash distributions of earnings from its other equity method investees. The measure of segment profit and loss the Company uses to evaluate performance and allocate its resources is Adjusted EBITDA, which is consistent with how Adjusted EBITDA is defined in ~~its~~the Company’s debt indentures.

~~(2)~~ ~~Distributions from NCM are reported entirely within the U.S. markets segment.~~

Three Months Ended

Nine Months Ended
Capital Expenditures (In millions)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
U.S. Markets

$
84.3

$
92.9

$
243.9

$
264.9
International Markets

34.0

40.9

104.3

110.0
Total capital expenditures

$
118.3

$
133.8

$
348.2

$
374.9

Three Months Ended

Six Months Ended
Capital Expenditures (In millions)

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
U.S. markets

$
24.9

$
84.1

$
81.8

$
159.6
International markets

10.1

31.0

44.9

70.3
Total capital expenditures

$
35.0

$
115.1

$
126.7

$
229.9

~~Financial Information About Geographic Area:~~

Three Months Ended

Nine Months Ended
Revenues (In millions)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
United States

$
970.7

$
895.6

$
2,999.1

$
3,007.1
United Kingdom

119.7

123.4

356.3

379.7
Spain

55.8

47.9

146.6

139.7
Sweden

42.9

43.1

124.7

137.0
Italy

40.8

29.5

139.2

124.1
Germany

30.4

22.3

91.0

79.6
Finland

23.7

22.2

71.8

72.3
Ireland

9.0

10.3

26.3

29.6
Other foreign countries

23.8

27.1

68.3

78.4
Total

$
1,316.8

$
1,221.4

$
4,023.3

$
4,047.5

As of

As of

As of

As of
Long-term assets, net (In millions)

September 30, 2019

December 31, 2018

June 30, 2020

December 31, 2019
United States

$
9,124.2

$
5,826.5
International

3,708.4

2,888.0
U.S. markets

$
7,532.1

$
9,039.6
International markets

3,059.8

3,963.1
Total long-term assets (1)

$
12,832.6

$
8,714.5

$
10,591.9

$
13,002.7
(1) Long-term assets are comprised of property, operating lease right-of-use assets, intangible assets, goodwill, deferred ~~income~~ tax assets, and other long-term ~~assets, and for 2019, right-of-use~~ assets.

3328

The following table sets forth a reconciliation of net ~~loss~~earnings (loss) to Adjusted EBITDA:

Three Months Ended

Nine Months Ended
(In millions)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
Net loss

$
(54.8)

$
(100.4)

$
(135.6)

$
(60.5)
Plus:

Income tax provision (benefit)

(0.2)

11.1

10.9

13.2
Interest expense

85.1

84.0

255.1

248.9
Depreciation and amortization

112.1

130.2

337.1

398.4
Certain operating expenses (1)

5.3

6.6

10.1

16.2
Equity in earnings of non-consolidated entities (2)

(7.5)

(70.0)

(24.2)

(74.0)
Cash distributions from non-consolidated entities (3)

4.7

3.1

17.0

30.9
Attributable EBITDA (4)

0.9

2.1

3.8

3.7
Investment income

(0.5)

(0.7)

(18.7)

(7.4)
Other expense (income) (5)

(1.5)

54.1

4.6

57.7
Non-cash rent - purchase accounting (6)

6.1

—

19.5

—
General and administrative — unallocated:

Merger, acquisition and other costs (7)

4.7

18.1

11.2

27.1
Stock-based compensation expense (8)

2.1

4.2

11.5

10.9
Adjusted EBITDA

$
156.5

$
142.4

$
502.3

$
665.1

Three Months Ended

Six Months Ended
(In millions)

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
Net earnings (loss)

$
(561.2)

$
49.4

$
(2,737.5)

$
(80.8)
Plus:

Income tax provision (benefit) (1)

(6.1)

5.4

62.1

11.1
Interest expense

91.2

86.4

174.0

170.0
Depreciation and amortization

119.7

112.0

242.2

225.0
Impairment of long-lived assets, indefinite-lived intangible assets and goodwill (2)

—

—

1,851.9

—
Certain operating expenses (3)

(1.5)

2.3

0.6

4.8
Equity in (earnings) loss of non-consolidated entities (4)

12.4

(10.2)

15.3

(16.7)
Cash distributions from non-consolidated entities (5)

6.1

1.8

13.7

12.3
Attributable EBITDA (6)

0.6

2.0

0.5

2.9
Investment expense (income)

(1.3)

(2.1)

8.1

(18.2)
Other expense (income) (7)

(1.9)

(23.8)

25.0

6.1
Other non-cash rent (8)

(3.8)

5.8

(1.5)

13.4
General and administrative — unallocated:

Merger, acquisition and other costs (9)

1.8

3.2

2.0

6.5
Stock-based compensation expense (10)

3.7

5.4

6.4

9.4
Adjusted EBITDA

$
(340.3)

$
237.6

$
(337.2)

$
345.8
(1) For information regarding the income tax provision, see Note 8—Income Taxes.
(2) During the six months ended June 30, 2020, the Company recorded non-cash impairment charges of $1,124.9 million and $619.4 million related to the enterprise fair values of its Domestic Theatres and International Theatres reporting units, respectively. The Company recorded non-cash impairment charges related to its long-lived assets of $81.4 million on 57 theatres in the U.S. markets with 658 screens which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $9.9 million on 23 theatres in the International markets with 213 screens which were related to property, net and operating lease right-of-use assets, net, during the six months ended June 30, 2020. The Company recorded non-cash impairment charges related to its indefinite-lived intangible assets of $5.9 million and $2.4 million related to the Odeon and Nordic tradenames, respectively, during the six months ended June 30, 2020. The Company also recorded non-cash impairment charges of $8.0 million related to its definite-lived intangible assets.
(3) Amounts represent preopening expense related to temporarily closed screens under renovation, theatre and other closure expense for the permanent closure of screens including the related accretion of interest, non-cash deferred digital equipment rent expense, and disposition of assets and other non-operating gains or losses included in operating expenses. The Company has excluded these items as they are non-cash in nature ~~include components of interest cost for the time value of money~~ or are non-operating in nature.

~~(2)~~(4) ~~For the three and nine months ended September 30, 2019, the Company recorded $6.5~~Equity in (earnings) loss of non-consolidated entities was primarily due to equity in loss from DCIP of $9.7 million ~~and $21.1 million, respectively, in earnings from DCIP. For~~for the three months ended ~~September~~June 30, ~~2018, the Company recorded~~2020 compared to equity in earnings ~~related to its sale~~from DCIP of ~~all remaining NCM units of $28.9~~$9.0 million ~~and a gain of $30.1 million related to~~for the ~~Screenvision merger.~~three months ended June 30, 2019. Equity in ~~earnings~~(earnings) loss of non-consolidated entities ~~also includes~~was primarily due to equity in loss onfrom DCIP of $11.6 million for the ~~surrender (disposition) of a portion of the Company’s investment in NCM of $1.1 million during the nine~~six months ended ~~September~~June 30, ~~2018. Equity~~2020 compared to equity in earnings from DCIP of ~~non-consolidated entities~~$14.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2018 includes a lower of carrying value impairment loss on the held-for-sale portion of NCM of $16.0 million.~~2019.

~~(3)~~(5) Includes U.S. non-theatre distributions from equity method investments and International non-theatre distributions from equity method investments to the extent received. The Company believes including cash distributions is an appropriate reflection of the contribution of these investments to ~~its~~the Company’s operations.

~~(4)~~(6) Attributable EBITDA includes the EBITDA from equity investments in theatre operators in certain ~~international~~International markets. See below for a reconciliation of the Company’s equity in (earnings) loss of non-consolidated entities to attributable EBITDA. Because these equity investments are in theatre operators in regions where the Company holds a significant market share, the Company believes attributable EBITDA is more indicative of the performance of these equity investments and management uses this measure to monitor and evaluate these equity investments. The Company also provides services to these theatre operators including information technology systems, certain on-screen advertising services and ~~its~~the Company’s gift card ~~and package ticket program.~~

3429

Three Months Ended

Nine Months Ended
(In millions)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
Equity in earnings of non-consolidated entities

$
(7.5)

$
(70.0)

$
(24.2)

$
(74.0)
Less:

Equity in earnings of non-consolidated entities excluding International theatre JV's

(7.4)

(68.5)

(23.2)

(72.1)
Equity in earnings of International theatre JV's

0.1

1.5

1.0

1.9
Income tax provision

0.1

0.1

0.2

0.2
Investment income

(0.1)

(0.1)

(0.6)

(0.3)
Interest expense

—

—

0.1

—
Depreciation and amortization

0.5

0.6

2.8

1.9
Other expense

0.3

—

0.3

—
Attributable EBITDA

$
0.9

$
2.1

$
3.8

$
3.7
and package ticket program.

Three Months Ended

Six Months Ended

(In millions)

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Equity in (earnings) loss of non-consolidated entities

$
12.4

$
(10.2)

$
15.3

$
(16.7)

Less:

Equity in (earnings) loss of non-consolidated entities excluding International theatre joint ventures

12.2

(9.8)

14.3

(15.8)

Equity in earnings (loss) of International theatre joint ventures

(0.2)

0.4

(1.0)

0.9

Income tax provision (benefit)

—

0.1

(0.1)

0.1

Investment income

—

(0.3)

(0.2)

(0.5)

Interest expense

—

0.1

—

0.1

Depreciation and amortization

0.7

1.7

1.5

2.3

Other expense

0.1

—

0.3

—

Attributable EBITDA

$
0.6

$
2.0

$
0.5

$
2.9

~~(5)~~(7) Other ~~expense (income)~~income for the three months ended ~~September~~June 30, 2020 compared to three months ended June 30, 2019 ~~includes income~~decreased $21.9 million. For the three months ended June 30, 2019, the Company recorded a gain of ~~$8.5~~$33.9 million ~~due~~related to the ~~increase~~change in fair value of the Company’s derivative ~~asset related to~~liability for the embedded conversion feature in the Company’s Convertible Notes due 2024, ~~expense of $5.7 million as a result of~~partially offset by the ~~decrease in fair value of its derivative liability, and~~ loss on ~~Pound sterling forward contract~~repayment of ~~$0.7~~indebtedness of $16.6 million. Other expense for the ~~nine~~six months ended ~~September~~June 30, 2020 compared to six months ended June 30, 2019 ~~includes $16.6~~increased $18.9 million, ~~of fees related to modifications of term loans income and $1.7 million loss on GBP forward contract, partially offset by income of $14.9 million~~primarily due to the decrease in the gain recorded for the change in fair value of the Company’s derivative liability ~~related to~~for the embedded conversion feature in the Company’s Convertible Notes due ~~2024. During~~2024 of $20.1 million, credit losses related to contingent lease guarantees of $9.2 million, and loss due to the ~~three months ended September 30, 2018,~~change in the ~~Company recorded expense of $54.1 million as a result of an increase in~~ fair value of the Company’s derivative ~~liability~~asset for the ~~Convertible Notes due 2024. Other~~contingent call option related to the Class B common stock purchase and cancellation agreement of $5.7 million. For the six months ended June 30, 2019, the Company recorded a loss on repayment of indebtedness of $16.6 million. See Note 1—Basis of Presentation for further information related to other expense (income) ~~for the three and nine months ended September 30, 2018 includes financing losses and financing related foreign currency transaction losses.~~.

~~(6)~~(8) Reflects amortization ofexpense for certain intangible assets reclassified from depreciation and amortization to rent expense due to the adoption of ASC ~~842.~~842 and deferred rent benefit related to the impairment of right-of-use operating lease assets.

~~(7)~~(9) Merger, acquisition and other costs are excluded as they are non-operating in nature.

~~(8)~~(10) ~~Stock-based compensation expense is non-cash~~Non-cash expense included in general and administrative: ~~other.~~other

NOTE ~~12—~~11—COMMITMENTS AND CONTINGENCIES

The Company, in the normal course of business, is a party to various ordinary course claims from vendors (including food and beverage suppliers and film distributors), landlords, competitors, and other legal proceedings. If management believes that a loss arising from these actions is probable and can reasonably be estimated, the Company records the amount of the loss, or the minimum estimated liability when the loss is estimated using a range and no point is more probable than another. As additional information becomes available, any potential liability related to these actions is assessed and the estimates are revised, if necessary. Management believes that the ultimate outcome of such matters discussed below, individually and in the aggregate, will not have a material adverse effect on the Company’s financial position or overall trends in results of operations. However, litigation and claims are subject to inherent uncertainties and unfavorable outcomes can occur. An unfavorable outcome might include monetary damages. If an unfavorable outcome were to occur, there exists the possibility of a material adverse impact on the results of operations in the period in which the outcome occurs or in future periods.

On January 12, 2018 and January 19, 2018, 2 putative federal securities class actions, captioned Hawaii Structural Ironworkers Pension Trust Fund v. AMC Entertainment Holdings, Inc., et al., Case No. 1:18-cv-00299-AJN ~~(the~~

(the “Hawaii Action”), and Nichols v. AMC Entertainment Holdings, Inc., et al., Case No. 1:18-cv-00510-AJN (the “Nichols Action,” and together with the Hawaii Action, the “Actions”), respectively, were filed against the Company in the U.S. District Court for the Southern District of New York. The Actions, which name certain of the Company’s officers and directors and, in the case of the Hawaii Action, the underwriters of the Company’s February 8, 2017 secondary public offering, as defendants, assert claims under Sections 11, 12(a)(2) and 15 of the Securities Act of 1933

and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) with respect to alleged material misstatements and omissions in the registration statement for the secondary public offering and in certain other public disclosures. On May 30, 2018, the court consolidated the Actions. On January 22, 2019, ~~the~~ defendants moved to dismiss the Second Amended Class Action Complaint. On September 23, 2019, the court granted the motion to dismiss in part and denied it in part.
On March 2, 2020, plaintiffs moved to certify the purported class and on July 22, 2020, defendants filed a brief opposing plaintiffs’ motion for class certification.
On May 21, 2018, a stockholder derivative complaint, captioned Gantulga v. Aron, et al., Case No. 2:18-cv-02262-JAR-TJJ (the “Gantulga Action”), was filed against certain of the Company’s officers and directors in the U.S. District Court for the District of Kansas. The Gantulga Action, which was filed on behalf of the Company, asserts claims under Section 14(a) of the ~~Securities~~ Exchange Act ~~of 1934~~ and for breaches of fiduciary duty and unjust enrichment based on allegations substantially similar to the Actions. On October 12, 2018, the parties filed a joint motion to transfer the action to the U.S. District Court for the Southern District of New York, which the court granted on October 15, 2018. When the action was transferred to the Southern District of New York, it was re-captioned Gantulga v. Aron, et al., Case No. 1:18-cv-10007-AJN. The parties filed a joint stipulation to stay the action, which the court granted on December 17, 2018.

On October 2, 2019, a stockholder derivative complaint, captioned Kenna v. Aron, et al., Case No. 1:~~19-cv-09148~~19-cv-09148-AJN (the “Kenna Action”), was filed in the U.S. District Court for the Southern District of New York. The ~~Kenna Action asserts the same claims as the Gantulga Action based on substantially similar allegations. The~~ parties filed a joint stipulation to stay the action, which the court granted on October 17, 2019. On April 20, 2020, the plaintiff filed an amended complaint. The Kenna Action asserts claims under Sections 10(b), 14(a), and 21D of the Exchange Act and for breaches of fiduciary duty and unjust enrichment based on allegations substantially similar to the Actions and the Gantulga Action. The action remains stayed.
On March 20, 2020, a stockholder derivative complaint, captioned Manuel v. Aron, et al., Case No. 1:20-cv-02456-AJN (the “Manuel Action”), was filed in the U.S. District Court for the Southern District of New York. The Manuel Action asserts claims under Sections 10(b), 21D, and 29(b) of the Exchange Act and for breaches of fiduciary duty based on allegations substantially similar to the Actions, the Gantulga Action, and the Kenna Action. The parties filed a joint stipulation to stay the action, which the court granted on May 18, 2020.
On April 7, 2020, a stockholder derivative complaint, captioned Dinkevich v. Aron, et al., Case No. 1:20-cv-02870-AJN (the “Dinkevich Action”), was filed in the U.S. District Court for the Southern District of New York. The Dinkevich Action asserts the same claims as the Manuel Action based on allegations substantially similar to the Actions, the Gantulga Action, the Kenna Action, and the Manuel Action. The parties filed a joint stipulation to stay the action, which was granted on June 25, 2020.
On February 3, 2020, the Company received a books and records demand pursuant to 8 Del. C. § 220, seeking to investigate the conduct challenged in the Actions. AMC rejected the demand on February 10, 2020.
On December 31, 2019, the Company received a stockholder litigation demand, requesting that the Board investigate the allegations in the Actions and pursue claims on the Company’s behalf based on those allegations. On May 5, 2020, the Board determined not to pursue the claims sought in the demand at this time.
On July 15, 2020, the Company received a second stockholder litigation demand requesting substantially the same action as the stockholder demand it received on December 31, 2019.
On April 22, 2019, a putative stockholder class and derivative complaint, captioned Lao v. Dalian Wanda Group Co., Ltd., et al., C.A. No. 2019-0303-JRS (the “Lao Action”), was filed against certain of the Company’s directors, Wanda, two of Wanda’s affiliates, Silver Lake, and one of Silver Lake’s affiliates in the Delaware Court of Chancery. The Lao Action asserts claims directly, on behalf of a putative class of Company stockholders, and derivatively, on behalf of the Company, for breaches of fiduciary duty and aiding and abetting breaches of fiduciary duty with respect to transactions that the Company entered into with affiliates of Wanda and Silver Lake on September 14, 2018, and the special cash dividend of $1.55 per share of common stock that was payable on September 28, 2018 to the Company’s stockholders of record as of September 25, 2018. On July 18, 2019, the

Company’s Board of Directors formed a Special Litigation Committee to investigate and evaluate the claims and allegations asserted in the Lao Action and make a determination as to how the Company should proceed with respect to the Lao Action. On October 25, 2019, the court granted a motion to stay the action for six months to allow the Special Litigation Committee to complete its investigation.
On March 17, 2020, the court extended the stay until December 11, 2020.
The Company remains contingently liable for lease payments under certain leases of theatres that it previously divested, in the event that such assignees are unable to fulfill their future lease payment obligations. ~~Due to~~During the ~~variety of remedies available,~~three and six months ended June 30, 2020, the Company ~~believes that if~~recorded $3.9 million and $9.2 million, respectively, in estimated credit losses related to contingent lease guarantees in other expense. The Company applied a probability weighted approach for the ~~current tenant defaulted on~~estimation of credit loss reserve for contingent lease guarantees expected to be funded over the ~~leases it would not have a material effect on~~lease term using the ~~Company’s financial condition, results~~discounted cash flow method. See Note 1—Basis of ~~operations or cash flows.~~Presentation for further information regarding the adoption of ASU 2016-13.

~~NOTE 13—LOSS PER SHARE~~

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding. Diluted loss per share includes the effects of potential dilutive shares from the conversion feature of the Convertible Notes due 2024, if dilutive.

~~The following table sets forth the computation of basic and diluted earnings (loss) per common share:~~

Three Months Ended

Nine Months Ended
(In millions)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
Numerator:

Net loss for basic loss per share

$
(54.8)

$
(100.4)

$
(135.6)

$
(60.5)
Net loss for diluted loss per share

$
(54.8)

$
(100.4)

$
(135.6)

$
(60.5)

Denominator (shares in thousands):

Weighted average shares for basic loss per common share

103,850

123,126

103,826

126,386
Common equivalent shares if converted: convertible notes 2024

—

—

—

—
Weighted average shares for diluted loss per common share

103,850

123,126

103,826

126,386
Basic loss per common share

$
(0.53)

$
(0.82)

$
(1.31)

$
(0.48)
Diluted loss per common share

$
(0.53)

$
(0.82)

$
(1.31)

$
(0.48)

Vested RSUs and PSU’s have dividend rights identical to the Company’s Class A and Class B common stock and are treated as outstanding shares for purposes of computing basic and diluted earnings per share. Certain unvested RSUs and unvested PSUs are subject to performance conditions and are included in diluted earnings per share, if dilutive, based on the number of shares, if any, that would be issuable under the terms of the Company’s 2013 Equity Incentive Plan if the end of the reporting period were the end of the contingency period. For the nine months ended September 30, 2019, unvested PSU’s of 488,931 at the minimum performance target were not included in the computation of diluted loss per share because they would not be issuable if the end of the reporting period were the end of the contingency period. For the nine months ended September 30, 2019, unvested RSU’s of 1,207,102 were not included in the computation of diluted loss per share because they would be anti-dilutive.

For the nine months ended September 30, 2018, unvested PSU’s of 411,657 at the minimum performance target were not included in the computation of diluted loss per share since the shares would not be issuable under the terms of the Plan, if the end of the reporting period were the end of the contingency period. For the nine months ended September 30, 2018, unvested RSU’s of 902,004 were not included in the computation of diluted loss per share because they would be anti-dilutive.

The Company uses the if-converted method for calculating any potential dilutive effect of the Convertible Notes due 2024 that were issued on September 14, 2018. The Company has not adjusted net loss for the three and nine months ended September 30, 2019 to eliminate the interest expense of $8.2 million and $24.2 million, respectively, and the loss (gain) for the derivative liability related to the Convertible Notes due 2024 of $5.7 million and $(14.9) million, respectively, in the computation of diluted loss per share because the effects would be anti-dilutive. The Company has not included in diluted weighted average shares of approximately 31.7 million shares issuable upon conversion for the three and nine months ended September 30, 2019, as the effects would be anti-dilutive. For the three and nine months ended September 30, 2018, the Company has not adjusted net loss to eliminate the interest expense or the change for the derivative liability related to the Convertible Notes due 2024 of $1.5 million and $54.1 million, respectively. The Company has not included in diluted weighted average shares approximately 5.9 million shares and 2.0 million shares upon conversion for the three and nine months ended September 30, 2018, respectively, as the effects would be anti-dilutive. Based on the current conversion price of $18.95 per share the Convertible Notes due 2024 are convertible into 31,662,269 Class A common shares.

NOTE ~~14—~~12—EARNINGS (LOSS) PER SHARE

Basic net earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share includes the effects of unvested restricted stock units (“RSUs”) with a service condition only, unvested contingently issuable RSUs that have service and performance conditions (“PSUs”), and unvested contingently issuable special performance stock units that have service and market conditions (“SPSUs”), if dilutive, as well as potential dilutive shares from the conversion feature of the Convertible Notes due 2024, if dilutive.
The following table sets forth the computation of basic and diluted earnings (loss) per common share:

Three Months Ended

Six Months Ended
(In millions)

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
Numerator:

Net earnings (loss) for basic earnings (loss) per share

$
(561.2)

$
49.4

$
(2,737.5)

$
(80.8)
Calculation of net earnings (loss) for diluted earnings (loss) per share:

Marked-to-market gain on derivative liability

—

(33.9)

—

—
Interest expense for Convertible Notes due 2024

—

8.1

—

—
Net earnings (loss) for diluted earnings (loss) per share

$
(561.2)

$
23.6

$
(2,737.5)

$
(80.8)

Denominator (shares in thousands):

Weighted average shares for basic loss per common share

104,319

103,845

104,282

103,814
Common equivalent shares for RSUs and PSUs

—

21

—

—
Common equivalent shares if converted: convertible notes 2024

—

31,662

—

—
Weighted average shares for diluted earnings (loss) per common share

104,319

135,528

104,282

103,814
Basic earnings (loss) per common share

$
(5.38)

$
0.48

$
(26.25)

$
(0.78)
Diluted earnings (loss) per common share

$
(5.38)

$
0.17

$
(26.25)

$
(0.78)

Vested RSUs and PSU’s have dividend rights identical to the Company’s Class A and Class B common stock and are treated as outstanding shares for purposes of computing basic and diluted earnings per share. For the three and six months ended June 30, 2020, unvested RSUs of 2,249,263 were not included in the computation of diluted loss per share because they would be anti-dilutive. For the six months ended June 30, 2019, unvested RSUs of 1,253,870 were not included in the computation of diluted loss per share because they would be anti-dilutive.
Unvested PSUs and SPSUs are subject to performance and market conditions, respectively, and are included in diluted earnings per share, if dilutive, based on the number of shares, if any, that would be issuable under the terms of the Company’s 2013 Equity Incentive Plan if the end of the reporting period were the end of the contingency period. Unvested PSUs of 782,992 and 502,858 at 100% performance target for the three months ended June 30, 2020 and June

30, 2019, respectively, unvested PSUs of 793,932 and 502,858 at 100% of performance target for the six months ended June 30, 2020 and June 30, 2019, respectively, and unvested SPSUs of 595,003 at the minimum market condition for both the three and six months ended June 30, 2020, were not included in the computation of diluted loss per share because they would not be issuable if the end of the reporting period were the end of the contingency period.

The Company uses the if-converted method for calculating any potential dilutive effect of the Convertible Notes due 2024 that were issued on September 14, 2018. For the three months ended June 30, 2020, the Company has not adjusted net loss to eliminate the interest expense of $8.3 million in the computation of diluted loss per share because the effects would be anti-dilutive. The (gain)/loss for the derivative liability related to the Convertible Notes due 2024 was $0 million for the three months ended June 30, 2020. For the six months ended June 30, 2020 and June 30, 2019, the Company has not adjusted net loss to eliminate the interest expense of $16.6 million and $16.0 million, respectively, and also the (gain)/loss for the derivative liability related to the Convertible Notes due 2024 of $(0.5) million and $(20.6) million, respectively, in the computation of diluted loss per share because the effects would be anti-dilutive. For the three months ended June 30, 2020, the six months June 30, 2020 and the six months ended June 30, 2019, the Company has not included in diluted weighted average shares approximately 31.7 million shares issuable upon conversion in both periods as the effects would be anti-dilutive. Based on the current conversion price of $18.95 per share the Convertible Notes due 2024 are convertible into 31,662,269 Class A common shares.

NOTE 13—CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The accompanying condensed consolidating financial information has been prepared and presented pursuant to SEC Regulation S-X Rule 3-10, Financial statements of guarantors and issuers of guaranteed securities registered or being registered. Each of the subsidiary guarantors are 100% owned by Holdings. The subsidiary guarantees of the Company’s ~~Sterling~~the Convertible Notes due 2024, ~~the Convertible~~Sterling Notes due 2024, the Notes due 2025, the Notes due 2026, and the Notes due 2027 are full and unconditional and joint and several and subject to customary release provisions. The Company and its subsidiary guarantors’ investments in its consolidated subsidiaries are presented under the equity method of accounting.

The condensed consolidating information for the guarantors/non-guarantors has been retrospectively revised based on the structure that exists as of September 30, 2019 and reflecting changes as a result of the Sixth Amendment.

