[ad_1]
The following discussion relates to the consolidated audited financial
statements of AMC Entertainment Holdings, Inc. ("AMC") included elsewhere in
this Annual Report on Form 10-K. This discussion contains forward-looking
statements. Please see "Forward-Looking Statements" and "Risk Factors" for a
discussion of the risks, uncertainties and assumptions relating to these
statements.
Overview
AMC is the world's largest theatrical exhibition company and an industry leader
in innovation and operational excellence. As of December 31, 2022 we operated in
12 countries, throughout the United States, Europe, and the Middle East.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 loyalty program, rental of theatre auditoriums,
income from gift card and exchange ticket sales, and online ticketing fees. As
of December 31, 2022, we owned, operated or had interests in 940 theatres and
10,474 screens.
Temporarily Suspended or Limited Operations
During the first quarter of 2020, we temporarily suspended 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 of March 17, 2020, all of our United
States and International theatre operations were temporarily suspended. We
resumed limited operations in the International markets in early June 2020 and
limited operations in the U.S. markets in late August 2020. A COVID-19
resurgence during the fourth quarter of 2020 resulted in additional local,
state, and federal governmental restrictions and many previously reopened
theatres in International markets temporarily suspended operations again. The
following table summarizes theatre operations for the Company in 2021:As of As of As of As of
January 1, March 31, June 30, September 30,
Theatre Operations: 2021 2021 2021 2021
Percentage of theatres operated - Domestic 66.8 % 99.2 % 99.8 % 99.8 %
Percentage of theatres operated - International 30.3 % 27.3 % 94.9 % 99.2 %
Percentage of theatres operated - Consolidated 52.9 % 72.2 %
98.0 % 99.6 %
During the year ended December 31, 2022, the Company operated essentially 100%
of all its U.S. and International theatres. As of December 31, 2022 and 2021,
there were no restrictions on operations in any of the U.S. or International
theatres.
Box Office Admissions and Film Content
Box office admissions are our largest source of revenue. We predominantly
license theatrical 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 based on a share of
admissions revenues and are accrued based on estimates of the final settlement
pursuant to our film licenses. These licenses typically state that rental fees
are based on the box office performance of each film, though in certain
circumstances and less frequently, our rental fees are based on a44
Table of Contents
mutually agreed settlement rate that is fixed. In some European territories,
film rental fees are established on a weekly basis and some licenses use a per
capita agreement instead of a revenue share, paying a flat amount per ticket.The North American and International industry box office have been significantly
impacted by the COVID-19 pandemic. As a result, film distributors have postponed
new film theatrical releases and/or shortened the period of theatrical
exclusivity (the "window") and reduced the number of theatrically released
motion pictures. Theatrical releases may continue to be postponed and windows
shortened while the box office suffers from COVID-19 impacts. As a result of the
reduction in theatrical film releases, we have licensed and exhibited a larger
number of previously released films that have lower film rental terms. We have
made adjustments to theatre operating hours to align screen availability and
associated theatre operating costs with attendance levels for each theatre.During the year ended December 31, 2022, films licensed from our seven largest
movie studio distributors based on revenues accounted for approximately 88% of
our U.S. admissions revenues, which consisted of Universal, Disney, Paramount,
Warner Bros., Sony, 20th Century Studios, and Lionsgate. In Europe,
approximately 73% of our box office revenue came from films attributed to our
four largest distributor groups; which consisted of Disney, Universal, Warner
Bros, and Paramount. 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.
Movie Screens
The following table provides detail with respect to digital delivery, 3D enabled
projection, large screen formats, such as IMAX® and our proprietary Dolby
Cinema™, other Premium Large Format ("PLF") screens, enhanced food and beverage
offerings and our premium seating as deployed throughout our circuit:U.S. Markets
International Markets
Number of Screens Number of Screens Number of Screens Number of Screens
As of As of As of As of
Format December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021
IMAX® 186 186 35 38
Dolby CinemaTM 156 154 9 8
Other Premium Large Format ("PLF") 57 56 83 77
Dine-in theatres 684 729 13 13
Premium seating 3,503 3,395 621 572As of December 31, 2022, AMC was the largest IMAX® exhibitor in the U.S. with a
55% market share. Each one of our IMAX® local installations is protected by
geographic exclusivity, and as of December 31, 2022, our IMAX® screen count was
96% greater than our closest competitor. Additionally, as of December 31, 2022,
our per screen grosses were 22% higher than our closest competition. We also
operate 35 IMAX® screens in International markets. As part of our long-term
growth strategy, we expect to continue to expand our IMAX® relationship across
the U.S. and Europe, further strengthening our position as the largest IMAX®
exhibitor in the U.S. and a leading IMAX® exhibitor in the United Kingdom and
Europe. During the year ended December 31, 2022, we closed three IMAX screens in
Europe.As of December 31, 2022, we operated 156 Dolby Cinema™ at AMC auditoriums in the
U.S. and nine Dolby Cinema™ Auditoriums in the International markets. We expect
to expand the deployment of our innovative Dolby Cinema™ auditoriums in both our
U.S. and International markets as part of our long-term growth strategy.We also offer our private label PLF experience at many of our locations, with
superior sight and sound technology and enhanced seating as contrasted with our
traditional auditoriums. These proprietary PLF auditoriums offer an enhanced
theatrical experience for movie-goers beyond our current core theatres, at a
lower price premium than IMAX® and/or Dolby Cinema™. Therefore, it may be
especially relevant in smaller or more price-sensitive markets. As of December
31, 2022, we operated 57 screens under proprietary PLF brand names in the U.S.
markets and 83 in the International markets.
Guest Amenities
As part of our long-term strategy, we seek to continually 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.45
Table of Contents
Our capital allocation strategy will be driven by the cash generation of our
business and will be contingent on a required return threshold. We believe we
are an industry leader in the development and operation of theatres. Typically,
our theatres have 11 or more screens and offer amenities to enhance the
movie-going experience, such as stadium seating providing unobstructed viewing,
digital sound and premium seat design.Recliner seating is the key feature of theatre renovations. We believe that
maximizing comfort and convenience for our customers will be increasingly
necessary to maintain and improve our relevance. These renovations, in
conjunction with capital contributions from our landlords, involve stripping
theatres to their basic structure in order to replace finishes throughout,
upgrading the sight and sound experience, installing modernized points of sale
and, most importantly, replacing traditional theatre seats with plush, electric
recliners that allow customers to deploy a leg rest and fully recline at the
push of a button. Upon reopening a remodeled theatre, we typically increase the
ticket price to reflect the enhanced consumer experience.As of December 31, 2022, in our U.S. markets we featured recliner seating in
approximately 361 U.S. theatres, including Dine-In Theatres, totaling
approximately 3,503 screens and representing 45.8% of total U.S. screens. In our
International markets, as of December 31, 2022, we had recliner seating in
approximately 96 International theatres, totaling approximately 621 screens and
representing 22.0% of total International screens.Open-source internet ticketing makes our AMC seats (approximately 1.0 million as
of December 31, 2022) 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 either directly or through mobile apps, at our own website
and our mobile apps and other third-party ticketing vendors. For the year ended
December 31, 2022, approximately 66% of our tickets were purchased online in the
U.S., with approximately 81% of total online tickets being purchased through
AMC's website or mobile app.Food and beverage sales are our second largest source of revenue after box
office admissions. We offer enhanced food and beverage products that include
meals, healthy snacks, premium liquor, beer and wine options, and other gourmet
products. Our long-term growth strategy calls for investment across a spectrum
of enhanced food and beverage formats, ranging from simple, less
capital-intensive food and beverage menu improvements to the expansion of our
Dine-In Theatre brand.We currently operate 49 Dine-In Theatres in the U.S. and three Dine-In Theatres
in Europe that deliver chef-inspired menus with seat-side or delivery service to
luxury recliners with tables. Our recent Dine-In Theatre concepts are designed
to capitalize on the latest food service trend, the fast and casual eating
experience.
Our MacGuffins Bar and Lounges (“MacGuffins”) give us an opportunity to engage
our legal age customers. As of December 31, 2022, we offer alcohol in
approximately 357 AMC theatres in the U.S. markets and 236 theatres in our
International markets and continue to explore expansion globally.
Loyalty Programs and Other Marketing
In our U.S. markets, we begin the process of engagement with AMC Stubs® our
customer loyalty program, which allows members to earn rewards, receive
discounts and participate in exclusive members-only offerings and services. It
features a paid tier called AMC Stubs Premiere™ for a flat annual membership fee
and a non-paid tier called AMC Stubs Insider™. Both programs reward loyal guests
for their patronage of AMC theatres. Rewards earned are redeemable on future
purchases at AMC 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 recorded 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 recorded 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 recorded as the rights are
redeemed or expire.AMC Stubs® A-List is our monthly subscription-based tier of our 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 repeat46
Table of Contents
visits to already seen movies from $19.95 to $24.95 per month depending upon
geographic market. AMC Stubs® A-List also includes premium offerings including
IMAX®, Dolby Cinema™ at AMC, RealD, Prime and other proprietary PLF brands. AMC
Stubs® A-List members can book tickets online in advance and select specific
seats at AMC Theatres with reserved seating. Upon the temporary suspension of
theatre operations due to the COVID-19 pandemic, all monthly A-List subscription
charges were put on hold. As we reopened theatres, A-List members had the option
to reactivate their subscription, which restarted the monthly charge for the
program.As of December 31, 2022, we had approximately 28,200,000 member households
enrolled in AMC Stubs® A-List, AMC Stubs Premiere™ and AMC Stubs Insider™
programs, combined. Our AMC Stubs® members represented approximately 43% of AMC
U.S. markets attendance during the year ended December 31, 2022. Our large
database of identified movie-goers also provides us with additional insight into
our customers' movie preferences. This enables us to have a larger, more
personalized and targeted marketing effort.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. We currently have more than 14,400,000 members
in our various International loyalty programs.Our marketing efforts are not limited to our loyalty program as we continue to
improve our customer connections through our website and mobile apps and expand
our online and movie offerings. We upgraded our mobile applications across the
U.S. circuit with the ability to order food and beverage offerings via our
mobile applications while ordering tickets ahead of scheduled showtimes.In response to the COVID-19 pandemic, AMC's robust online and mobile platforms
in our U.S. markets offer customers the safety and convenience of enhanced
social distancing by allowing them to purchase tickets and concession items
online, avoid the ticket line, and limit other high-touch interactions with AMC
employees and other guests. Online and mobile platforms are also available
in
our International markets.Significant Transactions
Equity Distribution Agreement. On September 26, 2022, we entered into an equity
agreement (the "Equity Distribution Agreement") with Citigroup Global Markets
Inc., as a sales agent ("Sales Agent"), to sell up to 425.0 million shares of
our AMC Preferred Equity Units, from time to time, through an "at-the-market"
offering program (the "Offering"). Subject to terms and conditions of the Equity
Distribution Agreement, the Sales Agent will use reasonable efforts consistent
with their normal trading and sales practices, applicable law and regulations,
and the rules of the NYSE to sell the AMC Preferred Equity Units from time to
time based upon our instructions for the sales, including any price, time or
size limits specified by us. We intend to use the net proceeds, if any, from the
sale of AMC Preferred Equity Units pursuant to the Equity Distribution Agreement
to repay, refinance, redeem or repurchase our existing indebtedness (including
expenses, accrued interest and premium, if any) and otherwise for general
corporate purposes.We raised gross proceeds of approximately $228.8 million during the year ended
December 31, 2022, through its at-the-market offering of approximately 207.7
million shares of its AMC Preferred Equity Units and paid fees to the sales
agent and incurred other third-party issuance costs of approximately $5.7
million and $5.5 million, respectively. See Note 16-Subsequent Events for
information about additional AMC Preferred Equity Unit issuances.AMC Preferred Equity Units. On August 4, 2022, we announced that the Board of
Directors declared a special dividend of one AMC Preferred Unit for each share
of Class A common stock outstanding at the close of business on August 15, 2022,
the record date. The dividend was paid at the close of business on August 19,
2022 to investors who held Class A common stock as of August 22, 2022, the
ex-dividend date.Each AMC Preferred Equity Unit is a depositary share and represents an interest
in one one-hundredth (1/100th) of a share of Series A Convertible Participating
Preferred Stock evidenced by a depositary receipt pursuant to a deposit
agreement. We have 50,000,000 Preferred Stock shares authorized, 10,000,000 of
which have currently been allocated and 7,245,872 have been issued under the
depositary agreement as Series A Convertible Participating Preferred Stock,
leaving 40,000,000 unallocated Preferred Stock shares. Each AMC Preferred Equity
Unit is designed to have the same economic and voting rights as a share of Class
A common stock. Trading of the AMC Preferred Equity Units on the NYSE began on
August 22, 2022 under the ticker symbol "APE". Due to the characteristics of the
AMC Preferred Equity Units, the special dividend had the effect of a stock split
pursuant to ASC 505-20-25-4. Accordingly, all references to made to share, per
share, or common share amounts in the accompanying consolidated financial
statements47
Table of Contents
and applicable disclosures include Class A common stock and AMC Preferred Equity
Units and have been retroactively adjusted to reflect the effects of the special
dividend as a stock split. See Note 9-Stockholders' Equity and Note 15-Loss Per
Share in the Notes to the Consolidated Financial Statements under Part II, Item
8 of this Form 10-K for further information.Investment in Hycroft. On March 14, 2022, we purchased 23.4 million units of
Hycroft Mining Holding Corporation (NASDAQ: HYMC) ("Hycroft") for $27.9 million,
with each unit consisting of one common share of Hycroft and one common share
purchase warrant. The units were priced at $1.193 per unit. Each warrant is
exercisable for one common share of Hycroft at a price of $1.068 per share over
a 5-year term through March 2027. We account for the common shares of Hycroft
under the equity method and we have elected the fair value option in accordance
with ASC 825-10. We account for the warrants as derivatives in accordance with
ASC 815. Accordingly, the fair value of the investments in Hycroft are
remeasured at each subsequent reporting period and unrealized gains and losses
are reported in investment income. During the year ended December 31, 2022, the
Company recorded unrealized losses related to the investment in Hycroft of $6.3
million in investment expense (income), respectively. See Note 12-Fair Value
Measurements in the Notes to the Consolidated Financial Statements under Part
II, Item 8 of this Form 10-K for further information.First Lien Senior Secured Notes due 2029. On February 14, 2022, we issued $950.0
million aggregate principal amount of our 7.5% First Lien Senior Secured Notes
due 2029 ("First Lien Notes due 2029"). We used the net proceeds from the sale
of the notes, and cash on hand, to fund the full redemption of the $500 million
aggregate principal amount of the First Lien Notes due 2025, the $300 million
aggregate principal amount of the First Lien Notes due 2026, and $73.5 million
aggregate principal amount of the First Lien Toggle notes due 2026 and to pay
related accrued interest, fees, costs, premiums and expenses. We recorded a loss
on debt extinguishment related to this transaction of $135.0 million in other
expense in 2022.Debt Repurchases. During the year ended December 31, 2022, we repurchased $118.3
million aggregate principal of the Second Lien Notes due 2026 for $68.3 million
and recorded a gain on extinguishment of $75.0 million in other expense
(income). Additionally, we repurchased $5.3 million aggregate principal of the
Senior Subordinated Notes due 2027 for $1.6 million and recorded a gain on
extinguishment of $3.7 million in other expense (income). Accrued interest of
$4.5 million was paid in connection with the repurchases. These repurchases
included a purchase of $15.0 million aggregate principal of the Second Lien
Notes due 2026 from Antara, which subsequently became a related party on
February 7, 2023, for $5.9 million and a gain on extinguishment of $12.0
million.Odeon debt refinancing. The Odeon Term Loan Facility was set to mature on August
19, 2023. On October 20, 2022, Odeon Finco PLC, a direct subsidiary of Odeon
Cinemas Group Limited ("OCGL") and an indirect subsidiary of the Company issued
$400.0 million aggregate principal amount of its 12.75% Odeon Senior Secured
Notes due 2027 ("Odeon Notes due 2027"), at an issue price of 92.00%. The Odeon
Notes due 2027 bear a cash interest rate of 12.75% per annum and will be payable
semi-annually in arrears on May 1 and November 1, beginning on May 1, 2023. The
Odeon Notes due 2027 are guaranteed on a senior secured basis by certain
subsidiaries of Odeon and by Holdings on a standalone and unsecured basis. The
Odeon Notes due 2027 contain covenants that limit Odeon and certain
subsidiaries' ability to, among other things: (i) incur additional indebtedness
or guarantee indebtedness; (ii) create liens; (iii) declare or pay dividends,
redeem stock or make other distributions to stockholders; (iv) make investments;
(v) enter into transaction with affiliates; (vi) consolidate, merge, sell or
otherwise dispose of all or substantially all of their respective assets; and
(vii) impair the security interest in the collateral. These covenants are
subject to a number of important limitations and exceptions. We used the $363.0
million net proceeds from the Odeon Notes due 2027 and $146.7 million of
existing cash to fund the payment in full of the £147.6 million ($167.7) million
and €312.2 million ($308.9) million aggregate principal amounts of the Odeon
Term Loan Facility and to pay related accrued interest, fees, costs, premiums
and expenses. We recorded a loss on debt extinguishment related to this
transaction of $36.5 million in other expense in 2022.Share issuances. During the years ended December 31, 2022, December 31, 2021 and
December 31, 2020, we entered into various equity distribution agreements with
sales agents to sell shares of our Class A common stock ("Common Stock") and AMC
Preferred Equity Units, from time to time, through "at-the-market" offering
programs. Subject to the terms and conditions of the equity distribution
agreements, the sales agents will use reasonable efforts consistent with their
normal trading and sales practices, applicable law and regulations, and the
rules of the NYSE to sell the Common Stock and AMC Preferred Equity Units from
time to time based upon the Company's instructions for the sales, including any
price, time or size limits specified by the Company. The Company intends to use
the net proceeds, from the sale of Common Stock and AMC Preferred Equity Units
pursuant to the equity distribution agreements to48
Table of Contents
repay, refinance, redeem or repurchase the Company’s existing indebtedness
(including expenses, accrued interest and premium, if any), capital expenditures
and otherwise for general corporate purposes.
