AMC ENTERTAINMENT HOLDINGS, INC. The following discussion relates to the consolidated audited financial statements ofAMC 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. We operate theatres in 12 countries, including theU.S. ,Europe andSaudi Arabia . 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 ofDecember 31, 2021 , we owned, operated or had interests in 946 theatres and 10,562 screens.
Temporarily Suspended or Limited Operations
Throughout the first quarter of 2020, we temporarily suspended theatre operations in ourU.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 ofMarch 17, 2020 , all of ourU.S. and International theatre operations were temporarily suspended. We resumed limited operations in the International markets in earlyJune 2020 and limited operations in theU.S. markets in lateAugust 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. As ofMarch 31, 2021 , we operated at 585 domestic theatres with limited seating capacities, representing approximately 99% of our domestic theatres. As ofJune 30, 2021 , the Company operated 593 domestic theatres, representing approximately 100% of our domestic theatres with remaining seating capacity restrictions winding down throughout the quarter. As ofSeptember 30, 2021 andDecember 31, 2021 , the Company operated 596 and 593 domestic theatres, respectively, representing essentially 100% of its domestic theatres. Total revenues for theU.S. markets increased$1,049.1 million for the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 . As ofMarch 31, 2021 , we operated at 97 international theatres, with limited seating capacities, representing approximately 27% of its international theatres. As ofJune 30, 2021 , we operated 335 international theatres with limited seating capacities, representing approximately 95% of our international theatres. The majority of international theatre operations were suspended for the first two months of the second quarter of 2021 due to a COVID-19 resurgence and did not reopen until earlyJune 2021 . AtSeptember 30, 2021 andDecember 31, 2021 , the Company operated 351 and 337 international theatres, respectively, representing approximately 99% and 95%, respectively, of its international theatres. Total revenues for the International markets increased$236.4 million for the year endedDecember 31 . 2021, compared to the year endedDecember 31, 2020 .
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 a
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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"). 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. As we continue our recovery from the impacts of the COVID-19 pandemic on our business, our aggregate attendance levels remain significantly behind pre-pandemic levels. However, for the first time since 2019, substantially all of our worldwide theatres were open for the entirety of the third and fourth quarters of 2021. During the year endedDecember 31, 2021 , films licensed from our six largest movie studio distributors based on revenues accounted for approximately 87% of ourU.S. admissions revenues, which consisted of Sony,Disney , Universal, Warner Bros.,Paramount , and Lionsgate. InEurope , approximately 77% of our box office revenue came from films attributed to our four largest distributor groups; which consisted of Universal,Disney , Sony, and Warner Bros. 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 Number of Number of Number of
Screens As of Screens As of Screens As of Screens As of
Format December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
IMAX® 186 185 38 36
Dolby CinemaTM 154 149 8 6
Other Premium Large Format ("PLF") 56 54 77 75
Dine-in theatres 729 723 13 8
Premium seating 3,395 3,342 572 533
As of December 31, 2021 , AMC was the largest IMAX® exhibitor in the U.S. with a
57% market share. Each one of our IMAX® local installations is protected by
geographic exclusivity, and as of December 31, 2021 , our IMAX® screen count was
96% greater than our closest competitor. We also operate 35 IMAX® screens in
Europe . 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,
2021 , we opened two new IMAX screens in the U.S. theatres, closed one IMAX
screen related to U.S. theatres that was permanently closed and opened two new
IMAX screens related to theatres in Saudi Arabia .