~~Condensed Consolidating Statement of Operations~~

~~Three Months Ended September 30, 2019:~~

Subsidiary

Subsidiary

Consolidating

Consolidated
(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings
Revenues










Admissions

$
—

$
578.1

$
219.2

$
—

$
797.3
Food and beverage

—

327.1

92.9

—

420.0
Other theatre

—

65.6

33.9

—

99.5
Total revenues

—

970.8

346.0

—

1,316.8
Operating costs and expenses

Film exhibition costs

—

321.6

95.2

—

416.8
Food and beverage costs

—

46.5

20.7

—

67.2
Operating expense, excluding depreciation and amortization

—

303.7

115.3

—

419.0
Rent

—

175.0

63.7

—

238.7
General and administrative:

Merger, acquisition and other costs

—

2.3

2.4

—

4.7
Other, excluding depreciation and amortization

—

22.1

15.4

—

37.5
Depreciation and amortization

—

84.2

27.9

—

112.1
Operating costs and expenses

—

955.4

340.6

—

1,296.0
Operating income

—

15.4

5.4

—

20.8
Other expense (income):

Equity in net loss of subsidiaries

72.6

15.5

—

(88.1)

—
Other expense (income)

(2.7)

1.1

0.3

—

(1.3)
Interest expense:

Corporate borrowings

72.6

73.3

0.7

(73.4)

73.2
Capital and financing lease obligations

—

0.5

1.3

—

1.8
Non-cash NCM exhibitor service agreement

—

10.1

—

—

10.1
Intercompany interest expense

—

—

18.8

(18.8)

—
Equity in earnings of non-consolidated entities

—

(7.1)

(0.4)

—

(7.5)
Investment income

(87.7)

(5.0)

—

92.2

(0.5)
Total other expense

54.8

88.4

20.7

(88.1)

75.8
Loss before income taxes

(54.8)

(73.0)

(15.3)

88.1

(55.0)
Income tax provision (benefit)

—

(0.4)

0.2

—

(0.2)
Net loss

$
(54.8)

$
(72.6)

$
(15.5)

$
88.1

$
(54.8)

Condensed Consolidating Statement of Operations
Three Months Ended ~~September~~June 30, ~~2018:~~2020:

Subsidiary

Subsidiary

Consolidating

Consolidated
(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings
Revenues















Admissions

$
—

$
539.0

$
212.4

$
—

$
751.4
Food and beverage

—

301.4

83.4

—

384.8
Other theatre

—

55.2

30.0

—

85.2
Total revenues

—

895.6

325.8

—

1,221.4
Operating costs and expenses

Film exhibition costs

—

289.0

89.8

—

378.8
Food and beverage costs

—

43.9

19.7

—

63.6
Operating expense, excluding depreciation and amortization

—

283.6

116.9

—

400.5
Rent

—

152.1

51.6

—

203.7
General and administrative:

Merger, acquisition and other costs

—

9.0

9.1

—

18.1
Other, excluding depreciation and amortization

—

31.7

16.7

—

48.4
Depreciation and amortization

—

94.2

36.0

—

130.2
Operating costs and expenses

—

903.5

339.8

—

1,243.3
Operating loss

—

(7.9)

(14.0)

—

(21.9)
Other expense (income):

Equity in net loss of subsidiaries

42.5

15.9

—

(58.4)

—
Other expense (income):

54.1

0.5

(0.5)

—

54.1
Interest expense:

Corporate borrowings

63.6

59.8

0.8

(59.9)

64.3
Capital and financing lease obligations

—

4.2

5.2

—

9.4
Non-cash NCM exhibitor service agreement

—

10.3

—

—

10.3
Equity in earnings of non-consolidated entities

—

(67.4)

(2.6)

—

(70.0)
Investment income

(59.8)

(0.8)

—

59.9

(0.7)
Total other expense

100.4

22.5

2.9

(58.4)

67.4
Loss before income taxes

(100.4)

(30.4)

(16.9)

58.4

(89.3)
Income tax provision (benefit)

—

12.1

(1.0)

—

11.1
Net loss

$
(100.4)

$
(42.5)

$
(15.9)

$
58.4

$
(100.4)

Subsidiary

Subsidiary

Consolidating

Consolidated
(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings
Revenues










Admissions

$
—

$
—

$
0.9

$
—

$
0.9
Food and beverage

—

—

0.4

—

0.4
Other theatre

—

15.7

1.9

—

17.6
Total revenues

—

15.7

3.2

—

18.9
Operating costs and expenses

Film exhibition costs

—

(0.2)

0.4

—

0.2
Food and beverage costs

—

3.3

1.2

—

4.5
Operating expense, excluding depreciation and amortization

—

79.4

35.4

—

114.8
Rent

—

164.8

59.3

—

224.1
General and administrative:

Merger, acquisition and other costs

—

1.7

0.1

—

1.8
Other, excluding depreciation and amortization

—

13.8

11.6

—

25.4
Depreciation and amortization

—

91.0

28.7

—

119.7
Operating costs and expenses

—

353.8

136.7

—

490.5
Operating loss

—

(338.1)

(133.5)

—

(471.6)
Other expense (income):

Equity in net loss of subsidiaries

569.8

125.0

—

(694.8)

—
Other expense (income):

(6.6)

6.7

(6.7)

—

(6.6)
Interest expense:

Corporate borrowings

78.3

79.1

1.4

(79.2)

79.6
Finance lease obligations

—

0.3

1.2

—

1.5
Non-cash NCM exhibitor service agreement

—

10.1

—

—

10.1
Intercompany interest expense

—

—

6.1

(6.1)

—
Equity in loss of non-consolidated entities

—

11.4

1.0

—

12.4
Investment income

(80.3)

(5.3)

(1.0)

85.3

(1.3)
Total other expense, net

561.2

227.3

2.0

(694.8)

95.7
Loss before income taxes

(561.2)

(565.4)

(135.5)

694.8

(567.3)
Income tax provision (benefit)

—

4.4

(10.5)

—

(6.1)
Net loss

$
(561.2)

$
(569.8)

$
(125.0)

$
694.8

$
(561.2)

3934

Condensed Consolidating Statement of Operations
~~Nine~~Three Months Ended ~~September~~June 30, 2019:

Subsidiary

Subsidiary

Consolidating

Consolidated

Subsidiary

Subsidiary

Consolidating

Consolidated
(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings
Revenues






























Admissions

$
—

$
1,774.1

$
650.2

$
—

$
2,424.3

$
—

$
680.7

$
214.8

$
—

$
895.5
Food and beverage

—

1,015.8

265.5

—

1,281.3

—

401.1

91.4

—

492.5
Other theatre

—

209.2

108.5

—

317.7

—

79.4

38.7

—

118.1
Total revenues

—

2,999.1

1,024.2

—

4,023.3

—

1,161.2

344.9

—

1,506.1
Operating costs and expenses

Film exhibition costs

—

989.2

275.4

—

1,264.6

—

390.2

92.3

—

482.5
Food and beverage costs

—

145.6

59.5

—

205.1

—

56.1

20.3

—

76.4
Operating expense, excluding depreciation and amortization

—

910.2

349.0

—

1,259.2

—

320.9

116.5

—

437.4
Rent

—

531.1

195.5

—

726.6

—

179.6

66.3

—

245.9
General and administrative:

Merger, acquisition and other costs

—

5.8

5.4

—

11.2

—

2.4

0.8

—

3.2
Other, excluding depreciation and amortization

—

74.4

52.5

—

126.9

—

24.9

18.3

—

43.2
Depreciation and amortization

—

252.1

85.0

—

337.1

—

84.2

27.8

—

112.0
Operating costs and expenses

—

2,908.4

1,022.3

—

3,930.7

—

1,058.3

342.3

—

1,400.6
Operating income

—

90.7

1.9

—

92.6

—

102.9

2.6

—

105.5
Other expense (income):

Equity in net loss of subsidiaries

376.3

230.7

—

(607.0)

—

9.1

18.2

—

(27.3)

—
Other expense (income)

(14.7)

19.2

0.6

—

5.1

(40.9)

17.7

(0.2)

—

(23.4)
Interest expense:

Corporate borrowings

217.1

218.6

2.2

(219.2)

218.7

73.6

74.4

0.7

(74.5)

74.2
Capital and financing lease obligations

—

1.9

4.1

—

6.0
Finance lease obligations

—

0.6

1.5

—

2.1
Non-cash NCM exhibitor service agreement

—

30.4

—

—

30.4

—

10.1

—

—

10.1
Intercompany interest expense

—

—

237.7

(237.7)

—

—

—

21.4

(21.4)

—
Equity in earnings of non-consolidated entities

—

(23.2)

(1.0)

—

(24.2)

—

(9.9)

(0.3)

—

(10.2)
Investment income

(443.1)

(19.5)

(13.0)

456.9

(18.7)

(91.2)

(4.9)

(1.9)

95.9

(2.1)
Total other expense

135.6

458.1

230.6

(607.0)

217.3
Loss before income taxes

(135.6)

(367.4)

(228.7)

607.0

(124.7)
Income tax provision

—

8.9

2.0

—

10.9
Net loss

$
(135.6)

$
(376.3)

$
(230.7)

$
607.0

$
(135.6)
Total other expense (income), net

(49.4)

106.2

21.2

(27.3)

50.7
Earnings (loss) before income taxes

49.4

(3.3)

(18.6)

27.3

54.8
Income tax provision (benefit)

—

5.8

(0.4)

—

5.4
Net earnings (loss)

$
49.4

$
(9.1)

$
(18.2)

$
27.3

$
49.4

4035

~~Condensed Consolidating Statement of Operations~~
~~Nine Months Ended September, 2018:~~

Subsidiary

Subsidiary

Consolidating

Consolidated
(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings
Revenues















Admissions

$
—

$
1,837.9

$
684.8

$
—

$
2,522.7
Food and beverage

—

982.2

254.2

—

1,236.4
Other theatre

—

187.0

101.4

—

288.4
Total revenues

—

3,007.1

1,040.4

—

4,047.5
Operating costs and expenses

Film exhibition costs

—

996.6

280.1

—

1,276.7
Food and beverage costs

—

142.4

59.6

—

202.0
Operating expense, excluding depreciation and amortization

—

866.0

370.9

—

1,236.9
Rent

—

430.8

162.3

—

593.1
General and administrative:

Merger, acquisition and other costs

—

15.2

11.9

—

27.1
Other, excluding depreciation and amortization

—

84.7

50.9

—

135.6
Depreciation and amortization

—

285.6

112.8

—

398.4
Operating costs and expenses

—

2,821.3

1,048.5

—

3,869.8
Operating income (loss)

—

185.8

(8.1)

—

177.7
Other expense (income):

Equity in net (earnings) loss of subsidiaries

(5.3)

23.4

—

(18.1)

—
Other expense

55.1

1.1

1.3

—

57.5
Interest expense:

Corporate borrowings

185.7

185.4

2.8

(185.7)

188.2
Capital and financing lease obligations

—

13.2

16.3

—

29.5
Non-cash NCM exhibitor service agreement

—

31.2

—

—

31.2
Equity in earnings of non-consolidated entities

—

(71.0)

(3.0)

—

��
(74.0)
Investment income

(175.0)

(17.4)

(0.7)

185.7

(7.4)
Total other expense (income)

60.5

165.9

16.7

(18.1)

225.0
Earnings (loss) before income taxes

(60.5)

19.9

(24.8)

18.1

(47.3)
Income tax provision (benefit)

—

14.6

(1.4)

—

13.2
Net earnings (loss)

$
(60.5)

$
5.3

$
(23.4)

$
18.1

$
(60.5)

Condensed Consolidating Statement of ~~Comprehensive Loss~~Operations
~~Three~~Six Months Ended ~~September~~June 30, ~~2019:~~2020:

Subsidiary

Subsidiary

Consolidating

Consolidated

(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings

Net loss

$
(54.8)

$
(72.6)

$
(15.5)

$
88.1

$
(54.8)

Other comprehensive income (loss):

Equity in other comprehensive loss of subsidiaries

(68.1)

(53.1)

—

121.2

—

Unrealized foreign currency translation adjustment, net of tax

—

(15.0)

(53.2)

—

(68.2)

Pension and other benefit adjustments:

Net gain arising during the period, net of tax

—

—

0.1

—

0.1

Other comprehensive loss

(68.1)

(68.1)

(53.1)

121.2

(68.1)

Total comprehensive loss

$
(122.9)

$
(140.7)

$
(68.6)

$
209.3

$
(122.9)

Subsidiary

Subsidiary

Consolidating

Consolidated
(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings
Revenues















Admissions

$
—

$
389.1

$
179.8

$
—

$
568.9
Food and beverage

—

216.6

71.9

—

288.5
Other theatre

—

71.3

31.7

—

103.0
Total revenues

—

677.0

283.4

—

960.4
Operating costs and expenses

Film exhibition costs

—

198.7

73.2

—

271.9
Food and beverage costs

—

38.2

19.7

—

57.9
Operating expense, excluding depreciation and amortization

—

331.3

140.4

—

471.7
Rent

—

339.2

122.7

—

461.9
General and administrative:

Merger, acquisition and other costs

—

2.0

—

—

2.0
Other, excluding depreciation and amortization

—

31.1

27.5

—

58.6
Depreciation and amortization

—

183.4

58.8

—

242.2
Impairment of long-lived assets, indefinite-lived intangible assets and goodwill

—

1,214.3

637.6

—

1,851.9
Operating costs and expenses

—

2,338.2

1,079.9

—

3,418.1
Operating loss

—

(1,661.2)

(796.5)

—

(2,457.7)
Other expense (income):

Equity in net loss of subsidiaries

2,728.0

869.2

—

(3,597.2)

—
Other expense (income)

13.6

12.0

(5.3)

—

20.3
Interest expense:

Corporate borrowings

149.0

150.1

2.2

(150.4)

150.9
Finance lease obligations

—

0.7

2.4

—

3.1
Non-cash NCM exhibitor service agreement

—

20.0

—

—

20.0
Intercompany interest expense

—

—

12.1

(12.1)

—
Equity in loss of non-consolidated entities

—

13.3

2.0

—

15.3
Investment income

(153.1)

—

(1.3)

162.5

8.1
Total other expense, net

2,737.5

1,065.3

12.1

(3,597.2)

217.7
Loss before income taxes

(2,737.5)

(2,726.5)

(808.6)

3,597.2

(2,675.4)
Income tax provision

—

1.5

60.6

—

62.1
Net loss

$
(2,737.5)

$
(2,728.0)

$
(869.2)

$
3,597.2

$
(2,737.5)

~~Condensed Consolidating Statement of Comprehensive Loss~~
~~Three Months Ended September 30, 2018:~~

Subsidiary

Subsidiary

Consolidating

Consolidated

(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings

Net loss

$
(100.4)

$
(42.5)

$
(15.9)

$
58.4

$
(100.4)

Other comprehensive income (loss):

Equity in other comprehensive loss of subsidiaries

(7.5)

(5.4)

—

12.9

—

Unrealized foreign currency translation adjustment, net of tax

—

(0.2)

(5.5)

—

(5.7)

Pension and other benefit adjustments:

Net gain arising during period, net of tax

—

—

0.1

—

0.1

Equity method investee's cash flow hedge:

Realized net gain reclassified to equity in earnings of non-consolidated entities, net of tax

—

(1.9)

—

—

(1.9)

Other comprehensive loss

(7.5)

(7.5)

(5.4)

12.9

(7.5)

Total comprehensive loss

$
(107.9)

$
(50.0)

$
(21.3)

$
71.3

$
(107.9)

4236

Condensed Consolidating Statement of ~~Comprehensive Loss~~Operations
~~Nine~~Six Months Ended ~~September~~June 30, 2019:

Subsidiary

Subsidiary

Consolidating

Consolidated

(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings

Net loss

$
(135.6)

$
(376.3)

$
(230.7)

$
607.0

$
(135.6)

Other comprehensive income (loss):

Equity in other comprehensive loss of subsidiaries

(102.2)

(72.5)

—

174.7

—

Unrealized foreign currency translation adjustment, net of tax

—

(30.3)

(72.6)

—

(102.9)

Realized loss on foreign currency transactions reclassified into other expense, net of tax

—

0.6

—

—

0.6

Pension and other benefit adjustments:

Net gain arising during the period, net of tax

—

0.1

0.1

—

0.2

Equity method investee's cash flow hedge:

Unrealized net holding loss arising during the period, net of tax

—

(0.1)

—

—

(0.1)

Other comprehensive loss

(102.2)

(102.2)

(72.5)

174.7

(102.2)

Total comprehensive loss

$
(237.8)

$
(478.5)

$
(303.2)

$
781.7

$
(237.8)

Subsidiary

Subsidiary

Consolidating

Consolidated
(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings
Revenues















Admissions

$
—

$
1,196.0

$
431.0

$
—

$
1,627.0
Food and beverage

—

688.7

172.6

—

861.3
Other theatre

—

143.6

74.6

—

218.2
Total revenues

—

2,028.3

678.2

—

2,706.5
Operating costs and expenses

Film exhibition costs

—

667.5

180.3

—

847.8
Food and beverage costs

—

99.0

38.9

—

137.9
Operating expense, excluding depreciation and amortization

—

606.5

233.7

—

840.2
Rent

—

356.2

131.7

—

487.9
General and administrative:

Merger, acquisition and other costs

—

3.5

3.0

—

6.5
Other, excluding depreciation and amortization

—

52.4

37.0

—

89.4
Depreciation and amortization

—

167.9

57.1

—

225.0
Operating costs and expenses

—

1,953.0

681.7

—

2,634.7
Operating income (loss)

—

75.3

(3.5)

—

71.8
Other expense (income):

Equity in net loss of subsidiaries

303.7

215.0

—

(518.7)

—
Other expense (income)

(12.0)

18.2

0.2

—

6.4
Interest expense:

Corporate borrowings

144.5

145.3

1.4

(145.7)

145.5
Finance lease obligations

—

1.4

2.8

—

4.2
Non-cash NCM exhibitor service agreement

—

20.3

—

—

20.3
Intercompany interest expense

—

—

218.9

(218.9)

—
Equity in earnings of non-consolidated entities

—

(16.0)

(0.7)

—

(16.7)
Investment income

(355.4)

(14.5)

(12.9)

364.6

(18.2)
Total other expense (income), net

80.8

369.7

209.7

(518.7)

141.5
Loss before income taxes

(80.8)

(294.4)

(213.2)

518.7

(69.7)
Income tax provision

—

9.3

1.8

—

11.1
Net loss

$
(80.8)

$
(303.7)

$
(215.0)

$
518.7

$
(80.8)

Condensed Consolidating Statement of Comprehensive Loss
Three Months Ended June 30, 2020:

Subsidiary

Subsidiary

Consolidating

Consolidated

(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings

Net loss

$
(561.2)

$
(569.8)

$
(125.0)

$
694.8

$
(561.2)

Other comprehensive income (loss):

Equity in other comprehensive loss of subsidiaries

56.0

55.0

—

(111.0)

—

Unrealized foreign currency translation adjustments

—

0.9

54.5

—

55.4

Pension adjustments:

Realized net loss reclassified into other expense, net of tax

—

0.1

0.5

—

0.6

Other comprehensive income (loss)

56.0

56.0

55.0

(111.0)

56.0

Total comprehensive loss

$
(505.2)

$
(513.8)

$
(70.0)

$
583.8

$
(505.2)

Condensed Consolidating Statement of Comprehensive Income (Loss)
Three Months Ended June 30, 2019:

Subsidiary

Subsidiary

Consolidating

Consolidated

(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings

Net earnings (loss)

$
49.4

$
(9.1)

$
(18.2)

$
27.3

$
49.4

Other comprehensive income (loss):

Equity in other comprehensive loss of subsidiaries

(9.2)

(4.1)

—

13.3

—

Unrealized foreign currency translation adjustments

—

(5.1)

(4.2)

—

(9.3)

Realized loss on foreign currency transactions reclassified into other expense, net of tax

—

0.1

—

—

0.1

Pension adjustments:

Net gain arising during the period, net of tax

—

—

0.1

—

0.1

Equity method investee's cash flow hedge:

Unrealized net holding loss arising during the period, net of tax

—

(0.1)

—

—

(0.1)

Other comprehensive loss

(9.2)

(9.2)

(4.1)

13.3

(9.2)

Total comprehensive income (loss)

$
40.2

$
(18.3)

$
(22.3)

$
40.6

$
40.2

Condensed Consolidating Statement of Comprehensive Loss
Six Months Ended June 30, 2020:

Subsidiary

Subsidiary

Consolidating

Consolidated

(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings

Net loss

$
(2,737.5)

$
(2,728.0)

$
(869.2)

$
3,597.2

$
(2,737.5)

Other comprehensive loss:

Equity in other comprehensive loss of subsidiaries

(37.5)

(53.6)

—

91.1

—

Unrealized foreign currency translation adjustment, net of tax

—

16.0

(54.2)

—

(38.2)

Pension adjustments:

Realized net loss reclassified into other expense, net of tax

—

0.1

0.6

—

0.7

Other comprehensive loss

(37.5)

(37.5)

(53.6)

91.1

(37.5)

Total comprehensive loss

$
(2,775.0)

$
(2,765.5)

$
(922.8)

$
3,688.3

$
(2,775.0)

Condensed Consolidating Statement of Comprehensive Loss
~~Nine~~Six Months Ended ~~September~~June 30, ~~2018:~~2019:

Subsidiary

Subsidiary

Consolidating

Consolidated

Subsidiary

Subsidiary

Consolidating

Consolidated

(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings


Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings

Net earnings (loss)

$
(60.5)

$
5.3

$
(23.4)

$
18.1

$
(60.5)

Net loss

$
(80.8)

$
(303.7)

$
(215.0)

$
518.7

$
(80.8)

Other comprehensive income (loss):

Equity in other comprehensive loss of subsidiaries

(103.9)

(75.4)

—

179.3

—

(34.1)

(19.3)

—

53.4

—

Unrealized foreign currency translation adjustment, net of tax

—

(27.5)

(74.1)

—

(101.6)

—

(15.4)

(19.3)

—

(34.7)

Realized loss on foreign currency transactions reclassified into other expense, net of tax

—

1.0

—

1.0

—

0.6

—

—

0.6

Pension and other benefit adjustments:

Net loss arising during the period, net of tax

—

—

(1.3)

—

(1.3)

Net gain arising during the period, net of tax

—

0.1

—

—

0.1

Equity method investee's cash flow hedge:

Unrealized net holding gain arising during the period, net of tax

—

0.2

—

—

0.2

Realized net gain reclassified to equity in earnings of non-consolidated entities, net of tax

—

(2.2)

—

—

(2.2)

Unrealized net holding loss arising during the period, net of tax

—

(0.1)

—

—

(0.1)

Other comprehensive loss

(103.9)

(103.9)

(75.4)

179.3

(103.9)

(34.1)

(34.1)

(19.3)

53.4

(34.1)

Total comprehensive loss

$
(164.4)

$
(98.6)

$
(98.8)

$
197.4

$
(164.4)

$
(114.9)

$
(337.8)

$
(234.3)

$
572.1

$
(114.9)

4339

Condensed Consolidating Balance Sheet
As of ~~September~~June 30, ~~2019:~~2020:

Subsidiary

Subsidiary

Consolidating

Consolidated

Subsidiary

Subsidiary

Consolidating

Consolidated
(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings
Assets






























Current assets:

Cash and cash equivalents

$
0.3

$
19.7

$
80.4

$
—

$
100.4

$
—

$
413.1

$
84.9

$
—

$
498.0
Restricted cash

—

—

10.2

—

10.2

—

—

10.4

—

10.4
Receivables, net

—

94.1

74.9

(11.1)

157.9

—

34.8

46.9

(11.0)

70.7
Other current assets

—

137.1

43.1

—

180.2

—

74.1

26.5

—

100.6
Total current assets

0.3

250.9

208.6

(11.1)

448.7

—

522.0

168.7

(11.0)

679.7
Investment in equity of subsidiaries

613.2

1,793.2

—

(2,406.4)

—

947.1

930.2

—

(1,877.3)

—
Property, net

—

1,976.2

605.2

—

2,581.4

—

1,805.7

611.8

—

2,417.5
Operating lease right-of-use assets, net

—

3,535.9

1,259.0

—

4,794.9

—

3,327.1

1,228.2

—

4,555.3
Intangible assets, net

—

131.4

62.5

—

193.9

—

120.9

53.4

—

174.3
Intercompany advances

5,277.1

(4,920.5)

(356.6)

—

—

2,911.9

(2,543.8)

(368.1)

—

—
Goodwill

(2.1)

3,074.7

1,621.2

—

4,693.8

(2.1)

1,949.8

1,040.7

—

2,988.4
Deferred tax asset, net

—

—

30.7

—

30.7

—

—

0.6

—

0.6
Other long-term assets

66.2

342.0

129.7

—

537.9

32.6

298.1

125.1

—

455.8
Total assets

$
5,954.7

$
6,183.8

$
3,560.3

$
(2,417.5)

$
13,281.3

$
3,889.5

$
6,410.0

$
2,860.4

$
(1,888.3)

$
11,271.6
Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$
—

$
274.1

$
98.6

$
(11.1)

$
361.6

$
—

$
256.6

$
190.6

$
(11.1)

$
436.1
Accrued expenses and other liabilities

51.3

175.1

112.2

—

338.6

55.7

110.3

91.4

0.1

257.5
Deferred revenues and income

—

278.1

69.4

—

347.5

—

321.9

84.2

—

406.1
Current maturities of corporate borrowings

20.0

1.4

—

—

21.4

20.0

—

—

—

20.0
Current maturities of finance lease liabilities

—

5.2

4.8

—

10.0

—

5.7

4.3

—

10.0
Current maturities of operating lease liabilities

—

441.3

126.8

—

568.1

—

453.0

128.5

—

581.5
Total current liabilities

71.3

1,175.2

411.8

(11.1)

1,647.2

75.7

1,147.5

499.0

(11.0)

1,711.2
Corporate borrowings

4,700.1

—

10.0

—

4,710.1

5,389.2

—

108.8

—

5,498.0
Finance lease liabilities

—

15.3

74.2

—

89.5

—

13.5

70.4

—

83.9
Operating lease liabilities

—

3,663.7

1,193.9

4,857.6

—

3,550.6

1,193.8

—

4,744.4
Exhibitor services agreement

—

553.8

—

—

553.8

—

546.3

—

—

546.3
Deferred tax liability, net

—

25.5

24.3

—

49.8

—

32.1

11.1

—

43.2
Other long-term liabilities

—

137.1

52.9

—

190.0

—

172.9

47.1

—

220.0
Total liabilities

4,771.4

5,570.6

1,767.1

(11.1)

12,098.0

5,464.9

5,462.9

1,930.2

(11.0)

12,847.0
Stockholders’ equity

1,183.3

613.2

1,793.2

(2,406.4)

1,183.3
Stockholders’ equity (deficit)

(1,575.4)

947.1

930.2

(1,877.3)

(1,575.4)
Total liabilities and stockholders’ equity

$
5,954.7

$
6,183.8

$
3,560.3

$
(2,417.5)

$
13,281.3

$
3,889.5

$
6,410.0

$
2,860.4

$
(1,888.3)

$
11,271.6

4440

Condensed Consolidating Balance Sheet
As of December 31, ~~2018:~~2019:

Subsidiary

Subsidiary

Consolidating

Consolidated

Subsidiary

Subsidiary

Consolidating

Consolidated
(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings
Assets






























Current assets:

Cash and cash equivalents

$
0.3

$
177.8

$
135.2

$
—

$
313.3

$
0.3

$
94.9

$
169.8

$
—

$
265.0
Restricted cash

—

—

10.7

—

10.7

—

—

10.5

—

10.5
Receivables, net

—

163.0

100.9

(4.4)

259.5

—

160.1

104.0

(9.9)

254.2
Other current assets

—

140.7

57.1

—

197.8

—

108.5

34.9

—

143.4
Total current assets

0.3

481.5

303.9

(4.4)

781.3

0.3

363.5

319.2

(9.9)

673.1
Investment in equity of subsidiaries

719.0

1,430.1

—

(2,149.1)

—

452.6

1,962.8

—

(2,415.4)

—
Property, net

—

2,152.3

887.3

—

3,039.6

—

1,969.3

679.9

—

2,649.2
Operating lease right-of-use assets, net

—

3,491.8

1,304.2

—

4,796.0
Intangible assets, net

—

225.6

126.5

—

352.1

—

130.6

64.7

—

195.3
Intercompany advances

5,362.3

(4,512.3)

(850.0)

—

—

5,488.0

(5,097.7)

(390.3)

—

—
Goodwill

(2.1)

3,074.7

1,716.1

—

4,788.7

(2.1)

3,074.7

1,716.5

—

4,789.1
Deferred tax asset, net

—

—

28.6

—

28.6

—

—

70.1

—

70.1
Other long-term assets

59.8

316.2

129.5

—

505.5

47.4

328.0

127.6

—

503.0
Total assets

$
6,139.3

$
3,168.1

$
2,341.9

$
(2,153.5)

$
9,495.8

$
5,986.2

$
6,223.0

$
3,891.9

$
(2,425.3)

$
13,675.8
Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$
—

$
327.2

$
129.9

$
(4.5)

$
452.6

$
—

$
382.8

$
170.5

$
(10.0)

$
543.3
Accrued expenses and other liabilities

31.5

197.5

149.4

0.1

378.5

18.6

184.0

121.9

0.1

324.6
Deferred revenues and income

—

314.0

100.8

—

414.8

—

348.9

100.3

—

449.2
Current maturities of corporate borrowings

13.8

1.4

—

—

15.2

20.0

—

—

—

20.0
Current maturities of capital and financing lease obligations

—

38.6

28.4

—

67.0
Current maturities of finance lease liabilities

—

5.3

5.0

—

10.3
Current maturities of operating lease liabilities

—

449.5

136.3

—

585.8
Total current liabilities

45.3

878.7

408.5

(4.4)

1,328.1

38.6

1,370.5

534.0

(9.9)

1,933.2
Corporate borrowings

4,696.0

—

11.8

—

4,707.8

4,733.4

—

—

—

4,733.4
Capital and financing lease obligations

—

194.3

298.9

—

493.2
Finance lease obligations

—

13.9

75.7

—

89.6
Operating lease liabilities

—

3,666.8

1,247.0

—

4,913.8
Exhibitor services agreement

—

564.0

—

—

564.0

—

549.7

—

—

549.7
Deferred tax liability, net

—

17.7

23.9

—

41.6

—

26.8

19.2

—

46.0
Other long-term liabilities

—

794.4

168.7

—

963.1

—

142.7

53.2

—

195.9
Total liabilities

4,741.3

2,449.1

911.8

(4.4)

8,097.8

4,772.0

5,770.4

1,929.1

(9.9)

12,461.6
Temporary equity

0.4

—

—

—

0.4
Stockholders’ equity

1,397.6

719.0

1,430.1

(2,149.1)

1,397.6

1,214.2

452.6

1,962.8

(2,415.4)

1,214.2
Total liabilities and stockholders’ equity

$
6,139.3

$
3,168.1

$
2,341.9

$
(2,153.5)

$
9,495.8

$
5,986.2

$
6,223.0

$
3,891.9

$
(2,425.3)

$
13,675.8

4541

Condensed Consolidating Statement of Cash Flows
Six Months Ended June 30, 2020:

Subsidiary

Subsidiary

Consolidating

Consolidated
(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings
Cash flows from operating activities:















Net cash provided by (used in) operating activities

$
46.7

$
(448.6)

$
(14.0)

$
—

$
(415.9)
Cash flows from investing activities:

Capital expenditures

—

(81.8)

(44.9)

—

(126.7)
Proceeds from disposition of long-term assets

—

3.4

0.3

—

3.7
Investments in non-consolidated entities, net

—

—

(9.3)

—

(9.3)
Other, net

—

0.8

—

—

0.8
Net cash used in investing activities

—

(77.6)

(53.9)

—

(131.5)
Cash flows from financing activities:

Proceeds from issuance of First Lien Notes due 2025

490.0

—

—

—

490.0
Borrowings under revolving credit facilities

213.2

—

109.6

—

322.8
Scheduled principal payments under Term Loans

(10.0)

—

—

—

(10.0)
Principal payments under finance lease obligations

—

(1.3)

(1.0)

—

(2.3)
Cash used to pay deferred financing costs

(9.3)

—

—

—

(9.3)
Cash used to pay dividends

(4.3)

—

—

—

(4.3)
Taxes paid for restricted unit withholdings

(1.0)

—

—

—

(1.0)
Change in intercompany advances

(684.6)

804.2

(119.6)

—

—
Net cash provided by financing activities

(6.0)

802.9

(11.0)

—

785.9
Effect of exchange rate changes on cash and cash equivalents and restricted cash

(41.0)

41.5

(6.1)

—

(5.6)
Net increase (decrease) in cash and cash equivalents and restricted cash

(0.3)

318.2

(85.0)

—

232.9
Cash and cash equivalents and restricted cash at beginning of period

0.3

94.9

180.3

—

275.5
Cash and cash equivalents and restricted cash at end of period

$
—

$
413.1

$
95.3

$
—

$
508.4

Condensed Consolidating Statement of Cash Flows
~~Nine~~Six Months Ended ~~September~~June 30, 2019:

Subsidiary

Subsidiary

Consolidating

Consolidated
(In millions)

Holdings

Guarantors

Non-Guarantors

Adjustments

Holdings
Cash flows from operating activities:















Net cash provided by operating activities

$
75.9

$
63.0

$
71.3

$
—

$
210.2
Cash flows from investing activities:

Capital expenditures

—

(243.8)

(104.4)

—

(348.2)
Acquisition of theatre assets

—

(11.8)

—

—

(11.8)
Proceeds from disposition of long-term assets

—

6.1

15.3

—

21.4
Investments in non-consolidated entities, net

—

(0.1)

(9.4)

—

(9.5)
Other, net

—

(0.3)

—

—

(0.3)
Net cash used in investing activities

—

(249.9)

(98.5)

—

(348.4)
Cash flows from financing activities:

Proceeds from issuance of Term Loan due 2026

1,990.0

—

—

—

1,990.0
Payment of principal Senior Secured Notes due 2023

(230.0)

—

—

—

(230.0)
Payment of principal Senior Subordinated Notes due 2022

(375.0)

—

—

—

(375.0)
Call premiums paid for Senior Secured Notes due 2023 and Senior Subordinated Notes due 2022

(15.9)

—

—

—

(15.9)
Principal payments under Term Loans due 2022 and 2023

(1,338.5)

—

—

—

(1,338.5)
Repayments under Revolving Credit Facility

—

—

(1.7)

—

(1.7)
Scheduled principal payments under Term Loans

(16.9)

—

—

—

(16.9)
Principal payments under capital and financing lease obligations

—

(4.9)

(3.6)

—

(8.5)
Cash used to pay debt financing costs

(11.7)

—

—

—

(11.7)
Cash used to pay dividends

(63.4)

—

—

—

(63.4)
Taxes paid for restricted unit withholdings

(1.3)

—

—

—

(1.3)
Change in intercompany advances

5.8

14.1

(19.9)

—

—
Net cash provided by (used in) financing activities

(56.9)

9.2

(25.2)

—

(72.9)
Effect of exchange rate changes on cash and cash equivalents and restricted cash

(19.0)

19.6

(2.9)

—

(2.3)
Net increase (decrease) in cash and cash equivalents and restricted cash

—

(158.1)

(55.3)

—

(213.4)
Cash and cash equivalents and restricted cash at beginning of period

0.3

177.8

145.9

—

324.0
Cash and cash equivalents and restricted cash at end of period

$
0.3

$
19.7

$
90.6

$
—

$
110.6

~~Condensed Consolidating Statement of Cash Flows~~
~~Nine Months Ended September 30, 2018:~~

Subsidiary

Subsidiary

Consolidating

Consolidated

Subsidiary

Subsidiary

Consolidating

Consolidated
(In millions)

Holdings
Guarantors

Non-Guarantors

Adjustments

Holdings

Holdings
Guarantors

Non-Guarantors

Adjustments

Holdings
Cash flows from operating activities:






























Net cash provided by operating activities

$
44.0

$
218.3

$
36.5

$
—

$
298.8
Net cash provided by (used in) operating activities

$
238.9

$
(135.9)

$
50.6

$
—

$
153.6
Cash flows from investing activities:

Capital expenditures

—

(264.9)

(110.0)

—

(374.9)

—

(159.6)

(70.3)

—

(229.9)
Proceeds from sale leaseback transactions

—

50.1

—

—

50.1
Proceeds from disposition of NCM, Inc. shares

—

162.5

—

—

162.5
Proceeds from Screenvision merger

—

45.8

—

—

45.8
Acquisition of theatre assets

—

(11.8)

—

—

(11.8)
Proceeds from disposition of long-term assets

—

8.2

5.7

—

13.9

—

6.0

15.3

—

21.3
Investments in non-consolidated entities, net

—

(11.0)

—

—

(11.0)

—

(0.1)

—

—

(0.1)
Other, net

—

(1.6)

0.9

—

(0.7)

—

(0.8)

—

—

(0.8)
Net cash used in investing activities

—

(10.9)

(103.4)

—

(114.3)

—

(166.3)

(55.0)

—

(221.3)
Cash flows from financing activities:

Proceeds from issuance of convertible note due 2024

600.0

—

—

—

600.0
Net borrowings under Revolving Credit Facility

—

—

6.6

—

6.6
Principal payments under Term Loan

(10.3)

—

—

—

(10.3)
Principal payments under capital and financing lease obligations

—

(30.2)

(23.3)

—

(53.5)
Cash used to pay deferred financing costs

(14.3)

—

—

—

(14.3)
Proceeds from issuance of Term Loan due 2026

1,990.0

—

—

—

1,990.0
Payment of principal Senior Secured Notes due 2023

(230.0)

—

—

—

(230.0)
Payment of principal Senior Subordinated Notes due 2022

(375.0)

—

—

—

(375.0)
Call premiums paid for Senior Secured Notes due 2023 and Senior Subordinated Notes due 2022

(15.9)

—

—

—

(15.9)
Principal payments under Term Loans due 2022 and 2023

(1,338.5)

—

—

—

(1,338.5)
Repayments under revolving credit facilities

—

—

(12.0)

—

(12.0)
Scheduled principal payments under Term Loans

(11.9)

—

—

—

(11.9)
Principal payments under finance lease obligations

—

(3.6)

(2.5)

—

(6.1)
Cash used to pay debt financing fees

(11.2)

—

—

—

(11.2)
Cash used to pay dividends

(237.4)

—

—

—

(237.4)

(42.6)

—

—

—

(42.6)
Taxes paid for restricted unit withholdings

(1.7)

—

—

—

(1.7)

(1.3)

—

—

—

(1.3)
Retirement of Class B stock

(422.9)

(422.9)
Purchase of treasury stock

(21.8)

—

—

—

(21.8)
Change in intercompany advances

87.2

(63.8)

(23.4)

—

—

(203.3)

227.7

(24.4)

—

—
Net cash used in financing activities

(21.2)

(94.0)

(40.1)

—

(155.3)
Net cash provided by (used in) financing activities

(239.7)

224.1

(38.9)

—

(54.5)
Effect of exchange rate changes on cash and cash equivalents and restricted cash

(23.4)

24.3

(4.1)

—

(3.2)

0.8

(0.4)

(1.0)

—

(0.6)
Net increase (decrease) in cash and cash equivalents and restricted cash

(0.6)

137.7

(111.1)

—

26.0

(0.0)

(78.5)

(44.3)

—

(122.8)
Cash and cash equivalents and restricted cash at beginning of period

1.1

95.9

221.3

—

318.3

0.3

177.7

146.0

—

324.0
Cash and cash equivalents and restricted cash at end of period

$
0.5

$
233.6

$
110.2

$
—

$
344.3

$
0.3

$
99.2

$
101.7

$
—

$
201.2

NOTE 14—SUBSEQUENT EVENTS

Senior Subordinated Debt Exchange Offer

On July 31, 2020, the Company closed its previously announced private offers to exchange (the “Exchange Offers”) any and all of its outstanding 6.375% Senior Subordinated Notes due 2024, 5.75% Senior Subordinated Notes due 2025, 5.875% Senior Subordinated Notes due 2026 and 6.125% Senior Subordinated Notes due 2027 (together the “Existing Subordinated Notes”) for newly issued Second Lien Notes due 2026.

The Exchange Offers reduced the principal amounts of the Company’s debt by approximately $555 million, which represented approximately 24.1% of the principal amount of the Existing Subordinated Notes. The Company raised $300 million in additional cash from the issuance of First Lien Notes due 2026, prior to deducting discounts and cash premiums based on contract assumptions and estimates of $36 million. Additionally, certain backstop purchasers of the First Lien Notes due 2026 that participated in the exchange offer received 5 million Class A common shares. The closing of the Exchange Offers also allowed the Company to extend maturities on approximately $1.7 billion of debt to 2026, most of which was maturing in 2024 and 2025 previously. Interest due for the coming 12 to 18 months on the Second Lien Notes due 2026 is expected to be paid all or in part on an in-kind basis, thereby generating a further near-term cash savings for the Company of between approximately $120 million and $180 million.

In connection with the Exchange Offers, the Company also received consents (the “Consent Solicitations”) from eligible holders of the Existing Subordinated Notes to amend the indentures governing the Existing Subordinated Notes to among other things, (i) release the existing subsidiary guarantees of the Existing Subordinated Notes, (ii) eliminate substantially all of the restrictive covenants, certain affirmative covenants and certain events of default contained in the indentures governing the Existing Subordinated Notes, and (iii) makes other conforming changes to internally conform to certain proposed amendments.

Under ASC 840-470-60, Troubled Debt Restructurings by Debtors, the Company believes the exchange of approximately $2,017.5 million principal amount of its senior subordinated notes for approximately $1,462.3 million principal amount of second lien secured debt will represent a troubled debt restructuring (“TDR”) as the Company was experiencing financial difficulties and the lenders granted a concession. The Company does not expect the TDR will result in a gain recognition, a new effective interest rate will be established based on the carrying value of the senior subordinated notes and the Company expects new fees paid to third parties of approximately $29.7 million will be expensed. The Company is currently evaluating the impact on its consolidated financial statements.

Second Lien Notes due 2026

In connection with the Exchange Offers, the Company issued the new Second Lien Notes due 2026 in exchange for the Existing Subordinated Notes. Interest due for the coming 12 to 18 months on the Second Lien Notes due 2026 is expected to be paid all or in part on an in-kind basis pursuant to the terms of the Second Lien Notes due 2026.

The Second Lien Notes due 2026 are fully and unconditionally guaranteed on a joint and several basis by each of the Company’s subsidiaries that currently guarantee its obligations under the Company’s Senior Secured Credit Facilities. The Second Lien Notes due 2026 are secured by a second-priority lien on substantially all of the tangible and intangible assets owned by the Company and the guarantor subsidiaries that secure obligations under the Senior Secured Credit Facilities (“Collateral”). The Second Lien Notes due 2026 are subordinated in right of payment to all indebtedness of the Company that is secured by a first-priority lien on the Collateral.

Incremental First Lien Notes due 2026

In connection with the Exchange Offers, holders of the Existing Subordinated Notes purchased new and incremental 10.5% first lien secured notes due 2026 (the “Incremental First Lien Notes due 2026”), in an aggregate principal of $200 million. Those providing a backstop commitment received their pro-rata share of 5 million shares of the Class A common stock, or 4.6% of AMC’s outstanding shares, worth $20.2 million at the market closing price on July 31, 2020.

Separately, upon the closing of its private debt exchange, Silver Lake purchased from the Company $100 million principal amount of Incremental First Lien Notes due 2026 of a separate series. The $300 million in new funding is prior to deducting discounts and cash premiums based on contract assumptions and estimates of $36 million.

The Incremental First Lien Notes due 2026 are fully and unconditionally guaranteed on a joint and several basis by each of the Company’s subsidiaries that currently guarantee its obligations under the Company’s Senior Secured Credit Facilities. The Incremental First Lien Notes are secured by a first-priority lien on the Collateral.

2.95% Senior Unsecured Convertible Notes due 2024

Concurrently with the Exchange Offers, to obtain the consent of the holders of the Convertible Notes due 2024, the Company restructured $600 million of Convertible Notes due 2024 issued in 2018 to Silver Lake and others pursuant to which the maturity of the Convertible Notes due 2024 were extended to May 1, 2026 and a first-priority lien on the collateral was granted to secure indebtedness thereunder.

Senior Secured Credit Facility

On July 31, 2020, the Company entered into an amendment with the administrative agent to the Senior Secured Credit Facility to add restrictive provisions arising under the terms of the Incremental First Lien Notes due 2026.

4745

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

In addition to historical information, this Quarterly Report on Form 10–Q contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “may,” “will,” “forecast,” “estimate,” “project,” “intend,” “plan,” “expect,” “should,” “believe” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Examples of forward-looking statements include statements we make regarding the impact of COVID-19 and our liquidity. These forward-looking statements are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future ~~conditions.~~conditions and speak only as of the date on which it is made. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including those discussed in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the following:

● the impact of the COVID-19 virus on us, the motion picture exhibition industry, and the economy in general, including our response to the COVID-19 virus related to suspension of operations at our theatres, personnel reductions and other cost-cutting measures and measures to maintain necessary liquidity and increases in expenses relating to precautionary measures at our facilities to protect the health and well-being of our customers and employees;

● the manner, timing and amount of benefit we receive under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) or other applicable governmental benefits and support for which we are eligible domestically and internationally;

● risks relating to impairment losses, including with respect to goodwill and other intangibles, and theatre and other closure charges;

● risks relating to motion picture production and performance;

● our lack of control over distributors of films;

● intense competition in the geographic areas in which we operate;

● increased use of alternative film delivery methods including premium video on demand or other forms of entertainment;

● shrinking exclusive theatrical release windows;

● AMC Stubs^® A-List may not meet anticipated revenue projections which could result in a negative impact upon operating results;

● general and international economic, political, regulatory, social and financial market conditions and other risks including the effects of the exit of the United Kingdom from the European Union;

● risks and uncertainties relating to our significant ~~indebtedness;~~indebtedness, including our borrowing capacity under our revolving credit agreements;

● our ability to execute cost cutting and revenue enhancement initiatives as previously disclosed and in connection with response to COVID-19;

● limitations on the availability of capital may prevent us from deploying strategic initiatives;

●

certain covenants in the agreements that govern our indebtedness may limit our ability to take advantage of certain business opportunities;

●

our ability to achieve expected synergies, benefits and performance from our strategic theatre acquisitions and strategic initiatives;

●

our ability to refinance our indebtedness on terms favorable to ~~us;~~us or at all;

●

optimizing our theatre circuit through new construction and the transformation of our existing theatres may be subject to delay and unanticipated costs;

●

failures, unavailability or security breaches of our information systems;

●

~~risks relating~~our ability to ~~impairment losses, including with respect~~utilize interest expense deductions may be limited annually due to ~~goodwill~~Section 163(j) of the Tax Cuts and ~~other intangibles, and theatre and other closure charges;~~Jobs Act of 2017;

●

our ability to ~~utilize~~recognize interest deduction carryforwards and net operating loss carryforwards to reduce our future tax ~~liability or valuation allowances taken with respect~~liability;

●

our ability to recognize certain international deferred tax ~~assets;~~assets which currently do not have a valuation allowance recorded;

●

impact of the elimination of the calculation of USD LIBOR rates on our contracts indexed to USD LIBOR:

●

review by antitrust authorities in connection with acquisition opportunities;

●

~~risks relating to unexpected costs or unknown liabilities relating to recently completed acquisitions;~~

●

risks relating to the incurrence of legal liability, including costs associated with recently filed securities class action lawsuits;

●

dependence on key personnel for current and future performance and our ability to attract and retain senior executives and other key personnel, including in connection with any future acquisitions;

●

risks of poor financial results may prevent us from deploying strategic initiatives;

●

operating a business in international markets AMC is unfamiliar with, including acceptance by movie-goers of AMC initiatives that are new to those markets;

●

increased costs in order to comply or resulting from failure to comply with governmental regulation, including the General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act and pending future domestic privacy laws and regulations;

●

geopolitical events, including the threat of terrorism or cyber-attacks, or widespread health emergencies, such as the novel coronavirus or other pandemics or epidemics, causing people to avoid our theatres or other public places where large crowds are in attendance;

●

the ability to obtain suitable equity and/or debt financing and the continued availability of financing, in the amounts and on the terms necessary to support our future refinancing requirements and business; and

●

~~we may not generate sufficient cash flows or have sufficient restricted payment capacity under our Senior Secured Credit Facility or~~other risks referenced from time to time in filings with the ~~indentures governing our debt securities to pay our intended dividends on our Class A and Class B common stock.~~SEC.

This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative but not exhaustive. In addition, new risks and uncertainties may arise from time to time. Accordingly, all forward-looking statements should be evaluated with an understanding of their inherent ~~uncertainty.~~uncertainty and we caution accordingly against relying on forward-looking statements.

Readers are urged to consider these factors carefully in evaluating the forward-looking statements. For further information about these and other risks and uncertainties as well as strategic initiatives, see Item 1A. “Risk Factors” of Part II of this Form 10-Q and Item 1A. “Risk Factors,” and Item 1. “Business” in our Annual Report on Form 10–K for the year ended December 31, ~~2018~~2019, and our other public filings.

All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included herein are made only as of the date of this Quarterly Report on Form 10–Q, and we do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Temporarily Suspended Operations

As of or before March 17, 2020, we temporarily suspended all theatre operations in our U.S. markets and International markets in compliance with local, state, and federal governmental restrictions and recommendations on social gatherings to prevent the spread of COVID-19 and as a precaution to help ensure the health and safety of our guests and theatre staff. As a result of these temporarily suspended operations, our revenues and expenses for the three and six months ended June 30, 2020 are significantly lower than our revenues and expenses for the three and six months ended June 30, 2019. The theatre operations in the U.S. markets remained suspended for the entire second quarter of 2020. We resumed limited operations in the International markets in early June. As of June 30, 2020, we had resumed operations at 37 theatres in nine countries in our International markets and recorded attendance of 100,000 guests during the three months ended June 30, 2020. On July 23, 2020, we announced we are currently planning to reopen our U.S. movie theatres in mid to late August 2020. In International markets, as of the end of July 2020, we already have resumed operations in more than 130 theatres in all of the countries we serve in Europe and the Middle East.

Overview

AMC is the world’s largest theatrical exhibition company and an industry leader in innovation and operational excellence. We operate theatres in 15 countries and are the market leader in nine of those.

Our theatrical exhibition revenues are generated primarily from box office admissions and theatre food and beverage sales. The balance of our revenues are generated from ancillary sources, including on-screen advertising, fees earned from our AMC Stubs^® customer frequency membership program, rental of theatre auditoriums, income from gift card and exchange ticket sales, ~~on-line~~online ticketing fees and arcade games located in theatre lobbies. As of ~~September~~June 30, ~~2019,~~2020, we owned, operated or had interests in ~~1,000~~978 theatres and ~~10,945~~10,833 screens.

Film Content

Box office admissions are our largest source of revenue. We predominantly license “first-run” films from distributors owned by major film production companies and from independent distributors on a film-by-film and theatre-by-theatre basis. Film exhibition costs are accrued based on the applicable admissions revenues and estimates of the final settlement pursuant to our film licenses. Licenses that we enter into typically state that rental fees are based on aggregate terms established prior to the opening of the picture. In certain circumstances and less frequently, our rental fees are based on a mutually agreed settlement upon the conclusion of the picture. In certain circumstances and less frequently, our rental fees are established on a weekly basis for the coming week’s percentage forecast. Some European licenses use a per capita agreement instead, paying a flat amount per ticket, where the sum is agreed in advance of the film showing. Under an aggregate terms formula, we pay the distributor a specified percentage of box office gross or pay based on a scale of percentages tied to different amounts of box office ~~gross.~~gross, or in Europe, we pay based on the number of weeks since release. The settlement process allows for negotiation based upon how a film actually performs.

Our revenues attributable to individual distributors may vary significantly from year to year depending upon the commercial success of each distributor’s films in any given year. Our results of operations may vary significantly from quarter to quarter and from year to year based on the timing and popularity of film releases.

~~AMC~~ Movie Screens

During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, we opened one new theatre with eight screens, added five ~~new~~additional screens to existing theatres, ~~with a total of 38 screens, acquired 64 screens,~~ permanently closed ~~181~~214 screens, temporarily closed ~~352~~18 screens to install consumer experience upgrades and reopened ~~285~~11 screens to install consumer experience upgrades.

~~As of September 30, 2019, we had 5,336 3D enabled screens, including 219 IMAX~~^®, ~~and 114 Premium Large Format (“PLF”) screens; approximately 49% of our screens were 3D enabled screens, including IMAX~~^® ~~3D enabled screens, and approximately 2% of our screens were IMAX~~^® ~~3D enabled screens.~~ The following table ~~identifies the upgrades to~~provides details of our theatre circuit ~~during~~by segment for the periods indicated:

U.S. Markets

International Markets


Number of

Number of

Number of

Number of

Screens As of

Screens As of

Screens As of

Screens As of
Format

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
IMAX®

188

188

35

30
Dolby CinemaTM

150

138

5

3
Other Premium Large Format ("PLF")

55

51

71

66
Dine-in theatres

725

668

8

2
Premium seating

3,282

3,029

470

447


Number of

Number of

Screens As of

Screens As of

Format

September 30, 2019

December 31, 2018

Digital

10,945

11,091

3D enabled

5,336

5,411

IMAX^® (3D enabled)

219

216

Dolby Cinema^TM at AMC

143

127

Other PLF (3D enabled)

114

112

Dine-in theatres

379

437

Premium seating

3,603

3,279

Guest Amenities

We ~~continually~~seek to upgrade the quality of our theatre circuit through substantial renovations featuring our seating concepts, acquisitions, new builds (including expansions), expansion of food and beverage offerings (including dine-in theatres), and by disposing of older screens through closures and sales.

Recliner seating is the key feature of theatre renovations, which drive a ~~35%~~34% increase in attendance, on average, at these locations in their first year post renovation. These renovations, in conjunction with capital contributions from our landlords, involve stripping theatres to their basic structure in order to replace finishes throughout, upgrade the sight and sound experience, install modernized points of sale and, most importantly, replace traditional theatre seats with plush, electric ~~recliners.~~
recliners that allow customers to deploy a leg rest and fully recline at the push of a button.
As of ~~September~~June 30, ~~2019,~~2020, in our U.S. markets we now feature recliner seating in approximately ~~378~~343 U.S. theatres, including Dine-in-Theatres, totaling approximately ~~3,603~~3,282 screens and representing 41.2% of total U.S. screens. ~~By the end~~In our International markets, we have recliner seating in approximately 74 International theatres, totaling approximately 470 screens and representing 16.4% of ~~2019, we expect to convert an additional 202 screens to recliner seating.~~
total International screens.
Open-source internet ticketing makes our AMC seats (over 1.1 million) in all our U.S. theatres and auditoriums, for all our showtimes as available as possible, on as many websites as possible. Our tickets are ~~currently on sale~~sold over the internet, directly or through mobile apps, at our own website and app, and other third-party ticketing vendors.

Food and beverage sales are our second largest source of revenue after box office admissions. Food and beverage items traditionally include popcorn, soft drinks, candy and hot dogs. Different varieties of food and beverage items are offered at our theatres based on preferences in the particular geographic region. Our traditional food and beverage strategy emphasizes prominent and appealing food and beverage offerings designed for rapid service and efficiency, including a customer friendly self-serve experience.

~~Our~~To address recent consumer trends, we have expanded our menu ~~includes~~of enhanced food and beverage products to include made-to-order drinks and meals, customized coffee, healthy snacks, premium beers, wine and mixed drinks, flatbread pizzas, more varieties of hot dogs, four flavors of popcorn and other menu items. We ~~currently~~ operate 2651 Dine-In Theatres in the U.S. and two Dine-In Theatres in Europe that deliver ~~meals~~chef-inspired menus with seat-side or delivery ~~service.~~

~~AMC Stubs~~^®service to luxury recliners with tables.

Loyalty Programs and Other Marketing

In our U.S. markets, we begin the process of engagement with AMC ~~Stubs~~^® ~~is a~~Stubs® our customer loyalty program ~~for our U.S. markets~~ which allows members to earn rewards, receive discounts and participate in exclusive members-only offerings and services. It features ~~both~~ a traditional paid tier called AMC Stubs ~~Premiere~~^TMPremiere™ for a $15 annual membership fee and a ~~non-paid~~non-

paid tier called AMC Stubs ~~Insider~~^TMInsider™. Both programs reward loyal guests for their patronage of AMC ~~Theatres.~~

~~On June 26, 2018, we launched AMC Stubs~~^® ~~A-List, a new tier of our AMC Stubs~~^® ~~loyalty program. This program offers guests admission to the movies~~theatres. Rewards earned are redeemable on future purchases at AMC ~~up to three times per week including multiple movies per day and repeat visits to already seen movies for $19.95 to $23.95 per month depending upon geographic market. AMC Stubs~~^® ~~A-List also includes premium offerings including IMAX~~^®~~, Dolby Cinema™ at AMC, RealD Holdings Inc., Prime and BigD. AMC Stubs~~^® ~~A-List members can book tickets on-line in advance and select specific seats at AMC Theatres with reserved seating.~~

~~As of September 30, 2019, we had approximately 21,596,000 member households in the AMC Stubs~~^® ~~program. AMC Stubs~~^® members represented approximately 46% of AMC U.S. markets attendance during the three months ended September 30, 2019, driving an average 2.0x higher total gross revenue versus non-members. Our much larger database of identified movie-goers also provides us with additional insight into our customers’ movie preferences, and this enables us to have both a larger and a more targeted marketing effort.
locations.
The portion of the admissions and food and beverage revenues attributed to the rewards is deferred as a reduction of admissions and food and beverage revenues and is allocated between admissions and food and beverage revenues based on expected member redemptions.

Upon redemption, deferred rewards are recognized as revenues along with associated cost of goods. We estimate point breakage in assigning value to the points at the time of sale based on historical trends. The program’s annual membership fee is allocated to the material rights for discounted or free products and services and is initially deferred, net of estimated refunds, and recognized as the rights are redeemed based on estimated utilization, over the one-year membership period in admissions, food and beverage, and other revenues. A portion of the revenues related to a material right are deferred as a virtual rewards performance obligation using the relative standalone selling price method and are recognized as the rights are redeemed or expire.
AMC Stubs^® A-List is our monthly subscription-based tier of the AMC Stubs^® loyalty program. This program offers guests admission to movies at AMC up to three times per week including multiple movies per day and repeat visits to already seen movies for $19.95 to $23.95 per month depending upon geographic market. AMC Stubs® A-List also includes premium offerings including IMAX®, Dolby Cinema™ at AMC, RealD, Prime and BigD. AMC Stubs® A-List members can book tickets on-line in advance and select specific seats at AMC Theatres with reserved seating.
As of June 30, 2020, we had more than 23,100,000 member households enrolled in AMC Stubs® A-List, AMC Stubs Premiere™ and AMC Stubs Insider™ programs, combined.
In our International markets, we currently have loyalty programs in the major territories in which we operate. The movie-goers can earn points for spending money at the theatre, and those points can be redeemed for tickets and concession items at a later date. Odeon currently has more than 8,700,000 members in these various loyalty programs. We are currently evaluating the Odeon loyalty programs to determine how best to reward our European movie-goers and heighten guest loyalty to drive additional attendance to Odeon theatres. The programs have been paused during the suspension of operations at all of our theatres.
Our marketing efforts are not limited to our loyalty programs as we continue to improve our customer connections through our website and mobile apps and expand our online and movie offerings. In select markets during 2019, we upgraded our mobile applications with the ability to order food and beverage offerings via our mobile applications while ordering tickets ahead of scheduled showtimes. Also, in 2019, we launched AMC Theatres On Demand, a new service where members of the AMC Stubs^®loyalty program can rent or buy movies. We believe our competitive advantage of a robust and easy-to-use online and mobile presence combined with an effective loyalty program that provides better market intelligence to anticipate customers’ future behavior should allow us to capture incremental share of both entertainment dollars and time.
Critical Accounting Policies and Estimates

Long-lived Assets Impairments. We evaluate indefinite-lived intangible assets for impairment annually or more frequently as specific events or circumstances dictate. We operate in a very competitive business environment and our revenues are highly dependent on movie content supplied by film producers. In addition, it is common for us to closely monitor certain locations where operating performance may not meet our expectations.
We review long-lived assets, including definite-lived intangible assets and theatre assets (including operating lease right-of-use assets) whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable. We identify impairments related to internal use software when management determines that the remaining carrying value of the software will not be realized through future use. We evaluate events or circumstances, including competition in the markets where we operate that would indicate the carrying value of theatre assets may not be fully recoverable. We evaluate theatres using historical and projected data of theatre level cash flow as our primary indicator of potential impairment and consider the seasonality of our business when making these evaluations. If an event or circumstance is identified indicating carrying value may not be recoverable, the sum of future undiscounted cash flows is compared to the carrying value. If carrying value exceeds the future undiscounted cash flows, the carrying value of the asset is reduced to fair value. Assets are evaluated for impairment on an individual theatre basis, which management believes is the lowest level for which there are identifiable cash flows. The fair value of assets is determined as either the expected selling price less selling costs (where appropriate) or the present value of the estimated future cash flows, adjusted as necessary for market participant factors.