During the years ended December 31, 2022, December 31, 2021 and December 31,
2020, we paid fees to the sales agents of approximately $5.7 million, $40.3
million and $8.1 million, respectively. During the year ended December 31, 2021,
we paid other fees of $0.8 million.The gross proceeds raised from the "at-the-market" sale of Common Stock and AMC
Preferred Equity Units during the years ended December 31, 2022, December 31,
2021 and December 31, 2020, are summarized in the table below:Number of Number of
Class A AMC
"At-the-market" common stock Preferred
Equity shares sold Equity Units Gross
Distribution (in sold (in Proceeds (in
Agreement Dates Sales Agents millions) millions) millions)
Citigroup Global Markets
Inc. and Goldman Sachs &
September 24, 2020 Co. LLC 15.0
15.0 $ 56.1
Citigroup Global Markets
Inc. and Goldman Sachs &
October 20, 2020 Co. LLC 15.0 15.0 41.6
Goldman Sachs & Co. LLC
and B. Riley Securities,
November 10, 2020 Inc. 20.0 20.0 61.4
Goldman Sachs & Co. LLC
and B. Riley Securities,
December 11, 2020 Inc. (1) 40.93 40.93 113.7
Total year ended December
31, 2020 90.93 90.93 $ 272.8
Goldman Sachs & Co. LLC
and B. Riley Securities,
December 11, 2020 Inc. (1) 137.07
137.07 352.6
Goldman Sachs & Co. LLC
and B. Riley Securities,
January 25, 2021 Inc. 50.0
50.0 244.3
Goldman Sachs & Co. LLC,
B. Riley Securities, Inc.
and Citigroup Global
April 27, 2021 Markets Inc. (2) 43.0
43.0 427.5
B. Riley Securities, Inc.
and Citigroup Global
June 3, 2021 Markets Inc. 11.55
11.55 587.4
Total year ended December
31, 2021 241.62 241.62 $ 1,611.8
Citigroup Global Markets
September 26, 2022 Inc. - 207.75 228.8
Total year ended December
31, 2022 - 207.75 $ 228.8On December 11, 2020, the Company entered into an equity distribution
agreement with Goldman Sachs & Co. LLC and B. Riley Securities, Inc., as
sales agents to sell up to 178.0 million shares of the Company’s Common Stock
(1) and 178.0 million AMC Preferred Equity Units, of which approximately 40.93
million shares of Common Stock and 40.93 shares of AMC Preferred Equity Units
were sold and settled during December 2020 and approximately 137.07 million
shares of Common Stock and 137.07 million shares of AMC Preferred Equity
Units were sold and settled during the year ended December 31, 2021.
Included in the Common Stock shares and AMC Preferred Equity Unit shares sold
of 43.0 million each was the reissuance of treasury stock shares of
(2) approximately 3.7 million shares. Upon the sales of treasury stock, the
Company reclassified amounts recorded in treasury stock to additional paid-in
capital of $37.1 million and loss of $19.3 million to retained earnings
during the year ended December 31, 2021.
Common Stock issuance to Mudrick. On June 1, 2021, we issued to Mudrick 8.5
million shares of our Common Stock and 8.5 million shares of our AMC Preferred
Equity Units and raised gross proceeds of $230.5 million and paid fees of
approximately $0.1 million related to this transaction. We issued the shares in
reliance on an exemption from registration provided by section 4(a)(2) of the
Securities Act of 1933. We intend to use the proceeds from the share sale
primarily for the pursuit of value creating acquisitions of theatre assets and
leases, as well as investments to enhance the consumer appeal of our theatres.
In addition, with these funds, we intend to continue exploring deleveraging
opportunities.Baltics theatre sale agreement. On August 28, 2020, we entered into an agreement
to sell our equity interest in Forum Cinemas OU, which consists of nine theatres
located in the Baltics region (Latvia, Lithuania and Estonia) and is49
Table of Contents
included in our International markets reportable segment, for total
consideration of approximately €77.25 million, including cash of approximately
€64.35 million or $76.6 million prior to any transaction costs. This transaction
was undertaken by us to further increase our liquidity and strengthen our
balance sheet at a transaction multiple that demonstrates that market
participants ascribe positive value to the business. The completion of the sale
took place in several steps, as noted below, and was contingent upon clearance
from each regulatory competition council in each country.We received $37.5 million (€31.53 million) cash consideration upon entering into
the sale agreement on August 28, 2020 and paid $0.5 million in transaction costs
during the year ended December 31, 2020. We transferred an equity interest of
49% in Forum Cinemas OU to the purchaser and recorded an initial noncontrolling
interest of $34.9 million in total equity (deficit). Transaction costs of $1.4
million and net gain of $1.2 million related to the sale of 49% equity interest
of Lithuania and Estonia and the 100% disposal of Latvia were recorded in
additional paid-in capital during the year ended December 31, 2020 and were
recorded in earnings during the year ended December 31, 2021 when the remaining
51% interests in Lithuania and Estonia were disposed. Also, during the year
ended December 31, 2020, we received cash consideration of $6.2 million (€5.3
million), net of cash of $0.2 million for the remaining 51% equity interest in
Latvia. At December 31, 2020, our noncontrolling interest of 49% in Lithuania
and Estonia was $26.9 million.During the year ended December 31, 2021, we received cash consideration of $34.2
million (€29.4 million), net of cash disposed of $0.4 million and transaction
costs of $1.3 million, for the remaining 51% equity interest in Estonia, 51%
equity interest in Lithuania and eliminated our noncontrolling interest in Forum
Cinemas OU. We recorded the net gain from the sale of our equity interest in
Forum Cinemas OU of $5.5 million (net of transaction costs of $2.6 million) in
investment expense (income), during the year ended December 31, 2021.Exchange Offers. On July 31, 2020, we closed our previously announced Exchange
Offer for our Existing Senior Subordinated Notes for new Second Lien Notes due
2026 and reduced the principal amount of the Company's total debt by
approximately $555 million, which represented approximately 23.9% of the
previously outstanding amount of the Company's subordinated notes. We raised
$300 million in additional cash from the issuance of First Lien Notes due 2026,
prior to deducting discounts of $30.0 million and deferred financing costs paid
to lenders of $6.0 million. Additionally, certain holders of the Company's
Existing Senior Subordinated Notes that agreed to backstop the offering of $200
million of the Company's First Lien Notes due 2026 received five million common
shares, or 4.6% of AMC's outstanding shares on July 31, 2020, worth $20.2
million at the market closing price on July 31, 2020 and five million shares of
AMC Preferred Equity Units. The closing of the Exchange Offer 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. See Note 8-Corporate
Borrowings and Finance Lease Liabilities in the Notes to the Consolidated
Financial Statements under Part II, Item 8 thereof for further information.We performed an assessment on a lender by lender basis to identify certain
lenders that met the criteria for troubled debt restructuring ("TDR") under ASC
470-60, Troubled Debt Restructurings by Debtors ("ASC 470-60") as we were
experiencing financial difficulties and the lenders granted us a concession. The
portion of the loans that did not meet the assessment of TDR under ASC 470-60
were treated as modifications. We accounted for the exchange of approximately
$1,782.5 million principal amount of our Existing Senior Subordinated Notes for
approximately $1,289.1 million principal amount of the Second Lien Notes due
2026 as TDR. We accounted for the exchange of the remaining approximately $235.0
million principal amount of our Existing Senior Subordinated Notes for
approximately $173.2 million principal amount of the Second Lien Notes due 2026
as a modification of debt as the lenders did not grant a concession and the
difference between the present value of the old and new cash flows was less than
10%. The TDR and modification did not result in a gain recognition and we
established new effective interest rates based on the carrying value of the
Existing Subordinated Notes and recorded the new fees paid to third parties of
approximately $39.3 million in other expense, during the year ended December 31,
2020.We realized $1.2 billion of cancellation of debt income ("CODI") in connection
with our 2020 debt restructuring. As a result, $1.2 billion of our federal net
operating losses were eliminated due to tax attribute reduction to offset the
CODI. The loss of these attributes may adversely affect our cash flows and
therefore our ability to service our indebtedness.50
Table of Contents
Selected Financial Data
Year Ended
December 31,
(In millions, except operating data) 2022 2021 2020 2019 2018
Statement of Operations Data:
Revenues:
Admissions $ 2,201.4 $ 1,394.2 $ 712.1 $ 3,301.3 $ 3,385.0
Food and beverage 1,313.7 857.3 362.4 1,719.6 1,671.5
Other revenue 396.3 276.4 167.9 450.1 404.3
Total revenues 3,911.4 2,527.9 1,242.4 5,471.0 5,460.8
Operating Costs and Expenses:
Film exhibition costs 1,051.7 607.7 322.7 1,699.1 1,710.2
Food and beverage costs 228.6 137.9 88.8 278.7 270.9
Operating expense, excluding depreciation and
amortization below 1,528.4 1,141.8 856.0 1,686.6 1,654.7
Rent 886.2 828.0 884.1 967.8 797.8
General and administrative:
Merger, acquisition and other costs(1) 2.1 13.7 24.6 15.5 31.3
Other, excluding depreciation and amortization below 207.6 226.6 156.7 153.0 179.3
Depreciation and amortization 396.0 425.0 498.3 450.0 537.8
Impairment of long-lived assets, definite and
indefinite-lived intangible assets and goodwill(2) 133.1 77.2 2,513.9 84.3 13.8
Operating costs and expenses 4,433.7 3,457.9 5,345.1 5,335.0 5,195.8
Operating income (loss) (522.3) (930.0) (4,102.7) 136.0 265.0
Other expense (income)(3) 53.6 (87.9) 28.9 13.4 (108.1)
Interest expense:
Corporate borrowings 336.4 414.9 311.0 292.8 262.3
Capital and financing lease obligations 4.1 5.2 5.9 7.6 38.5
Non-cash NCM exhibitor services agreement(4) 38.2 38.0 40.0 40.4 41.5
Equity in (earnings) losses of non-consolidated
entities(5) 1.6 (11.0) 30.9 (30.6) (86.7)
Investment expense (income)(6) 14.9 (9.2) 10.1 (16.0) (6.2)
Earnings (loss) before income taxes (971.1) (1,280.0) (4,529.5) (171.6) 123.7
Income tax provision (benefit)(7) 2.5 (10.2) 59.9 (22.5) 13.6
Net earnings (loss) (973.6) (1,269.8) (4,589.4) (149.1) 110.1
Less: Net loss attributable to noncontrolling
interests - (0.7) (0.3) - -
Net earnings (loss) attributable to AMC Entertainment
Holdings, Inc.
$ (973.6) $ (1,269.1) $ (4,589.1) $ (149.1) $ 110.1
Earnings (loss) per share attributable to AMC
Entertainment Holdings, Inc.'s common stockholders:
Basic $ (0.93) $ (1.33) $ (19.58) $ (0.72) $ 0.46
Diluted $ (0.93) $ (1.33) $ (19.58) $ (0.72) $ 0.21
Average shares outstanding
Basic (in thousands) 1,047,689 954,820 234,424 207,664 241,242
Diluted (in thousands) 1,047,689 954,820 234,424 207,664 260,210
Dividends declared per basic and diluted common share $ 0.00 $
0.00 $ 0.02 $ 0.40 $ 1.1851
Table of Contents
Year Ended
December 31,
(In millions, except operating data) 2022 2021 2020 2019 2018
Balance Sheet Data (at period end):
Cash and cash equivalents $ 631.5 $ 1,592.5 $ 308.3 $ 265.0 $ 313.3
Corporate borrowings 5,140.8 5,428.0 5,715.8 4,753.4 4,723.0
Other long-term liabilities(8) 105.1 165.0 241.3 195.9 963.1
Capital and financing lease obligations 58.8 72.7 96.0 99.9 560.2
AMC Entertainment Holdings, Inc.'s
stockholder's equity (deficit) (2,624.5) (1,789.5) (2,885.1) 1,214.2 1,397.6
Total assets 9,135.6 10,821.5 10,276.4 13,675.8 9,495.8
Other Data:
Net cash provided by (used in) operating
activities $ (628.5) $ (614.1) $ (1,129.5) $ 579.0 $ 523.2
Capital expenditures (202.0) (92.4) (173.8) (518.1) (576.3)
Screen additions 51 82 63 85 89
Screen acquisitions 157 140 14 70 39
Screen dispositions 323 166 593 210 211
Construction openings (closures), net 27 (37) 18 5 5
Average screens-continuing operations(9) 10,118 8,998 5,049 10,669 10,696
Number of screens operated 10,474 10,448 6,048 11,041 11,091
Number of theatres operated 940 930 503 1,004 1,006
Total number of circuit screens 10,474 10,562 10,543 11,041 11,091
Total number of circuit theatres 940 946 950 1,004 1,006
Screens per theatre 11.1 11.2 11.1 11.0 11.0
Attendance (in thousands)-continuing
operations(9) 200,965 128,547
75,190 356,443 358,901
During the year ended December 31, 2022, expenses were primarily related to
legal and professional costs related to strategic contingent planning. During
the year ended December 31, 2021, expenses were primarily due to bonus
expense and stock-based compensation expense. During the year ended December
31, 2020, expenses were primarily due to legal and professional costs related
to strategic contingent planning. During the year ended December 31, 2019,
(1) expenses were primarily due to organizational design including one-time
severance and outplacement costs of $9.8 million and acquisitions and
divestitures including entity simplification costs of $4.0 million. The year
ended December 31, 2018 includes the write-off of $8.0 million of deferred
costs related to an Odeon proposed public offering and $6.3 million of
expense related to an arbitration ruling on a pre-acquisition date rent
dispute for Odeon.