As of December 31, 2021 , we operated 154 Dolby Cinema™ at AMC auditoriums in the
U.S. In December 2018 , we introduced the first United Kingdom Dolby Cinema
Auditorium in our iconic Leicester Square theatre in the heart of London , ending
2021 with eight 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
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of
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. 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 12 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. As ofDecember 31, 2019 , prior to the COVID-19 pandemic, the quality improvement in the customer experience could drive a 33% increase in attendance, on average, at these locations in their first year post renovation. These increases will only continue post-COVID-19 pandemic if attendance returns to normalized pre COVID-19 levels. Upon reopening a remodeled theatre, we typically increase the ticket price to reflect the enhanced consumer experience. As ofDecember 31, 2021 , in ourU.S. markets we featured recliner seating in approximately 351 U.S. theatres, including Dine-in-Theatres, totaling approximately 3,395 screens and representing 43.8% of totalU.S. screens. In our International markets, as ofDecember 31, 2021 , we had recliner seating in approximately 89 International theatres, totaling approximately 572 screens and representing 20.4% of total International screens. Open-source internet ticketing makes our AMC seats (approximately 1.1 million as ofDecember 31, 2021 ) in all ourU.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 endedDecember 31, 2021 , approximately 67% of our tickets were purchased online in theU.S. , with approximately 80% 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. As a result of the COVID-19 pandemic, we have streamlined our concession menus to focus on our best-selling products and expanded cashless transactions technology through the deployment of mobile ordering across all brands, all in an effort to reduce the number of touchpoints between guests and employees. We have also upgraded our Coca-Cola Freestyle beverage software to allow guests to dispense drinks without the need to utilize the machine's touch screen using the Coca-Cola Freestyle app. We currently operate 51Dine-In Theatres in theU.S. and threeDine-In Theatres inEurope that deliver chef-inspired menus with seat-side or delivery service to luxury recliners with tables. Our recentDine-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
Loyalty Programs and Other Marketing
In ourU.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 44
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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 repeat visits to already seen movies from$19.95 to$23.95 per month depending upon geographic market. AMC Stubs® A-List also includes premium offerings including IMAX®, Dolby Cinema™ at AMC,RealD , Prime and other proprietary PLF brands. AMC Stubs® A-List members can book tickets online in advance and select specific seats atAMC 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 ofDecember 31, 2021 , we had more than 25,300,000 member households enrolled in AMC Stubs® A-List, AMC Stubs Premiere™ and AMC Stubs Insider™ programs, combined. Our AMC Stubs® members represented approximately 40% of AMCU.S. markets attendance during the year endedDecember 31, 2021 . 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 12,800,000 members in our various International loyalty programs. We are currently evaluating the Odeon loyalty programs to determine how best to reward our European movie-goers and heighten guest loyalty to drive additional attendance to Odeon theatres. 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 theU.S. circuit with the ability to order food and beverage offerings via our mobile applications while ordering tickets ahead of scheduled showtimes. Our mobile applications also include AMC Theatres On Demand, a service for members of the AMC Stubs® loyalty program that allows them to rent or buy movies. In response to the COVID-19 pandemic, AMC's robust online and mobile platforms in ourU.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 First Lien Senior Secured Notes due 2029. OnFebruary 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 estimate we will record a loss on debt extinguishment related to this transaction of approximately$135 million in other expense in 2022. See Note 16-Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof for further information. Common Stock issuance. We entered into equity distribution agreements with sales agents to sell approximately 241.6 million and 90.9 million shares of our Class A common stock ("Common Stock"), par value$0.01 45