We recorded impairment charges primarily related to long-lived assets and definite lived intangible assets of $0 and $106.5 million during the six months ended June 30, 2020, respectively. There are a number of estimates and significant judgments that are made by management in performing these impairment evaluations. Such judgments and estimates include estimates of future attendance, revenues, rent relief, cost savings, cash flows, capital expenditures, and the cost of capital, among others. Attendance is expected to be significantly below historical levels for the first several months following reopening but is expected to increase as customers become more comfortable with the experience. We believe we have used reasonable and appropriate business judgments. There is considerable management judgment with respect to cash flow estimates and appropriate discount rates to be used in determining fair value, and, accordingly, actual results could vary significantly from such estimates, which fall under Level 3 within the fair value measurement hierarchy. These estimates determine whether impairments have been incurred, and quantify the amount of any related impairment charge. Given the nature of our business and our recent history, future impairments are possible and they may be material, based upon business conditions that are constantly changing and the competitive business environment in which we operate.

During the three and six months ended June 30, 2020, we recorded non-cash impairment of long-lived assets of $0 and $81.4 million on 57 theatres in the U.S. markets with 658 screens (in Alabama, Arkansas, California, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming), respectively, and $0 and $9.9 million on 23 theatres in the International markets with 213 screens (in Germany, Italy, Spain, UK and Sweden), respectively. During the three and six months ended June 30, 2020, we recorded impairment losses related to definite-lived intangible assets of $0 and $8.0 million, respectively. In addition, we recorded an impairment loss of $0 and $7.2 million within investment expense (income), related to equity interest investments without a readily determinable fair value accounted for under the cost method during the three and six months ended June 30, 2020, respectively.

At March 31, 2020, we performed a quantitative impairment evaluation of our indefinite-lived intangible assets related to the AMC, Odeon and Nordic tradenames and recorded impairment charges of $0 and $5.9 million related to Odeon tradenames and $0 and $2.4 million related to Nordic for the three and six months ended June 30, 2020, respectively. To estimate fair value of our indefinite-lived trade names, we employed a derivation of the Income Approach known as the Royalty Savings Method. The Royalty Savings Method values an intangible asset by estimating the royalties saved through ownership of the asset. We applied royalty rates of 0.5% for AMC and Odeon tradenames and 1.0% for Nordic to the related theatre revenues on an after-tax basis using effective tax rates. Related cash flows were discounted at 12.5% for AMC and 14.0% for Odeon and Nordic.

Goodwill. We evaluate the goodwill recorded at our two reporting units (Domestic Theatres and International Theatres) for impairment annually as of the beginning of the fourth fiscal quarter or more frequently as specific events or circumstances dictate. ~~Prior to calendar 2019, we evaluated our recorded goodwill for impairment at three reporting units (Domestic Theatres, Odeon Theatres and Nordic Theatres).~~ Our market capitalization has been below carrying value since May 24, 2019.

In performing the Step 1 quantitative goodwill impairment test as of March 31, 2020, we used an enterprise value approach to measure fair value of the reporting units. The enterprise fair values of the Domestic Theatres and International Theatres reporting units were less than their carrying values and a goodwill impairment charge of $1,124.9 million and $619.4 million was recorded as of March 31, 2020 for our Domestic Theatres and International Theatres reporting units, respectively.

In accordance with ASC 350-20-35-30, we performed an assessment to determine whether there were any events or changes in circumstances that would warrant an interim ASC 350 impairment analysis as of June 30, 2020. Given the temporary suspension of operations during the second quarter of 2020, we performed a qualitative impairment test to evaluate whether it is more likely than not that the fair value of our two reporting units is less than their respective carrying amounts as of June 30, 2020. We compared key assumptions utilized in our quantitative analysis as of March 31, 2020 to those that existed as of the second quarter. Our considerations included changes during the quarter due to macroeconomic, industry, and entity specific factors. We also observed the increase in the Company’s common stock price and the fair value of corporate borrowings as of June 30, 2020 in comparison to March 31, 2020 noting that our estimated fair value of our corporate borrowings and finance lease obligations represents approximately 74% of our market enterprise value. In considering the totality of the aforementioned factors, we have concluded that it is not more likely than not that the fair value of our two reporting units has been reduced below their respective carrying amounts. As a result, we concluded that an interim quantitative impairment test as of June 30, 2020 was not required.

The quantitative goodwill impairment test performed as of March 31, 2020 indicated our estimated enterprise

~~The following table sets forth the historical closing prices per share of our Class A common stock for the calendar periods indicated:~~

Closing
Date

Price Per Share
June 30, 2017

$
22.75
September 30, 2017

14.70
December 31, 2017

15.10
March 31, 2018

14.05
June 30, 2018

15.90
September 30, 2018

20.50
December 31, 2018

12.28
January 31, 2019

14.65
February 28, 2019

14.03
March 31, 2019

14.85
April 30, 2019

15.16
May 31, 2019

11.98
June 30, 2019

9.33
July 31, 2019

11.83
August 31, 2019

11.11
September 30, 2019

10.70
November 6, 2019

9.69

The following tables reconcile enterprise carrying value to carrying value of our stockholders’ equity by reporting unit on our condensed consolidated balance sheet and reconciles estimated enterprise fair value to estimated fair value of our stockholders’ equity:

Carrying Value

Corporate Borrowings

Carrying Value

Enterprise

and Finance

Stockholders'
(In millions)

Carrying Value

Lease Obligations

Equity
Domestic Theatres

$
3,820.3

$
(4,372.3)

$
(552.0)
International Theatres

2,194.0

(458.7)

1,735.3
Total

$
6,014.3

$
(4,831.0)

$
1,183.3

Estimated

Fair Value

Estimated

Estimated

Corporate Borrowings

Fair Value

Enterprise

and Finance

Stockholders'
(In millions)

Fair Value

Lease Obligations

Equity
Domestic Theatres

$
4,199.6

$
(4,316.9)

$
(117.3)
International Theatres

2,451.9

(453.0)

1,998.9
Total

$
6,651.5

$
(4,769.9)

$
1,881.6

Estimated

Estimated Enterprise Fair Value

Enterprise

Enterprise

exceeds Enterprise Carrying Value
(In millions)

Carrying Value

Fair Value

Amount

Percentage
Domestic Theatres

$
3,820.3

$
4,199.6

$
379.3

9.9%
International Theatres

2,194.0

2,451.9

257.9

11.8%
Total

$
6,014.3

$
6,651.5

$
637.2

10.6%

Based on sustained declines during 2019 in our market capitalization, we performed a step 1 quantitative goodwill impairment test as of September 30, 2019. The impairment test for goodwill involves estimating the fair value of the reporting unit and comparing that value to its carrying value. If the estimated fair value of the reporting unit is less than its carrying value, the difference is recorded as a goodwill impairment charge, not to exceed the total amount of goodwill allocated to that reporting unit.

We determined the fair value of our Domestic Theatres and International Theatres reporting units by using an enterprise valuation methodology and an equally weighted combination of the income approach, which utilizes discounted cash flows, and the market approach which utilizes market comparable multiples of cash flows. We believe that a market participant acquisition premium for a highly leveraged company is more reasonably measured on an enterprise value basis. There was considerable management judgment with respect to cash flow estimates and appropriate multiples and discount rates to be used in estimating fair value, which are classified as Level 3 in the fair value hierarchy. The income approach provides an estimate of fair value by measuring estimated annual cash flows over a discrete projection period and applying a present value discount rate to the cash flows. The present value of the cash flows is then added to the present value equivalent of the residual value of the business to arrive at an estimated fair value of the reporting unit. The residual value represents the present value of the projected cash flows beyond the discrete projection period. The discount rates were determined using a rate of return deemed appropriate for the risk of achieving the projected cash flows. The market approach used cash flow multiples based on a comparison of growth and profitability of the reporting units and publicly traded peer companies and a 20% enterprise control premium based on analysis of comparable transactions.

~~The following is a calculation of our market equity capitalization as of September 30, 2019:~~

(In millions, except share data)

As of September 30, 2019
Total outstanding shares

103,849,861
Share price

$
10.70
Market equity capitalization

$
1,111.2

~~The following is a comparison of our estimated enterprise~~ fair value to our market enterprise value ~~indicating an~~ implied a premium ~~to market~~ of ~~13.1%:~~22.7%.

(In millions)

As of September 30, 2019
Estimated enterprise fair value

$
6,651.5

Market equity capitalization

$
1,111.2
Estimated fair value corporate borrowings and finance lease obligations

4,769.9
Market enterprise value

$
5,881.1

Implied premium to market

13.1%

We believe a significant reason for the difference in our ~~current~~ market enterprise value as compared to our estimated enterprise fair value is due to a market participant acquisition premium. We believe a market participant acquisition premium is applicable and has been historically realized in our industry. In the event of an acquisition of control of our enterprise by another market participant, this premium for control would likely be realized in the form of increased revenue opportunities, lower costs, better working capital terms and lower cost of capital. In addition, following our adoption of ASC 842, there are certain data providers in the analyst community that have characterized our operating lease liabilities as indebtedness, which has the impact of increasing our leverage as reported by these data providers. We believe ~~inconsistencies~~the uncertainty around the temporary suspension of our theatre operations during the COVID-19 pandemic and the behavior of the movie-going public after we resume operations is a significant reason for the difference in ~~the reported data concerning operating leases from these data providers has caused~~our market ~~confusion which has negatively impacted~~enterprise value as compared to our ~~stock price.~~
estimated enterprise fair value.

Key ~~rates~~assumptions used in the ~~income and market approach~~quantitative impairment test performed at March 31, 2020 were as follows:

September 30, 2019

March 31, 2020

Domestic

International

Domestic

International

Description

Theatres

Income approach:

Weighted average cost of capital/discount rate

9.0%

11.0%

11.5%

13.0%

Long-term growth rate

2.0%

Market approach:

Control premium

20%

Selected cash flow multiple

6.5 x

9.74 x

The enterprise fair value of the Domestic Theatres and International Theatres reporting units exceeded their enterprise carrying values by approximately 9.9% and 11.8%, respectively. Accordingly, there was no goodwill impairment recorded as of September 30, 2019. Our Domestic Theatres reporting unit has a negative equity value carrying amount.

Prior to completing the goodwill impairment test, we tested the recoverability of long-lived intangible assets in our Domestic Theatres and our International Theatres, and concluded these assets were not impaired as of September 30, 2019.

While the ~~enterprise~~ fair ~~value~~values of our reporting units ~~exceed the enterprise~~approximate their respective carrying values at the present time, the performance of the reporting units may require ~~continued~~ improvement in future periods to maintain ~~their carrying values.~~this level. Declines in the operating performance of our Domestic and International Theatres, further declines in the fair value of our debt, further declines in the trading price of our Class A common stock, small changes in certain key input assumptions, and/or other events or circumstances could occur and could have a significant impact on the estimated fair ~~value.~~values. Examples of adverse events or circumstances that could change include (i) the ultimate duration of the COVID-19 pandemic and the prolonged temporary suspension of our theatre operations as well as the behavior of the movie-going public after we resume operations; (ii) an adverse change in macroeconomic conditions; ~~(ii)~~(iii) increased cost factors that have a negative effect on our earnings and cash flows; ~~(iii)~~(iv) negative or overall declining financial performance compared with our actual and projected results of relevant prior periods; (v) further declines in the fair value of our debt, and ~~(iv)~~(vi) a further sustained decrease in our share price. A future impairment could result for a portion of the goodwill, long-lived assets or intangible assets. Any impairment charges that we may take in the future could be material to our results of operations and financial condition.

~~Leases.~~ Significant Event~~We adopted ASC Topic 842 effective January 1, 2019 and as a result our lease accounting policy has been modified as discussed in Note 2~~—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1. Lessees are required to recognize a right-of-use asset and a lease liability for virtually all of their leases (other than leases that meet the definition of a short-term lease). The liability is equal to the present value of lease payments. The asset is based on the liability, subject to certain adjustments, such as for lease incentives. For financial presentation purposes, a dual model was retained, requiring leases to be classified as either operating or finance leases. Operating leases result in straight-line expense (similar to operating leases under the prior accounting standard) while finance leases result in a front-loaded expense pattern (similar to capital leases under the prior accounting standard). We used our incremental borrowing rate to calculate the present value of our future operating lease payments, which was determined using a portfolio approach based on the rate of interest that we would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term.

~~Dividends.~~ ~~The following is a summary of dividends and dividend equivalents declared to stockholders:~~






Amount per

Total Amount

Share of

Declared
Declaration Date

Record Date

Date Paid

Common Stock

(In millions)
August 2, 2019

September 9, 2019

September 23, 2019

$
0.20

$
21.3
May 3, 2019

June 10, 2019

June 24, 2019

0.20

21.3
February 15, 2019

March 11, 2019

March 25, 2019

0.20

21.3
November 1, 2018

December 10, 2018

December 26, 2018

0.20

21.2
September 14, 2018

September 25, 2018

September 28, 2018

1.55

162.9
July 24, 2018

September 10, 2018

September 24, 2018

0.20

25.8
May 3, 2018

June 11, 2018

June 25, 2018

0.20

26.0
February 28, 2018

March 12, 2018

March 26, 2018

0.20

26.0

During the nine months ended September 30, 2019 and September 30, 2018, we paid dividends and dividend equivalents of $63.4 million and $237.4 million, respectively. As of September 30, 2019, we accrued $3.9 million for the remaining unpaid dividends.

On October 24, 2019, we declared a cash dividend in the amount of $0.20 per share on our Class A and Class B common stock, payable on December 16, 2019 to stockholders of record on December 2, 2019.

Stock ~~Repurchases.~~Buyback Program. On ~~August 3, 2017,~~February 27, 2020, we announced that our Board of Directors had ~~approved~~authorized a ~~$100.0~~$200.0 million Company share ~~repurchase~~buyback program to repurchase up to $200.0 million of our Class A common stock over a ~~two-year~~three-year period.

Repurchases may be made at management's discretion from time to time through open-market transactions including block purchases, through privately negotiated transactions, or otherwise over the next ~~two~~three years in accordance with all applicable securities laws and regulations. The extent to which AMC repurchases its shares, and the timing of such repurchases, will depend upon a variety of factors, including liquidity, capital needs of the business, market conditions, regulatory requirements, and other corporate considerations, as determined by AMC’s management team. Repurchases may or may not be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when our management might otherwise be precluded from doing so under insider trading laws. The repurchase program does not obligate us to repurchase any minimum dollar amount or number of shares and may be suspended for periods or discontinued at any time. ~~This~~Since April 24, 2020, we are prohibited from making purchases under our recently authorized stock repurchase program ~~expired~~in accordance with the covenant suspension conditions in our Senior Secured Credit Agreement.

Exchange Offers. On July 31, 2020, we closed our previously announced exchange offer and reduced the principal amount of our senior subordinated notes by approximately $555 million. We raised $300 million in additional cash from incremental first lien financing, prior to deducting discounts and cash premiums based on ~~August 2, 2019. During~~contract assumptions and estimates of $36 million. Additionally, certain backstop purchasers in the ~~program, we repurchased 3,695,856 shares for approximately $55.7~~first lien notes offering that participated in the exchange offer received 5 million ~~and at an average price~~Class A common shares. The closing of ~~$14.87 per share.~~

~~AMC Shares Repurchased from Wanda.~~ ~~On September 14, 2018, we issued $600.0 million of Convertible Notes due 2024. Using proceeds from~~ the Convertible Notes, we repurchased 24,057,143 shares from Wanda at a price of $17.50 per share or $421.0 million and associated legal fees of $2.6 million. As of September 30, 2019, Wanda owns 49.85% of AMC through its 51,769,784 shares of Class B common stock. With the 3 to 1 voting rights of Class B common shares, Wanda retains voting control of AMC.

exchange offer also

5552

allowed us to change maturities on approximately $1.7 billion of debt to 2026, most of which was maturing in 2024 and 2025 previously. Interest due for the coming 12 to 18 months on the Second Lien Notes due 2026 is expected to be paid all or in part on an in-kind basis, thereby generating a further near-term cash savings for us of between approximately $120 million and $180 million. See Note 14—Subsequent Events in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information.

Under ASC 840-470-60, Troubled Debt Restructurings by Debtors, we believe the exchange of approximately $2,017.5 million principal amount of our senior subordinated notes for approximately $1,462.3 million principal amount of second lien secured debt will represent a troubled debt restructuring (“TDR”) as we were experiencing financial difficulties and the lenders granted a concession. We do not expect the TDR will result in a gain recognition, a new effective interest rate will be established based on the carrying value of the senior subordinated notes and we expect new fees paid to third parties of approximately $29.7 million will be expensed. We are currently evaluating the impact on our consolidated financial statements.

Operating Results

The following table sets forth our consolidated revenues, operating costs and expenses.


	Three Months Ended						Nine Months Ended						Three Months Ended						Six Months Ended
(In millions)	September 30, 2019		September 30, 2018		% Change		September 30, 2019		September 30, 2018		% Change		June 30, 2020		June 30, 2019		% Change		June 30, 2020		June 30, 2019		% Change
Revenues
Admissions	$	797.3	$	751.4	6.1	%	$	2,424.3	$	2,522.7	(3.9)	%	$	0.9	$	895.5	(99.9)	%	$	568.9	$	1,627.0	(65.0)	%
Food and beverage		420.0		384.8	9.1	%		1,281.3		1,236.4	3.6	%		0.4		492.5	(99.9)	%		288.5		861.3	(66.5)	%
Other theatre		99.5		85.2	16.8	%		317.7		288.4	10.2	%		17.6		118.1	(85.1)	%		103.0		218.2	(52.8)	%
Total revenues	$	1,316.8	$	1,221.4	7.8	%	$	4,023.3	$	4,047.5	(0.6)	%	$	18.9	$	1,506.1	(98.7)	%	$	960.4	$	2,706.5	(64.5)	%
Operating Costs and Expenses
Film exhibition costs	$	416.8	$	378.8	10.0	%	$	1,264.6	$	1,276.7	(0.9)	%	$	0.2	$	482.5	(100.0)	%	$	271.9	$	847.8	(67.9)	%
Food and beverage costs		67.2		63.6	5.7	%		205.1		202.0	1.5	%		4.5		76.4	(94.1)	%		57.9		137.9	(58.0)	%
Operating expense, excluding depreciation and amortization below		419.0		400.5	4.6	%		1,259.2		1,236.9	1.8	%		114.8		437.4	(73.8)	%		471.7		840.2	(43.9)	%
Rent		238.7		203.7	17.2	%		726.6		593.1	22.5	%		224.1		245.9	(8.9)	%		461.9		487.9	(5.3)	%
General and administrative:
Merger, acquisition and other costs		4.7		18.1	(74.0)	%		11.2		27.1	(58.7)	%		1.8		3.2	(43.8)	%		2.0		6.5	(69.2)	%
Other, excluding depreciation and amortization below		37.5		48.4	(22.5)	%		126.9		135.6	(6.4)	%		25.4		43.2	(41.2)	%		58.6		89.4	(34.5)	%
Depreciation and amortization		112.1		130.2	(13.9)	%		337.1		398.4	(15.4)	%		119.7		112.0	6.9	%		242.2		225.0	7.6	%
Impairment of long-lived assets, indefinite-lived intangible assets and goodwill														—		—	*	%		1,851.9		—	*	%
Operating costs and expenses		1,296.0		1,243.3	4.2	%		3,930.7		3,869.8	1.6	%		490.5		1,400.6	(65.0)	%		3,418.1		2,634.7	29.7	%
Operating income (loss)		20.8		(21.9)	(195.0)	%		92.6		177.7	(47.9)	%		(471.6)		105.5	*	%		(2,457.7)		71.8	*	%
Other expense (income):
Other expense (income)		(1.3)		54.1	*	%		5.1		57.5	(91.1)	%
Other expense (income):														(6.6)		(23.4)	(71.8)	%		20.3		6.4	*	%
Interest expense:
Corporate borrowings		73.2		64.3	13.8	%		218.7		188.2	16.2	%		79.6		74.2	7.3	%		150.9		145.5	3.7	%
Capital and financing lease obligations		1.8		9.4	(80.9)	%		6.0		29.5	(79.7)	%
Finance lease obligations														1.5		2.1	(28.6)	%		3.1		4.2	(26.2)	%
Non-cash NCM exhibitor service agreement		10.1		10.3	(1.9)	%		30.4		31.2	(2.6)	%		10.1		10.1	—	%		20.0		20.3	(1.5)	%
Equity in earnings of non-consolidated entities (1)		(7.5)		(70.0)	(89.3)	%		(24.2)		(74.0)	*	%
Investment income		(0.5)		(0.7)	(28.6)	%		(18.7)		(7.4)	*	%
Total other expense		75.8		67.4	12.5	%		217.3		225.0	(3.4)	%
Loss before income taxes		(55.0)		(89.3)	*	%		(124.7)		(47.3)	*	%
Equity in (earnings) loss of non-consolidated entities														12.4		(10.2)	*	%		15.3		(16.7)	*	%
Investment expense (income)														(1.3)		(2.1)	(38.1)	%		8.1		(18.2)	*	%
Total other expense, net														95.7		50.7	88.8	%		217.7		141.5	53.9	%
Earnings (loss) before income taxes														(567.3)		54.8	*	%		(2,675.4)		(69.7)	*	%
Income tax provision (benefit)		(0.2)		11.1	*	%		10.9		13.2	*	%		(6.1)		5.4	*	%		62.1		11.1	*	%
Net loss	$	(54.8)	$	(100.4)	*	%	$	(135.6)	$	(60.5)	*	%
Net earnings (loss)													$	(561.2)	$	49.4	*	%	$	(2,737.5)	$	(80.8)	*	%

* Percentage change in excess of 100%

Three Months Ended

Nine Months Ended

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
Operating Data:

Screen additions

1

6

38

46
Screen acquisitions

—

8

64

39
Screen dispositions

77

43

181

177
Construction openings (closures), net

(15)

12

(67)

(106)
Average screens (1)

10,662

10,626

10,674

10,699
Number of screens operated

10,945

10,971

10,945

10,971
Number of theatres operated

1,000

1,002

1,000

1,002
Screens per theatre

10.9

10.9

10.9

10.9
Attendance (in thousands) (1)

87,100

82,662

263,880

264,838


Three Months Ended

Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
Operating Data:

Screen additions

—

16

13

37
Screen acquisitions

—

64

—

64
Screen dispositions

140

36

214

104
Construction openings (closures), net

—

(3)

(7)

(52)
Average screens (1)

60

10,675

4,467

10,679
Number of circuit screens

10,833

11,036

10,833

11,036
Number of circuit theatres

978

1,004

978

1,004
Screens per theatre

11.1

11.0

11.1

11.0
Attendance (in thousands) (1)

100

96,955

60,595

176,780

5654

(1)

Includes consolidated theatres only and excludes screens offline due to ~~construction.~~construction and temporary suspension of operations as consequence of the COVID-19 pandemic.

Segment Operating Results

The following table sets forth our revenues, operating costs and expenses by reportable segment.


	U.S. Markets				International Markets				Consolidated				U.S. Markets				International Markets				Consolidated
	Three Months Ended				Three Months Ended				Three Months Ended				Three Months Ended				Three Months Ended				Three Months Ended
	September 30,				September 30,				September 30,				June 30,				June 30,				June 30,
(In millions)	2019		2018		2019		2018		2019		2018		2020		2019		2020		2019		2020		2019
Revenues
Admissions	$	578.1	$	539.0	$	219.2	$	212.4	$	797.3	$	751.4	$	—	$	680.7	$	0.9	$	214.8	$	0.9	$	895.5
Food and beverage		327.0		301.4		93.0		83.4		420.0		384.8		—		401.1		0.4		91.4		0.4		492.5
Other theatre		65.6		55.2		33.9		30.0		99.5		85.2		15.7		79.4		1.9		38.7		17.6		118.1
Total revenues		970.7		895.6		346.1		325.8		1,316.8		1,221.4		15.7		1,161.2		3.2		344.9		18.9		1,506.1
Operating Costs and Expenses
Film exhibition costs		321.7		289.0		95.1		89.8		416.8		378.8		(0.2)		390.2		0.4		92.3		0.2		482.5
Food and beverage costs		46.5		43.9		20.7		19.7		67.2		63.6		3.3		56.1		1.2		20.3		4.5		76.4
Operating expense		303.7		283.5		115.3		117.0		419.0		400.5		79.4		320.9		35.4		116.5		114.8		437.4
Rent		174.9		152.1		63.8		51.6		238.7		203.7		164.8		179.6		59.3		66.3		224.1		245.9
General and administrative expense:
Merger, acquisition and other costs		2.3		9.0		2.4		9.1		4.7		18.1		1.7		2.4		0.1		0.8		1.8		3.2
Other		22.1		31.7		15.4		16.7		37.5		48.4
Other, excluding depreciation and amortization below														13.8		24.9		11.6		18.3		25.4		43.2
Depreciation and amortization		84.3		94.2		27.8		36.0		112.1		130.2		91.0		84.2		28.7		27.8		119.7		112.0
Operating costs and expenses		955.5		903.4		340.5		339.9		1,296.0		1,243.3		353.8		1,058.3		136.7		342.3		490.5		1,400.6
Operating income (loss)		15.2		(7.8)		5.6		(14.1)		20.8		(21.9)		(338.1)		102.9		(133.5)		2.6		(471.6)		105.5
Other expense (income):
Other expense (income)		(1.6)		54.6		0.3		(0.5)		(1.3)		54.1		0.1		(23.2)		(6.7)		(0.2)		(6.6)		(23.4)
Interest expense:
Corporate borrowings		72.4		63.5		0.8		0.8		73.2		64.3		78.2		73.5		1.4		0.7		79.6		74.2
Capital and financing lease obligations		0.5		4.3		1.3		5.1		1.8		9.4
Finance lease obligations														0.3		0.6		1.2		1.5		1.5		2.1
Non-cash NCM exhibitor service agreement		10.1		10.3		—		—		10.1		10.3		10.1		10.1		—		—		10.1		10.1
Equity in earnings of non-consolidated entities		(7.2)		(67.4)		(0.3)		(2.6)		(7.5)		(70.0)
Investment income		(0.4)		(0.7)		(0.1)		—		(0.5)		(0.7)
Total other expense		73.8		64.6		2.0		2.8		75.8		67.4
Equity in (earnings) loss of non-consolidated entities														11.4		(9.9)		1.0		(0.3)		12.4		(10.2)
Investment expense (income)														(1.2)		(0.2)		(0.1)		(1.9)		(1.3)		(2.1)
Total other expense (income), net														98.9		50.9		(3.2)		(0.2)		95.7		50.7
Earnings (loss) before income taxes		(58.6)		(72.4)		3.6		(16.9)		(55.0)		(89.3)		(437.0)		52.0		(130.3)		2.8		(567.3)		54.8
Income tax provision (benefit)		(0.4)		12.1		0.2		(1.0)		(0.2)		11.1		4.4		5.8		(10.5)		(0.4)		(6.1)		5.4
Net earnings (loss)	$	(58.2)	$	(84.5)	$	3.4	$	(15.9)	$	(54.8)	$	(100.4)	$	(441.4)	$	46.2	$	(119.8)	$	3.2	$	(561.2)	$	49.4


	U.S. Markets		International Markets		Consolidated		U.S. Markets		International Markets		Consolidated
	Three Months Ended		Three Months Ended		Three Months Ended		Three Months Ended		Three Months Ended		Three Months Ended
	September 30,		September 30,		September 30,		June 30,		June 30,		June 30,
	2019	2018	2019	2018	2019	2018	2020	2019	2020	2019	2020	2019
Segment Operating Data:
Screen additions	—	—	1	6	1	6	—	—	—	16	—	16
Screen acquisitions	—	8	—	—	—	8	—	64	—	—	—	64
Screen dispositions	70	30	7	13	77	43	81	28	59	8	140	36
Construction openings (closures), net	6	22	(21)	(10)	(15)	12	—	(6)	—	3	—	(3)
Average screens (1)	7,996	7,992	2,666	2,634	10,662	10,626	—	8,006	60	2,669	60	10,675
Number of screens operated	8,043	8,080	2,902	2,891	10,945	10,971
Number of theatres operated	634	639	366	363	1,000	1,002
Number of circuit screens							7,967	8,107	2,866	2,929	10,833	11,036
Number of circuit theatres							620	639	358	365	978	1,004
Screens per theatre	12.7	12.6	7.9	8.0	10.9	10.9	12.9	12.7	8.0	8.0	11.1	11.0
Attendance (in thousands) (1)	61,172	58,935	25,928	23,727	87,100	82,662	—	71,900	100	25,055	100	96,955

(1)

Includes consolidated theatres only and excludes screens offline due to ~~construction.~~construction and temporary suspension of operations as consequence of the COVID-19 pandemic.