During the year ended December 31, 2022, we recorded non-cash impairment
charges related to our long-lived assets of $73.4 million on 68 theatres in
the U.S. markets with 817 screens which were related to property, net, and
operating lease right-of-use assets, net and $59.7 million on 53 theatres in
the International markets with 456 screens which were related to property,
net and operating lease right-of-use assets, net. During the year ended
December 31, 2021, we recorded non-cash impairment charges related to our
long-lived assets of $61.3 million on 77 theatres in the U.S. markets with
805 screens which were related to property, net, operating lease right-of-use
assets, net and other long-term assets and $15.9 million on 14 theatres in
the International markets with 118 screens which were related to property,
net and operating lease right-of-use assets, net. During the year ended
December 31, 2020, we recorded goodwill non-cash impairment of $1,276.1
million and $1,030.3 million related to the enterprise fair values of the
Domestic Theatres and International Theatres reporting units, respectively.
(2) During the year ended December 31, 2020, we recorded non-cash impairment
charges related to our long-lived assets of $152.5 million on 101 theatres in
the U.S. markets with 1,139 screens and $25.4 million on 37 theatres in the
International markets with 340 screens and recorded impairment charges
related to indefinite-lived intangible assets of $12.5 million and $2.7
million related to the Odeon and Nordic trade names, respectively, in the
International markets. We also recorded non-cash impairment charges of $14.4
million for our definite-lived intangible assets in the Domestic Theatres
reporting unit during the year ended December 31, 2020. During the year ended
December 31, 2019, we recorded non-cash impairment of long-lived assets of
$84.3 million on 40 theatres in the U.S. markets with 512 screens,
14 theatres in the International markets with 148 screens, and a U.S.
property held and not used. During the fourth quarter of 2018, we recorded
non-cash impairment losses of $13.8 million on 13 theatres in the U.S.
markets with 150 screens and on 15 theatres in the International markets with
118 screens.
Other expense for the year ended December 31, 2022 was primarily due to a
(3) loss on extinguishment of debt of $135.0 million related to the full
redemption of the $500 million aggregate principal amount of the First52
Table of Contents
Lien Notes due 2025, the $300 million aggregate principal amount of the First
Lien Notes due 2026, and the $73.5 million aggregate principal amount of the
First Lien Toggle Notes due 2026 and a loss on extinguishment of debt of $36.5
million related to the full redemption of the £147.6 million and €312.2 million
($476.6 million) aggregate principal amount of the Odeon Term Loan due 2023,
partially offset by a gain on extinguishment of debt of $(75.0) million related
to the redemption of $118.3 million of aggregate principal amount of the Second
Lien Notes due 2026, a gain on extinguishment of debt of $(3.7) million related
to the redemption of $5.3 million aggregate principal amount of Senior
Subordinated Notes due 2027, $(25.8) million in government assistance related to
COVID-19 and $(12.3) million in foreign currency transaction gains. Other income
for the year ended December 31, 2021 was primarily due to $87.1 million in
government assistance related to COVID-19. Other expense (income) for the year
ended December 31, 2020 included a loss of $109.0 million related to the fair
value adjustments of the derivative liability and derivative asset for our
Convertible Notes, financing fees related to the Exchange Offer of $39.3
million, and credit losses related to contingent lease guarantees of $15.0
million, partially offset by a gain on extinguishment of the Second Lien Notes
due 2026 of $93.6 million and financing related foreign currency transaction
losses. Other expense of $13.4 million during the year ended December 31, 2019
was primarily due to $16.6 million of expense related to the repayment of
indebtedness, foreign currency transaction losses of $1.5 million, non-operating
net periodic benefit cost of $1.2 million, and 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 $17.7 million, partially offset by
decrease in fair value of our derivative liability for the embedded conversion
feature in our Convertible Notes of $23.5 million. During the year ended
December 31, 2018, other income of $108.1 million is primarily due to
$66.4 million of income for the decrease in the fair value of the derivative
liability related to the embedded conversion feature for the Convertible Notes
and $45.0 million of income for the increase in fair value of the derivative
asset related to the contingent call option for the cancellation of additional
shares of Class B common stock in the Stock Purchase and Cancellation Agreement
with Wanda. See Note 8-Corporate Borrowings and Finance Lease Liabilities in the
Notes to Consolidated Financial Statements under Part II, Item 8 thereof, for
further information regarding the derivative liability related to the embedded
conversion feature, the call option for the cancellation of additional shares of
Class B common stock.
Non-cash NCM exhibitor services agreement includes a significant financing
component due to the significant length of time between receiving the
non-cash consideration and fulfilling the performance obligation. We received
(4) the non-cash consideration in the form of common membership units from NCM,
in exchange for rights to exclusive access to our theatre screens and
attendees through February 2037. Upon adoption of ASC 606 in year 2018, our
advertising revenues have significantly increased with a similar offsetting
increase in non-cash interest expense.
Equity in (earnings) loss of non-consolidated entities was primarily due to
equity in loss from Saudi Cinema Company, LLC, partially offset by equity in
earnings from DCIP and AC JV for the year ended December 31, 2022. Equity in
(earnings) loss of non-consolidated entities was primarily due to equity in
earnings from DCIP for the year ended December 31, 2021. Equity in (earnings)
(5) loss of non-consolidated entities includes impairment losses in the
International markets related to equity method investments of $8.6 million
during the year ended December 31, 2020. Equity in earnings for the year
ended December 31, 2018 includes a $28.9 million gain on the sale of all of
our remaining interest in NCM and a $30.1 million gain related to the
Screenvision merger.
Investment expense during the year ended December 31, 2022 includes a decline
in estimated fair value of investment in common shares of Hycroft Mining
Holding Corporation of $12.5 million partially offset by $(6.2) million of
appreciation in estimated fair value of our investment in warrants to
purchase common shares of Hycroft Mining Holding Corporation, a $13.5 million
loss on sale of our investment in NCM common units offset by interest income
(6) of $(5.9) million. Investment income during the year ended December 31, 2021
includes a gain on sale of the Baltics theatres of $5.5 million. Investment
expense (income) during the year ended December 31, 2020 includes impairment
losses of $15.9 million related to equity interest investments without a
readily determinable fair value accounted for under the cost method in the
U.S. markets. Investment expense (income) during the year ended December 31,
2019 includes a gain on the sale of our Austria theatres of $12.9 million and
a loss on impairment of an investment of $3.6 million.53
Table of Contents
During the year ended December 31, 2022, income tax expense was primarily
related to changes in domestic indefinite-lived deferred liabilities and
taxes in Finland. During the year ended December 31, 2020, income tax expense
was primarily due to the recording of international valuation allowances
against deferred tax assets held in Spain of $40.1 million and Germany of
(7) $33.1 million, partially offset by income tax benefit from net losses
incurred in International markets. During the year ended December 31, 2019,
an international valuation allowance previously established against deferred
tax assets held in Spain was released in the fourth quarter of 2019 resulting
in a $41.5 million benefit to income tax expense. We estimate that we will
have no liability for deemed repatriation of foreign earnings.
Other long-term liabilities exclude operating lease liabilities, which were
(8) recorded to operating lease liabilities in the consolidated balance sheets
effective in year 2019 upon adoption of ASC 842, Leases.
(9) Includes consolidated theatres only.
Critical Accounting Estimates
Our Consolidated Financial Statements are prepared in accordance with U.S. GAAP.
In connection with the preparation of our financial statements, we are required
to make assumptions and estimates about future events and apply judgments that
affect the reported amounts of assets, liabilities, revenue, expenses and the
related disclosures. We base our assumptions, estimates, and judgments on
historical experience, current trends and other factors that management believes
to be relevant at the time our consolidated financial statements are prepared.
On a regular basis, we review the accounting policies, assumptions, estimates,
and judgments to ensure that our financial statements are presented fairly and
in accordance with U.S. GAAP. However, because future events and their effects
cannot be determined with certainty, actual results could differ from our
assumptions and estimates, and such differences could be material. We have
identified several policies as being critical because they require management to
make particularly difficult, subjective and complex judgments about matters that
are inherently uncertain, and there is a likelihood that materially different
amounts would be reported under different conditions or using different
assumptions.All of our significant accounting policies are discussed in Note 1-The Company
and Significant Accounting Policies in the Notes to the Consolidated Financial
Statements under Part II, Item 8 thereof.Long-lived Assets Impairments. We review long-lived assets, indefinite-lived
intangible assets and other intangible assets and theatre assets (including
operating lease right-of-use lease assets) whenever events or changes in
circumstances indicate that the carrying amount of the assets may not be fully
recoverable.Critical estimates. There are a number of estimates and significant judgments
that are made by management in performing impairment evaluations of long-lived
assets. 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. These estimates determine whether impairments
have been incurred and quantify the amount of any related impairment charge.Assumptions and judgment. Our valuation methodology for assessing impairment
requires management to make judgments and assumptions based on historical
experience and projections of future operating performance. Our projections
assume that attendance will continue to gradually improve from 2022 levels to
the point of approaching historical levels. Our projections have considered the
risks of a shortened theatrical window and direct to consumer releases although
on a more limited basis. These assumptions, among others, inform the
considerable amount of management judgment with respect to cash flow estimates
and appropriate discount rates to be used in determining the fair value of
long-lived assets.
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.
Impact if actual results differ from assumptions. Although we believe that our
estimates and judgments are reasonable, actual results may differ from these
estimates, many of which fall under Level 3 within the fair value measurement
hierarchy. Factors that could lead to impairment of long-lived assets include
adverse industry or economic trends that would result in declines in the
operating performance of our Domestic and International Theatres. Examples of
adverse events or circumstances that could change include (i) limited
availability of new theatrical releases; (ii) an adverse change in macroeconomic
conditions; (iii) increased cost factors that have a negative effect on our
earnings and54
Table of Contents
cash flows and higher interest rates; and (iv) negative or overall declining
financial performance compared with our actual and projected results of relevant
prior periods.If we are required to record an impairment charge it may substantially reduce
the carrying value of our assets and reduce our income in the year in which it
is recorded. 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.Our Current Long-lived Asset Impairment related Estimates and Changes in those
Estimates. During the year ended December 31, 2022, we recorded non-cash
impairment charges related to our long-lived assets of $73.4 million on 68
theatres in the U.S. markets with 817 screens which were related to property,
net and operating lease right-of-use assets, net and $59.7 million on 53
theatres in the International markets with 456 screens which were related to
property, net and operating lease right-of-use assets, net. During the year
ended December 31, 2021, we recorded non-cash impairment charges related to our
long-lived assets of $61.3 million on 77 theatres in the U.S. markets with 805
screens which were related to property, net, operating lease right-of-use
assets, net and other long-term assets and $15.9 million on 14 theatres in the
International markets with 118 screens which were related to property, net and
operating lease right-of-use assets, net. At December 31, 2022, related cash
flows were discounted at 10.0% for the Domestic Theatres and 12.5% for the
International Theatres, at December 31, 2021, related cash flows were discounted
at 10.0% for Domestic Theatres and 11.5% for International Theatres.
There were no intangible asset impairment charges incurred during the years
ended December 31, 2022 and December 31, 2021.
At December 31, 2020, September 30, 2020 and March 31, 2020, we performed
quantitative impairment evaluations of our indefinite-lived intangible assets
related to the AMC, Odeon and Nordic trade names and recorded impairment charges
of $12.5 million related to Odeon trade name and $2.7 million related to Nordic
for the year ended December 31, 2020. No impairment charges were recorded
related to the AMC trade name for the year ended December 31, 2020. At December
31, 2020, September 30, 2020 and March 31, 2020, we applied royalty rates of
0.5% for AMC and Odeon trade names and 1.0% for Nordic trade names to the
related theatre revenues on an after-tax basis using effective tax rates. At
December 31, 2020, related cash flows were discounted at 12.0% for AMC and 13.5%
for Odeon and Nordic, at September 30, 2020, related cash flows were discounted
at 13.0% for AMC and 14.0% for Odeon and Nordic, and at March 31, 2020, 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. The impairment test for goodwill involves estimating the
fair value of the reporting unit and comparing that value to our 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.Critical estimates. Calculating the fair value of our Domestic Theatres and
International Theatres reporting units by use of the income approach for
enterprise valuation methodology which utilizes estimated future discounted cash
flows. 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 are determined using weighted
average cost of capital for the risk of achieving the projected cash flows.We did not weigh any of the enterprise valuation methodology on the market
approach in 2020. We believe that using 100% income approach provided a more
reasonable measurement of the enterprise value basis at December 31, 2020. Due
to the volatility and unreliability in the market multiples, the lack of
standalone Domestic and International public theatre companies, and the
temporary suspension of operations due to the COVID-19 pandemic and the current
impact on Adjusted EBITDA, we did not believe that placing any weight on the
market approach was appropriate for this valuation.Assumptions and judgment. Our projections assume that attendance will continue
to gradually improve from 2022 levels to the point of approaching historical
levels. Our projections have considered the risks of a shortened55
Table of Contents
theatrical window and direct to consumer releases, although on a more limited
basis. These assumptions, among others, inform the considerable amount of
management judgment with respect to cash flow estimates and appropriate discount
rates to be used in determining the fair value of our reporting units. Other
factors that could lead to impairment of our goodwill include adverse industry
or economic trends, declines in the market price of our Common Stock and AMC
Preferred Equity Units and our debt instruments, all of which we utilize in
establishing the estimates underlying these values. There is considerable
management judgment with respect to cash flow estimates and discount rates to be
used in estimating fair value, many of which are classified as Level 3 in fair
value hierarchy.Declines in the operating performance of our Domestic and International
Theatres, the fair value of our debt, and the trading price of our Common Stock
and AMC Preferred Equity Units, together with small changes in other key input
assumptions, and/or other events or circumstances could occur and could have a
significant impact on the estimated fair values of our reporting units. Examples
of adverse events or circumstances that could change include (i) the potential
for political, social, or economic unrest, terrorism, hostilities, cyber-attacks
or war, including the conflict between Russia and Ukraine; (ii) an adverse
change in macroeconomic conditions; (iii) increased cost factors that have a
negative effect on our earnings and cash flows and higher interest rates; (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 (vi) a further sustained decrease in the price of our
common shares and/or our preferred equity units.Impact if actual results differ from assumptions. Although we believe that our
estimates and judgments are reasonable, actual results may differ from these
estimates many of which fall under Level 3 within the fair value measurement
hierarchy. If we are required to record an impairment charge to our goodwill it
may substantially reduce the carrying value of goodwill on our balance sheet and
reduce our income in the year in which it is recorded. 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.Our Current Goodwill Estimates and Changes in those Estimates. As further
described below, we recorded impairment charges as of March 31, 2020, September
30, 2020, and December 31, 2020 due to significant decreases in our market
enterprise value. Our enterprise market capitalization increased and there were
no other triggering events during 2022. At our goodwill impairment annual
assessment date, October 1, 2022, we performed a qualitative impairment test to
evaluate whether it is more likely than not that the fair value of its two
reporting units was less than their respective carrying amounts as of its annual
assessment date. We concluded that it was not more likely than not that the fair
value of either of our two reporting units had been reduced below their
respective carrying amounts.
For calendar year 2020, we performed an assessment in accordance with ASC
350-20-35-30 to determine whether there were any events or changes in
circumstances that would warrant an interim ASC 350 impairment analysis as of
December 31, 2020, September 30, 2020, June 30, 2020, and March 31, 2020.