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per share, through "at-the-market" offering programs during the years endedDecember 31, 2021 andDecember 31, 2020 , respectively. During the year endedDecember 31, 2021 , the Company raised gross proceeds of approximately$1,611.8 million related to the "at-the-market" offering programs and paid fees to the sales agents of approximately$40.3 million and other fees of$0.8 million . During the year endedDecember 31, 2020 , the Company raised gross proceeds of approximately$272.8 million related to the "at-the-market" offering programs and paid fees to the sales agents of approximately$8.1 million . The Company intends to use the net proceeds from the sale of the Common Stock pursuant to the equity distribution agreement for general corporate purposes, which may include the repayment, refinancing, redemption or repurchase of existing indebtedness or working capital, capital expenditures and other investments. The gross proceeds raised from the "at-the-market" sale of Common Stock during the years endedDecember 31, 2021 andDecember 31, 2020 , are summarized in
the
table below:
"At-the-market" Number of Class
Equity A common stock Gross
Distribution shares sold (in Proceeds (in
Agreement Dates Sales Agents
millions) millions)
15.0 $ 56.1
15.0 41.6
November 10, 2020 Goldman Sachs & Co. LLC and B. Riley Securities, Inc. 20.0 61.4
40.93 113.7
Total year ended December 31, 2020 90.93 $ 272.8
137.07 352.6
January 25, 2021 Goldman Sachs & Co. LLC and B. Riley Securities, Inc. 50.0 244.3
April 27, 2021 Goldman Sachs & Co. LLC, B. Riley Securities, Inc. and
Citigroup Global Markets Inc. (2) 43.0 427.5
June 3, 2021 B. Riley Securities, Inc. and Citigroup Global Markets Inc. 11.55 587.4
Total year ended December 31, 2021 241.62 $ 1,611.8
On December 11, 2020 , the Company entered into an equity distribution
agreement with Goldman Sachs & Co. LLC and B. Riley Securities, Inc. , as(1) sales agents to sell up to 178.0 million shares of the Company's Common
Stock, of which approximately 40.93 million shares of Common Stock were sold
and settled during
Common Stock were sold and settled during the year ended
Included in the Common Stock shares sold of 43.0 million was the reissuance
of treasury stock shares of approximately 3.7 million shares. Upon the sales
(2) of treasury stock, the Company reclassified amounts recorded in treasury
stock to additional paid-in capital of
million to retained earnings during the year ended
Common Stock issuance to Mudrick. OnJune 1, 2021 , we issued to Mudrick 8.5 million shares of our Common Stock 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. OnAugust 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 andEstonia ) and is 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 onAugust 28, 2020 and paid$0.5 million in transaction costs during the year endedDecember 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 46
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interest ofLithuania andEstonia and the 100% disposal ofLatvia were recorded in additional paid-in capital during the year endedDecember 31, 2020 and were recorded in earnings during the year endedDecember 31, 2021 when the remaining 51% interests inLithuania andEstonia were disposed. Also, during the year endedDecember 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 inLatvia . AtDecember 31, 2020 , our noncontrolling interest of 49% inLithuania andEstonia was$26.9 million . During the year endedDecember 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 inEstonia , 51% equity interest inLithuania 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 endedDecember 31, 2021 . Exchange Offers. OnJuly 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 onJuly 31, 2020 , worth$20.2 million at the market closing price onJuly 31, 2020 . 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 Obligations 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 endedDecember 31, 2020 . We realized$1.2 billion of cancellation of debt income ("CODI") in connection with our 2020 debt restructuring. As a result,$1.2 billion of our federal net operating losses were eliminated due to tax attribute reduction to offset the CODI. The loss of these attributes may adversely affect our cash flows and therefore our ability to service our indebtedness. 