5756


	U.S. Markets				International Markets				Consolidated				U.S. Markets				International Markets				Consolidated
	Nine Months Ended				Nine Months Ended				Nine Months Ended				Six Months Ended				Six Months Ended				Six Months Ended
	September 30,				September 30,				September 30,				June 30,				June 30,				June 30,
(In millions)	2019		2018		2019		2018		2019		2018		2020		2019		2020		2019		2020		2019
Revenues
Admissions	$	1,774.1	$	1,837.9	$	650.2	$	684.8	$	2,424.3	$	2,522.7	$	389.1	$	1,196.1	$	179.8	$	430.9	$	568.9	$	1,627.0
Food and beverage		1,015.7		982.2		265.6		254.2		1,281.3		1,236.4		216.6		688.7		71.9		172.6		288.5		861.3
Other theatre		209.3		187.0		108.4		101.4		317.7		288.4		71.3		143.6		31.7		74.6		103.0		218.2
Total revenues		2,999.1		3,007.1		1,024.2		1,040.4		4,023.3		4,047.5		677.0		2,028.4		283.4		678.1		960.4		2,706.5
Operating Costs and Expenses
Film exhibition costs		989.2		996.6		275.4		280.1		1,264.6		1,276.7		198.7		667.5		73.2		180.3		271.9		847.8
Food and beverage costs		145.6		142.4		59.5		59.6		205.1		202.0		38.2		99.0		19.7		38.9		57.9		137.9
Operating expense		910.2		866.0		349.0		370.9		1,259.2		1,236.9		331.3		606.5		140.4		233.7		471.7		840.2
Rent		531.1		430.8		195.5		162.3		726.6		593.1		339.2		356.2		122.7		131.7		461.9		487.9
General and administrative expense:
Merger, acquisition and other costs		5.8		15.2		5.4		11.9		11.2		27.1		2.0		3.5		—		3.0		2.0		6.5
Other		74.4		84.7		52.5		50.9		126.9		135.6		31.1		52.5		27.5		36.9		58.6		89.4
Depreciation and amortization		252.2		285.6		84.9		112.8		337.1		398.4		183.4		167.9		58.8		57.1		242.2		225.0
Impairment of long-lived assets, indefinite-lived intangible assets and goodwill														1,214.3		—		637.6		—		1,851.9		—
Operating costs and expenses		2,908.5		2,821.3		1,022.2		1,048.5		3,930.7		3,869.8		2,338.2		1,953.1		1,079.9		681.6		3,418.1		2,634.7
Operating income (loss)		90.6		185.8		2.0		(8.1)		92.6		177.7		(1,661.2)		75.3		(796.5)		(3.5)		(2,457.7)		71.8
Other expense (income):
Other expense		4.6		56.2		0.5		1.3		5.1		57.5
Other expense (income)														25.6		6.1		(5.3)		0.3		20.3		6.4
Interest expense:
Corporate borrowings		216.5		185.5		2.2		2.7		218.7		188.2		148.7		144.1		2.2		1.4		150.9		145.5
Capital and financing lease obligations		1.8		13.2		4.2		16.3		6.0		29.5
Finance lease obligations														0.7		1.4		2.4		2.8		3.1		4.2
Non-cash NCM exhibitor service agreement		30.4		31.2		—		—		30.4		31.2		20.0		20.3		—		—		20.0		20.3
Equity in earnings of non-consolidated entities (1)		(23.2)		(71.0)		(1.0)		(3.0)		(24.2)		(74.0)
Investment income		(5.7)		(7.4)		(13.0)		—		(18.7)		(7.4)
Total other expense (income)		224.4		207.7		(7.1)		17.3		217.3		225.0
Equity in (earnings) loss of non-consolidated entities (1)														13.3		(16.0)		2.0		(0.7)		15.3		(16.7)
Investment expense (income)														8.2		(5.3)		(0.1)		(12.9)		8.1		(18.2)
Total other expense (income), net														216.5		150.6		1.2		(9.1)		217.7		141.5
Earnings (loss) before income taxes		(133.8)		(21.9)		9.1		(25.4)		(124.7)		(47.3)		(1,877.7)		(75.3)		(797.7)		5.6		(2,675.4)		(69.7)
Income tax provision (benefit)		8.9		14.6		2.0		(1.4)		10.9		13.2
Income tax provision														1.5		9.3		60.6		1.8		62.1		11.1
Net earnings (loss)	$	(142.7)	$	(36.5)	$	7.1	$	(24.0)	$	(135.6)	$	(60.5)	$	(1,879.2)	$	(84.6)	$	(858.3)	$	3.8	$	(2,737.5)	$	(80.8)


	U.S. Markets		International Markets		Consolidated		U.S. Markets		International Markets		Consolidated
	Nine Months Ended		Nine Months Ended		Nine Months Ended		Six Months Ended		Six Months Ended		Six Months Ended
	September 30,		September 30,		September 30,		June 30,		June 30,		June 30,
	2019	2018	2019	2018	2019	2018	2020	2019	2020	2019	2020	2019
Segment Operating Data:
Screen additions	21	26	17	20	38	46	11	21	2	16	13	37
Screen acquisitions	64	31	—	8	64	39	—	64	—	—	—	64
Screen dispositions	121	155	60	22	181	177	138	51	76	53	214	104
Construction openings (closures), net	(35)	(46)	(32)	(60)	(67)	(106)	—	(41)	(7)	(11)	(7)	(52)
Average screens (1)	8,001	8,032	2,673	2,667	10,674	10,699	3,333	8,003	1,134	2,676	4,467	10,679
Number of screens operated	8,043	8,080	2,902	2,891	10,945	10,971	7,967	8,107	2,866	2,929	10,833	11,036
Number of theatres operated	634	639	366	363	1,000	1,002	620	639	358	365	978	1,004
Screens per theatre	12.7	12.6	7.9	8.0	10.9	10.9	12.9	12.7	8.0	8.0	11.1	11.0
Attendance (in thousands) (1)	188,051	190,542	75,829	74,296	263,880	264,838	39,669	126,879	20,926	49,901	60,595	176,780

(1)

Includes consolidated theatres only and excludes screens offline due to ~~construction.~~construction and temporary suspension of operations as consequence of the COVID-19 pandemic.

Adjusted EBITDA

We present Adjusted EBITDA as a supplemental measure of our performance. We define Adjusted EBITDA as net earnings (loss) plus (i) income tax provision (benefit), (ii) interest expense and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance and to include attributable EBITDA from equity investments in theatre operations in ~~international~~International markets and any cash distributions of earnings from other equity method investees. These further adjustments are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may

incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Adjusted EBITDA ~~increased by $14.1~~decreased $577.9 million during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, 2018. Adjusted EBITDA in U.S. markets increased by $11.3 million primarily due to the increase in attendance, food and beverage per patron, and average ticket price, partially offset by the increased rent due to the new lease standard that reduced Adjusted EBITDA by approximately $12.8 million. Adjusted EBITDA in international markets increased $2.8 million primarily due to increases in attendance and food and beverage per patron, partially offset by increased rent due to the new lease standard that reduced Adjusted EBITDA by approximately $9.9 million and a decrease in foreign currency translation rates. See Note 2—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 for the impact of ASC 842.~~

~~Adjusted EBITDA decreased by $162.8 million during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018.~~2019. Adjusted EBITDA in U.S. markets decreased ~~by $139.8~~$443.7 million, primarily due to the ~~modification~~decrease in attendance largely attributable to the temporary suspension of operations as consequence of the COVID-19 pandemic, partially offset by a ~~lease~~decrease in ~~the prior year that reduced rent expense~~general and administrative expenses, decrease in ~~2018 by $35.0 million, increased rent~~operating expenses due to the ~~new lease standard that reduced~~decrease in attendance and an increase in cash distributions from equity method investees. Adjusted EBITDA in International markets decreased $134.2 million primarily due to the decreases in attendance, partially offset by ~~approximately $38.4~~decreases in operating expenses due to the decrease in attendance and increases in governmental assistance for COVID-19.

Adjusted EBITDA decreased $683.0 million during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. Adjusted EBITDA in U.S. markets decreased $524.9 million, primarily due to the decrease in attendance largely attributable to the temporary suspension of operations as a consequence of the COVID-19 pandemic, partially offset by a decrease in general and administrative expenses and a decrease in operating expenses due to the decrease in attendance. Adjusted EBITDA in ~~international~~International markets decreased ~~$23.0~~$158.1 million primarily due to ~~increased rent~~the decreases in attendance, partially offset by a decrease in operating expenses due to the ~~new lease standard that reduced Adjusted EBITDA by approximately $29.7 million and a~~ decrease ~~in foreign currency translation rates, partially offset by an increase~~ in attendance and ~~food and beverage per patron. See Note 2~~—~~Leases~~increases in ~~the Notes to the Condensed Consolidated Financial Statements under Item 1~~governmental assistance for ~~the impact of ASC 842.~~

COVID-19.

The following tables set forth our Adjusted EBITDA by reportable operating segment and our reconciliation of Adjusted EBITDA:

Three Months Ended

Six Months Ended
Adjusted EBITDA (In millions)

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
U.S. markets

$
(241.6)

$
202.1

$
(245.4)

$
279.5
International markets

(98.7)

35.5

(91.8)

66.3
Total Adjusted EBITDA

$
(340.3)

$
237.6

$
(337.2)

$
345.8

Three Months Ended

Nine Months Ended
Adjusted EBITDA (In millions)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
U.S. markets (1)

$
116.3

$
105.0

$
395.8

$
535.6
International markets

40.2

37.4

106.5

129.5
Total Adjusted EBITDA

$
156.5

$
142.4

$
502.3

$
665.1

Three Months Ended

Six Months Ended
(In millions)

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019
Net earnings (loss)

$
(561.2)

$
49.4

$
(2,737.5)

$
(80.8)
Plus:

Income tax provision (benefit) (1)

(6.1)

5.4

62.1

11.1
Interest expense

91.2

86.4

174.0

170.0
Depreciation and amortization

119.7

112.0

242.2

225.0
Impairment of long-lived assets, indefinite-lived intangible assets and goodwill (2)

—

—

1,851.9

—
Certain operating expenses (3)

(1.5)

2.3

0.6

4.8
Equity in (earnings) loss of non-consolidated entities (4)

12.4

(10.2)

15.3

(16.7)
Cash distributions from non-consolidated entities (5)

6.1

1.8

13.7

12.3
Attributable EBITDA (6)

0.6

2.0

0.5

2.9
Investment expense (income)

(1.3)

(2.1)

8.1

(18.2)
Other expense (income) (7)

(1.9)

(23.8)

25.0

6.1
Other non-cash rent (8)

(3.8)

5.8

(1.5)

13.4
General and administrative — unallocated:

Merger, acquisition and other costs (9)

1.8

3.2

2.0

6.5
Stock-based compensation expense (10)

3.7

5.4

6.4

9.4
Adjusted EBITDA

$
(340.3)

$
237.6

$
(337.2)

$
345.8
(1) ~~Distributions from NCM are reported entirely within~~For information on income tax provision, see Note 8—Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q.
(2) During the six months ended June 30, 2020, we recorded non-cash impairment charges of $1,124.9 million and $619.4 million related to the enterprise fair values of our Domestic Theatres and International Theatres reporting units, respectively. We recorded non-cash impairment charges related to our long-lived assets of $81.4 million on 57 theatres in the U.S. markets ~~segment.~~with 658 screens which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $9.9 million on 23 theatres in the International markets with 213 screens which were related to property, net and operating lease right-of-use assets, net, during the six months ended June 30, 2020. We recorded non-cash impairment charges related to our indefinite-lived intangible assets of $5.9 million and $2.4 million related to the Odeon and Nordic tradenames, respectively, during the six months ended June 30, 2020. We also recorded non-cash impairment charges of $8.0 million related to our definite-lived intangible assets.

Three Months Ended

Nine Months Ended
(In millions)

September 30, 2019

September 30, 2018

September 30, 2019

September 30, 2018
Net loss

$
(54.8)

$
(100.4)

$
(135.6)

$
(60.5)
Plus:

Income tax provision (benefit)

(0.2)

11.1

10.9

13.2
Interest expense

85.1

84.0

255.1

248.9
Depreciation and amortization

112.1

130.2

337.1

398.4
Certain operating expenses (1)

5.3

6.6

10.1

16.2
Equity in earnings of non-consolidated entities (2)

(7.5)

(70.0)

(24.2)

(74.0)
Cash distributions from non-consolidated entities (3)

4.7

3.1

17.0

30.9
Attributable EBITDA (4)

0.9

2.1

3.8

3.7
Investment income

(0.5)

(0.7)

(18.7)

(7.4)
Other expense (income) (5)

(1.5)

54.1

4.6

57.7
Non-cash rent - purchase accounting (6)

6.1

—

19.5

—
General and administrative — unallocated:

Merger, acquisition and other costs (7)

4.7

18.1

11.2

27.1
Stock-based compensation expense (8)

2.1

4.2

11.5

10.9
Adjusted EBITDA

$
156.5

$
142.4

$
502.3

$
665.1
~~(1)~~(3) Amounts represent preopening expense related to temporarily closed screens under renovation, theatre and other closure expense for the permanent closure of screens including the related accretion of interest, non-cash deferred digital equipment rent expense, and disposition of assets and other non-operating gains or losses

included in operating expenses. We have excluded these items as they are non-cash in nature ~~include components of interest cost for the time value of money~~ or are non-operating in nature.

~~(2)~~(4)

~~For the three and nine months ended September 30, 2019, we recorded $6.5~~Equity in (earnings) loss of non-consolidated entities was primarily due to equity in loss from DCIP of $9.7 million ~~and $21.1 million, respectively, in earnings from DCIP. For~~for the three months ended ~~September~~June 30, ~~2018, we recorded~~2020, compared to equity in earnings ~~related to our sale~~from DCIP of ~~all remaining NCM units of $28.9~~$9.0 million ~~and a gain of $30.1 million related to~~for the ~~Screenvision merger.~~three months ended June 30, 2019. Equity in ~~earnings~~(earnings) loss of non-consolidated entities ~~also includes~~was primarily due to equity in loss onfrom DCIP of $11.6 million for the ~~surrender (disposition) of a portion of our investment in NCM of $1.1 million during the nine~~six months ended ~~September~~June 30, ~~2018. Equity~~2020, compared to equity in earnings from DCIP of ~~non-consolidated entities~~$14.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2018 includes a lower of carrying value impairment loss on the held-for-sale portion of NCM of $16.0 million.~~2019.

~~(3)~~(5)

Includes U.S. non-theatre distributions from equity method investments and International non-theatre distributions from equity method investments to the extent received. We believe including cash distributions is an appropriate reflection of the contribution of these investments to our operations.

~~(4)~~(6)

Attributable EBITDA includes the EBITDA from equity investments in theatre operators in certain ~~international~~International markets. See below for a reconciliation of our equity (earnings) loss of non-consolidated entities to attributable EBITDA. Because these equity investments are in theatre operators in regions where we hold a significant market share, we believe attributable EBITDA is more indicative of the performance of these equity investments and management uses this measure to monitor and evaluate these equity investments. We also provide services to these theatre operators including information technology systems, certain on-screen advertising services and our gift card and package ticket program.

Three Months Ended

Six Months Ended

(In millions)

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

Equity in (earnings) loss of non-consolidated entities

$
12.4

$
(10.2)

$
15.3

$
(16.7)

Less:

Equity in (earnings) loss of non-consolidated entities excluding International theatre joint ventures

12.2

(9.8)

14.3

(15.8)

Equity in earnings (loss) of International theatre joint ventures

(0.2)
��

0.4

(1.0)

0.9

Income tax provision (benefit)

—

0.1

(0.1)

0.1

Investment income

—

(0.3)

(0.2)

(0.5)

Interest expense

—

0.1

—

0.1

Depreciation and amortization

0.7

1.7

1.5

2.3

Other expense

0.1

—

0.3

—

Attributable EBITDA

$
0.6

$
2.0

$
0.5

$
2.9

~~(5)~~(7) Other ~~expense (income)~~income for the three months ended ~~September~~June 30, 2020 compared to three months ended June 30, 2019 ~~includes income~~decreased $21.9 million. For the three months ended June 30, 2019, we recorded a gain of ~~$8.5~~$33.9 million ~~due~~related to the increase in fair value of our derivative asset for the Convertible Notes due 2024, expense of $5.7 million as a result of a decrease in the fair value of our derivative liability, and loss on Pound sterling forward contract of $0.7 million. Other expense for the nine months ended September 30, 2019 includes $16.6 million of fees related to modifications of term loans income and $1.7 million loss on GBP forward contract, partially offset by income of $14.9 million due to the decreasechange in fair value of our derivative liability for the embedded conversion feature in the our Convertible Notes due ~~2024. During~~2024, partially offset by the ~~three~~loss on repayment of indebtedness of $16.6 million. Other expense for the six months ended ~~September~~June 30, ~~2018, we~~2020 compared to six months ended June 30, 2019 increased $18.9 million, primarily due to the decrease in the gain recorded ~~expense of $54.1 million as a result of an increase~~for the change in fair value of ~~the~~our derivative liability for the embedded conversion feature in our Convertible Notes due ~~2024. Other~~2024 of $20.1 million, credit losses related to contingent lease guarantees of $9.2 million, and loss due to the change in the fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $5.7 million. For the six months ended June 30, 2019, we recorded a loss on repayment of indebtedness of $16.6 million. See Note 1—Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information about other expense (income) ~~for the three and nine months ended September 30, 2018 includes financing losses and financing related foreign currency transaction losses.~~.

~~(6)~~(8) Reflects amortization ofexpense for certain intangible assets reclassified from depreciation and amortization to rent expense due to the adoption of ASC ~~842.~~842 and deferred rent benefit related to the impairment of right-of-use operating lease assets.

~~(7)~~(9) Merger, acquisition and other costs are excluded as they are non-operating in nature.

~~(8)~~(10) ~~Stock-based compensation expense is non-cash~~Non-cash expense included in general and administrative: other.

Adjusted EBITDA is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to net earnings (loss) as an indicator of operating performance (as determined in accordance with U.S. GAAP). Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. We have included Adjusted EBITDA because we believe it provides management and investors with additional information to measure our performance and estimate our value.

Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. For example, Adjusted EBITDA:

●

does not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments;

●

does not reflect changes in, or cash requirements for, our working capital needs;

●

does not reflect the significant interest expenses, or the cash requirements necessary to service interest or principal payments, on our debt;

●

excludes income tax payments that represent a reduction in cash available to us; and

●

does not reflect any cash requirements for the assets being depreciated and amortized that may have to be replaced in the ~~future; and~~future.

●

~~does not reflect the impact of divestitures that were required in connection with recently completed acquisitions.~~

Segment Information
Our historical results of operations for the three and six months ended June 30, 2020 and June 30, 2019, respectively, reflect the results of operations for our two Theatrical Exhibition reportable segments, U.S. markets and International markets.
Results of Operations— For the Three Months Ended ~~September~~June 30, 2020 Compared to the Three Months Ended June 30, 2019 ~~and September 30, 2018~~

Condensed Consolidated Results of Operations

Revenues. Total revenues ~~increased 7.8%~~decreased 98.7%, or ~~$95.4~~$1,487.2 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018.~~2019. Admissions revenues ~~increased 6.1%~~decreased 99.9%, or ~~$45.9~~$894.6 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to a ~~5.4% increase~~99.9% decrease in ~~attendance and a 0.7% increase in average ticket price.~~attendance. The ~~increase~~decrease in attendance was primarily due to the ~~popularity~~temporary suspension of ~~films and strategic pricing initiatives~~operations at all our theatres in ~~the~~ U.S. markets and ~~the popularity of films in~~ International markets ~~The increase~~on or before March 17, 2020. During the latter part of the current quarter, we reopened and operated 37 theatres with 359 screens in ~~average ticket price was primarily due to increases~~9 different countries in ~~the popularity of PLF, IMAX and 3D premium content partially offset by declines in foreign currency translation rates.~~our International markets.

Food and beverage revenues ~~increased 9.1%~~decreased 99.9%, or ~~$35.2~~$492.1 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to ~~a 3.6% increase~~the decrease in ~~food and beverage revenues per patron and the increase in~~ attendance. Food and beverage revenues per patron increased as a result of strategic price increases, our food and beverage initiatives including theatre renovations, and our Feature Fare menu, partially offset by declines in foreign currency translation rates.

Total other theatre revenues ~~increased 16.8%~~decreased 85.1%, or ~~$14.3~~$100.5 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to ~~the increase~~decreases in ticket fees, ~~screen advertising and~~ income from gift cards and package tickets ~~partially offset by declines~~and screen advertising due to the decrease in ~~foreign currency translation rates.~~attendance.

Operating costs and expenses. Operating costs and expenses ~~increased 4.2%, or $52.7~~decreased $910.1 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018.~~2019 primarily due to the decrease in attendance and a decrease in average screens operated. Film exhibition costs ~~increased 10.0%~~decreased 100.0%, or ~~$38.0~~$482.3 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to the ~~increase~~decrease in admissions revenues. As a percentage of admissions revenues, film exhibition costs were ~~52.3%~~not meaningful due to the low level of admissions revenues for the three months ended ~~September~~June 30, ~~2019~~2020 and ~~50.4%~~were 53.9% for the three months ended ~~September~~June 30, 2018. The increase in film exhibition cost percentage is primarily due to the concentration of box office revenues in higher grossing films in the current year which typically results in higher film exhibition costs.2019.

Food and beverage costs ~~increased 5.7%~~decreased 94.1%, or ~~$3.6~~$71.9 million, during the three months ended ~~September~~June 30, ~~2019~~

Table of ~~declines in stock-based compensation expense due to forfeitures and expected performance and declines in foreign currency translation rates.~~Contents

2020 compared to the three months ended ~~September~~June 30, ~~2018.~~2019. The ~~increase~~decrease in food and beverage costs was primarily due to the ~~increase~~decrease in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were ~~16.0%~~not meaningful for the three months ended ~~September~~June 30, ~~2019~~2020 due to the low level of food and ~~16.5%~~beverage revenues and were 15.5% for the three months ended ~~September~~June 30, ~~2018.~~2019. Food and beverage ~~gross profit per patron increased 4.2% and is calculated as food and beverage revenues less food and beverage~~ costs ~~divided by attendance.~~included $4.5 million of charges for obsolete inventory during the three months ended June 30, 2020 due to the suspension of theatre operations.

As a percentage of revenues, operating expense was ~~31.8%~~not meaningful for the three months ended ~~September~~June 30, ~~2019~~2020 due to the low level of revenues and ~~32.8%~~the fixed nature of certain operating expenses and was 29.0% for the three months ended ~~September~~June 30, ~~2018.~~2019. Rent expense ~~increased 17.2%~~decreased 8.9%, or ~~$35.0~~$21.8 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018,~~2019 due primarily to declines in deferred rent expense due to the ~~adoption~~impairment of ~~ASC 842 for lease accounting where approximately $20.9 million~~right of ~~principal~~use assets in calendar 2019 and ~~interest payments were recorded as~~2020, cash rent ~~expense during~~abatements from landlords, declines in percentage rentals due to the three months ended September 30, 2019 related to previously capitalized build-to-suit financing lease obligations, the elimination of $1.8 million of deferred gain amortization for sale leaseback transactions that previously reduced rent expensedecline in revenues and ~~$6.1 million of non-cash expense from purchase accounting recorded as rent expense, which was previously recorded as depreciation and amortization expense.~~declines in common area maintenance charges. See Note 2—2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of ~~ASC 842.~~

~~General and Administrative Expense:~~Covid-19 on leases.

Merger, acquisition and other costs. Merger, acquisition and other costs were ~~$4.7~~$1.8 million during the three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$18.1~~$3.2 million during the three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to ~~expenses incurred~~a decline in ~~connection with the Nordic acquisition in the prior year.~~merger related activities.

Other. Other general and administrative expense decreased ~~$10.9~~41.2% or $17.8 million during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018~~2019, primarily due to ~~a reduction in legal expenses of $4.4 million, a $2.6 million decrease~~decreases in bonus expense ~~due to declines~~and decreases in ~~number~~salaries as a result of ~~participants~~our furlough program that began in March of 2020 and ~~expected performance, $2.0 million~~continued throughout the three months ended June 30, 2020.

Depreciation and amortization. Depreciation and amortization ~~decreased $18.1~~increased 6.9% or $7.7 million during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to ~~the adoption of ASC 842 where the financing lease building~~recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and ~~related depreciation were eliminated. See Note 2~~—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 for the impact of ASC 842.~~2020.

~~Other Expense (Income):~~

Other expense (income). Other income of ~~$1.3~~$6.6 million during the three months ended ~~September~~June 30, ~~2019 is~~2020 was primarily due to anthe increase in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of ~~$8.5~~$6.4 million, international government assistance related to COVID-19 of $4.4 million and $2.0 million of international foreign currency transaction gains, offset by estimated credit losses related to contingent lease guarantees of $3.9 million and $2.8 million of third party financing costs related to an ~~increase~~ongoing debt restructuring. During the three months ended June 30, 2019, other income of ~~$5.7~~$23.4 million was primarily due to $33.9 million of income related to the decrease in the fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2024 ~~which resulted~~and $7.1 million of income related to the increase in ~~a net gain~~the fair value our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement, offset by $16.6 million of ~~$2.8 million (See~~expense related to the repayment of indebtedness. See Note ~~6—Corporate Borrowings~~1—The Company and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements under Item 1 ~~for additional information). During the three months ended September 30, 2018, other expense included $54.1 million~~ of ~~expense related to our derivative liability for the embedded conversion feature in our Convertible Notes due 2024. See Note 1—Basis~~Part I of ~~Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1~~this Form 10-Q for additional information about the components of other ~~expense (income).~~expense.

Interest expense. Interest expense increased ~~$1.1~~$4.8 million to ~~$85.1~~$91.2 million for the three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$84.0~~$86.4 million during the three months ended ~~September~~June 30, ~~2018. The increase is~~2019 primarily due to the issuance of ~~our 2.95% $600.0~~$500 million ~~Convertible~~of 10.5% First Lien Notes due ~~2024~~2025 on ~~September 14, 2018~~April 24, 2020 and ~~our Senior Secured Credit Facility-Term Loan due 2026, partially offset by~~borrowings under revolving credit facilities of approximately $325.0 million during the ~~recording to rent expense~~three months ended March 31, 2020 that remained outstanding as of ~~$6.9 million of financing lease obligation interest as a result of the adoption of ASC 842. See Note 2~~—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 for the impact of ASC 842.~~June 30, 2020.

Equity in ~~earnings~~(earnings) loss of non-consolidated entities. Equity in ~~earnings~~loss of non-consolidated entities were ~~$7.5~~$12.4 million for the three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$70.0~~ $(10.2) million for the three months ended ~~September~~June 30, ~~2018. During~~2019. The decrease in equity in earnings of $22.6 million was primarily due to decreases in equity in earnings from DCIP of $18.2 million as a result of accelerated depreciation charges for digital projectors during the three months ended ~~September~~June 30, ~~2018, we recorded equity in earnings of $28.9 million related~~2020 and lower revenues due to the ~~sale~~closure of ~~our then remaining interest in NCM and $30.1 million related to the Screenvision merger.~~theatres.

Investment income. Investment income was ~~$0.5~~$1.3 million for the three months ended ~~September~~June 30, ~~2019~~

2020 compared to ~~$0.7~~investment income of $2.1 million for the three months ended ~~September~~June 30, ~~2018.~~2019. Investment income includes a gain on the sale of our Austria theatres of $1.8 million for the three months ended June 30, 2019.

Income tax provision (benefit). The income tax ~~benefit~~provision (benefit) was ~~($0.2)~~$(6.1) million and $5.4 million for the three months ended ~~September~~June 30, 2020 and June 30, 2019, ~~and $11.1 million for~~respectively. The increase in income tax benefit is primarily due to net losses incurred in International markets during the three months ended ~~September~~June 30, ~~2018.~~2020 that are projected to offset previously unabsorbed deferred tax liabilities in International markets. See Note 8—Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.

Net ~~loss.~~earnings (loss). Net ~~loss~~earnings (loss) was ~~$54.8~~$(561.2) million and ~~$100.4~~$49.4 million during the three months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, respectively. Net loss during the three months ended ~~September~~June 30, ~~2019~~2020 compared to net earnings for the three months ended ~~September~~June 30, ~~2018~~2019 was ~~positively~~negatively impacted by ~~higher admissions~~the decrease in attendance as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020, increased depreciation expense, declines in investment income, declines in equity in earnings of non-consolidated entities and ~~food and beverage revenue and higher~~declines in other ~~theatre revenue, decreased other~~income, partially offset by reduced operating expenses, lower amounts of rent expense, ~~related to our derivative asset and liability, decreases~~declines in ~~depreciation and amortization expense, lower~~ general and administrative expenses ~~lower~~and increases in income tax ~~expense and a decline in foreign currency translation rates and partially offset by lower equity in earnings and higher interest expense, rent expense and operating expenses.~~

benefits.

Theatrical Exhibition–U.S. Markets

Revenues. Total revenues ~~increased 8.4%~~decreased 98.6%, or ~~$75.1~~$1,145.5 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018.~~2019. Admissions revenues ~~increased 7.3%~~decreased 100%, or ~~$39.1~~$680.7 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to a ~~3.8% increase~~100% decrease in ~~attendance and a 3.3% increase in average ticket price.~~attendance. The ~~increase~~decrease in attendance was ~~primarily~~ due to the ~~popularity~~temporary suspension of ~~films and strategic pricing initiatives. The increase~~operations at all our theatres in ~~average ticket price was primarily due to increases in the popularity of PLF, IMAX and 3D premium content.~~U.S. markets on or before March 17, 2020.