Based on the suspension of operations at all of our theatres on or before March
17, 2020 due to the COVID-19 pandemic during the first quarter of 2020, the
suspension of operations during the second and third quarters of 2020, the
temporary suspension of operations of certain of our International Theatres
during the fourth quarter of 2020 again after operations had previously been
resumed, and the further delay or cancellation of film releases than originally
estimated, we performed the Step 1 quantitative goodwill impairment test as of
March 31, 2020, September 30, 2020, and December 31, 2020. In performing those
Step 1 quantitative goodwill impairment tests, we used an enterprise value
approach to measure fair value of the reporting units. The enterprise fair value
of the Domestic Theatres and International Theatres reporting units was less
than their carrying values as of March 31, 2020 and September 30, 2020, and the
fair value of the International Theatres reporting unit was less than its fair
value as of December 31, 2020 and goodwill impairment charges of $1,276.1
million and $1,030.3 million, were recorded during the year ended December 31,
2020 for our Domestic Theatres and International Theatres reporting units,
respectively.56
Table of Contents
Key rates used in the income approach were as follows:
Measurement Domestic International
Description Date Theatres Theatres
Income approach:
Weighted average cost of capital/discount rate December 31, 2020 11.0%
12.5%
Long-term growth rate December 31, 2020 1.0%
1.0%
Weighted average cost of capital/discount rate September 30, 2020 12.0%
13.0%
Long-term growth rate September 30, 2020 1.0%
1.0%
Weighted average cost of capital/discount rate March 31, 2020 11.5%
13.0%
Long-term growth rate March 31, 2020 2.0% 2.0%Income and operating taxes. Income and operating taxes are inherently difficult
to estimate and record. This is due to the complex nature of the U.S. and
International tax codes and also because our returns are routinely subject to
examination by government tax authorities, including federal, state and local
officials. Most of these examinations take place a few years after we have filed
our tax returns. Our tax audits in many instances raise questions regarding our
tax filing positions, the timing and amount of deductions claimed and the
allocation of income among various tax jurisdictions.Critical estimates. In calculating our effective income tax rate and other taxes
applicable to our operations, we make judgments regarding certain tax positions,
including the timing and amount of deductions and allocations of income among
various tax jurisdictions with disparate tax laws.Assumptions and judgment. We have various tax filing positions with regard to
the timing and amount of deductions and credits and the allocation of income
among various tax jurisdictions, based on our interpretation of local tax laws.
We also inventory, evaluate and measure all uncertain tax positions taken or
expected to be taken on tax returns and record liabilities for the amount of
such positions that may not be sustained, or may only be partially sustained,
upon examination by the relevant taxing authorities.Impact if actual results differ from assumptions. Although we believe that our
estimates and judgments are reasonable, actual results may differ from these
estimates. Some or all of these judgments are subject to review by the taxing
authorities. If one or more of the taxing authorities were to successfully
challenge our right to realize some or all of the tax benefit we have recorded,
and we were unable to realize this benefit, it could have a material adverse
effect on our financial results and cash flows.Our Current Tax Estimates and Changes in those Estimates. At December 31, 2022,
our federal income tax loss carryforwards were approximately $1,712.5 million,
our state income tax loss carryforwards were approximately $2,293.2 million, and
our foreign income tax loss carryforwards were approximately $878.5 million.
Since these losses have varying degrees of carryforward periods, it requires us
to estimate the amount of carryforward losses that we can reasonably be expected
to realize. Future changes in conditions and in the tax code may change these
strategies and thus change the amount of carry forward losses that we expect to
realize and the amount of valuation allowances we have recorded. As of December
31, 2022, we had a total valuation allowance of $1,513.0 million related to the
above loss carryforward and other future tax benefits for which realization is
not likely to occur. Accordingly, future reported results could be materially
impacted by changes in tax matters, positions, rules and estimates and these
changes could be material. See Note 10-Income Taxes in the Notes to Consolidated
Financial Statements under Part II, Item 8 thereof, for further information.During the first quarter of 2020, the severe impact of the COVID-19 pandemic on
operations in Germany and Spain caused us 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. At December 31, 2020, we
determined that it was appropriate to record a valuation allowance on the
disallowed interest carryforward in Sweden as the realizability of this deferred
tax asset in this jurisdiction does not meet the more likely than not standard.
As such, the overall net tax benefit on Sweden was reduced by a charge of $3.7
million. During 2021, we recorded a valuation allowance on all other deferred
tax assets in Sweden, resulting in a charge of less than $1 million. With the
exception of Finland, all other international jurisdictions carried valuation
allowances against their deferred tax assets at the end of 2022.57
Table of Contents
On July 31, 2020, we completed our private offers to exchange our Existing
Subordinated Notes for newly issued Second Lien Notes due 2026. Due to the terms
of that exchange, we were required to recognize CODI for US tax purposes on the
difference between the face value of debt exchanged and the fair market value of
the new debt issued. We determined that we should recognize $1.2 billion of CODI
for tax purposes. Further, we concluded that the level of our insolvency at July
31, 2020 exceeded the indicated amount of CODI resulting from the debt exchange,
which allowed us to reduce our tax attributes rather than recognize current
taxable income. As a result, $1.2 billion of our net operating losses have been
eliminated due to tax attribute reduction. See Note 8-Corporate Borrowings and
Finance Lease Liabilities and Note 10-Income Taxes in the Notes to Consolidated
Financial Statements under Part II, Item 8 thereof, for further information.Leases. Under ASC Topic 842, 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).Critical estimates. 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 since the leases do not provide a determinable implicit rate.
Assumptions and judgment. Estimating the incremental borrowing rate for
operating leases is subjective when reviewing the reasonableness of the inputs
and rates applied to each lease.
Impact if actual results differ from assumptions. A 100-basis point increase in
the incremental borrowing rate would have decreased total operating lease
liabilities by approximately $187.7 million and a 100-basis point decrease in
weighted average discount rate would have increased total operating lease
liabilities by approximately $200.5 million.58
Table of Contents
Operating Results
The following table sets forth our consolidated revenues, operating costs and
expenses attributable to our theatrical exhibition operations and segment
operating results. Reference is made to Note 13-Operating Segments in the Notes
to the Consolidated Financial Statements under Part II, Item 8 thereof, for
additional information therein:U.S. Markets International Markets Consolidated
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
(In millions) 2022 2021 % Change 2022 2021 % Change 2022 2021 % Change
Revenues
Admissions $ 1,642.2 $ 1,016.5 61.6 % $ 559.2 $ 377.7 48.1 % $ 2,201.4 $ 1,394.2 57.9 %
Food and beverage 1,055.7 677.1 55.9 % 258.0 180.2 43.2 % 1,313.7 857.3 53.2 %
Other theatre 263.8 182.2 44.8 % 132.5 94.2 40.7 % 396.3 276.4 43.4 %
Total revenues 2,961.7 1,875.8 57.9 % 949.7 652.1 45.6 % 3,911.4 2,527.9 54.7 %
Operating Costs and
Expenses
Film exhibition costs 831.4 460.6 80.5 %
220.3 147.1 49.8 % 1,051.7 607.7 73.1 %
Food and beverage costs
165.1 95.9 72.2 % 63.5 42.0 51.2 % 228.6 137.9 65.8 %
Operating expense,
excluding depreciation and
amortization below 1,110.5 833.9 33.2 % 417.9 307.9 35.7 % 1,528.4 1,141.8 33.9 %
Rent 666.5 614.2 8.5 % 219.7 213.8 2.8 % 886.2 828.0 7.0 %
General and administrative
expense:
Merger, acquisition and
other costs 2.7 9.0 (70.0) % (0.6) 4.7 * % 2.1 13.7 (84.7) %
Other, excluding
depreciation and
amortization below 142.4 158.4 (10.1) % 65.2 68.2 (4.4) % 207.6 226.6 (8.4) %
Depreciation and
amortization 312.2 321.2 (2.8) % 83.8 103.8 (19.3) % 396.0 425.0 (6.8) %
Impairment of long-lived
assets 73.4 61.3 19.7 % 59.7 15.9 * % 133.1 77.2 72.4 %
Operating costs and
expenses 3,304.2 2,554.5 29.3 % 1,129.5 903.4 25.0 % 4,433.7 3,457.9 28.2 %
Operating loss (342.5) (678.7) (49.5) % (179.8) (251.3) (28.5) % (522.3) (930.0) (43.8) %
Other expense (income):
Other expense (income) 52.0 9.2 * % 1.6 (97.1) * % 53.6 (87.9) * %
Interest expense:
Corporate borrowings 267.3 349.2 (23.5) % 69.1 65.7 5.2 % 336.4 414.9 (18.9) %
Finance lease obligations 0.4 0.7 (42.9) % 3.7 4.5 (17.8) % 4.1 5.2 (21.2) %
Non-cash NCM exhibitor
service agreement 38.2 38.0 0.5 % - - - % 38.2 38.0 0.5 %
Equity in (earnings) loss
of non-consolidated
entities (4.3) (13.7) (68.6) % 5.9 2.7 * % 1.6 (11.0) * %
Investment expense
(income) 15.0 (3.7) * % (0.1) (5.5) (98.2) % 14.9 (9.2) * %
Total other expense
(income), net 368.6 379.7 (2.9) % 80.2 (29.7) * % 448.8 350.0 28.2 %
Net loss before income
taxes (711.1) (1,058.4) (32.8) % (260.0) (221.6) 17.3 % (971.1) (1,280.0) (24.1) %
Income tax provision
(benefit) 0.9 (9.4) * % 1.6 (0.8) * % 2.5 (10.2) * %
Net loss (712.0) (1,049.0) (32.1) % (261.6) (220.8) 18.5 % (973.6) (1,269.8) (23.3) %
Less: Net loss
attributable to
noncontrolling interests - - - % - (0.7) * % - (0.7) * %
Net loss attributable to
AMC Entertainment
Holdings, Inc. $ (712.0) $ (1,049.0) (32.1) % $ (261.6) $ (220.1) 18.9 % $ (973.6) $ (1,269.1) (23.3) %
*Percentage change in excess of 100%.
59Table of Contents
U.S. Markets International Markets Consolidated
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2022 2021 2022 2021 2022 2021
Operating Data:
Screen additions 12 34 39 48 51 82
Screen acquisitions 132 134 25 6 157 140
Screen dispositions 256 66 67 100 323 166
Construction openings
(closures), net 5 (15) 22 (22) 27 (37)
Average screens(1) 7,635 7,341 2,483 1,657 10,118 8,998
Number of screens operated 7,648 7,755 2,826 2,693
10,474 10,448
Number of theatres
operated 586 593 354 337 940 930
Total number of circuit
screens 7,648 7,755 2,826 2,807 10,474 10,562
Total number of circuit
theatres 586 593 354 353 940 946
Screens per theatre 13.1 13.1 8.0 8.0 11.1 11.2
Attendance (in
thousands)(1) 141,376 91,102 59,589 37,445 200,965 128,547
Includes consolidated theatres only and excludes screens offline due to
(1) 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 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. The preceding definition
of and adjustments made to GAAP measures to determine Adjusted EBITDA are
broadly consistent with Adjusted EBITDA as defined in the Company's debt
indentures.During the year ended December 31, 2022, Adjusted EBITDA in the U.S. markets was
$59.6 million compared to $(250.6) million during the year ended December 31,
2021. The year-over-year improvement was primarily due to the decreased net loss
driven by an increase in attendance primarily due to the COVID-19 pandemic
impact on the prior year which resulted in the temporary suspension or limited
operations at our theatres, deterred customers from attending our theatres when
we resumed operations, and prompted film distributors to delay or alternatively
distribute films, and lifting of seat restrictions, increases in package ticket
and gift card breakage, partially offset by increases in operating costs due to
the increase in attendance, increases in rent expense, decreases in cash
distributions from equity method investees, decreases in government assistance
and increases in general and administrative expenses excluding stock-based
compensation. During the year ended December 31, 2022, Adjusted EBITDA in the
International markets was $(13.0) million compared to $(41.1) million during the
year ended December 31, 2021. The year-over-year improvement was primarily due
to the decreased net loss driven by an increase in attendance primarily due to
the COVID-19 pandemic impact on the prior year and lifting of seat restrictions,
partially offset by increases in operating costs due to the increase in
attendance and utilities costs, decreases in government assistance, decreases in
attributable EBITDA from equity investments in theatre operations and increases
in rent expense. During the year ended December 31, 2022, Adjusted EBITDA in the
U.S. markets and International markets was $46.6 million compared to $(291.7)
million during the year ended December 31, 2021, driven by the aforementioned
factors impacting Adjusted EBITDA.
The following tables set forth our Adjusted EBITDA by reportable operating
segment and our reconciliation of Adjusted EBITDA:
Year Ended
Adjusted EBITDA (In millions) December 31, 2022 December 31, 2021
U.S. markets $ 59.6 $ (250.6)
International markets (13.0) (41.1)
Total Adjusted EBITDA (1) $ 46.6 $ (291.7)60
Table of Contents
Year Ended
(In millions) December 31, 2022 December 31, 2021
Net loss $ (973.6) $ (1,269.8)
Plus:
Income tax provision (benefit) (1) 2.5
(10.2)
Interest expense 378.7
458.1
Depreciation and amortization 396.0
425.0
Impairment of long-lived assets, definite and
indefinite-lived intangible assets and
goodwill (2) 133.1 77.2
Certain operating expense (income) (3) 8.0 0.2
Equity in (earnings) loss of non-consolidated
entities (4) 1.6
(11.0)
Cash distributions from non-consolidated
entities (5) 6.6 12.5
Attributable EBITDA (6) 0.4 3.7
Investment expense (income) 14.9 (9.2)
Other expense (income) (7) 80.4 (0.1)
Other non-cash rent benefit (8) (26.6)
(24.9)
General and administrative - unallocated:
Merger, acquisition and other costs (9) 2.1 13.7
Stock-based compensation expense (10) 22.5
43.1
Adjusted EBITDA $ 46.6 $ (291.7)
For information regarding the income tax provision (benefit), see Note
(1) 10-Income Taxes to the Consolidated Financial Statements under Part II,
Item 8 thereof.
During the year ended December 31, 2022, we recorded non-cash impairment
charges related to our long-lived assets of $73.4 million on 68 theatres in
(2) the U.S. markets with 817 screens which were related to property, net and
operating lease right-of-use assets, net and $59.7 million on 53 theatres in
the International markets with 456 screens which were related to property,
net and operating lease right-of-use assets, net.
During the year ended December 31, 2021, we recorded non-cash impairment charges
related to our long-lived assets of $61.3 million on 77 theatres in the U.S.
markets with 805 screens which were related to property, net, operating lease
right-of-use assets, net and other long-term assets and $15.9 million on 14
theatres in the International markets with 118 screens which were related to
property, net and operating lease right-of-use assets, net.
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
(3) 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 or are non-operating in
nature.
Equity in (earnings) loss of non-consolidated entities primarily consisted of
equity in loss from Saudi Cinema Company, LLC of $7.6 million, partially
(4) offset by equity in (earnings) in DCIP of $3.4 million during the year ended
December 31, 2022. During the year ended December 31, 2021, equity in
(earnings) loss of non-consolidated entities was primarily due to equity in
(earnings) from DCIP of $12.2 million.
Includes U.S. non-theatre distributions from equity method investments and
(5) 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.
Attributable EBITDA includes the EBITDA from equity investments in theatre
operators in certain International markets. See below for a reconciliation of
our equity in (earnings) loss of non-consolidated entities to attributable
EBITDA. Because these equity investments are in theatre operators in regions
(6) 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.61
Table of Contents
Year Ended
(In millions) December 31, 2022 December 31, 2021
Equity in (earnings) loss of non-consolidated
entities $ 1.6 $
(11.0)
Less:
Equity in earnings of non-consolidated
entities excluding International theatre
joint ventures (5.4)
(13.5)
Equity in loss of International theatre joint
ventures (7.0) (2.5)
Income tax provision 0.1 0.3
Investment expense (income) 0.2 (0.1)
Interest expense 0.1 0.2
Impairment of long-lived assets 4.2
-
Depreciation and amortization 2.8 5.6
Other expense - 0.2
Attributable EBITDA $ 0.4 $ 3.7
Other expense (income) during the year ended December 31, 2022, primarily
(7) consisted of a loss on debt extinguishment of $92.8 million, partially offset
by income related to the foreign currency transaction gains of $(12.3)
million and contingent lease guarantees of $(0.2) million.
Other expense (income) for the year ended December 31, 2021, primarily consisted
of a loss on debt extinguishment of $14.4 million and financing fees of $1.0
million, partially offset by income related to the foreign currency transaction
gains of $(9.8) million and contingent lease guarantees of $(5.7) million.
Reflects amortization of certain intangible assets reclassified from
(8) depreciation and amortization to rent expense, due to the adoption of ASC
842, Leases and deferred rent benefit related to the impairment of
right-of-use operating lease assets.
(9) Merger, acquisition and other costs are excluded as they are non-operating in
nature.
(10) 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. Our definition of Adjusted EBITDA definition is broadly
consistent with how it is defined in our debt indentures.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.62
Table of Contents
Segment Information
Our historical results of operations for the years ended December 31, 2022 and
December 31, 2021 reflect the results of operations for our two Theatrical
Exhibition reportable segments, U.S. markets and International markets.
Results of Operations-For the Year Ended December 31, 2022, Compared to the Year
Ended December 31, 2021
Consolidated Results of Operations
Revenues. Total revenues increased $1,383.5 million, during the year ended
December 31, 2022, compared to the year ended December 31, 2021. Admissions
revenues increased $807.2 million, during the year ended December 31, 2022,
compared to the year ended December 31, 2021, primarily due to an increase in
attendance from 128.5 million patrons to 201.0 million patrons and a 0.9%
increase in average ticket price. The increase in attendance was primarily due
to the COVID-19 pandemic impact on the prior year which resulted in the
temporary suspension or limited operations at our theatres in U.S. markets and
International markets, deterred customers from attending our theatres when we
resumed operations, and prompted film distributors to delay or alternatively
distribute films. The increase in average ticket price was primarily due to
strategic pricing initiatives put in place over the prior year, increases in 3D,
IMAX and Premium content, partially offset by a decrease in foreign currency
translation rates.Food and beverage revenues increased $456.4 million, during the year ended
December 31, 2022, compared to the year ended December 31, 2021, primarily due
to the increase in attendance, partially offset by the decrease in food and
beverage per patron. Food and beverage per patron decreased 1.9% from $6.67 to
$6.54 due primarily to the decline in foreign currency translation rates.Total other theatre revenues increased $119.9 million, during the year ended
December 31, 2022, compared to the year ended December 31, 2021, primarily due
to increases in ticket fees, income from gift cards and package tickets and
screen and other advertising due to the increase in attendance, partially offset
by the decrease in foreign currency translation rates.Operating costs and expenses. Operating costs and expenses increased $975.8
million, during the year ended December 31, 2022, compared to the year ended
December 31, 2021. Film exhibition costs increased $444.0 million, during the
year ended December 31, 2022, compared to the year ended December 31, 2021,
primarily due to the increase in attendance. As a percentage of admissions
revenues, film exhibition costs were 47.8% for the year ended December 31, 2022,
compared to 43.6% for the year ended December 31, 2021. 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. Additionally, lower film exhibition costs were
paid on films with shorter exclusive theatrical windows in the prior year.Food and beverage costs increased $90.7 million, during the year ended December
31, 2022, compared to the year ended December 31, 2021. 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
17.4% for the year ended December 31, 2022, compared to 16.1% for the year ended
December 31, 2021.As a percentage of revenues, operating expense was 39.1% for the year ended
December 31, 2022, compared to 45.2% for the year ended December 31, 2021 due to
the very low levels of attendance in the prior year. Rent expense increased
7.0%, or $58.2 million, during the year ended December 31, 2022, compared to the
year ended December 31, 2021, due primarily to cash rent abatements from
landlords in the prior year and the opening of new theatres, partially offset by
theatre closures and the decrease in foreign currency translation rates. See
Note 3-Leases in the Notes to the Consolidated Financial Statements under Part
II Item 8 thereof for further information on the impact of COVID-19 on leases
and rent obligations of approximately $157.2 million that have been deferred to
future years as of December 31, 2022.Merger, acquisition, and other costs. Merger, acquisition, and other costs were
$2.1 million during the year ended December 31, 2022, compared to $13.7 million
during the year ended December 31, 2021, primarily due to higher legal and
professional costs related to strategic contingent planning in the prior year.63
Table of Contents
Other. Other general and administrative expense decreased 8.4% or $19.0 million
during the year ended December 31, 2022, compared to the year ended December 31,
2021, due primarily to a $20.6 million decrease in expense for stock-based
compensation expense due primarily to lower expectations for performance based
vesting and lower expense for SPSU's that fully vested in 2021 and the decrease
in foreign currency translation rates.Depreciation and amortization. Depreciation and amortization decreased 6.8% or
$29.0 million during the year ended December 31, 2022, compared to the year
ended December 31, 2021, primarily due to lower depreciation expense on theatres
impaired during years ended December 31, 2020 and December 31, 2021 and the
decrease in foreign currency translation rates.Impairment of long-lived assets, definite and indefinite-lived intangible
assets, and goodwill. During the year ended December 31, 2022, we recognized
non-cash impairment losses of $73.4 million on 68 theatres in the U.S. markets
with 817 screens (in Alabama, Arkansas, Arizona, California, Connecticut,
District of Columbia, Florida, Georgia, Iowa, Illinois, Indiana, Kentucky,
Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, North
Carolina, North Dakota, New York, Ohio, Oklahoma, Oregon, Pennsylvania,
Tennessee, Texas, Utah, West Virginia, and Wisconsin) which were related to
property, net and operating lease right-of-use assets, net and $59.7 million on
53 theatres in the International markets with 456 screens (in Germany, Italy,
Spain, Sweden, and the UK), which were related to property, net and operating
lease right-of-use assets, net.During the year ended December 31, 2021, we recognized non-cash impairment
losses of $61.3 million on 77 theatres in the U.S. markets with 805 screens (in
Alabama, Arkansas, California, Colorado, Connecticut, District of Columbia,
Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana,
Maryland, Minnesota, Mississippi, Missouri, Montana, New York, North Carolina,
North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee,
Texas, Utah, West Virginia, and Wisconsin) which were related to property, net,
operating lease right-of-use assets, net and other long-term assets and $15.9
million on 14 theatres in the International markets with 118 screens (in Italy,
Norway, Spain, and the UK), which were related to property, net and operating
lease right-of-use assets, net.Other expense (income). Other expense of $53.6 million during the year ended
December 31, 2022 was primarily due to a loss on extinguishment of debt of
$135.0 million related to the full redemption of the $500 million aggregate
principal amount of the First Lien Notes due 2025, the $300 million aggregate
principal amount of the First Lien Notes due 2026, and the $73.5 million
aggregate principal amount of the First Lien Toggle Notes due 2026 and a loss on
extinguishment of debt of $36.5 million related to the full redemption of the
$476.6 million aggregate amount of the Odeon Term Loan due 2023, partially
offset by a gain on extinguishment of debt of $(75.0) million related to the
redemption of $118.2 million of aggregate principal amount of the Second Lien
Notes due 2026, a gain on extinguishment of debt of $(3.7) million related to
the redemption of $5.3 million aggregate principal amount of Senior Subordinated
Notes due 2027, $(25.8) million in government assistance related to COVID-19 and
$(12.3) million in foreign currency transaction gains. Other income of $(87.9)
million during the year ended December 31, 2021 was primarily due to $(87.1)
million in government assistance related to COVID-19, foreign currency
transaction gains of $(9.8) million and estimated credit income of $(5.7)
million related to contingent lease guarantees, partially offset by a loss on
extinguishment of $14.4 million related to the redemption of $35.0 million
principal amount of 15%/17% Cash/PIK Toggle First Lien Secured Notes due 2026
and $1.0 million of financing fees related to the write-off of unamortized
deferred charges. See Note 1-The Company and Significant Accounting Policies in
the Notes to the Consolidated Financial Statements under Part II Item 8 thereof
for additional information about the components of other expense (income).
Interest expense. Interest expense decreased $79.4 million to $378.7 million for
the year ended December 31, 2022 compared to $458.1 million during the year
ended December 31, 2021 primarily due to:
? the extinguishment of $72.5 million of 10%/12% Cash/PIK/Toggle Second Lien
Notes due 2026 in May of 2022;
the conversion of $600.0 million 2.95% Convertible Notes due 2026 to 44,422,860
Common Shares and 44,422,860 AMC Preferred Equity Units on January 27, 2021
? that resulted in the write-off to interest expense of $70.0 million of
unamortized discount and deferred charges at the date of conversion following
the guidance in ASC 815-15-40-1;
? the extinguishment of $500.0 million of 10.5% First Lien Notes due 2025 on
February 14, 2022;
? the extinguishment of $300.0 million of 10.5% First Lien Notes due 2026 on
February 14, 2022;64
Table of Contents
? the extinguishment of $73.5 million of 15%/17% Cash/PIK/Toggle Second Lien
Notes due 2026 on February 14, 2022;
? the extinguishment of $476.6 million 10.75%/11.25% Cash/PIK Term Loans due 2023
on October 20, 2022;
? the extinguishment of $45.7 million of 10%/12% Cash/PIK/Toggle Second Lien
Notes due 2026 in November and December of 2022;
? the extinguishment of $5.25 million of 6.125% Senior Subordinated Notes due
2027 in November 2022: and
? the decline in foreign currency translation rates,
partially offset by:
? increases in interest rates on the Senior Secured Credit Facility Term Loan due
2026;
? the issuance of $950.0 million of 7.5% First Lien Senior Secured Notes due 2029
on February 14, 2022;
? the issuance of £140.0 million and €296.0 million 10.75%/11.25% Cash/PIK Term
Loans due 2023 on February 19, 2021; and
? the issuance of $400.0 million 12.75% Odeon Senior Secured Notes due 2027 on
October 20, 2022.
See Note 8-Corporate Borrowings and Finance Lease Liabilities in the Notes to
the Consolidated Financial Statements under Part II Item 8 thereof for
additional information about our indebtedness.
Equity in loss (earnings) of non-consolidated entities. Equity in loss of
non-consolidated entities was $1.6 million for the year ended December 31, 2022,
compared to $(11.0) million for the year ended December 31, 2021. The increase
in equity in loss was primarily due to a decrease in equity in earnings from
Digital Cinema Implementation Partners ("DCIP") of $8.9 million.Investment expense (income). Investment expense was $14.9 million for the year
ended December 31, 2022, compared to investment income of $(9.2) million for the
year ended December 31, 2021. Investment expense in the current year includes
$12.5 million of decline in estimated fair value of our investment in common
shares of Hycroft Mining Holding Corporation partially offset by $(6.2) million
of appreciation in estimated fair value of our investment in warrants to
purchase common shares of Hycroft Mining Holding Corporation, a $13.5 million
decline in estimated fair value of our investment in NCM common units offset by
interest income of $(5.9) million. Investment income includes a gain on sale of
the Baltics of $(5.5) million during the year ended December 31, 2021.
Income tax provision (benefit). The income tax provision (benefit) was $2.5
million and $(10.2) million for the year ended December 31, 2022 and December
31, 2021, respectively. See Note 10-Income Taxes in the Notes to the
Consolidated Financial Statements under Part II Item 8 thereof for further
information.
Net loss. Net loss was $973.6 million and $1,269.8 million during the year ended
December 31, 2022, and December 31, 2021, respectively. Net loss during the year
ended December 31, 2022 compared to net loss for the year ended December 31,
2021 was positively impacted by the increase in attendance as a result of an
increase in new film releases in connection with the reopening of theatres in
the current year that had been temporarily closed or limited operationally due
to the COVID-19 pandemic and lifting of seating restrictions, decreases in
depreciation and amortization expense, decreases in interest expense, decreases
in general and administrative expenses and decreases in foreign currency
translation rates, partially offset by increases in rent expense, decreases in
other income, decreases in investment income and a decrease in income tax
benefit.
Theatrical Exhibition-U.S. Markets
Revenues. Total revenues increased $1,085.9 million, during the year ended
December 31, 2022, compared to the year ended December 31, 2021. Admissions
revenues increased $625.7 million, during the year ended December 31, 2022,
compared to the year ended December 31, 2021, primarily due to an increase in
attendance from 91.1 million patrons to 141.4 million patrons and an 4.1%
increase in average ticket price. The increase in attendance was primarily due
to the COVID-19 pandemic impact on the prior year which resulted in the
temporary suspension or limited operations at our theatres in U.S. markets,
deterred customers from attending our theatres when we resumed operations, and
prompted film distributors to delay or alternatively distribute films. The
increase in average ticket price was65
Table of Contents
primarily due to strategic pricing initiatives put in place over the prior year
and increases in 3D, IMAX and Premium content.
Food and beverage revenues increased $378.6 million, during the year ended
December 31, 2022, compared to the year ended December 31, 2021, primarily due
to the increase in attendance and an increase in food and beverage per patron.
Food and beverage per patron increased 0.5% from $7.43 to $7.47.
Total other theatre revenues increased $81.6 million, during the year ended
December 31, 2022, compared to the year ended December 31, 2021, primarily due
to increases in ticket fees, income from gift cards and package tickets and
screen and other advertising due to the increase in attendance.
Operating costs and expenses. Operating costs and expenses increased $749.7
million, during the year ended December 31, 2022, compared to the year ended
December 31, 2021. Film exhibition costs increased $370.8 million, during the
year ended December 31, 2022, compared to the year ended December 31, 2021,
primarily due to the increase in attendance. As a percentage of admissions
revenues, film exhibition costs were 50.6% for the year ended December 31, 2022
and 45.3% for the year ended December 31, 2021. 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. Additionally, lower film exhibition costs were paid on
films with shorter exclusive theatrical windows in the prior year.Food and beverage costs increased $69.2 million, during the year ended December
31, 2022, compared to the year ended December 31, 2021. 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
15.6% for the year ended December 31, 2022, compared to 14.2% for the year ended
December 31, 2021.As a percentage of revenues, operating expense was 37.5% for the year ended
December 31, 2022 and 44.5% for the year ended December 31, 2021 due to the low
levels of attendance in the prior year. Rent expense increased 8.5%, or $52.3
million, during the year ended December 31, 2022, compared to the year ended
December 31, 2021, due primarily to cash rent abatements from landlords in the
prior year and the opening of new theatres, partially offset by theatre
closures. See Note 3-Leases in the Notes to the Consolidated Financial
Statements under Part II Item 8 thereof for further information on the impact of
COVID-19 on leases and rent obligations of approximately $130.5 million that
have been deferred to future years as of December 31, 2022.Merger, acquisition, and other costs. Merger, acquisition, and other costs were
$2.7 million during the year ended December 31, 2022, compared to $9.0 million
during the year ended December 31, 2021, primarily due to higher legal and
professional costs in the prior year.Other. Other general and administrative expense decreased 10.1%, or $16.0
million, during the year ended December 31, 2022, compared to the year ended
December 31, 2021 due primarily to an $18.8 million decrease in expense for
stock-based compensation expense due primarily to lower expectations for
performance based vesting and lower expense for SPSU's that fully vested in
2021. See Note 9-Stockholders' Equity in the Notes to the Consolidated Financial
Statements under Part II Item 8 thereof for additional information about
stock-based compensation expense.Depreciation and amortization. Depreciation and amortization decreased 2.8%, or
$9.0 million, during the year ended December 31, 2022, compared to the year
ended December 31, 2021, primarily due to lower depreciation expense on theatres
impaired during years ended December 31, 2020 and December 31, 2021.Impairment of long-lived assets, definite and indefinite-lived intangible
assets, and goodwill. During the year ended December 31, 2022, we recognized
non-cash impairment losses of $73.4 million on 68 theatres in the U.S. markets
with 817 screens (in Alabama, Arkansas, Arizona, California, Connecticut,
District of Columbia, Florida, Georgia, Iowa, Illinois, Indiana, Kentucky,
Louisiana, Massachusetts, Maryland, Michigan, Minnesota, Missouri, North
Carolina, North Dakota, New York, Ohio, Oklahoma, Oregon, Pennsylvania,
Tennessee, Texas, Utah, West Virginia, and Wisconsin) which were related to
property, net and operating lease right-of-use assets, net.During the year ended December 31, 2021, we recognized non-cash impairment
losses of $61.3 million on 77 theatres in the U.S. markets with 805 screens (in
Alabama, Arkansas, California, Colorado, Connecticut, District of Columbia,
Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana,
Maryland, Minnesota, Mississippi, Missouri, Montana, New York, North Carolina,
North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina,66
Table of Contents
Tennessee, Texas, Utah, West Virginia, and Wisconsin) which were related to
property, net, operating lease right-of-use assets, net and other long-term
assets.