Food and beverage revenues ~~increased 8.5%~~decreased 100%, or ~~$25.6~~$401.1 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018, primarily~~2019, due to ~~a 4.5% increase~~the decrease in ~~food and beverage revenues per patron and the increase in~~ attendance. ~~Food and beverage revenues per patron increased as a result of strategic price increases, our food and beverage initiatives including theatre renovations, and our Feature Fare menu.~~

Total other theatre revenues ~~increased 18.8%~~decreased 80.2%, or ~~$10.4~~$63.7 million, during the three months ended ~~September~~June 30, ~~2019~~ 2020

compared to the three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to ~~an increase~~decreases in ticket fees, ~~of $10.0 million or 52.1%.~~income from gift cards and package tickets and screen advertising due to the decrease in attendance.

Operating costs and expenses. Operating costs and expenses ~~increased 5.8%, or $52.1~~decreased $704.5 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018.~~2019 primarily due to the decrease in attendance and a decrease in average screens operated. Film exhibition costs ~~increased 11.3%, or $32.7~~decreased $390.4 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to the ~~increase~~decrease in admissions revenues. As a percentage of admissions revenues, film exhibition costs were ~~55.6%~~not meaningful for the three months ended ~~September~~June 30, ~~2019~~2020 due to the low level of admissions revenues and ~~53.6%~~were 57.3% for the three months ended ~~September~~June 30, 2018. The increase in film exhibition cost percentage is primarily due to the concentration of box office revenues in higher grossing films in the current year which typically results in higher film exhibition costs.2019.

Food and beverage costs ~~increased 5.9%~~decreased 94.1%, or ~~$2.6~~$52.8 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018.~~2019. The ~~increase~~decrease in food and beverage costs was primarily due to the ~~increase~~decrease in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were ~~14.2%~~not meaningful for the three months ended ~~September~~June 30, ~~2019~~2020 due to the low level of food and ~~14.6%~~beverage revenues and 14.0% for the three months ended ~~September~~June 30, ~~2018.~~2019. Food and beverage ~~gross profit per patron increased 4.9% and is calculated as food and beverage revenues less food and beverage~~ costs ~~divided by attendance.~~included $3.3 million of charges for obsolete inventory during the three months ended June 30, 2020 due to the suspension of theatre operations.

As a percentage of revenues, operating expense was ~~31.3%~~not meaningful for the three months ended ~~September~~June 30, ~~2019~~2020 due to the low level of revenues and ~~31.7%~~the fixed nature of certain operating expenses and was 27.6% for the three months ended ~~September~~June 30, ~~2018.~~2019. Rent expense ~~increased 15.0%~~decreased 8.2%, or ~~$22.8~~$14.8 million, during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018,~~2019 due primarily to declines in deferred rent expense due to the ~~adoption~~impairment of ~~ASC 842 for lease accounting where approximately $11.0 million~~right of ~~principal~~use assets in calendar 2019 and ~~interest payments were recorded as~~2020, cash rent ~~expense during~~abatements from landlords, declines in percentage rentals due to the three months ended September 30, 2019 related to build-to-suit financing lease obligations, the elimination of $1.8 million of deferred gain amortization for sale leaseback transactions that previously reduced rent expensedecline in revenues and ~~$4.6 million of non-cash expense from purchase accounting recorded as rent expense, which was previously recorded as depreciation and amortization expense.~~declines in common area maintenance charges. See Note 2—2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of ~~ASC 842.~~

~~General and Administrative Expense:~~COVID-19 on leases.

Merger, acquisition and other costs. Merger, acquisition and other costs were ~~$2.3~~$1.7 million during the three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$9.0~~$2.4 million during the three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to ~~expenses incurred~~a decline in ~~connection with the Nordic acquisition in the prior year.~~merger related activities.

Other. Other general and administrative expense decreased ~~$9.6~~44.6% or $11.1 million during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to ~~a reduction in legal expenses of $4.4 million, a $2.6 million decrease~~decreases in bonus expense ~~due to declines~~and decreases in ~~number~~salaries as a result of ~~participants~~our furlough program that began in March of 2020 and ~~expected performance and $1.8 million of declines in stock-based compensation expense due to forfeitures and expected performance.~~continued throughout the three months ended June 30, 2020.

Depreciation and amortization. Depreciation and amortization ~~decreased $9.9~~increased 8.1% or $6.8 million during the three months ended ~~September~~June 30, ~~2019~~2020 compared to the three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to ~~the adoption of ASC 842 where the financing lease building~~recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and ~~related depreciation were eliminated. See Note 2~~—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 for the impact of ASC 842.~~

2020. 

~~Other Expense (Income):~~

Other expense (income). Other ~~income~~expense of ~~$1.6~~$0.1 million during the three months ended ~~September~~June 30, 2019 is primarily due to an increase in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $8.5 million offset by an increase of $5.7 million in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2024 which resulted in a net gain of $2.8 million (See Note 6—Corporate Borrowings in the Notes to the Condensed Consolidated Financial Statements under Item 1 for additional information). During the three months ended September 30, 2018, other expense included $54.1 million of expense related to our derivative liability for the embedded conversion feature in our Convertible Notes due 2024. See Note 1—Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1 for additional information about the components of other expense (income).

~~Interest expense.~~ Interest expense increased $4.9 million to $83.0 million for the three months ended September 30, 2019 compared to $78.1 million during the three months ended September 30, 2018. The increase is primarily due to the issuance of our 2.95% $600.0 million Convertible Notes due 2024 on September 14, 2018 and our Senior Secured Credit Facility-Term Loan due 2026, partially offset by the recording to rent expense of $3.3 million of financing lease obligation interest as a result of the adoption of ASC 842. See Note 2—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 for the impact of ASC 842.~~

~~Equity in earnings of non-consolidated entities.~~ ~~Equity in earnings of non-consolidated entities were $7.2 million for the three months ended September 30, 2019 compared to $67.4~~ million for the three months ended September 30, 2018. During the three months ended September 30, 2018, we recorded equity in earnings of $28.9 million related to the sale of our then remaining interest in NCM and $30.1 million related to the Screenvision merger.

~~Investment income.~~ ~~Investment income was $0.4 million for the three months ended September 30, 2019 compared to $0.7 million for the three months ended September 30, 2018.~~

~~Income tax provision (benefit).~~ ~~The income tax benefit was ($0.4) million for the three months ended September 30, 2019 and the income tax provision was $12.1 million for the three months ended September 30, 2018. See Note 8~~—~~Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.~~

~~Net loss.~~ Net loss was $58.2 million and $84.5 million during the three months ended September 30, 2019 and September 30, 2018, respectively. Net loss during the three months ended September 30, 2019 compared to the three months ended September 30, 2018 was positively impacted by higher admissions and food and beverage revenue and higher other theatre revenue, decreased other expense related to our derivative asset and liability, decreases in depreciation and amortization expense, lower general and administrative expenses, lower income tax expense and partially offset by lower equity in earnings and higher interest expense, rent expense and operating expenses.

~~Theatrical Exhibition - International Markets~~

~~Revenues.~~ ~~Total revenues increased 6.2%, or $20.3 million, during the three months ended September 30, 2019 compared to the three months ended September 30, 2018. Admissions revenues increased 3.2%, or $6.8~~ million during the three months ended September 30, 2019 compared to the three months ended September 30, 2018, primarily due to a 9.3% increase in attendance, partially offset by a 5.6% decrease in average ticket price including decreases related to foreign currency translation. The increase in attendance2020 was primarily due to ~~the popularity~~estimated credit losses related to contingent lease guarantees of ~~films. ~~

Food and beverage revenues increased 11.5%, or $9.6 million, during the three months ended September 30, 2019 compared to the three months ended September 30, 2018, primarily due the increase in attendance and a 2.1% increase in food and beverage revenues per patron, partially offset by declines in foreign currency translation rates.

~~Total other theatre revenues increased 13.0%, or~~ $3.9 million ~~during the three months ended September 30, 2019 compared to the three months ended September 30, 2018, primarily due to the increase in ticket fees, screen advertising~~ and ~~income from gift cards and package tickets partially offset by declines in foreign currency translation rates.~~

~~Operating costs and expenses.~~ Operating costs and expenses increased 0.2%, or $0.6 million, during the three months ended September 30, 2019 compared to the three months ended September 30, 2018. Film exhibition costs increased 5.9%, or $5.3 million, during the three months ended September 30, 2019 compared to the three months ended September 30, 2018, primarily due to the increase in admissions revenues. As a percentage of admissions revenues, film exhibition costs were 43.4% for the three months ended September 30, 2019 and 42.3% for the three months ended September 30, 2018. The increase in film exhibition cost percentage is primarily due to the concentration of box office revenues in higher grossing films in the current year which typically results in higher film exhibition costs.

Food and beverage costs increased 5.1%, or $1.0 million, during the three months ended September 30, 2019 compared to the three months ended September 30, 2018. The increase in food and beverage costs was primarily due to the increase in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were 22.3% for the three months ended September 30, 2019 and 23.6% for the three months ended September 30, 2018. Food and beverage gross profit per patron increased 3.9% and is calculated as food and beverage revenues less food and beverage costs divided by attendance.

As a percentage of revenues, operating expense was 33.3% for the three months ended September 30, 2019 and 35.9% for the three months ended September 30, 2018. Rent expense increased 23.6%, or $12.2 million, during the three months ended September 30, 2019 compared to the three months ended September 30, 2018, primarily due to the adoption of ASC 842 for lease accounting where approximately $9.9$2.8 million of ~~principal and interest payments were recorded as rent expense during the three months ended September 30, 2019~~third party financing costs related to build-to-suit financing lease obligations and $1.5 million of non-cash expense from purchase accounting was recorded as rent expense, which was previously recorded as depreciation and amortization expense. See Note 2—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 for the impact of ASC 842.~~

~~General and Administrative Expense:~~

~~Merger, acquisition and other costs.~~ Merger, acquisition and other costs were $2.4 million during the three months ended September 30, 2019 compared to $9.1 million during the three months ended September 30, 2018, primarily due to expenses incurred in connection with the Nordic acquisition in the prior year.

~~Other.~~ Other general and administrative expense decreased $1.3 million or 7.8% during the three months ended September 30, 2019 compared to the three months ended September 30, 2018 primarily due to $0.2 million of declines in stock-based compensation expense due to forfeitures and expected performance and declines in foreign currency translation rates.

~~Depreciation and amortization.~~ Depreciation and amortization decreased $8.2 million during the three months ended September 30, 2019 compared to the three months ended September 30, 2018, primarily due to the adoption of ASC 842 where the financing lease building and related depreciation were eliminated. See Note 2—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 for the impact of ASC 842.~~

~~Other Expense (Income):~~

~~Other expense (income).~~ ~~Other expense (income) was $0.3~~ million during the three months ended September 30, 2019 compared to ($0.5) million for the three months ended September 30, 2018. See Note 1—Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1 for additional information about the components of other expense (income).

~~Interest expense.~~ Interest expense decreased $3.8 million to $2.1 million for the three months ended September 30, 2019 compared to $5.9 million during the three months ended September 30, 2018. The decrease is primarily due to the recording to rent expense of $3.6 million of financing lease obligation interest as a result of the adoption of ASC 842. See Note 2—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 for the impact of ASC 842.~~

~~Equity in earnings of non-consolidated entities.~~ ~~Equity in earnings of non-consolidated entities were $0.3 million for the three months ended September 30, 2019 compared to $2.6~~ ~~million for the three months ended September 30, 2018. During the three months ended September 30, 2019, we recorded equity losses of $1.1 million related to Saudi Cinema Company LLC.~~
~~ ~~
~~Income tax provision (benefit).~~ ~~The income tax provision was $0.2 million for the three months ended September 30, 2019 and the income tax benefit was $(1.0) million for the three months ended September 30, 2018. See Note 8~~—~~Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.~~

~~Net earnings (loss).~~ Net earnings were $3.4 million during the three months ended September 30, 2019 and net loss was $15.9 million during the three months ended September 30, 2018. Net earnings (loss) during the three months ended September 30, 2019 compared to the three months ended September 30, 2018 was positively impacted by the increase in attendance, higher admissions and food and beverage revenue and higher other theatre revenue, decreases in depreciation and amortization expense, declines in interest expense, lower operating and general and administrative expenses and partially offset by higher rent expense, increased income tax expense, lower equity earnings of non-consolidated investees and decreases in foreign currency translation rates.

~~Results of Operations—~~~~For the Nine Months Ended September 30, 2019 and September 30, 2018~~

~~Condensed Consolidated Results of Operations~~

~~Revenues.~~ Total revenues decreased 0.6%, or $24.2 million, during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Admissions revenues decreased 3.9%, or $98.4 million, during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily due a 3.5% decrease in average ticket price and a 0.4% decrease in attendance. The decrease in average ticket price was primarily due to strategic pricing initiatives put in place over the last year; decreases in the popularity of 3D premium content, and declines in foreign currency translation rates, partially offset by increases in attendance for PLF and IMAX premium content. The decrease in attendance was primarily due to the popularity of films (for U.S. markets and International markets) released in the first quarter as compared to the same period a year ago as well as temporary screen closures for theatre refurbishments.

Food and beverage revenues increased 3.6%, or $44.9 million, during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily due to a 4.0% increase in food and beverage revenues per patron, partially offset by the decrease in attendance. Food and beverage revenues per patron increased as a result of strategic price increases, our food and beverage initiatives including theatre renovations, and our Feature Fare menu, partially offset by declines in foreign currency translation rates.

Total other theatre revenues increased 10.2%, or $29.3 million, during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily due to increases in ticket fees, theatre rentals and income from gift cards and package tickets partially offset by declines in foreign currency translation rates.

~~Operating costs and expenses.~~ Operating costs and expenses increased 1.6%, or $60.9 million, during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. Film exhibition costs decreased 0.9%, or $12.1 million, during the nine months ended September 30, 2019 compared to the nine months

ended September 30, 2018, primarily due to the decrease in admissions revenues. As a percentage of admissions revenues, film exhibition costs were 52.2% for the nine months ended September 30, 2019 and 50.6% for the nine months ended September 30, 2018.

Food and beverage costs increased 1.5%, or $3.1 million, during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018. The increase in food and beverage costs was primarily due to the increase in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were 16.0% for the nine months ended September 30, 2019 and 16.3% for the nine months ended September 30, 2018. Food and beverage gross profit per patron increased 4.4% and is calculated as food and beverage revenues less food and beverage costs divided by attendance.

As a percentage of revenues, operating expense was 31.3% for the nine months ended September 30, 2019 and 30.6% for the nine months ended September 30, 2018. Rent expense increased 22.5%, or $133.5 million, during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily due to the adoption of ASC 842 for lease accounting where approximately $62.7 million of principal and interest payments were recorded as rent expense during the nine months ended September 30, 2019 related to build-to-suit financing lease obligations, prior year modification of a theatre lease which reduced rent by $35.0 million in 2018, and $19.5 million of non-cash expense from purchase accounting recorded as rent expense, which was previously recorded as depreciation and amortization expense, and the elimination of $5.4 million of deferred gain amortization for sale leaseback transactions that previously reduced rent expense. See Note 2—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 for the impact of ASC 842.~~

~~General and Administrative Expense:~~

~~Merger, acquisition and other costs.~~ Merger, acquisition and other costs were $11.2 million during the nine months ended September 30, 2019 compared to $27.1 million during the nine months ended September 30, 2018, primarily due to expenses incurred in connection with the Nordic acquisition in the prior year.

~~Other.~~ Other general and administrative expense decreased $8.7 million during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily due to a reduction in legal expenses of $5.4 million and a $2.9 million decrease in bonus expense due to declines in number of partipants and expected performance.

~~Depreciation and amortization.~~ Depreciation and amortization decreased $61.3 million during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily due to the adoption of ASC 842 for lease accounting where the financing lease building and related depreciation were eliminated. See Note 2—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 for the impact of ASC 842.~~

~~Other Expense (Income):~~

~~Other expense.~~ ~~Other expense of $5.1 million during the nine months ended September 30, 2019 is primarily due to $16.6 million of expense related to the repayment of indebtedness (See Note 6~~—Corporate Borrowings in the Notes to the Condensed Consolidated Financial Statements under Item 1 for additional information), $2.5 million of foreign currency transaction losses and $0.8 million of non-operating net periodic benefit cost,an ongoing debt restructuring, partially offset by the increase in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of ~~$0.5~~$6.4 million. During the three months ended June 30, 2019, other income of $23.2 million ~~and a~~was primarily due to $33.9 million of income related to the decrease in the fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2024 and $7.1 million of ~~$14.9 million. During~~income related to the ~~nine months ended September 30, 2018, other expense included $54.1~~increase in the fair value our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement, partially offset by $16.6 million of expense related to ~~our derivative liability for~~ the ~~embedded conversion feature in our Convertible Notes due 2024.~~repayment of indebtedness. See Note 1—~~Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item~~ ~~1 for additional information about the components of other expense (income).~~

~~Interest expense.~~ ~~Interest expense increased $6.2 million to $255.1 million for the nine months ended September 30, 2019 compared to $248.9 million during the nine months ended September 30, 2018.~~ The ~~increase is primarily due to the issuance of our 2.95% $600.0 million Convertible Notes due 2024 on September 14, 2018~~Company and ~~our Senior Secured Credit Facility-Term Loan due 2026 (See Note 6—Corporate Borrowings~~Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional ~~information), partially offset by~~information about the ~~recording~~components of other expense.
Interest expense. Interest expense increased $4.4 million to ~~rent~~$88.6 million for the three months ended June 30, 2020 compared to $84.2 million during the three months ended June 30, 2019 primarily due to the issuance of $500 million of 10.5% First Lien Notes due 2025 on April 24, 2020 and borrowings under revolving credit facilities of approximately $215.0 million during the three months ended March 31, 2020 that remained outstanding as of June 30, 2020.
Equity in (earnings) loss of non-consolidated entities. Equity in loss of non-consolidated entities were

6763

~~expense~~$11.4 million for the three months ended June 30, 2020 compared to $(9.9) million for the three months ended June 30, 2019. The decrease in equity in earnings of ~~$20.7~~$21.3 million was primarily due to decreases in equity in earnings from DCIP of ~~financing lease obligation interest~~$18.2 million as a result of accelerated depreciation charges for digital projectors during the ~~adoption of ASC 842. See Note 2~~—~~Leases in the Notes~~three months ended June 30, 2020 and lower revenues due to the ~~Condensed Consolidated Financial Statements under Item 1 for the impact~~closure of ~~ASC 842.~~theatres.

~~Equity in earnings of non-consolidated entities.~~ Equity in earnings of non-consolidated entities were $24.2 million for the nine months ended September 30, 2019 compared to $74.0 million for the nine months ended September 30, 2018. The earnings for the nine months ended September 30, 2018 includes equity in earnings of $28.9 million related to the sale of our then remaining interest in NCM, $30.1 million related to the Screenvision merger, and $2.3 million gain on the sale of NCM, Inc. common shares, partially offset by a $16.0 million lower of carrying value or fair value impairment loss on 9,492,820 NCM units and 1,000,000 NCM, Inc. common shares held-for-sale and a $1.1 million loss on the return of 915,150 NCM units as a part of the annual common unit adjustment under the NCM ESA.

Investment income. Investment income was ~~$18.7~~$1.2 million for the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$7.4~~investment income of $0.2 million for the ~~nine~~three months ended ~~September~~June 30, 2018. Investment income includes a gain on the sale of our Austria theatres of $12.9 million for the nine months ended September 30, 2019 and includes payments received related to the NCM tax receivable agreement of $4.0 million and $5.4 million for the nine months ended September 30, 2019 and September 30, 2018, respectively. Investment income for the nine months ended September 30, 2018 also includes a $1.5 million gain on the sale of a joint venture managed theatre.2019.

Income tax provision. The income tax provision was ~~$10.9~~$4.4 million and ~~$13.2~~$5.8 million for the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, respectively. See Note 8—Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.

Net ~~loss.~~earnings (loss). Net ~~loss~~earnings (loss) was ~~$135.6~~$(441.4) million and ~~$60.5~~$46.2 million during the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, respectively. Net loss during the ~~nine~~three months ended ~~September~~June 30, 2020 compared to net earnings for the three months ended June 30, 2019 ~~compared to the nine months ended September 30, 2018~~ was negatively impacted by ~~lower~~the decrease in attendance ~~which negatively impacted admissions revenue, higher rent~~as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020, increased depreciation expense, ~~operating expense and interest expense, decreased~~declines in equity in earnings ~~from~~of non-consolidated entities and declines in other income, partially offset by ~~increases~~reduced operating expenses, lower amounts of rent expense, declines in ~~food and beverage revenues and other revenues, decreases in other expense related to our derivative liability, income tax provision, depreciation and amortization expense,~~ general and administrative expenses, ~~increased~~increases in investment income and ~~a decline~~decreases in ~~foreign currency translation rates.~~

income tax provision.

Theatrical ~~Exhibition–U.S.~~Exhibition - International Markets

Revenues.Total revenues decreased ~~0.3%~~99.1%, or ~~$8.0~~$341.7 million, during the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~three months ended ~~September~~June 30, ~~2018.~~2019. Admissions revenues decreased ~~3.5%~~99.6%, or ~~$63.8~~ $213.9 million, during the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to a ~~2.2%~~99.6% decrease in ~~average ticket price and a 1.3% decrease in~~ attendance. The decrease in average ticket price was primarily due to strategic pricing initiatives put in place over the last year; decreases in the popularity of 3D premium content, partially offset by increases in attendance for PLF and IMAX premium content. The decrease in attendance was primarily due to the ~~popularity~~temporary suspension of ~~films released~~operations at all our theatres in International markets on or before March 17, 2020. During the ~~first~~latter part of the current quarter, ~~as compared to the same period a year ago as well as temporary screen closures for theatre refurbishments.~~

we reopened and operated 37 theatres with 359 screens in 9 different countries in our International markets.

Food and beverage revenues ~~increased 3.4%~~decreased 99.6%, or ~~$33.5~~$91.0 million, during the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to the ~~increase~~decrease in ~~food~~attendance.

Total other theatre revenues decreased 95.1%, or $36.8 million, during the three months ended June 30, 2020 compared to the three months ended June 30, 2019, primarily due to decreases in ticket fees, income from gift cards and ~~beverage revenues per patron of 4.8%, partially offset by~~package tickets and screen advertising due to the decrease in attendance. ~~Food and beverage revenues per patron increased as a result of strategic price increases and our food and beverage initiatives including our Feature Fare menu and theatre renovations.~~

Total other theatre revenues increased 11.9%, or $22.3 million, during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily due to increased ticket fees of $18.5 million or 25.1% and increase in theatre rentals.

Operating costs and expenses. Operating costs and expenses ~~increased 3.1%, or $87.2~~decreased $205.6 million, during the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~three months ended ~~September~~June 30, ~~2018.~~2019 primarily due to the decrease in attendance and a decrease in average screens operated. Film exhibition costs decreased ~~0.7%~~99.6%, or ~~$7.4~~$91.9 million, during the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to the decrease in admissions revenues. As a percentage of admissions revenues, film exhibition costs were ~~55.8% and 54.2%~~not meaningful due to the low level of admissions revenues for the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~were 43.0% for the three months ended June 30, ~~2018, respectively.~~2019.

Food and beverage costs ~~increased 2.2%~~decreased 94.1%, or ~~$3.2~~ $19.1��million, during the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~three months ended ~~September~~June 30, ~~2018,~~2019. The decrease in food and beverage costs was primarily asdue to the ~~result of increases~~decrease in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were ~~14.3%~~not meaningful for the ~~nine~~three months ended ~~September~~June 30, ~~2019 and 14.5% for~~2020 due to the ~~nine months ended September 30, 2018. Food and beverage gross profit per patron increased 5.0% and is calculated as~~low level of food and beverage revenues ~~less food~~and were 22.2% for the three months ended June 30, 2019. Food and beverage costs ~~divided by attendance.~~included $1.2 million of charges for obsolete inventory during the three months ended June 30, 2020 due to the suspension of theatre operations.

As a percentage of revenues, operating expense was ~~30.3%~~not meaningful for the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 due to the low level of revenues and ~~28.8% during~~ the ~~nine~~fixed nature of certain operating expenses and was 33.8% for the three months ended ~~September~~June 30, ~~2018.~~2019. Rent expense ~~increased 23.3%~~decreased 10.6%, or ~~$100.3~~$7.0 million, during the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~three months ended ~~September~~June 30, ~~2018~~2019 due primarily to declines in deferred rent expense due to ~~a prior year modification~~the impairment of ~~a theatre lease which reduced~~right of use assets in calendar 2019 and 2020, cash rent ~~by $35.0 million~~abatements from landlords, declines in ~~2018 offset by~~percentage rentals due to the ~~adoption of ASC 842 for lease accounting where approximately $33.0 million of principal~~decline in revenues, declines in common area maintenance charges and interest payments were recorded as rent expense during the nine months ended September 30, 2019 related to build-to-suit financing lease obligations, the elimination of $5.4 million of deferred gain amortization for sale leaseback transactions that previously reduced rent expense and $13.7 ~~million of non-cash expense from purchase accounting recorded as rent expense, which was previously recorded as depreciation and amortization expense.~~declines in foreign currency exchange rates. See Note 2—2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of ~~ASC 842.~~COVID-19 on leases.

~~General and Administrative Expense:~~

Merger, acquisition and other costs. Merger, acquisition and other costs were ~~$5.8~~$0.1 million during the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$15.2~~$0.8 million during the ~~nine~~three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to ~~expenses incurred~~a decline in ~~connection with the Nordic acquisition in the prior year.~~merger related activities.

Other. Other general and administrative expense decreased ~~$10.3~~ 36.6% or $6.7 million during the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to ~~a reduction in legal expenses of $5.4 million and a $2.9 million decrease~~decreases in bonus expense ~~due to~~and decreases in salaries as a result of our furlough program that began in March of 2020 and continued throughout the three months ended June 30, 2020 and declines in ~~number of participants and expected performance.~~foreign currency exchange rates.

Depreciation and amortization. Depreciation and amortization ~~decreased $33.4~~increased 3.2% or $0.9 million during the ~~nine~~three months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~three months ended ~~September~~June 30, ~~2018,~~2019, primarily due to recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and 2020.

Other income. Other income of $6.7 million during the three months ended June 30, 2020 was primarily due to the ~~adoption~~international government assistance related to COVID-19 of ~~ASC 842 for lease accounting where the financing lease buildings~~$4.4 million and ~~related depreciation were eliminated.~~$2.0 million of international foreign currency transaction gains. See Note 21—The Company and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about the components of other expense.

Interest expense. Interest expense increased $0.4 million to $2.6 million for the three months ended June 30, 2020 compared to $2.2 million during the three months ended June 30, 2019 primarily due to borrowings under revolving credit facilities of approximately $110 million during the three months ended March 31, 2020 that remained outstanding as of June 30, 2020.

Equity in (earnings) loss of non-consolidated entities. Equity in loss of non-consolidated entities were $1.0 million for the three months ended June 30, 2020 compared to $(0.3) million for the three months ended June 30, 2019.

Investment income. Investment income was $0.1 million for the three months ended June 30, 2020 compared to investment income of $1.9 million for the three months ended June 30, 2019. Investment income includes a gain on the sale of our Austria theatres of $1.8 million for the three months ended June 30, 2019.

Income tax benefit. The income tax benefit was $10.5 million and $0.4 million for the three months ended June 30, 2020 and June 30, 2019, respectively. The increase in income tax benefit is primarily due to net losses incurred during the three months ended June 30, 2020 that are projected to offset previously unabsorbed deferred tax liabilities. See Note 8—Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.

Net earnings (loss). Net earnings (loss) was $(119.8) million and $3.2 million during the three months ended June 30, 2020 and June 30, 2019, respectively. Net loss during the three months ended June 30, 2020 compared to net earnings for the three months ended June 30, 2019 was negatively impacted by the decrease in attendance as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020, increased depreciation expense, declines in investment income and declines in equity in earnings of non-consolidated entities, partially offset by reduced operating expenses, lower amounts of rent expense, declines in general and administrative expenses, increases in other income and increases in income tax benefits.

Results of Operations—For the Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019

Condensed Consolidated Results of Operations

Revenues. Total revenues decreased 64.5%, or $1,746.1 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. Admissions revenues decreased 65.0%, or $1,058.1 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due a 65.7% decrease in attendance offset by a 2.0% increase in average ticket price. The decrease in attendance was primarily due to the temporary suspension of operations at all our theatres in U.S. markets and International markets on or before March 17, 2020. As some theatres across Europe began closing in late February 2020 and social distancing practices were initiated in the U.S. in response to the ensuing COVID-19 global pandemic, attendance and revenues began to deteriorate in early March. During the latter part of the current quarter, we reopened and operated 37 theatres with 359 screens in 9

different countries in our International markets. The increase in average ticket price was primarily due to strategic pricing initiatives put in place over the prior year and lower frequency on our A-List subscription program, partially offset by decreases in attendance for 3D, IMAX and Alternative premium content and declines in foreign currency exchange rates.

Food and beverage revenues decreased 66.5%, or $572.8 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to the decrease in attendance.

Total other theatre revenues decreased 52.8%, or $115.2 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance.

Operating costs and expenses. Operating costs and expenses increased $783.4 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019 primarily due to the impairment of long-lived assets, partially offset by a decrease in operating costs and expenses due to the decrease in attendance and a decrease in average screens operated. Film exhibition costs decreased 67.9%, or $575.9 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to the decrease in admissions revenues. As a percentage of admissions revenues, film exhibition costs were 47.8% for the six months ended June 30, 2020 and 52.1% for the six months ended June 30, 2019. The decrease in film exhibition cost percentage is primarily due to the concentration of box office revenues in lower grossing films in the current year which typically results in lower film exhibition costs.