Other expense. Other expense of $52.0 million during the year ended December 31,
2022 was primarily due to a loss on extinguishment of debt of $135.0 million
related to the full redemption of the $500 million aggregate principal amount of
the First Lien Notes due 2025, the $300 million aggregate principal amount of
the First Lien Notes due 2026, and the $73.5 million aggregate principal amount
of the First Lien Toggle Notes due 2026, partially offset by a gain on
extinguishment of debt of $75.0 million related to the redemption of $118.2
million of aggregate principal amount of the Second Lien Notes due 2026, a gain
on extinguishment of debt of $3.7 million related to the redemption of $5.25
million aggregate principal amount of Senior Subordinated Notes due 2027, $2.8
million in government assistance related to COVID-19 and $0.5 million in foreign
currency transaction gains. Other expense of $9.2 million during the year ended
December 31, 2021, was primarily due to a loss on extinguishment of $14.4
million related to the redemption of $35.0 million principal amount of 15%/17%
Cash/PIK Toggle First Lien Secured Notes due 2026, partially offset by $5.6
million in government assistance related to COVID-19. See Note 1-The Company and
Significant Accounting Policies in the Notes to the Consolidated Financial
Statements under Part II Item 8 thereof for additional information about the
components of other expense.Interest expense. Interest expense decreased $82.0 million to $305.9 million for
the year ended December 31, 2022, compared to $387.9 million during the year
ended December 31, 2021, primarily due to:
? the extinguishment of $72.5 million of 10%/12% Cash/ PIK/Toggle Second Lien
Notes due 2026 in May of 2022;
the conversion of $600.0 million 2.95% Convertible Notes due 2026 to 44,422,860
Common Stock and 44,422,860 AMC Preferred Equity Units on January 27, 2021 that
? resulted in the write-off to interest expense of $70.0 million of unamortized
discount and deferred charges at the date of conversion following the guidance
in ASC 815-15-40-1;
? the extinguishment of $500.0 million of 10.5% First Lien Notes due 2025 on
February 14, 2022;
? the extinguishment of $300.0 million of 10.5% First Lien Notes due 2026 on
February 14, 2022;
? the extinguishment of $73.5 million of 15%/17% Cash/PIK/Toggle second Lien
Notes due 2026 on February 14, 2022,
? the extinguishment of $45.7 million of 10%/12% Cash/PIK/Toggle Second Lien
Notes due 2026 in November and December of 2022; and
? the extinguishment of $5.25 million of 6.125% Senior Subordinated Notes due
2027 in November 2022partially offset by:
? increases in interest rates on the Senior Secured Credit Facility Term Loan due
2026; and
? the issuance of $950.0 million of 7.5% First Lien Senior Secured Notes due 2029
on February 14, 2022.
See Note 8-Corporate Borrowings and Finance Lease Liabilities in the Notes to
the Consolidated Financial Statements under Part II Item 8 thereof for
additional information about our indebtedness.
Equity in earnings of non-consolidated entities. Equity in earnings of
non-consolidated entities was $4.3 million for the year ended December 31, 2022,
compared to $13.7 million for the year ended December 31, 2021. The decrease in
equity in earnings was primarily due to a decrease in equity in earnings from
DCIP of $8.9 million.Investment expense (income). Investment expense was $15.0 million for the year
ended December 31, 2022, compared to investment income of $(3.7) million for the
year ended December 31, 2021. Investment expense in the current year includes
$12.5 million of deterioration in estimated fair value of our investment in
common shares of Hycroft Mining Holding Corporation and $(6.2) million of
appreciation in estimated fair value of our investment in warrants to purchase
common shares of Hycroft Mining Holding Corporation and a $13.5 million decline
in estimated fair value of our investment in NCM common units offset by interest
income of $(5.8) million.67
Table of Contents
Income tax provision (benefit). The income tax provision (benefit) was
$0.9 million and $(9.4) million for the year ended December 31, 2022, and
December 31, 2021, respectively. See Note 10-Income Taxes in the Notes to the
Consolidated Financial Statements under Part II Item 8 thereof for further
information.
Net loss. Net loss was $712.0 million and $1,049.0 million during the year ended
December 31, 2022 and December 31, 2021, respectively. Net loss during the year
ended December 31, 2022 compared to net loss for the year ended December 31,
2021 was positively impacted by the increase in attendance as a result of an
increase in new film releases in connection with the reopening of theatres in
the current year that had been temporarily closed due to the COVID-19 pandemic
and lifting of seating restrictions, decreases in depreciation and amortization
expense, decreases in general and administrative expenses and decreases in
interest expense, partially offset by increases in rent expense, increases in
other expense and a decrease in income tax benefit.
Theatrical Exhibition – International Markets
Revenues. Total revenues increased $297.6 million, during the year ended
December 31, 2022, compared to the year ended December 31, 2021. Admissions
revenues increased $181.5 million, during the year ended December 31, 2022,
compared to the year ended December 31, 2021, primarily due to an increase in
attendance from 37.4 million patrons to 59.6 million patrons partially offset by
a 7.0% decrease in average ticket price. The increase in attendance was
primarily due to the COVID-19 pandemic impact on the prior year which resulted
in the temporary suspension or limited operations at our theatres in
International markets, deterred customers from attending our theatres when we
resumed operations, and prompted film distributors to delay or alternatively
distribute films. The decrease in average ticket price was primarily due a
decrease in foreign currency translation rates, partially offset by strategic
pricing initiatives put in place over the prior year.Food and beverage revenues increased $77.8 million, during the year ended
December 31, 2022, compared to the year ended December 31, 2021, primarily due
to the increase in attendance, partially offset by the decrease in food and
beverage per patron. Food and beverage per patron decreased 10.0% from $4.81 to
$4.33 due primarily to decreases in foreign currency translation rates.Total other theatre revenues increased $38.3 million, during the year ended
December 31, 2022, compared to the year ended December 31, 2021, primarily due
to increases in ticket fees, income from gift cards and screen advertising due
to the increase in attendance, partially offset by the decrease in foreign
currency translation rates.Operating costs and expenses. Operating costs and expenses increased $226.1
million, during the year ended December 31, 2022 compared to the year ended
December 31, 2021 primarily due to an increase in attendance, increases in
property taxes, and increase in utilities costs due to energy supply shortages
and inflationary pressures, partially offset by the decrease in currency
translation rates. The increases in property taxes was due to the expiration of
property tax holidays related to the COVID-19 pandemic during the second half of
2021.Film exhibition costs increased $73.2 million, during the year ended December
31, 2022, compared to the year ended December 31, 2021, primarily due to the
increase in attendance. As a percentage of admissions revenues, film exhibition
costs were 39.4% for the year ended December 31, 2022, compared to 38.9% for the
year ended December 31, 2021.Food and beverage costs increased $21.5 million, during the year ended December
31, 2022, compared to the year ended December 31, 2021. 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
24.6% for the year ended December 31, 2022, compared to 23.3% for the year ended
December 31, 2021.As a percentage of revenues, operating expense was 44.0% for the year ended
December 31, 2022, and 47.2% for the year ended December 31, 2021 due to the
very low levels of attendance in the prior year. Rent expense increased 2.8%, or
$5.9 million, during the year ended December 31, 2022, compared to the year
ended December 31, 2021, due primarily to cash rent abatements from landlords in
the prior year and the opening of new theatres, partially offset by theatre
closures and the decrease in foreign currency translation rates. See Note
3-Leases in the Notes to the Consolidated Financial Statements under Part II
Item 8 thereof for further information on the impact of COVID-19 on leases and
rent obligations of approximately $26.7 million that have been deferred to
future years as of December 31, 2022.68
Table of Contents
Merger, acquisition, and other costs. Merger, acquisition, and other costs were
$(0.6) million during the year ended December 31, 2022, compared to $4.7 million
during the year ended December 31, 2021, primarily due to legal and professional
costs related to strategic contingency planning in the prior year.Other. Other general and administrative expense decreased 4.4%, or $3.0 million,
during the year ended December 31, 2022, compared to the year ended December 31,
2021 due primarily to a $1.8 million decrease in expense for stock-based
compensation expense due primarily to lower expectations for performance based
vesting and lower expense for SPSU's that fully vested in 2021 and the decrease
in foreign currency translation rates. See Note 9-Stockholders' Equity in the
Notes to the Consolidated Financial Statements under Part II Item 8 thereof for
additional information about stock-based compensation expense.Depreciation and amortization. Depreciation and amortization decreased 19.3%, or
$20.0 million, during the year ended December 31, 2022, compared to the year
ended December 31, 2021, primarily due to lower depreciation expense on theatres
impaired during years ended December 31, 2020 and December 31, 2021 and the
decrease in foreign currency translation rates.Impairment of long-lived assets, definite and indefinite-lived intangible
assets, and goodwill. During the year ended December 31, 2022, we recognized
non-cash impairment losses of $59.7 million on 53 theatres in the International
markets with 456 screens (in Germany, Italy, Spain, Sweden, and UK), which were
related to property, net, and operating lease right-of-use assets, net.
During the year ended December 31, 2021, we recognized non-cash impairment
losses of $15.9 million on 14 theatres in the International markets with
118 screens (in Italy, Norway, Spain, and UK), which were related to property,
net, and operating lease right-of-use assets, net.
Other expense (income). Other expense of $1.6 million during the year ended
December 31, 2022 was primarily due to a loss on extinguishment of debt of $36.5
million related to the full redemption of the $476.6 million aggregate amount of
the Odeon Term Loan due 2023 and partially offset by $(23.0) million in
government assistance related to COVID-19 and $(12.3) million of foreign
currency transaction gains. Other income of ($97.1) million during the year
ended December 31, 2021, was primarily due to $(81.5) million in government
assistance related to COVID-19, $(9.8) million of foreign currency transaction
gains and estimated credit income of $(6.0) million related to contingent lease
guarantees. See Note 1-The Company and Significant Accounting Policies in the
Notes to the Consolidated Financial Statements under Part II Item 8 thereof for
additional information about the components of other expense (income).Interest expense. Interest expense increased $2.6 million to $72.8 million for
the year ended December 31, 2022 compared to $70.2 million during the year ended
December 31, 2021, primarily due to:
? the issuance of £140.0 million and €296.0 million 10.75%/11.25% Cash/PIK Term
Loans due 2023 on February 19, 2021; and
? the issuance of $400.0 million 12.75% Odeon Senior Secured Notes due 2027 on
October 20, 2022.partially offset by:
? the extinguishment of £147.6 million and €312.2 million ($476.6 million)
10.75%/11.25% Cash/PIK Term Loans due 2023 on October 20, 2022.
See Note 8-Corporate Borrowings and Finance Lease Liabilities in the Notes to
the Consolidated Financial Statements under Part II Item 8 thereof for
additional information about our indebtedness.
Equity in loss of non-consolidated entities. Equity in loss of non-consolidated
entities was $5.9 million for the year ended December 31, 2022, compared to
$2.7 million for the year ended December 31, 2021.
Investment income. Investment income was $0.1 million for the year ended
December 31, 2022, compared to investment income of $(5.5) million for the year
ended December 31, 2021. Investment income includes a gain on sale of the
Baltics of $5.5 million during the year ended December 31, 2021.
Income tax provision (benefit). The income tax provision (benefit) was
$1.6 million and $(0.8) million for the year ended December 31, 2022, and
December 31, 2021, respectively. See Note 10-Income Taxes in the Notes to the
Consolidated Financial Statements under Part II Item 8 thereof for further
information.
69
Table of Contents
Net loss. Net loss was $261.6 million and $220.8 million during the year ended
December 31, 2022 and December 31, 2021, respectively. Net loss during the year
ended December 31, 2022 compared to net loss for the year ended December 31,
2021 was positively impacted by the increase in attendance as a result of an
increase in new film releases in connection with the reopening of theatres in
the current year that had been temporarily closed due to the COVID-19 pandemic
and lifting of seating restrictions, decreases in depreciation and amortization
expense, decreases in general and administrative expenses, and decreases in
foreign currency translation rates, partially offset by increases in rent
expense, decreases in other income, increases in interest expense, decreases in
investment income and a decrease in income tax benefit.
Results of Operations-For the Year Ended December 31, 2021, Compared to the Year
Ended December 31, 2020
For a comparison of our results of operations for the year ended December 31,
2021, compared to the year ended December 31, 2020, see "Part II, Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" of our annual report on Form 10-K for the year ended December 31,
2021 , filed with the Securities and Exchange Commission on March 1, 2022,
which is incorporated herein by reference.
Liquidity and Capital Resources-For the Year Ended December 31, 2022, Compared
to the Year Ended December 31, 2021
Our consolidated revenues are primarily collected in cash, principally through
box office admissions and food and beverage sales. Prior to the impact of
COVID-19 on our business, we had an operating "float" which partially financed
our operations and which generally permitted us to maintain a smaller amount of
working capital capacity. This float existed 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. As operations are beginning to approach pre-pandemic
levels, we are starting to see this float resume. 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 surplus (deficits) (excluding restricted cash) as of
December 31, 2022 and December 31, 2021 of $(811.1) million and $54.6 million,
respectively. As of December 31, 2022 and December 31, 2021, working capital
included $567.3 million and $605.2 million, respectively, of operating lease
liabilities and $402.7 million and $408.6 million, respectively, of deferred
revenues. At December 31, 2022, we had $211.2 million unused borrowing capacity,
net of letters of credit, under our $225.0 million Senior Secured Revolving
Credit Facility. As of December 31, 2021, we had borrowed $209.1 million (the
full availability net of standby letters of credit) under our $225.0 million
Senior Secured Revolving Credit Facility. Reference is made to Note 8-Corporate
Borrowings and Finance Lease Liabilities in the Notes to the Consolidated
Statements under Part II, Item 8 thereof, for further discussion of our
Financial Covenants.As of December 31, 2022, we had cash and cash equivalents of approximately
$631.5 million. In response to the COVID-19 pandemic, we adjusted certain
elements of our business strategy and took significant steps to preserve cash.
We are continuing to take significant measures to further strengthen our
financial position and enhance our operations, by eliminating non-essential
costs, including reductions to our variable costs and elements of our fixed cost
structure, introducing new initiatives, and optimizing our theatrical footprint.
Additionally, we enhanced liquidity through debt refinancing that extended
maturities, purchases of debt below par value, and equity sales. See Note
8-Corporate Borrowings and Finance Lease Liabilities, Note 9-Stockholders’
Equity, and Note 16-Subsequent Events in the Notes to the Consolidated Financial
Statements under Part II, Item 8 thereof, for further information.
70
Table of Contents
The table below summarizes net decreases in cash and cash equivalents and
restricted cash by quarter for the year ended December 31, 2022:
Three Months Ended Year Ended
March 31, June 30, September 30, December 31, December 31
(In millions) 2022 2022 2022 2022 2022
Cash flows from operating
activities:
Net cash used in operating
activities $ (295.0) $ (76.6) $ (223.6) $ (33.3) $ (628.5)
Cash flows from investing
activities:
Net cash used in investing
activities (54.9) (48.0) (50.8) (70.3) (224.0)
Cash flows from financing
activities:
Net cash provided by (used in)
financing activities (76.3) (59.7) 0.5 44.2 (91.3)
Effect of exchange rate changes
on cash and cash equivalents
and restricted cash (5.5) (16.4) (8.2) 8.0 (22.1)
Net decrease in cash and cash
equivalents and restricted cash (431.7) (200.7) (282.1) (51.4) (965.9)
Cash and cash equivalents and
restricted cash at beginning of
period 1,620.3 1,188.6 987.9 705.8 1,620.3
Cash and cash equivalents and
restricted cash at end of
period $ 1,188.6 $ 987.9 $ 705.8
$ 654.4 $ 654.4
Our net cash provided by (used in) operating activities improved by $341.5
million during the three months ended March 31, 2022 compared to the three
months ended December 31, 2021, $218.4 million during the three months ended
June 30, 2022 compared to the three months ended March 31, 2022, deteriorated by
$(147.0) million during the three months ended September 30, 2022 compared to
the three months ended June 30, 2022, and improved by $190.3 million during the
three months ended December 31, 2022 compared to September 30, 2022. The
improvement is primarily attributable to working capital changes, partially
offset by an increased net loss during the three months ended December 31, 2022.
We also continue to repay rent amounts that were deferred during the pandemic,
which increases its cash outflows from operating activities. See Note 3-Leases
in the Notes to the Consolidated Financial Statements under Part II, Item 8 in
this Form 10-K for a summary of estimated future repayment terms for the
remaining $157.2 million of rentals that were deferred during the COVID-19
pandemic.
Our net cash provided by (used in) investing activities included:
$34.8 million of capital expenditures and $27.9 million of investments in
? non-consolidated entities, partially offset from the disposition of long-term
assets of $7.2 million during the three months ended March 31, 2022;
$40.4 million of capital expenditures, $17.8 million for the acquisition of
? theatres, partially offset by proceeds of $11.4 million from the sale of
securities in conjunction with the liquidation of a non-qualified deferred
compensation plan during the three months ended June 30, 2022;
$54.5 million of capital expenditures, partially offset by of proceeds from
? disposition of long-term assets of $3.6 million during the three months ended
September 30, 2022; and
$72.3 million of capital expenditures, partially offset by $0.5 million of
? proceeds from disposition of long-term assets and $1.5 million of proceeds from
the sale of NCM shares during the three months ended December 31, 2022.
Our net cash provided by (used in) financing activities included:
$955.7 million of principal and premium payments, $52.2 million of taxes paid
? for restricted unit withholdings, and $17.7 million of cash used to pay for
deferred financing costs, partially offset by proceeds from the Company’s debt
issuance of $950.0 million, during the three months ended March 31, 2022;
$57.9 million of principal and premium payments, $1.8 million of cash used to
? pay for deferred financing costs, and $0.7 million of AMC Preferred Equity Unit
issuance costs during the three months ended June 30, 2022;
71
Table of Contents
$7.4 million of principal payments and $0.5 million of cash used to pay
? deferred financing costs, partially offset by $8.5 million of net proceeds from
AMC Preferred Equity Units issuance during the three months ended September 30,
2022; and
$529.5 million of principal and premium payments and $6.9 million of cash used
to pay for deferred financing costs, partially offset by proceeds from the
? Company’s debt issuance of $368.0 million and $212.6 million of net proceeds
from AMC Preferred Equity Units issuances during the three months ended
December 31, 2022;
The table below summarizes net increase (decrease) in cash and cash equivalents
and restricted cash by quarter for the year ended December 31, 2021:
Three Months Ended Year Ended
March 31, June 30, September 30, December 31, December 31,
(In millions) 2021 2021 2021 2021 2021
Cash flows from operating
activities:
Net cash provided by (used in)
operating activities $ (312.9) $ (233.8) $ (113.9) $ 46.5 $ (614.1)
Cash flows from investing
activities:
Net cash provided by (used in)
investing activities (16.0) 13.5 (28.8) (36.9) (68.2)
Cash flows from financing
activities:
Net cash provided by (used in)
financing activities 854.7 1,212.2 (48.3) (27.9) 1,990.7
Effect of exchange rate changes
on cash and cash equivalents
and restricted cash (5.1) 5.6 (8.4) (1.6) (9.5)
Net increase (decrease) in cash
and cash equivalents and
restricted cash 520.7 997.5 (199.4) (19.9) 1,298.9
Cash and cash equivalents and
restricted cash at beginning of
period 321.4 842.1 1,839.6 1,640.2 321.4
Cash and cash equivalents and
restricted cash at end of
period $ 842.1 $ 1,839.6 $ 1,640.2
$ 1,620.3 $ 1,620.3
Our net cash used in operating activities improved by $79.1 million during the
three months ended June 30, 2021 compared to the three months ended March 31,
2021, $119.9 million during the three months ended September 30, 2021 compared
to the three months ended June 30, 2021, and $160.4 million during the three
months ended December 31, 2021 compared to the three months ended September 30,
2021. This is primarily attributable to continued increases in attendance and
industry box office revenues during the year ended December 31, 2021.We believe our existing cash and cash equivalents, together with cash generated
from operations, will be sufficient to fund our operations, satisfy our
obligations, including cash outflows to repay rent amounts that were deferred
during the COVID-19 pandemic and planned capital expenditures, and comply with
minimum liquidity and financial covenant requirements under our debt covenants
related to borrowings pursuant to the Senior Secured Revolving Credit Facility
for at least the next twelve months. In order to achieve net positive operating
cash flows and long-term profitability, we believe that operating revenues will
need to increase significantly from 2021 and 2022 levels to levels in line with
pre-COVID-19 operating revenues. We believe the anticipated volume of titles
available for theatrical release, and the anticipated broad appeal of many of
those titles will support increased operating revenues and attendance levels. We
believe that recent operating revenues and attendance levels are positive signs
of continued demand for the moviegoing experience. Total revenues for the years
ended December 31, 2022, 2021, and 2020 were $3.9 billion, $2.5 billion, and
$1.2 billion respectively, compared to $5.5 billion for the year ended December
31, 2019. For the years ended December 31, 2022, 2021, and 2020 attendance was
201.0 million patrons, 128.5 million patrons, and 75.2 million patrons,
respectively, compared to 356.4 million patrons for the year ended December 31,
2019. Moreover, it is difficult to predict future operating revenues and
attendance levels and there remain significant risks that may negatively impact
operating revenues and attendance, including movie studios release schedules,
the production and theatrical release of fewer films compared to levels before
the onset of the COVID-19 pandemic, and direct to streaming or other changing
movie studio practices.72
Table of Contents
We currently estimate that our existing cash and cash equivalents will be
sufficient to comply with minimum liquidity and financial covenant requirements
under our debt covenants related to borrowings pursuant to the Senior Secured
Revolving Credit Facility, currently and through the next twelve months.
Pursuant to the Twelfth Amendment, the requisite revolving lenders party thereto
agreed to extend the suspension period for the financial covenant applicable to
the Senior Secured Revolving Credit Facility under the Credit Agreement through
March 31, 2024. The current maturity date of the Senior Secured Revolving Credit
Facility is April 22, 2024; since the financial covenant applicable to the
Senior Secured Revolving Credit Facility is tested as of the last day of any
fiscal quarter for which financial statements have been (or were required to
have been) delivered, the financial covenant has been effectively suspended
through maturity of the Senior Secured Revolving Credit Facility. As of December
31, 2022 we were subject to a minimum liquidity requirement of $100 million as a
condition to the financial covenant suspension period under the Credit
Agreement.The 11.25% Odeon Term Loan due 2023 ("Odeon Term Loan Facility") was to mature
on August 19, 2023 during the third fiscal quarter of the Company's next
calendar year. On October 20, 2022 we completely repaid the Odeon Term Loan
Facility using existing cash and $363.0 million net proceeds from the issuance
of Odeon Notes due 2027.We or our affiliates actively seek and expect, at any time and from time to
time, to continue to seek to retire or purchase our outstanding debt through
cash purchases and/or exchanges for equity (including AMC Preferred Equity
Units) or debt, in open-market purchases, privately negotiated transactions or
otherwise. Such repurchases or exchanges, if any will be upon such terms and at
such prices as we may determine, and will depend on prevailing market
conditions, our liquidity requirements, contractual restrictions and other
factors. The amounts involved may be material and to the extent equity is used,
dilutive. During the year ended December 31, 2022, we repurchased $118.3 million
aggregate principal of the Second Lien Notes due 2026 for $68.3 million and
recorded a gain on extinguishment of $75.0 million in other expense (income).
These 2022 repurchases included a purchase of $15.0 million aggregate principal
of the Second Lien Notes due 2026 from Antara, which subsequently became a
related party on February 7, 2023, for $5.9 million and a gain on extinguishment
of $12.0 million. Additionally, we repurchased $5.3 million aggregate principal
of the Senior Subordinated Notes due 2027 for $1.6 million and recorded a gain
on extinguishment of $3.7 million in other expense (income). Accrued interest of
$4.5 million was paid in connection with the repurchases. See Note 8-Corporate
Borrowings and Finance Lease Liabilities in the Notes to the Consolidated
Financial Statements under Part II, Item 8 thereof, for more information.We received rent concessions provide by the lessors that aided in mitigating the
economic effects of COVID-19 during the pandemic. These concessions primarily
consisted of rent abatements and the deferral of rent payments. As a result,
deferred lease amounts were approximately $157.2 million as of December 31,
2022. Including repayments of deferred lease amounts, our cash expenditures for
rent increased significantly during the year ended December 31, 2022 compared to
December 31, 2021. See Note 3-Leases in the Notes to the Consolidated Financial
Statements under Part II, Item 8 in this Form 10-K for a summary of the
estimated future repayment terms for the deferred lease amounts due to COVID-19,
and also a summary of the estimated future repayment terms for the minimum
operating lease and finance lease amounts.It is very difficult to estimate our liquidity requirements, future cash burn
rates, future operating revenues and attendance levels. Depending on our
assumptions regarding the timing and ability to achieve significantly increased
levels of operating revenue, the estimates of amounts of required liquidity vary
significantly. In order to achieve net positive operating cash flows and
long-term profitability, we believe that operating revenues will need to
increase significantly to levels in line with pre-COVID-19 operating revenues.
Our current cash burn rates are not sustainable. Further, we cannot accurately
predict what future changes may occur to the supply or release date of movie
titles available for theatrical exhibition once moviegoers are prepared to
return in large numbers. Nor can we know with certainty the impact on consumer
movie-going behavior of studios who release movies to theatrical exhibition and
their streaming platforms on the same date, or the potential attendance impact
of other studio decisions to accelerate in-home availability of their theatrical
movies. Studio negotiations regarding evolving theatrical release models and
film licensing terms are ongoing. There can be no assurance that the operating
revenues, attendance levels, and other assumptions used to estimate our
liquidity requirements and future cash burn rates will be correct, and our
ability to be predictive is uncertain due to limited ability to predict studio
film release dates and success of individual titles. Further, there can be no
assurances that we will be successful in generating the additional liquidity
necessary to meet our obligations beyond twelve months from the issuance of
these financial statements on terms acceptable to us or at all. If we are unable
to maintain or renegotiate our minimum liquidity covenant requirements, it could
have a significant adverse effect on our business, financial condition and
operating results.73
Table of Contents
Cash Flows from Operating Activities
Net cash used in operating activities, as reflected in the consolidated
statements of cash flows, were $628.5 million and $614.1 million during the
years ended December 31, 2022 and December 31, 2021, respectively. The increase
in cash used in operating activities was primarily due to increased deferred
rent payments and increases in working capital used, partially offset by an
increase in attendance, which resulted in improved operating results during the
year ended December 31, 2022. See Note 3-Leases in the Notes to the Consolidated
Financial Statements in Item 8 of Part II in this Form 10-K for a summary of the
estimated future repayment terms for the remaining $157.2 million of rentals
that were deferred during the COVID-19 pandemic.
Cash Flows from Investing Activities
Net cash used in investing activities, as reflected in the consolidated
statements of cash flows, were $224.0 million and $68.2 million during the years
ended December 31, 2022 and December 31, 2021, respectively. Cash outflows from
investing activities for capital expenditures during the years ended
December 31, 2022 and December 31, 2021 were $202.0 million and $92.4 million,
respectively.During the year ended December 31, 2022, cash flows used in investing activities
included investment in Hycroft common stock for $25.0 million, investment in
Hycroft warrants for $2.9 million, acquisition of theatre assets for $17.8
million, partially offset by proceeds from the disposition of long-term assets
of $11.3 million and proceeds of $13.0 million from the sale of securities in
conjunction with the liquidation of a non-qualified deferred compensation plan.During the year ended December 31, 2021, cash flows used in investing activities
included proceeds from the disposition of Baltics of $34.2 million, primarily
related to the sale of our remaining equity interest in Estonia of $3.7 million
and Lithuania of $30.5 million and proceeds received from the disposition of
long-term assets of $7.9 million primarily related to four properties. During
the year ended December 31, 2021, we made an additional investment of $9.3
million in Saudi Cinema Company LLC and acquired theatre assets of $8.2 million
related to two theatres.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
estimate that our cash outflows for capital expenditures, net of landlord
contributions, will be approximately $150 million to $200 million for the year
ending December 31, 2023 to maintain and enhance operations.
Cash Flows from Financing Activities
Net cash (used in) provided by financing activities, as reflected in the
consolidated statements of cash flows, were $(91.3) million and
$1,990.7 million, during the years ended December 31, 2022 and December 31,
2021, respectively. The increase in cash flows used in financing activities
during the year ended December 31, 2022 compared to December 31, 2021 was
primarily due to principal and premium payments under the First Lien Notes due
2025 of $534.5 million, principal and premium payments under the First Lien
Notes due 2026 of $325.6 million, principal and premium payments under the First
Lien Toggle Notes due 2026 of $88.1 million, taxes for restricted unit
withholdings of $52.3 million, repurchase of Second Lien Notes due 2026 of $68.3
million, and cash used to pay for deferred financing costs of $26.1 million,
partially offset by the issuance of the First Lien Notes due 2029 of $950.0
million, issuance of the Odeon Senior Secured Notes due 2027 of $368.0 million,
and net proceeds from AMC Preferred Equity Unit share issuances of $220.4
million. See Note 8-Corporate Borrowings and Finance Lease Liabilities and Note
9-Stockholders' Equity in the Notes to the Consolidated Financial Statements in
Item 8 of Part II of this Form 10-K for further information, including a summary
of principal payments required and maturities of corporate borrowings as of
December 31, 2022.During the year ended December 31, 2021, borrowings under the Odeon Term Loan
Facility of $534.3 million, borrowings under the issuance of First Lien Toggle
Notes due 2026 of $100.0 million, net proceeds from the sale of Common Stock of
$1,570.7 million, and net proceeds from Common Stock issuance to Mudrick of
$230.4 million, partially offset by the repayments under the revolving credit
facilities of $335.0 million, principal and redemption premium under the First
Lien Toggle Notes due 2026 of $40.3 million, payment for deferred financing
costs of $19.974
Table of Contents
million, payment of $19.1 million of taxes for restricted unit withholdings, and
principal payments under the Term Loan due 2026 of $20.0 million.
Dividends. The following is a summary of dividends and dividend equivalents
declared to stockholders:Amount per Amount per Total Amount
Share of Share of AMC Declared
Declaration Date Record Date Date Paid Common Stock Preferred Equity Units (In millions)
February 26, 2020 March 9, 2020 March 23, 2020 $ 0.015 $
0.015 $ 3.2During the year ended December 31, 2020, we paid dividends and dividend
equivalents of $6.5 million. As of December 31, 2022 and December 31, 2021, we
accrued $0.0 million and $0.7 million, respectively, for the remaining unpaid
dividends.