Food and beverage costs decreased 58.0%, or $80.0 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The decrease in food and beverage costs was primarily due to the decrease in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were 20.1% for the six months ended June 30, 2020 and 16.0% for the six months ended June 30, 2019. Food and beverage costs included $7.2 million of charges for obsolete inventory during the six months ended June 30, 2020 due to the suspension of theatre operations.

As a percentage of revenues, operating expense was 49.1% for the six months ended June 30, 2020 and 31.0% for the six months ended June 30, 2019. Rent expense decreased 5.3%, or $26.0 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019 due primarily to declines in deferred rent expense due to the impairment of right of use assets in calendar 2019 and 2020, cash rent abatements from landlords, declines in percentage rentals due to the decline in revenues and declines in common area maintenance charges. See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of ~~ASC 842.~~Covid-19 on leases.

Merger, acquisition and other costs. Merger, acquisition and other costs were $2.0 million during the six months ended June 30, 2020 compared to $6.5 million during the six months ended June 30, 2019, primarily due to a decline in merger related activities.

Other. Other general and administrative expense decreased 34.5% or $30.8 million during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to decreases in bonus expense and decreases in salaries as a result of our furlough program that began in March of 2020 and continued throughout the six months ended June 30, 2020.

~~Other Expense (Income):~~Depreciation and amortization. Depreciation and amortization increased 7.6% or $17.2 million during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and 2020.

Impairment of long-lived assets. During the three months ended March 31, 2020, we recognized non-cash impairment losses of $81.4 million on 57 theatres in the U.S. markets with 658 screens (in Alabama, Arkansas, California, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Montana, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming) which were related to property, net, operating lease right-of-use assets, net and other long-term assets and $9.9 million on 23 theatres in the International markets with 213 screens (in Germany, Italy, Spain, UK and Sweden) which were related to property, net and operating lease right-of-use assets, net.

During the three months ended March 31, 2020, we performed a quantitative impairment evaluation of our

indefinite-lived intangible assets related to the AMC, Odeon and Nordic tradenames and recorded impairment charges of $8.3 million related to these assets during the three months ended March 31, 2020. In addition, we performed a quantitative impairment evaluation of our definite-lived intangible assets and recorded impairment charges of $8.0 million.

During the three months ended March 31, 2020, we performed a quantitative impairment evaluation of our goodwill and recorded impairment charges of $1,124.9 million and $619.4 million for our Domestic Theatres and International Theatres reporting units, respectively.

Other expense. Other expense of ~~$4.6~~$20.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019 is~~2020 was primarily due to ~~$16.6 million of expense related to~~ the ~~repayment of indebtedness (See Note 6~~—Corporate Borrowings in the Notes to the Condensed Consolidated Financial Statements under Item 1 for additional information), $1.7 million of foreign currency transaction losses and $0.8 million of non-operating net periodic benefit cost, partially offset by the increasedecrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of ~~$0.5~~$13.7 million, estimated credit losses related to contingent lease guarantees of $9.2 million and $2.8 million of third party financing costs related to an ongoing debt restructuring, partially offset by international government assistance related to COVID-19 of $4.4 million. Other expense of $6.4 million during the six months ended June 30, 2019 is primarily due to a $16.6 million expense related to the repayment of indebtedness, the decrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $8.0 million, $1.0 million loss on forward currency contracts, partially offset by a decrease in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2024 of ~~$14.9 million.~~ $20.6 million. See Note 1—The Company and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional information about the components of other expense.
Interest expense. Interest expense increased $4.0 million to $174.0 million for the six months ended June 30, 2020 compared to $170.0 million during the six months ended June 30, 2019 primarily due to the issuance of $500 million of 10.5% First Lien Notes due 2025 on April 24, 2020 and borrowings under revolving credit facilities of approximately $325.0 million during the six months ended June 30, 2020 that remained outstanding as of June 30, 2020.
Equity in (earnings) loss of non-consolidated entities. Equity in loss of non-consolidated entities were $15.3 million for the six months ended June 30, 2020 compared to $(16.7) million for the six months ended June 30, 2019. The decrease in equity in earnings of $32.0 million was primarily due to decreases in equity in earnings from DCIP of $26.2 million as a result of accelerated depreciation charges for digital projectors during the six months ended June 30, 2020 and lower revenues due to the closure of theatres.
Investment (income) expense. Investment expense was $8.1 million for the six months ended June 30, 2020 compared to investment income of $(18.2) million for the six months ended June 30, 2019. Investment expense includes an impairment charge of $7.2 million related to an investment and declines in fair value of our non-qualified deferred compensation plan investments during the six months ended June 30, 2020. Investment income includes a gain on the sale of our Austria theatres of $12.9 million for the six months ended June 30, 2019 and a payment of $4.0 million under the NCM tax receivable agreement for the six months ended June 30, 2019.
Income tax provision. The income tax provision was $62.1 million and $11.1 million for the six months ended June 30, 2020 and June 30, 2019, respectively. The increase in income tax expense is primarily due to the recording of international valuation allowances against deferred tax assets held in Spain of $40.1 million and Germany of $33.1 million, partially offset by income tax benefit from net losses incurred in International markets during the six months ended June 30, 2020 that are projected to offset previously unabsorbed deferred tax liabilities in International markets. See Note 8—Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.
Net loss. Net loss was $2,737.5 million and $80.8 million during the six months ended June 30, 2020 and June 30, 2019, respectively. Net loss during the six months ended June 30, 2020 compared to net loss for the six months ended June 30, 2019 was negatively impacted by the decrease in attendance as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020, impairment charges related to long-lived assets, definite and indefinite-lived intangible assets and goodwill, increased depreciation expense, declines in investment income, declines in equity in earnings of non-consolidated entities, increases in income tax provision and increases in other expense, partially offset by reduced operating expenses, lower amounts of rent expense and declines in general and administrative expenses.

Theatrical Exhibition–U.S. Markets

Revenues. Total revenues decreased 66.6%, or $1,351.4 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. Admissions revenues decreased 67.5%, or $807.0 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to a 68.7% decrease in attendance offset by a 4.0% increase in average ticket price. The decrease in attendance was primarily due to the temporary suspension of operations at all our theatres in U.S. markets on or before March 17, 2020. As social distancing practices were initiated in the U.S. in response to the ensuing COVID-19 global pandemic, attendance and revenues began to deteriorate in early March. The increase in average ticket price was primarily due to strategic pricing initiatives put in place over the prior year and lower frequency on our A-List subscription program, partially offset by decreases in attendance for 3D, IMAX and Alternative premium content.

Food and beverage revenues decreased 68.5%, or $472.1 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to the decrease in attendance.

Total other theatre revenues decreased 50.3%, or $72.3 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to decreases in ticket fees, income from gift cards and package tickets and screen advertising due to the decrease in attendance.

Operating costs and expenses. Operating costs and expenses increased $385.1 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019 primarily due to the impairment of long-lived assets, partially offset by a decrease in operating costs and expenses due to the decrease in attendance and a decrease in average screens operated. Film exhibition costs decreased 70.2%, or $468.8 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to the decrease in admissions revenues. As a percentage of admissions revenues, film exhibition costs were 51.1% for the six months ended June 30, 2020 and 55.8% for the six months ended June 30, 2019. The decrease in film exhibition cost percentage is primarily due to the concentration of box office revenues in lower grossing films in the current year which typically results in lower film exhibition costs.

Food and beverage costs decreased 61.4%, or $60.8 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019. The decrease in food and beverage costs was primarily due to the decrease in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were 17.6% for the six months ended June 30, 2020 and 14.4% for the six months ended June 30, 2019. Food and beverage costs included $4.0 million of charges for obsolete inventory during the six months ended June 30, 2020 due to the suspension of theatre operations.

As a percentage of revenues, operating expense was 48.9% for the six months ended June 30, 2020 and 29.9% for the six months ended June 30, 2019. Rent expense decreased 4.8%, or $17.0 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019 due primarily to declines in deferred rent expense due to the impairment of right of use assets in calendar 2019 and 2020, cash rent abatements from landlords, declines in percentage rentals due to the decline in revenues and declines in common area maintenance charges. See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of Covid-19 on leases.

Merger, acquisition and other costs. Merger, acquisition and other costs were $2.0 million during the six months ended June 30, 2020 compared to $3.5 million during the six months ended June 30, 2019, primarily due to a decline in merger related activities.

Other. Other general and administrative expense decreased 40.8% or $21.4 million during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to decreases in bonus expense and decreases in salaries as a result of our furlough program that began in March of 2020 and continued throughout the six months ended June 30, 2020.

Depreciation and amortization. Depreciation and amortization increased 9.2% or $15.5 million during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and 2020.

Impairment of long-lived assets. During the ~~nine~~three months ended ~~September~~March 31, 2020, we recognized non-cash impairment losses of $81.4 million on 57 theatres in the U.S. markets with 658 screens (in Alabama, Arkansas, California, District of Columbia, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri,

~~Table~~Interest expense. Interest expense increased $3.6 million to $169.4 million for the six months ended June 30, 2020 compared to $165.8 million during the six months ended June 30, 2019 primarily due to the issuance of ~~Contents~~$500 million of 10.5% First Lien Notes due 2025 on April 24, 2020 and borrowings under revolving credit facilities of approximately $215.0 million during the six months ended March 31, 2020 that remained outstanding as of June 30, 2020.

Montana, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee, Texas, Washington, Wisconsin and Wyoming) which were related to property, net, operating lease right-of-use assets, net and other long-term assets.

During the three months ended March 31, 2020, we performed a quantitative impairment evaluation of our definite-lived intangible assets and recorded impairment charges of $8.0 million.

During the three months ended March 31, 2020, we performed a quantitative impairment evaluation of our goodwill and recorded an impairment charge of $1,124.9 million for our Domestic Theatres reporting unit.

Other expense. Other expense of $25.6 million during the six months ended June 30, ~~2018, other~~2020 was primarily due to the decrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $13.7 million, estimated credit losses related to contingent lease guarantees of $9.2 million and $2.8 million of third party financing costs related to an ongoing debt restructuring. Other expense ~~included $54.1~~of $6.1 million ofduring the six months ended June 30, 2019 is primarily due to a $16.6 million expense related to the repayment of indebtedness, the decrease in fair value of our derivative asset for the contingent call option related to the Class B common stock purchase and cancellation agreement of $8.0 million, $1.0 million loss on forward currency contracts, partially offset by a decrease in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due ~~2024.~~2024 of $20.6 million. See Note 1—~~Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item~~ ~~1 for additional information about the components of other expense (income).~~

~~Interest expense.~~ Interest expense increased $18.8 million to $248.7 million for the nine months ended September 30, 2019 compared to $229.9 million the nine months ended September 30, 2018 primarily due to the interest expense related to our 2.95% $600.0 million Convertible Notes due 2024 issued on September 14, 2018The Company and ~~our Senior Secured Credit Facility-Term Loan due 2026 (See Note 6—Corporate Borrowings~~Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for additional ~~information), partially offset by~~information about the ~~recording to rent expense~~components of ~~$9.9 million of financing lease obligation interest as a result of the adoption of ASC 842. See Note 2~~—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 for the impact of ASC 842.~~other expense.

Equity in ~~earnings~~(earnings) loss of non-consolidated entities. Equity in ~~earnings~~loss of non-consolidated entities were ~~$23.2~~$13.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to ~~$71.0~~$(16.0) million for the ~~nine~~six months ended ~~September~~June 30, ~~2018. Equity~~2019. The decrease in ~~earnings for the nine months ended September 30, 2018 includes~~ equity in earnings of ~~$28.9~~$29.3 million was primarily due to decreases in equity in earnings from DCIP of $26.2 million as a result of accelerated depreciation charges for digital projectors during the six months ended June 30, 2020 and lower revenues due to the closure of theatres.

Investment expense (income). Investment expense was $8.2 million for the six months ended June 30, 2020 compared to investment income of $(5.3) million for the six months ended June 30, 2019. Investment expense includes an impairment charge of $7.2 million related to ~~the sale~~an investment and declines in fair value of our ~~then remaining interest in NCM, $30.1 million related to~~non-qualified deferred compensation plan investments during the Screenvision merger and a $2.3 million gain on the sale of NCM, Inc. common shares, partially offset by a $16.0 million lower of carrying value or fair value impairment loss on 9,492,820 NCM units and 1,000,000 NCM, Inc. common shares held-for-sale and a $1.1 million loss on the return of 915,150 NCM units as a part of the annual common unit adjustment under the NCM ESA.

~~Investment income.~~ ~~Investment income was $5.7 million for the nine~~six months ended ~~September~~June 30, ~~2019 compared to $7.4 million for the nine months ended September 30, 2018.~~2020. Investment income includes ~~payments received related to~~a payment of $4.0 million under the NCM tax receivable agreement ~~of $4.0 million and $5.4 million~~ for the ~~nine~~six months ended ~~September~~June 30, ~~2019 and September 30, 2018, respectively. Investment income for the nine months ended September 30, 2018 also includes a $1.5 million gain on the sale of a joint venture managed theatre.~~2019.

Income tax provision. The income tax provision was ~~$8.9~~$1.5 million and ~~$14.6~~$9.3 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, respectively. See Note 8—Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.

Net loss. Net loss was ~~$142.7~~$1,879.2 million and ~~$36.5~~$84.6 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, respectively. Net loss during the ~~nine~~six months ended ~~September~~June 30, 2020 compared to net loss for the six months ended June 30, 2019 ~~compared to the nine months ended September 30, 2018~~ was negatively impacted by ~~lower~~the decrease in attendance ~~which negatively impacted admissions revenue, higher rent~~as a result of the temporary suspension of operations at all our theatres on or before March 17, 2020, impairment charges related to long-lived assets, definite and indefinite-lived intangible assets and goodwill, increased depreciation expense, ~~operating expense and interest expense, decreased~~declines in investment income, declines in equity in earnings ~~from~~of non-consolidated entities ~~offset by~~and increases ~~in food and beverage revenues and other revenues, decreases~~ in other expense, ~~related to our derivative liability,~~partially offset by reduced operating expenses, lower amounts of rent expense, a decrease in income tax provision ~~depreciation~~ and ~~amortization expense,~~declines in general and administrative ~~expenses and increased investment income.~~

expenses.

Theatrical Exhibition - International Markets

Revenues.Total revenues decreased ~~1.6%~~58.2%, or ~~$16.2~~ $394.7 million, during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. Admissions revenues decreased ~~5.1%~~58.3%, or ~~$34.6~~$251.1 million, during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, primarily due a 58.1% decrease in attendance and a 0.6% decrease in average ticket price. The decrease in attendance was primarily due to ~~a decline~~the temporary

suspension of operations at all our theatres in ~~average ticket price~~International markets on or before March 17, 2020. As some theatres across Europe began closing in late February 2020, attendance and revenues began to deteriorate in early March. During the latter part of ~~7.0%, partially offset by an increase~~the current quarter we reopened and operated 37 theatres with 359 screens in ~~attendance of 2.1%.~~9 different countries in our International markets. The decrease in average ticket price was primarily due to ~~decreases~~declines in foreign currency ~~translation~~exchange rates. ~~The increase in attendance was~~

Food and beverage revenues decreased 58.3%, or $100.7 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to the ~~popularity of films released~~decrease in ~~the period as compared to the same period a year ago.~~attendance.

Food and beverage revenues increased 4.5%, or $11.4 million, during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily due to the overall increase in food and beverage per patron of 2.3% including declines in foreign currency translation rates and the increase in attendance.

Total other theatre revenues ~~increased $7.0~~decreased 57.5%, or $42.9 million, during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, primarily due to ~~increases~~decreases in ticket fees, ~~theatre rentals and~~ income from gift cards and package tickets ~~partially offset by a decline~~and screen advertising due to the decrease in ~~foreign currency translation rates.~~

attendance.

Operating costs and expenses. Operating costs and expenses ~~decreased 2.5%, or $26.3~~increased $398.3 million, during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019 primarily due to the impairment of long-lived assets, partially offset by a decrease in operating costs and expenses due to the decrease in attendance and a decrease in average screens operated. Film exhibition costs decreased ~~$4.7~~ 59.4%, or $107.1 million, during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, primarily due to the decrease in admissions revenues. As a percentage of admissions revenues, film exhibition costs were ~~42.4%~~40.7% for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~40.9%~~41.8% for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The decrease in film exhibition cost percentage is primarily due to the concentration of box office revenues in lower grossing films in the current year which typically results in lower film exhibition costs.

Food and beverage costs decreased ~~$0.1~~49.4%, or $19.2 million, during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. The decrease in food and beverage costs was primarily due to the decrease in ~~foreign currency translation rates.~~food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were ~~22.4%~~27.4% for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~23.4%~~22.5% for the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~2019. Food and beverage ~~gross profit per patron~~costs included $3.2 million of charges for obsolete inventory during the six months ended June 30, 2020 due to the suspension of theatre operations.

As a percentage of revenues, operating expense was 49.5% for the six months ended June 30, 2020 and 34.5% for the six months ended June 30, 2019. Rent expense decreased 6.8%, or $9.0 million, during the six months ended June 30, 2020 compared to the six months ended June 30, 2019 due primarily to declines in deferred rent expense due to the impairment of right of use assets in calendar 2019 and 2020, cash rent abatements from landlords, declines in percentage rentals due to the decline in revenues, declines in common area maintenance charges and declines in foreign currency translation rates. See Note 2—Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 of Part I of this Form 10-Q for further information on the impact of Covid-19 on leases.

Merger, acquisition and other costs. Merger, acquisition and other costs were $0.0 million during the six months ended June 30, 2020 compared to $3.0 million during the six months ended June 30, 2019, primarily due to a decline in merger related activities.

Other. Other general and administrative expense decreased 25.5% or $9.4 million during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to decreases in bonus expense and decreases in salaries as a result of our furlough program that began in March of 2020 and continued throughout the six months ended June 30, 2020 and declines in foreign currency translation rates.

Depreciation and amortization. Depreciation and amortization increased ~~3.7%~~3.0% or $1.7 million during the six months ended June 30, 2020 compared to the six months ended June 30, 2019, primarily due to recent capital expenditures, partially offset by lower depreciation expense on theatres impaired in calendar 2019 and ~~is calculated as food~~2020.

Impairment of long-lived assets. During the three months ended March 31, 2020, we recognized non-cash impairment losses of $9.9 million on 23 theatres in the International markets with 213 screens (in Germany, Italy, Spain, UK and ~~beverage revenues less food~~Sweden) which were related to property, net, and ~~beverage costs divided by attendance.~~operating lease right-of-use assets, net.

During the three months ended March 31, 2020, we performed a quantitative impairment evaluation of our indefinite-lived intangible assets related to the Odeon and Nordic tradenames and recorded impairment charges of $8.3 million related to these assets during the three months ended March 31, 2020.

During the three months ended March 31, 2020, we performed a quantitative impairment evaluation of our

~~As a percentage~~goodwill and recorded impairment charges of ~~revenues, operating~~$619.4 million for our International Theatres reporting unit.

Other expense ~~was 34.1% for the nine months ended September 30, 2019 and 35.6% during the nine months ended September 30, 2018. Rent expense increased $33.2~~(income). Other income of $(5.3) million during the ~~nine~~six months ended ~~September~~June 30, ~~2019 compared to the nine months ended September 30, 2018~~2020 was primarily due to the ~~adoption of ASC 842 for lease accounting where approximately $29.7 million of prior year principal and interest payments were recorded as rent expense during the nine months ended September 30, 2019~~international government assistance related to ~~build-to-suit financing lease obligations and $5.8 million~~COVID-19 of ~~non-cash rent expense - purchase accounting was recorded as rent expense, offset by a decline in foreign currency translation rates.~~$4.4 million. See Note 2—~~Leases~~1—The Company and Significant Accounting Policies in the Notes to the Condensed Consolidated Financial Statements under Item 1 ~~for the impact~~ of ~~ASC 842.~~

~~General and Administrative Expense:~~

~~Merger, acquisition and other costs.~~ Merger, acquisition and other costs decreased $6.5 million during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018, primarily due to expenses incurred in connection with the Nordic acquisition in the prior year.

~~Other.~~ ~~Other general and administrative expense increased $1.6 million during the nine months ended September 30, 2019, compared to the nine months ended September 30, 2018.~~

~~Depreciation and amortization.~~ ~~Depreciation and amortization decreased $27.9 million during the nine months ended September 30, 2019 compared to the nine months ended September 30, 2018 primarily due to the adoption~~Part I of ~~ASC 842 for lease accounting where the financing lease buildings and depreciation were eliminated and a decline in foreign currency translation rates. See Note 2~~—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1 for the impact of ASC 842.~~

~~Other Expense:~~

~~Other expense.~~ ~~Other expense was $0.5~~ million during the nine months ended September 30, 2019 compared to $1.3 million for the nine months ended September 30, 2019. See Note 1—Basis of Presentation in the Notes to the Condensed Consolidated Financial Statements under Item 1this Form 10-Q for additional information about the components of other ~~expense (income).~~expense.

Interest expense. Interest expense ~~decreased $12.6~~increased $0.4 million to $4.6 million for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to $4.2 million during the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019 primarily due to borrowings under revolving credit facilities of approximately $110 million during the ~~adoption~~six months ended June 30, 2020 that remained outstanding as of ~~ASC 842 for lease accounting which recorded build-to-suit finance lease obligation interest expense to rent and a decline~~June 30, 2020.
Equity in ~~foreign currency translation rates. See Note 2~~—(earnings) loss of non-consolidated entities. ~~Leases~~Equity in ~~the Notes to the Condensed Consolidated Financial Statements under Item 1~~loss of non-consolidated entities were $2.0 million for the ~~impact of ASC 842.~~six months ended June 30, 2020 compared to $(0.7) million for the six months ended June 30, 2019.

Investment income. Investment income ~~increased $13.0~~was $0.1 million ~~due~~for the six months ended June 30, 2020 compared to investment income of $12.9 million for the six months ended June 30, 2019. Investment income includes a gain on the sale of our Austria ~~theatres.~~
theatres of $12.9 million for the six months ended June 30, 2019. 
Income tax ~~provision (benefit).~~provision. The income tax provision was ~~$2.0~~$60.6 million and $1.8 million for the ~~nine~~six months ended ~~September~~June 30, 2020 and June 30, 2019, respectively. The increase in income tax provision is primarily due to the recording of international valuation allowances against deferred tax assets held in Spain of $40.1 million and ~~the~~Germany of $33.1 million, partially offset by income tax benefit ~~was ($1.4) million for~~from net losses incurred in International markets during the ~~nine~~six months ended ~~September~~June 30, ~~2018.~~ 2020 that are projected to offset previously unabsorbed deferred tax liabilities in International markets. See Note 8—Income Taxes in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information.

Net earnings (loss). Net earnings ~~increased $31.1~~(loss) was $(858.3) million and $3.8 million during the ~~nine~~six months ended ~~September~~June 30, 2020 and June 30, 2019, respectively. Net loss during the six months ended June 30, 2020 compared to net earnings for the six months ended June 30, 2019 was negatively impacted by the decrease in attendance as a result of ~~higher attendance,~~the temporary suspension of operations at all our theatres on or before March 17, 2020,impairment charges related to long-lived assets, definite and indefinite-lived intangible assets and goodwill increased depreciation expense, increased income tax provision, declines in investment income ~~lower depreciation~~ and ~~amortization,~~declines in equity in earnings of non-consolidated entities, partially offset by reduced operating expenses, lower amounts of rent expense, declines in general and administrative ~~expense~~expenses and ~~lower interest expense, offset by a decline~~increases in ~~foreign currency translation rates, higher rent expense and higher income tax provisions.~~other income.

LIQUIDITY AND CAPITAL RESOURCES

Our consolidated revenues are primarily collected in cash, principally through box office admissions and food and beverage sales. We have an operating “float” which partially finances our operations, and which generally permits us to maintain a smaller amount of working capital capacity. This float exists because admissions revenues are received in cash, while exhibition costs (primarily film rentals) are ordinarily paid to distributors from 20 to 45 days following receipt of box office admissions revenues. Film distributors generally release the films which they anticipate will be the most successful during the summer and year-end holiday seasons. Consequently, we typically generate higher revenues during such periods.
We had working capital deficits (excluding restricted cash) as of June 30, 2020 and December 31, 2019 of $1,041.9 million and $1,270.6 million, respectively. As of June 30, 2020 and December 31, 2019, working capital included operating lease liabilities of $581.5 million and $585.8 million, respectively, and deferred revenues of $406.1 million and $449.2 million, respectively. We have borrowed all available amounts under our Revolving Credit Facility to meet obligations as they come due. As of June 30, 2020, we had borrowed $213.2 million (the full availability net of letters of credit) under our $225.0 million Senior Secured Revolving Credit Facility. We also maintain a revolving credit facility due February 14, 2022 at our Odeon subsidiary (the “Odeon Revolver”). As of June 30, 2020, we had borrowed $108.8 million (the full availability net of letters of credit) under our £100.0 million Odeon Revolver ($122.9 million based on the foreign currency translation rate of 1.2287 on June 30, 2020).
In response to the COVID-19 pandemic, the Company has taken and is continuing to take significant steps to preserve cash by eliminating non-essential costs, including reductions to executive compensation and elements of our

~~during such periods.~~

fixed cost structure:

● Suspended non-essential operating expenditures, including marketing & promotional and travel and entertainment expenses; and where possible, for example: utilities, reduced essential operating expenditures to minimum levels necessary while theatres are closed.
● Terminated or deferred all non-essential capital expenditures to minimum levels necessary while theatres are closed.
● Implemented measures to reduce corporate-level employment costs, including full or partial furloughs of all corporate-level Company employees, including senior executives, with individual work load and salary reductions ranging from 20% to 100%; cancellation of pending annual merit pay increases; and elimination or reduction of non-healthcare benefits.
● All domestic theatre-level crew members have been fully furloughed and theatre-level management has been reduced to the minimum level necessary to begin resumption of operations when permitted. Similar efforts to reduce theatre-level and corporate employment costs are being undertaken internationally consistent with applicable laws across the jurisdictions in which the Company operates.
● Working with our landlords, vendors, and other business partners to manage, defer, and/or abate the related rent expenses and operating expenses during the disruptions caused by the COVID-19 pandemic and beyond.
● Introduced an active cash management process, which, among other things, requires senior management approval of all outgoing payments.
● Since April 24, 2020, we have been prohibited from making dividend payments in accordance with the covenant suspension conditions in our Senior Secured Credit Agreement. We have also previously elected to decrease the dividends paid in the first quarter of 2020 by $0.17 per share when compared to the first quarter of 2019. The cash savings as a result of the prior decrease and current prohibition on making dividend payments was $38.3 million during the six months ended June 30, 2020 in comparison to the six months ended June 30, 2019.
● We are prohibited from making purchases under our recently authorized stock repurchase program in accordance with the covenant suspension conditions in our Senior Secured Credit Agreement.
~~We had working capital deficits (excluding restricted cash) as~~On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. The CARES Act provides opportunities for additional liquidity, loan guarantees, and other government programs to support companies affected by the COVID-19 pandemic and their employees. Based on our preliminary analysis of September 30, 2019 and December 31, 2018 of $1,208.7 million and $557.5 million, respectively. Working capital included $568.1 million and $0 of operating lease liabilities as of September 30, 2019 and December 31, 2018, respectively. Working capital included $347.5 million and $414.8 million of deferred revenues as of September 30, 2019 and December 31, 2018, respectively. We have the ~~ability~~CARES Act, we expect to ~~borrow under our Revolving Credit Facility to meet obligations as they come due (subject to limitations on~~recognize the incurrence of indebtedness in our various debt instruments). As of September 30, 2019, we had $211.7 million available for borrowing, net of letters of credit, under our Revolving Credit Facility. We also maintain a £100.0 million ($123.0 million based on the foreign currency translation rate of 1.2298 on September 30, 2019) revolving credit facility at our Odeon subsidiary. As of September 30, 2019, we had $10.0 million drawn down on the revolving credit facility and had issued £17.0 million ($20.9 million) standby letters of credit in the ordinary course of business, leaving £74.9 million ($92.1 million) available for borrowing.following benefits:
● Approximately $17.4 million of cash tax refunds from overpayments and refundable alternative minimum tax credits with the filing of our 2019 federal tax return, amending 2018 state tax returns and filing 2019 state tax returns in which the Company expects a refund.
● Deferral of social security payroll tax matches that would otherwise be required in 2020.
● Receipt of a payroll tax credit in 2020 for expenses related to paying wages and health benefits to employees who are not working as a result of temporarily suspended operations and reduced receipts associated with COVID-19.