Future Contractual Obligations
Our estimated future obligations as of December 31, 2022 include both current
and long term obligations. Our expected material contractual cash requirements
over the next twelve months, primarily consist of capital related betterments of
$45.6 million, minimum operating lease obligations of $973.2 million, finance
lease obligations of $9.1 million, contractual cash rent amounts that were due
and not paid of $24.9 million recorded in accounts payable, and corporate
borrowings principal and interest payments of $20.0 million and $417.6 million,
respectively.Capital related betterments. At December 31, 2022, we have short-term committed
capital expenditures, investments, and betterments to our circuit, which do not
include planned, but non-committed capital expenditures of $45.6 million.Pension funding. Our U.S., U.K., and Sweden defined benefit plans are frozen. We
fund our U.S. pension plans such that the plans are in compliance with Employee
Retirement Income Security Act ("ERISA") and the plans are not considered "at
risk" as defined by ERISA guidelines. We do not expect to make a material
contribution to the defined pension plans during the year ended December 31,
2023.Obligation for unrecognized tax benefits. As of December 31, 2022, our recorded
obligation for unrecognized tax benefits is $7.4 million. There are currently no
unrecognized tax benefits which we anticipate will be resolved in the next
twelve months. See Note 10-Income Taxes in the Notes to Consolidated Financial
Statements under Part II, Item 8 thereof for further information.Minimum operating lease and finance lease payments. We have current and
long-term minimum cash requirements for operating lease payments of $973.2
million and $6,426.3 million, respectively. We have current and long-term
minimum cash requirements for finance lease payments of $9.1 million and $81.5
million, respectively. The total amounts do not equal the carrying amount due to
imputed interest. We received rent concessions provided by the lessors that
aided in mitigating the economic effects of COVID-19 during the pandemic. These
concessions primarily consisted of rent abatements and the deferral of rent
payments and were included in the amounts above, except for contractual cash
rent amounts recorded in accounts payable that were due and not paid of $24.9
million. Our cash expenditures for rent increased significantly in the second,
third, and fourth quarters of 2021 and all of 2022 as previously deferred rent
payments and landlord concessions started to become current obligations. See
Note 3-Leases in the Notes to the Consolidated Financial Statements under Part
II, Item 8 thereof, for a summary of the estimated future repayment terms for
the minimum operating lease and finance lease amounts, including the deferred
lease amounts due to COVID-19.Corporate borrowings principal and interest payments. We have current and
long-term cash requirements for the payment of principal related to corporate
borrowings of $20.0 million and $4,929.0 million, respectively. The total amount
does not equal the carrying amount due to unamortized discounts, premiums and
deferred charges. We have current and long-term cash interest payment
requirements related to our corporate borrowings of $417.6 million and $1,262.8
million, respectively. The cash interest payment requirements for our Senior
Secured Term Loans due 2026 was estimated at 7.3% based on the interest rate in
effect as of December 31, 2022. See Note 8-Corporate Borrowings and Finance
Lease Liabilities in the Notes to the Consolidated Financial Statements under
Part II, Item 8 thereof, for further information, including a summary of
principal payments required and maturities of corporate borrowings as of
December 31, 2022.75
Table of Contents
Senior Secured Credit Facilities (Senior Secured Revolving Credit Facility and
Senior Secured Term Loan due 2026). On March 8, 2021, we entered into the Ninth
Amendment, pursuant to which the requisite revolving lenders party thereto
agreed to extend the suspension period for the financial covenant applicable to
the Senior Secured Revolving Credit Facility under our Credit Agreement from a
period ending on March 31, 2021 to a period ending on March 31, 2022, which was
further extended by the Eleventh Amendment and the Twelfth Amendment from March
31, 2022 to March 31, 2023, and then from March 31, 2023 to March 31, 2024,
respectively, in each case, as described, and on the terms and conditions
specified, therein. On March 8, 2021, we entered into the Tenth Amendment (as
defined in Note 8-Corporate Borrowings and Finance Lease Liabilities in the
Notes to the Consolidated Financial Statements under Part II, Item 8 thereof),
pursuant to which we agreed that certain modifications to the Credit Agreement
described in the Tenth Amendment require the consent of the majority of the
revolving lenders party to the Tenth Amendment.The Senior Secured Term Loan bears interest at a rate per annum equal to, at our
option, either (1) 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,
(b) the prime rate announced by the Administrative Agent 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%
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. As of December 31, 2022, the
Senior Secured Term Loan had an outstanding principal balance of $1,925.0
million. As of December 31, 2022, we had $211.2 million of unused borrowing
capacity, net of letters of credit, under our $225.0 million Senior Secured
Revolving Credit Facility.Odeon Senior Secured Notes due 2027. On October 20, 2022, Odeon Finco PLC, a
direct subsidiary of Odeon Cinemas Group Limited ("OCGL") and an indirect
subsidiary of the Company issued $400.0 million aggregate principal amount of
its 12.75% Odeon Senior Secured Notes due 2027 ("Odeon Notes due 2027"), at an
issue price of 92.00%. The Odeon Notes due 2027 bear a cash interest rate of
12.75% per annum and will be payable semi-annually in arrears on May 1 and
November 1, beginning on May 1, 2023. The Odeon Notes due 2027 are guaranteed on
a senior secured basis by certain subsidiaries of Odeon and by Holdings on a
standalone and unsecured basis. The Odeon Notes due 2027 contain covenants that
limit Odeon and certain subsidiaries' ability to, among other things: (i) incur
additional indebtedness or guarantee indebtedness; (ii) create liens; (iii)
declare or pay dividends, redeem stock or make other distributions to
stockholders; (iv) make investments; (v) enter into transactions with
affiliates; (vi) consolidate, merge, sell or otherwise dispose of all or
substantially all of their respective assets; and (vii) impair the security
interest in the collateral. These covenants are subject to a number of important
limitations and exceptions. We used the $363.0 million net proceeds from the
Odeon Notes due 2027 and $146.7 million of existing cash to fund the payment in
full of the £147.6 million and €312.2 million ($167.7 million and $308.9
million, respectively using October 20, 2022 exchange rates) aggregate principal
amounts of the Odeon Term Loan Facility and to pay related accrued interest,
fees, costs, premiums and expenses. We recorded a loss on debt extinguishment
related to this transaction of $36.5 million in other expense during the year
ended December 31, 2022.Prior to November 1, 2024, up to 35% of the original aggregate principal amount
of the Odeon Notes due 2027 may be redeemed at a price of 112.75% of the
principal thereof with the net proceeds of one or more certain equity offerings
provided that the redemption occurs with 120 days after the closing of such
equity offerings. On or after November 1, 2024, the Odeon Notes due 2027 will be
redeemable, in whole or in part, at redemption prices equal to (i) 106.375% for
the twelve-month period beginning on November 1, 2024; (ii) 103.188% for the
twelve-month period beginning on November 1, 2025 and (iii) 100.000% at any time
thereafter, plus accrued and unpaid interest, if any. If we or our restricted
subsidiaries sell assets under certain circumstances, we will be required to use
the net proceeds to repay the Odeon Notes due 2027, or any additional First Lien
Obligations at a price no less than 100% of the issue price of the Odeon Notes
due 2027, plus accrued and unpaid interest, if any. Upon a Change of Control (as
defined in the indenture governing the Odeon Notes due 2027), we must offer to
purchase the Odeon Notes due 2027 at a purchase price equal to 101% of the
principal amount, plus accrued and unpaid interest, if any. On December 14,
2022, the Odeon Notes due 2027 were admitted to the official list of The
International Stock Exchange ("TISE"). The Odeon Notes due 2027 will
automatically delist from TISE on the business day following the maturity date
of November 1, 2027, unless adequate notice is given together with supporting
documents setting out any changes to the date of maturity or confirmation that
the Odeon Notes due 2027 have not been fully repaid.First Lien Toggle Notes due 2026. On January 15, 2021, we issued $100.0 million
aggregate principal amount of our First Lien Toggle Notes due 2026 as
contemplated by the previously disclosed commitment letter with Mudrick Capital
Management, LP ("Mudrick"), dated as of December 10, 2020. The First Lien Toggle
Notes due 2026 were issued pursuant to an indenture dated as of January 15, 2021
among us, the guarantors named therein and the U.S. Bank National Association,
as trustee and collateral agent. On September 30, 2021, we exercised an option
to repurchase76
Table of Contents
$35.0 million of our First Lien Toggle Notes due 2026. The total cost to
exercise this repurchase option was $40.3 million, including principal,
redemption premium and accrued and unpaid interest. During the year ended
December 31, 2021, we recorded loss on debt extinguishment of $14.4 million in
other expense. As a result of this debt reduction, our annual interest cost has
been reduced by $5.25 million. The First Lien Toggle Notes due 2026 bear cash
interest at a rate of 15% per annum payable semi-annually in arrears on January
15 and July 15, beginning on July 15, 2021. Interest for the first three
interest periods after the issue date may, at our option, be paid in PIK
interest at a rate of 17% per annum, and thereafter interest shall be payable
solely in cash. The First Lien Toggle Notes due 2026 will mature on April 24,
2026. The indenture provides that the First Lien Toggle Notes due 2026 are
general senior secured obligations of the Company and are secured on a pari
passu basis with the Senior Secured Credit Facilities, the First Lien Notes due
2026, the First Lien Notes due 2025, and the Convertible Notes due 2026.On December 14, 2020, Mudrick received a total of 21,978,022 AMC Preferred
Equity Units and 21,978,022 shares of our Common Stock; of which 8,241,758
shares ("Commitment Shares") relates to consideration received for a commitment
fee and 13,736,264 shares ("Exchange shares") as consideration received for the
second lien exchange. Mudrick exchange $100 million aggregate principal amount
of the Second Lien Notes due 2026 that were held by Mudrick for the Exchange
Shares (the "Second Lien Exchange") and waived its claim to PIK interest of $4.5
million principal amount. During the year ended December 31, 2021, we
reclassified the prepaid commitment fee and deferred charges of $28.6 million to
corporate borrowings from other long-term assets for the Commitment Shares and
deferred charges. The prepaid commitment fee was recorded as a discount and,
together with deferred charges, will be amortized to interest expense over the
term of the First Lien Toggle Notes due 2026 using the effective interest
method. During the year ended December 31, 2020, we recorded a gain on
extinguishment of the Second Lien Notes due 2026 of $93.6 million based on the
fair value of the Exchange Shares of $43.8 million and the carrying value of the
$104.5 million principal amount of the Second Lien Notes exchanged of $137.4
million.Convertible Notes. On January 27, 2021, affiliates of Silver Lake and certain
co-investors (collectively, the "Noteholders") elected to convert (the
"Conversion") all $600.0 million principal amount of our Convertible Notes due
2026 into shares of our Common Stock at a conversion price of $6.76 per share.
The Conversion settled on January 29, 2021 and resulted in the issuance of
44,422,860 shares of our Common Stock and 44,422,860 AMC Preferred Equity Units
to the Noteholders. The Conversion reduced our first-lien indebtedness by $600.0
million. Pursuant to the Stock Repurchase and cancellation agreement with Dalian
Wanda Group Co., Ltd. ("Wanda") dated as of September 14, 2018, 5,666,000 shares
of our Class B common stock and 5,666,000 AMC Preferred Equity Units held by
Wanda were forfeited and cancelled in connection with the Conversion.Convertible Notes. 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 due 2024 Indenture to permit us to issue
the First Lien Notes due 2025, among other changes.Concurrently with the Exchange Offers, to obtain the consent of the holders of
the Convertible Notes due 2024, we 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 (the
"Convertible Notes due 2026") and a first-priority lien on the collateral
securing our Senior Secured Credit Facilities was granted to secure indebtedness
thereunder. We accounted for this transaction as a modification of debt as the
lenders did not grant a concession and the difference between the present value
of the old and new cash flows was less than 10%. The modification did not result
in the recognition of any gain or loss and we established new effective interest
rates based on the carrying value of the Convertible Notes due 2024. Third party
costs related to the transaction were expensed as incurred and amounts paid to
lenders were capitalized and amortized through maturity of the debt.
As noted above, on January 27, 2021, affiliates of Silver Lake and certain
co-investors elected to convert all $600.0 million principal amount of our
Convertible Notes due 2026 into shares of our Common Stock at a conversion price
of $6.76 per share.
First Lien Notes due 2029. On February 14, 2022, we issued $950.0 million
aggregate principal amount of our 7.5% First Lien Senior Secured Notes due 2029
("First Lien Notes due 2029"), pursuant to an indenture, dated February 14,
2022, among the Company, the guarantors named therein and U.S. Bank Trust
Company, National Association, as trustee and collateral agent. We used the net
proceeds from the sale of the notes, and cash on hand, to fund the full
redemption of the then outstanding $500.0 million aggregate principal amount of
our 10.5% First Lien Notes due 2025, the then outstanding $300.0 million
aggregate principal amount of our 10.5% First Lien Notes due 2026 and to pay77
Table of Contents
related accrued interest, fees, costs, premiums and expenses. We recorded a loss
on debt extinguishment related to this transaction of $135.0 million in other
expense, during the year ended December 31, 2022. The First Lien Notes due 2029
bear cash interest at a rate of 7.5% per annum payable semi-annually in arrears
on February and August 15, beginning on August 15, 2022. The First Lien Notes
due 2029 will mature on February 15, 2029. The First Lien Notes due 2029 are
general senior secured obligations of the Company and are secured on a pari
passu basis with the Senior Secured Credit Facilities.The First Lien Notes due 2029 bear cash interest at a rate of 7.5% per annum
payable semi-annually in arrears on February 15 and August 15, beginning on
August 15, 2022. The First Lien Notes due 2029 have not been registered under
the Securities Act of 1933, as amended, and will mature on February 15, 2029. We
may redeem some or all of the First Lien Notes due 2029 at any time on or after
February 15, 2025, at the redemption prices equal to (i) 103.750% for the
twelve-month period beginning on February 15, 2025; (ii) 101.875% for the
twelve-month period beginning on February 15, 2026, and (iii) 100.0% at any time
thereafter, plus accrued and unpaid interest. In addition, we may redeem up to
107.5% of the aggregate principal amount and accrued and unpaid interest to, but
not including the date of redemption. We may redeem some or all of the First
Lien Notes due 2029 at any time prior to February 15, 2025 at a redemption price
equal to 100% of the aggregate principal amount and accrued and unpaid interest
to, but not including, the date of redemption, plus an applicable make-whole
premium. Upon a Change of Control (as defined in the indenture governing the
First Lien Notes due 2029), we must offer to purchase the First Lien Notes due
2029 at a purchase price equal to 101% of the principal amounts, plus accrued
and unpaid interest.The First Lien Notes due 2029 are general senior secured obligations and are
fully and unconditionally guaranteed on a joint and several senior secured basis
by all of the Company's existing and future subsidiaries that guarantee the
Company's other indebtedness, including the Company's Senior Secured Credit
Facilities. The First Lien Notes due 2029 are secured, on a pari passu basis
with the Senior Secured Credit Facilities, on a first-priority basis by
substantially all of the tangible and intangible assets owned by the Company and
guarantors that secure obligations under the Senior Secured Credit Facilities
including pledges of capital stock of certain of the 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 and
permitted liens.See Note 8-Corporate Borrowings and Finance Lease Liabilities in the Notes to
the Consolidated Financial Statements under Part II, Item 8 thereof, for further
information regarding the above.Equity Distribution Agreement. On September 26, 2022, we entered into an equity
distribution agreement with Citigroup Global Markets Inc., as a sales agent, to
sell up to 425.0 million shares of the Company's AMC Preferred Equity Units,
from time to time, through an "at-the-market" offering program. Subject to the
terms and conditions of the equity distribution agreement, the sales agent will
use reasonable efforts consistent with their normal trading and sales practices,
applicable law and regulations, and the rules of the NYSE to sell the AMC
Preferred Equity Units from time to time based upon our instructions for the
sales, including any price, time or size limits specified by us. We intend to
use the net proceeds, from the sale of AMC Preferred Equity Units pursuant to
the equity distribution agreement to repay, refinance, redeem or repurchase the
Company's existing indebtedness (including expenses, accrued interest and
premium, if any) and otherwise for general corporate purposes.During the year ended December 31, 2022, we raised gross proceeds of
approximately $228.8 million and paid fees to the Sales Agent and incurred other
third-party issuance costs of approximately $5.7 million and $5.5 million,
respectively through the at-the-market offering of approximately 207.7 million
shares of AMC Preferred Equity Units. See Note 16-Subsequent Events for further
information regarding at-the-market offerings.
Liquidity and Capital Resources-For the Year Ended December 31, 2021, Compared
to the Year Ended December 31, 2020
For a comparison of our liquidity and capital resources for the year ended
December 31, 2021, compared to the year ended December 31, 2020, see "Part II,
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations" of our annual report on Form 10-K for the year ended December 31,
2021 , filed with the Securities and Exchange Commission on March 1, 2022,
which is incorporated herein by reference.
New Accounting Pronouncements
See Note 1-The Company and Significant Accounting Policies in Notes to the
Consolidated Financial Statements under Part II, Item 8 thereof for information
regarding recently issued accounting standards.
78
Table of Contents
© Edgar Online, source Glimpses
[ad_2]
Source link