We intend to seek any available potential benefits under the CARES Act, including loans, investments or guarantees, and any other such current or future government programs for which we qualify domestically and internationally, including those described above. 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.
We believe ~~that~~our cash balance as of June 30, 2020, cash generated from ~~operations, existing cash~~operating activities, the proceeds from the issuance on July 31, 2020 of $300.0 million, prior to deducting discounts and cash ~~equivalents, availability under our Revolving Credit Facility~~premiums based on contract assumptions and ~~Odeon’s revolving credit facility will~~estimates of $36 million, of new 10.5% Senior Secured Notes due 2026 (the “First Lien Notes due 2026) and the closing of the exchange offer on July 31, 2020 (the “Exchange Offers”) (which allowed us to extend maturities on approximately $1.7 billion of debt to 2026, most of which was maturing in 2024 and 2025 previously, with interest due for the coming 12 to 18 months on the exchanged senior subordinated notes expected to be paid all or in part on an in-kind basis pursuant to the terms of the 10%/12% Cash/PIK Toggle Second Lien Subordinated Secured Notes due 2026 (the “Second Lien Notes due 2026”), thereby generating a further near-term cash savings for us of between approximately $120 million to $180 million) may provide sufficient liquidity to fund operations ~~planned~~and essential capital expenditures ~~and dividends currently and~~ for ~~at least~~ the next 12 ~~months~~months. Further, as discussed in Note 6—Corporate Borrowings, our lenders have granted relief from the maintenance covenants in the revolving credit agreements and ~~enable us to~~we believe we will maintain compliance with all financial debt ~~covenants.~~covenants for the next 12 months. See Note 14—Subsequent Events in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for information regarding the

exchange offer and the incremental 10.5% First Lien Notes due 2026 in new funding.

Therefore, we believe we have the cash resources to reopen our theatres and resume operations this summer or later. Our liquidity needs thereafter will depend, among other things, on the timing of a full resumption of operations, the timing of movie releases and our ability to generate revenues.

While we have used our best estimates based on currently available information, we cannot assure the reader that our assumptions used to estimate our liquidity requirements will be correct—including but not limited to attendance, food and beverage revenues, rent relief, cost savings, and capital expenditures—because we have never previously experienced a complete cessation of our operations, and as a consequence, our ability to be predictive is uncertain. If we do not recommence operations within our estimated timeline, we will require additional capital and may also require additional financing if, for example, our operations do not generate the expected revenues or a recurrence of COVID-19 were to cause another suspension of operations. Such additional financing may not be available on favorable terms or at all. Due to these factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time.

As of ~~September~~June 30, ~~2019,~~2020, we were in compliance with all financial debt covenants.

Cash Flows from Operating Activities

Cash flows provided by (used in) operating activities, as reflected in the condensed consolidated statements of cash flows, were ~~$210.2~~$(415.9) million and ~~$298.8~~$153.6 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~ June 30, ~~2018,~~2019, respectively. The decrease in cash flows provided by operating activities was primarily due to decreased attendance levels and ~~average ticket prices~~temporary suspension of operations at all of our theatres on or before March 17, 2020, which ~~drove~~resulted in lower operating results during the six months ended June 30, 2020 and ~~the adoption of ASC 842 which reclassified approximately $42.0~~ ~~million of principal~~higher payments ~~under build-to-suit finance lease obligations from net cash used in financing activities~~for accounts payable primarily due to ~~net cash used in operating activities during calendar 2019.~~

timing.

Cash Flows from Investing Activities

Cash flows used in investing activities, as reflected in the condensed consolidated statements of cash flows, were ~~$348.4~~$131.5 million and ~~$114.3~~$221.3 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, respectively. Cash outflows from investing activities include capital expenditures of ~~$348.2~~$126.7 million and ~~$374.9~~$229.9 million during the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 and ~~September~~June 30, ~~2018,~~2019, respectively. Our capital expenditures primarily consisted of strategic growth initiatives and remodels, capital improvements to existing locations in our theatre circuit, and technology upgrades. During the ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, cash flows used in investing activities included an additional investment in SCC, a non-consolidated entity of $9.3 million and proceeds from the disposition of assets of $3.7 million primarily related to three properties. During the six months ended June 30, 2019, cash inflows from investing activities included the proceeds from the disposition of long-term assets of $21.3 million primarily from the sale of theatres located in Austria of $15.3 million and disposition of assets of $6.0 million, partially offset by cash outflows of $11.8 million for the acquisition of assets related to 4four theatres in the U.S. markets, offset by proceeds from the disposition of long-term assets of $21.4 million. During the nine months ended September 30, 2018, net cash used in investing activities included proceeds from the Screenvision merger of $45.8 million, proceeds from sale leaseback transactions of $50.1 million, and proceeds from the disposition of NCM units of $162.5 million. We expect that our cash outflows for capital expenditures, net of landlord contributions, will be approximately $415.0 million for calendar 2019.
markets.
We fund the costs of constructing, maintaining and remodeling our theatres through existing cash balances, cash generated from operations, landlord contributions, or borrowed funds, as necessary. We generally lease our theatres pursuant to long-term non-cancelable operating leases which may require the developer, who owns the property, to reimburse us for the construction costs. We ~~may decide~~terminated or deferred all non-essential capital expenditures to ~~own~~minimum levels necessary while theatres are closed. We expect capital expenditures (net of landlord contributions) to be between $130 million and $160 million for calendar year 2020, which includes $101.8 million net spend during the real estate assets of new or acquired theatres and, following construction or acquisition, sell and leaseback the real estate assets pursuant to long-term non-cancelable operating leases. See Commitments and Contingencies below for additional discussion of the potential cash outflows.
six months ended June 30, 2020.
Cash Flows from Financing Activities

Cash flows ~~used in~~provided by (used in) financing activities, as reflected in the condensed consolidated statements of cash flows, were ~~$72.9~~$785.9 million and ~~$155.3~~$(54.5) million during the ~~nine~~six months ended ~~September~~June 30, 2020 and June 30, 2019, respectively. The increase in cash flows from financing activities during the six months ended June 30, 2020 compared to June 30, 2019 was primarily due to the borrowings under our First Lien Notes due 2025, revolving credit facilities and ~~September~~the reduction in cash dividends paid.

Borrowings under our First Lien Notes due 2025 and revolving credit facilities were $490.0 million and $322.8 million, respectively, during the six months ended June 30, ~~2018, respectively.~~2020.

7273

During the ~~nine~~six months ended ~~September~~June 30, 2019, cash inflows from financing activities included the proceeds from the issuance of $1,990.0 million of Term ~~Loans~~Loan due 2026, offset by cash outflows for the repayment of the Term Loan due 2022 of $849.8 million, repayment of the Term Loan due 2023 of $488.7 million, repayments of the 6.0% Senior Secured Notes due 2023 of $230.0 million, and payment of the 5.875% Senior Subordinated Notes due ~~2022~~2023 of $375.0 million. Call premiums paid related to the repayment of the 6.0% Senior Secured Notes due 2023 and the 5.875% Senior Subordinated Notes due 2022 were $15.9 million and debt financing costs paid were ~~$11.7~~$11.2 million.
The following is a summary of dividends and dividend equivalents declared to stockholders:






Amount per

Total Amount

Share of

Declared
Declaration Date

Record Date

Date Paid

Common Stock

(In millions)
February 26, 2020

March 9, 2020

March 23, 2020

$
0.03

$
3.2
October 24, 2019

December 2, 2019

December 16, 2019

0.20

21.0
August 2, 2019

September 9, 2019

September 23, 2019

0.20

21.3
May 3, 2019

June 10, 2019

June 24, 2019

0.20

21.3
February 15, 2019

March 11, 2019

March 25, 2019

0.20

21.3

During the six months ended June 30, 2020 and June 30, 2019, we paid dividends and dividend equivalents of $4.3 million and $42.6 million, respectively. As of June 30, 2020, we accrued $1.1 million for the remaining unpaid dividend equivalents. As of April 24, 2020, we are prohibited from making dividend payments in accordance with the covenant suspension conditions in our Senior Secured Credit Agreement.
Senior Secured Credit Facility Term Loan due 2026. On April 23, 2020, we entered into an amendment to the Senior Secured Credit Facility pursuant to which the requisite lenders thereunder granted a waiver of the maintenance covenant thereunder for the period from the and after the effective date of the Senior secured Credit Agreement Amendment to and including the earlier of (a) March 31, 2021 and (b) the day immediately preceding the last day of the Test Period (as defined in the Senior Secured Credit Facility).
Odeon Revolving Credit Facility. On April 24, 2020, we entered into an amendment to the Odeon Revolving Credit Facility, pursuant to which the requisite lenders thereunder granted a waiver of the maintenance covenant thereunder for the period from and after the effective date of the Odeon Amendment to and including the earlier of (a) March 31, 2021 and (b) the day immediately preceding the last day of the Relevant Period (as defined in the Odeon Amendment).
Convertible Notes due 2024. On April 24, 2020, we entered into a supplemental indenture (the “Supplemental Indenture”) to the Convertible Notes due 2024 indenture, dated as of September 14, 2018. The Supplemental Indenture amended the debt covenant under the Convertible Notes Indenture to permit us to issue the First Lien Notes due 2025, among other changes.
First Lien Notes due 2025. On April 24, 2020, we issued $500.0 million aggregate principal amount of our 10.5% first lien notes due 2025, with an original issue discount of $10.0 million. The First Lien Notes due 2025 bear interest at a rate of 10.5% per annum, payable semi-annually on April 15 and October 15 each year, commencing October 15, 2020 and are secured, on a pari passu basis with the Senior Secured Credit Facility. The First Lien Notes due 2025 will mature on April 15, 2025.
Senior Subordinated Debt Exchange Offers. On July 31, 2020, we closed our previously announced Exchange offers for any and all of our outstanding Existing Subordinated Notes in exchange for newly issued Second Lien Notes due 2026 and reduced the principal amounts of our debt by approximately $555 million, which represented approximately 24.1% of the principal amount of the Existing Subordinated Notes. We raised $300 million in additional cash from the issuance of First Lien Notes due 2026 prior to deducting discounts and cash premiums based on contract assumptions and estimates of $36 million. Additionally, certain backstop purchasers in the Offering of the First Lien Notes due 2026 that participated in the Exchange Offer received 5 million Class A common shares. The closing of the Exchange Offers also allowed us to extend maturities on approximately $1.7 billion of debt to 2026, most of which was maturing in 2024 and 2025 previously. Interest due for the coming 12 to 18 months on the Second Lien Notes due 2026 is expected to be paid all or in part on an in-kind basis, thereby generating a further near-term cash savings for us of between approximately $120 million and $180 million.
In connection with the Exchange Offers, we also received consents (the ”Consent Solicitations”) from eligible holders of the Existing Subordinated Notes to amend the indentures governing the Existing Subordinated Notes among

other things, (i) release the existing subsidiary guarantees of the Existing Subordinated Notes, (ii) eliminate substantially all of the restrictive covenants, certain affirmative covenants and certain events of default contained in the indentures governing the Existing Subordinated Notes, and (iii) makes other conforming changes to internally conform to certain proposed amendments.

See Note 6—6—Corporate Borrowings and Note 14—Subsequent Events in the Notes to the Condensed Consolidated Financial Statements ~~under~~in Item 1 of Part I of this Form 10-Q for ~~additional information.~~

~~Principal payments under finance lease obligations declined to $8.5 million due primarily to~~further information regarding the adoption of ASC 842 where principal payments of $42.0 million for build-to-suit finance lease obligations were reclassified as operating leases and the related cash flows were also classified as operating activities. See Note 2—~~Leases in the Notes to the Condensed Consolidated Financial Statements under Item 1. for the impact of ASC 842.~~

On February 15, 2019, our Board of Directors declared a cash dividend in the amount of $0.20 per share of Class A and Class B common stock, paid on March 25, 2019 to stockholders of record on March 11, 2019. On May 3, 2019, our Board of Directors declared a cash dividend in the amount of $0.20 per share of Class A and Class B common stock, paid on June 24, 2019 to stockholders of record on June 10, 2019. On August 2, 2019, our Board of Directors declared a cash dividend in the amount of $0.20 per share of Class A and Class B common stock, paid on September 23, 2019 to stockholders of record on September 9, 2019. We paid dividends and dividend equivalents of $63.4 million and $237.4 million during the nine months ended September 30, 2019 and September 30, 2018, respectively.

On October 24, 2019, the Board of Directors declared a cash dividend in the amount of $0.20 per share on our Class A and Class B common stock, payable on December 16, 2019 to stockholders of record on December 2, 2019.

~~We made tax payments for restricted stock units withholdings of $1.3 million and $1.7 million during the nine months ended September 30, 2019 and September 30, 2018, respectively.~~

We paid $13.5 million for treasury stock purchased at the end of 2017 and settled during January of 2018. We paid $8.3 million for treasury stock purchased during the nine months ended September 30, 2018.

On September 14, 2018, we used the net proceeds from the Convertible Notes due 2024 private offering to repurchase and retire 24,057,143 shares of Class B common stock held by Wanda for $422.9 million and to pay a special dividend on September 28, 2018 to shareholders of record on September 25, 2018 of $1.55 per share, or approximately $160.5 million.

above.

Contractual Obligations, Commitments and Contingencies

We have commitments and contingencies for financing leases, corporate borrowings, operating leases, capital related betterments and pension funding that were summarized in a table in our Annual Report on Form 10–K for the year ended December 31, ~~2018. Since~~2019. Except as set forth above with respect to borrowings under our revolving lines of credit and the issuance of the First Lien Notes due 2025, since December 31, ~~2018,~~2019, there have been no material changes to the commitments and contingencies outside of the ordinary course of ~~business, except entering into~~business. See Note 6—Corporate Borrowings in the ~~amended~~Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q for further information, including a table that provides the principal payments required and ~~restated Senior Secured Credit Agreement.~~

maturities of corporate borrowings as of June 30, 2020.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

In the ordinary course of business, our financial results are exposed to fluctuations in interest rates and foreign currency exchange rates. In accordance with applicable guidance, we presented a sensitivity analysis showing the potential impact to net income of changes in interest rates and foreign currency exchange rates. For the ~~nine~~six months ended ~~September~~June 30, 2020 and June 30, 2019, our analysis utilized a hypothetical 100 basis-point increase or decrease to the average interest rate on our variable rate debt instruments to illustrate the potential impact to interest expense of changes in interest rates. For the ~~nine~~six months ended ~~September~~June 30, 2020 and June 30, 2019, our analysis utilized a hypothetical 100 basis-point increase or decrease to market interest rates on our fixed rate debt instruments to illustrate the potential impact to fair value of changes in interest rates.

Similarly, for the same period, our analysis used a uniform and hypothetical 10% strengthening of the U.S. dollar versus the average exchange rates of applicable currencies to depict the potential impact to net income of changes in foreign exchange rates. These market risk instruments and the potential impacts to the condensed consolidated statements of operations ~~for the current year, have not materially fluctuated, individually or in the aggregate from the preceding year; thus, only current year information is~~are presented below.

Market risk on variable-rate financial instruments. At ~~September~~June 30, 2020 and June 30, 2019, we maintained a Senior Secured Credit Facility comprised of a $225.0 million revolving credit facility and $2,000.0 million of Term Loan due 2026. The Senior Secured Credit Facility provides for borrowings at a rate per annum equal to, at our option, either (i) an applicable margin plus a base rate determined by reference to the highest of (a) 0.50% per annum plus the Federal Funds Effective Rate, or (b) the prime rate of Citi or (ii) the LIBOR + 3.0%. The rate in effect ~~at September 30, 2019~~ for the outstanding Term Loan due 2026 was 4.08% per annum at June 30, 2020 and 5.23% per ~~annum.~~annum at June 30, 2019. Increases in market interest rates would cause interest expense to increase and earnings before income taxes to decrease. The change in interest expense and earnings before income taxes would be dependent upon the weighted average outstanding borrowings during the reporting period following an increase in market interest rates. At ~~September~~June 30, 2020, we had an aggregate principal balance of $213.2 million under our revolving credit facility, $108.8 million under the Odeon Revolver Credit Facility, and had an aggregate principal balance of $1,975.0 million outstanding under the Term Loan due 2026. A 100-basis point change in market interest rates would have increased or decreased interest expense on the Senior Secured Credit Facility and the Odeon Revolver Credit Facility by $11.5 million during the six months ended June 30, 2020. At June 30, 2019, we had no variable-rate borrowings outstanding under our revolving credit

facility and had an aggregate principal balance of ~~$1,990.0~~$1,995.0 million outstanding under the Term Loan due 2026. A 100-basis point change in market interest rates would have increased or decreased interest expense on the Senior Secured Credit Facility by ~~$14.9~~$9.8 million during the ~~nine~~six months ended ~~September~~June 30, 2019.

Market risk on fixed-rate financial instruments. Included in long-term corporate borrowings at ~~September~~June 30 2020 were principal amounts of $500.0 million of our First Lien Notes due 2025, $600.0 million of our Convertible Notes due 2024, $600.0 million of our Notes due 2025, $595.0 million of our Notes due 2026, $475.0 million of our Notes due 2027, and £500.0 million ($614.4 million) of our Sterling Notes due 2024. A 100-basis point change in market interest rates would have caused an increase or (decrease) in the fair value of our fixed rate financial instruments of approximately $45.5 million and $(43.5) million, respectively, during the six months ended June 30, 2020.
Included in long-term corporate borrowings at June 30 2019 were principal amounts of $600.0 million of our Convertible Notes due 2024, $600.0 million of our Notes due 2025, $595.0 million of our Notes due 2026, $475.0 million of our Notes due 2027, and £500.0 million ($~~614.9~~635.0 million) of our Sterling Notes due 2024. A 100-basis point change in market interest rates would have caused an increase or (decrease) in the fair value of our fixed rate financial instruments of approximately ~~$136.0~~$138.6 million and ~~$(128.0)~~$(130.2) million, ~~respectively.~~
respectively, during the six months ended June 30, 2019.
Foreign currency exchange rate risk. We are also exposed to market risk arising from changes in foreign currency exchange rates as a result of our ownership of Odeon and Nordic. Odeon’s revenues and operating expenses are transacted in British Pounds and Euros, and Nordic’s revenues and operating expenses are transacted primarily in Swedish Krona and Euros. U.S. GAAP requires that our subsidiaries use the currency of the primary economic environment in which they operate as their functional currency. If Odeon and Nordic operate in a highly inflationary economy, U.S. GAAP requires that the U.S. dollar be used as the functional currency for Odeon and Nordic. Currency fluctuations in the countries in which we operate result in us reporting exchange gains (losses) or foreign currency translation adjustments. Based upon our ownership in Odeon and Nordic as of ~~September~~June 30, 2020, holding everything else constant, a hypothetical 10% strengthening of the U.S. dollar versus the average exchange rates of applicable currencies to depict the potential impact to net income (loss) of changes in foreign exchange rates would decrease the aggregate net loss of our International theatres for the six months ended June 30, 2020 by approximately $85.8 million. Based upon our ownership in Odeon and Nordic as of June 30, 2019, holding everything else constant, a hypothetical 10% strengthening of the U.S. dollar versus the average exchange rates of applicable currencies to depict the potential impact to net income (loss) of changes in foreign exchange rates would decrease the aggregate net earnings of our International theatres for the ~~nine~~six months ended ~~September~~June 30, 2019 by approximately ~~$0.7~~$0.4 million.

Our foreign currency translation rates decreased by approximately ~~6.3%~~2.9% for the ~~nine~~six months ended ~~September~~June 30, ~~2019~~2020 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2018,~~2019, which did not significantly impact our consolidated net loss for the ~~nine~~six months ended ~~September~~June 30, ~~2019.~~2020.

Item 4. Controls and Procedures.

(a)
Evaluation of disclosure controls and procedures.

The Company maintains a set of disclosure controls and procedures designed to ensure that material information required to be disclosed in its filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that material information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s Chief Executive Officer and Chief Financial Officer have evaluated these disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10–Q and have determined that such disclosure controls and procedures were effective.

(b)
Changes in internal control.

~~As part of the adoption of ASC Topic 842, the~~The Company ~~implemented new internal controls~~has not experienced any material impact to ensure we adequately evaluated our contracts and properly assessed the new lease accounting standard’s impact on our consolidated financial statements. There were no other significant changes in the Company’s internal control over financial reporting due to the adoption of the new standard, and no other changes in its internal control over financial reporting as defined in Exchange Act Rule 13a-15(f) during the ~~quarter ended September 30, 2019, that has materially affected, or is reasonably likely to materially affect,~~COVID-19 pandemic. Most of the Company’s ~~internal control over~~employees worked remotely during the period in which we prepared these financial ~~reporting.~~statements due to the impact of COVID-19. The Company enhanced its oversight and monitoring during the close and reporting process and assessed frequency of

controls to align with decreased or no volume of transactions occurring during the suspension of theatre operations. Other than enhancing Company’s oversight and monitoring processes, the Company did not alter or compromise its disclosure controls and procedures. The Company is continually monitoring and assessing the need to modify or enhance its disclosure controls to ensure disclosure controls and procedures continue to be effective.

7577

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

Reference is made to Note 1211—Commitments and Contingencies of the Notes to the Company’s Condensed Consolidated Financial Statements contained in Part I of this quarterly report on Form 10–Q for information on certain litigation to which we are a party.

Item 1A. Risk Factors

Reference is made to Part I Item 1A. Risk Factors in our Annual Report on Form 10–K for the year ended December 31, ~~2018,~~2019 and Part II Item 1A. Risk Factors in our Quarterly Report on Form 10-Q for the three months ended March 31, 2020, which sets forth information relating to important risks and uncertainties that could materially adversely affect our business, financial condition or operating results. There have been no material changes to the risk factors contained in our ~~Annual~~Quarterly Report on Form ~~10-K~~10-Q for the ~~year~~three months ended ~~December 31, 2018.~~June 30, 2020.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) None.

(b) None.

(c) Issuer Purchases of Equity Securities

Purchases of Equity Securities

Purchases of Equity Securities

Approximate Dollar

Approximate Dollar

Total Number of

Value of Shares that

Total Number of

Value of Shares that

Shares Purchased as

May Yet Be

Shares Purchased as

May Yet Be

Part of Publicly

Purchased Under the

Part of Publicly

Purchased Under the

Total Number of

Average Price Paid

Announced Plans or

Plans or Program (a)

Total Number of

Average Price Paid

Announced Plans or

Plans or Program (a)
Period

Shares Purchased

Per Share

Programs (a)

(in millions)

Shares Purchased

Per Share

Programs (a)

(in millions)
July 1, 2019 through July 31, 2019

—

$
—

—

$
44.3
August 1, 2019 through August 31, 2019

—

$
—

—

$
44.3
September 1, 2019 through September 30, 2019

—

$
—

—

$
44.3
February 27, 2020 through June 30, 2020 (1)

—

$
—

—

$
200.0
Total

—

—

—

—

~~(a)~~(1) As announced on ~~August 3, 2017,~~February 27, 2020, our Board of Directors authorized a share repurchase program for an aggregate purchase of up to ~~$100.0~~$200.0 million of our common ~~stock, excluding transaction costs.~~stock. As of ~~September~~June 30, ~~2019, $44.3~~2020, $200.0 million remained available for repurchase under this plan. Also, as of April 24, 2020, the Company is prohibited from making purchases under its recently authorized stock repurchase program in accordance with the covenant suspension conditions in its Senior Secured Credit Agreement. A ~~two-year~~three-year time limit had been set for the completion of this program, ~~which expired August 2, 2019.~~expiring February 26, 2023.

Item 3. Defaults Upon Senior Securities

None.

Item 5. Other Information

None.

7678

Item 6. Exhibits.
EXHIBIT INDEX

EXHIBIT
NUMBER

DESCRIPTION
3.1.1

Third Amended and Restated Certificate of Incorporation of AMC Entertainment Holdings, Inc. (incorporated by reference from Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 1-33892) filed on December 23, 2013).

3.1.2

Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of AMC Entertainment Holdings, Inc., dated as of July 29, 2020 (incorporated by reference from Exhibit 3.1 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

3.2.1

Third Amended and Restated Bylaws of AMC Entertainment Holdings, Inc. (incorporated by reference from Exhibit 3.2 to the Company’s Registration Statement on Form S-1 (File No. 333-190904) filed on November 22, 2013, as amended).

3.2.2

Amendment to the Third Amended and Restated Bylaws of AMC Entertainment Holdings, Inc., effective as of July 29, 2020 (incorporated by reference from Exhibit 3.2 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

4.1

Indenture, dated as of April 24, 2020, among AMC Entertainment Holdings, Inc. the guarantors named therein and U.S. Bank National Association, as trustee and collateral agent, including the form of the 10.5% First Lien Notes due 2025 (incorporated by reference from Exhibit 4.1 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on April 24, 2020).

4.2

Second Supplemental Indenture with respect to $600 million principal amount of 2.95% Convertible Senior Notes due 2024, dated as of April 24, 2020, between AMC Entertainment Holdings, Inc. and U.S. bank National Association, as trustee (incorporated by reference from Exhibit 4.2 to AMC’s Quarterly Report on Form 10-Q (File No. 1-33892) filed on June 9, 2020.

4.3

Seventh Amendment to Credit Agreement, dated as of April 23, 2020, by and among AMC Entertainment Holdings, Inc., lenders from time to time party thereto and Citicorp North America, Inc., as administrative agent (incorporated by reference from Exhibit 10.1 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on April 24, 2020).

4.4

Indenture by and among AMC Entertainment Holdings, Inc., the guarantors party thereto and GLAS Trust Company LLC, as trustee and collateral agent, dated as of July 31, 2020 (incorporated by reference from Exhibit 4.1 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

4.5

Form of 10%/12% Cash/PIK Toggle Second Lien Subordinated Secured Notes due 2026 (incorporated by reference from Exhibit 4.2 (and is included in Exhibit 4.1) to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

4.6

Indenture by and among AMC Entertainment Holdings, Inc., the guarantors party thereto and GLAS Trust Company LLC, as trustee and collateral agent, dated as of July 31, 2020 (incorporated by reference from Exhibit 4.3 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

4.7

Form of 10.500% Senior Secured Notes due 2026 (incorporated by reference from Exhibit 4.4 (and is included in Exhibit 4.3) to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

4.8		Indenture by and among AMC Entertainment Holdings, Inc., the guarantors party thereto and U.S. Bank National Association, as trustee and collateral agent, dated as of July 31, 2020 (incorporated by reference from Exhibit 4.5 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

4.9		Form of 10.500% Senior Secured Notes due 2026 (incorporated by reference from Exhibit 4.6 (and is included in Exhibit 4.5) to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

4.10		Amended and Restated Indenture by and among AMC Entertainment Holdings, Inc., the guarantors party thereto and U.S. Bank National Association, as trustee and collateral agent, dated as of July 31, 2020 (incorporated by reference from Exhibit 4.7 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

4.11		Form of 2.95% Convertible Senior Secured Notes due 2026 (incorporated by reference from Exhibit 4.8 (and is included in Exhibit 4.7) to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

4.12		Fourth Supplemental Indenture by and among AMC Entertainment Holdings, Inc. and U.S. Bank National Association, as trustee, dated as of July 31, 2020 (incorporated by reference from Exhibit 4.9 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

4.13		Second Supplemental Indenture by and among AMC Entertainment Holdings, Inc. and U.S. Bank National Association, as trustee, dated as of July 31, 2020 (incorporated by reference from Exhibit 4.10 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

4.14		Second Supplemental Indenture by and among AMC Entertainment Holdings, Inc. and U.S. Bank National Association, as trustee, dated as of July 31, 2020 (incorporated by reference from Exhibit 4.11 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

4.15		Registration Rights Agreement by and among AMC Entertainment Holdings, Inc. and the Backstop Parties, dated as of July 31, 2020 (incorporated by reference from Exhibit 4.12 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

10.1		Transaction Support and Standstill Agreement, dated July 10, 2020 (incorporated by reference from Exhibit 10.1 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 10, 2020).

10.2		Backstop Commitment Agreement, dated July 10, 2020 (incorporated by reference from Exhibit 10.2 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 10, 2020).

10.3		Commitment, Transaction Support and Fee Letter, dated July 10, 2020 (incorporated by reference from Exhibit 10.3 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 10, 2020).

10.4		Second Amendment to the AMC Entertainment Holdings, Inc. 2013 Equity Incentive Plan, approved as of July 29, 2020 (incorporated by reference from exhibit 10.1 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

10.5		First Lien/Second Lien Intercreditor Agreement, by and among AMC Entertainment Holdings, Inc., the guarantors party thereto and the Collateral Agents, dated as of July 31, 2020 (incorporated by reference from Exhibit 10.1 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

10.6		Joinder No. 1 to First Lien Intercreditor Agreement, by and among AMC Entertainment Holdings, Inc., the guarantors party thereto, the First Lien Credit Facilities Collateral Agent, the Additional Silver Lake First Lien Notes Collateral Agent, the New First Lien Notes Collateral Agent and the Convertible First Lien Notes Collateral Agent, dated as of July 31, 2020 (incorporated by reference from Exhibit 10.2 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

10.7		Eighth Amendment to the Credit Agreement, by and among AMC Entertainment Holdings, Inc., the lenders party thereto and Citigroup North America, Inc. as administrative agent, dated as of July 31, 2020 (incorporated by reference from Exhibit 10.3 to AMC’s Current Report on Form 8-K (File No. 1-33892) filed on July 31, 2020).

*10.8		Amended and Restated Investment Agreement by and among AMC Entertainment Holdings, Inc., SLA CM Avatar Holdings, L.P., and Sargas Investment Pte. Ltd, dated as of July 31, 2020.

*31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Acts of 2002.

*31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Acts of 2002.

*32.1		Section 906 Certifications of Adam M. Aron (Chief Executive Officer) and ~~Craig R. Ramsey~~Sean D. Goodman (Chief Financial Officer) furnished in accordance with Securities Act Release 33-8212.

**101.INS		Inline XBRL Instance Document

**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 as Exhibit 101)

* Filed herewith

** Submitted electronically with this Report.

7781