47 Table of Contents Selected Financial Data Year Ended December 31, (In millions, except operating data) 2021 2020 2019 2018 2017 Statement of Operations Data: Revenues: Admissions$ 1,394.2 $ 712.1 $ 3,301.3 $ 3,385.0 $ 3,229.5 Food and beverage 857.3 362.4 1,719.6 1,671.5 1,548.4 Other revenue 276.4 167.9 450.1 404.3 301.3 Total revenues 2,527.9 1,242.4 5,471.0 5,460.8 5,079.2 Operating Costs and Expenses: Film exhibition costs 607.7 322.7 1,699.1 1,710.2 1,604.3 Food and beverage costs 137.9 88.8 278.7 270.9 252.1 Operating expense, excluding depreciation and amortization below 1,141.8 856.0 1,686.6 1,654.7 1,548.0 Rent 828.0 884.1 967.8 797.8 794.4 General and administrative: Merger, acquisition and other costs(1) 13.7 24.6 15.5 31.3 63.0 Other, excluding depreciation and amortization below 226.6 156.7 153.0 179.3 133.2 Depreciation and amortization 425.0 498.3 450.0 537.8 538.6 Impairment of long-lived assets, definite and indefinite-lived intangible assets and goodwill(2) 77.2 2,513.9 84.3 13.8 43.6 Operating costs and expenses 3,457.9 5,345.1 5,335.0 5,195.8 4,977.2 Operating income (loss) (930.0) (4,102.7) 136.0 265.0 102.0 Other expense (income)(3) (87.9) 28.9 13.4 (108.1) (1.5) Interest expense: Corporate borrowings 414.9 311.0 292.8 262.3 231.6
Capital and financing lease obligations 5.2 5.9 7.6 38.5 42.4 Non-cash NCM exhibitor services agreement(4) 38.0 40.0 40.4 41.5 - Equity in (earnings) losses of non-consolidated entities(5) (11.0) 30.9 (30.6) (86.7) 185.2 Investment expense (income)(6) (9.2) 10.1 (16.0) (6.2) (22.6) Earnings (loss) before income taxes (1,280.0) (4,529.5) (171.6) 123.7 (333.1) Income tax provision (benefit)(7) (10.2) 59.9 (22.5) 13.6 154.1 Net earnings (loss) (1,269.8) (4,589.4) (149.1) 110.1 (487.2) Less: Net loss attributable to noncontrolling interests (0.7) (0.3) - - -
Net earnings (loss) attributable to
$ (1,269.1) $ (4,589.1) $ (149.1) $ 110.1 $ (487.2) Earnings (loss) per share attributable toAMC Entertainment Holdings, Inc.'s common stockholders: Basic$ (2.66) $ (39.15) $ (1.44) $ 0.91 $ (3.80) Diluted$ (2.66) $ (39.15) $ (1.44) $ 0.41 $ (3.80) Average shares outstanding Basic (in thousands) 477,410 117,212 103,832 120,621 128,246 Diluted (in thousands) 477,410 117,212 103,832 130,105 128,246 Dividends declared per basic and diluted common share$ 0.00 $
0.03$ 0.80 $ 2.35 $ 0.80 48 Table of Contents Year Ended December 31, (In millions, except operating data) 2021 2020 2019 2018 2017 Balance Sheet Data (at period end): Cash and cash equivalents$ 1,592.5 $ 308.3 $ 265.0 $ 313.3 $ 310.0 Corporate borrowings 5,428.0 5,715.8 4,753.4 4,723.0 4,235.3 Other long-term liabilities(8) 165.0 241.3 195.9 963.1 903.8 Capital and financing lease obligations 72.7 96.0 99.9 560.2 651.4AMC Entertainment Holdings, Inc.'s stockholder's equity (deficit) (1,789.5) (2,885.1) 1,214.2 1,397.6 2,112.4 Total assets 10,821.5 10,276.4 13,675.8 9,495.8 9,805.9 Other Data: Net cash provided by (used in) operating activities$ (614.1) $ (1,129.5) $ 579.0 $ 523.2 $ 537.4 Capital expenditures (92.4) (173.8) (518.1) (576.3) (626.8) Screen additions 82 63 85 89 96 Screen acquisitions 140 14 70 39 736 Screen dispositions 166 593 210 211 258
Construction openings (closures), net (37) 18 5 5 37 Average screens-continuing operations(9) 8,998 5,049 10,669 10,696 10,675 Number of screens operated 10,448 6,048 11,041 11,091 11,169 Number of theatres operated 930 503 1,004 1,006 1,014 Total number of circuit screens 10,562 10,543 11,041 11,091 11,169 Total number of circuit theatres 946 950 1,004 1,006 1,014 Screens per theatre 11.2 11.1 11.0 11.0 11.0 Attendance (in thousands)-continuing operations(9) 128,547 75,190
356,443 358,901 346,763
During the year ended
bonus expense and stock-based compensation expense. During the year ended
costs related to strategic contingent planning. During the year ended
including one-time severance and outplacement costs of
acquisitions and divestitures including entity simplification costs of
million. The year ended
(1)
and
pre-acquisition date rent dispute for Odeon. During the year ended
of expense for NCM common units surrendered as a part of the exclusivity
waiver with NCM in connection with the
Judgment ("Final Judgment") and merger, acquisition and other costs related
to expenses incurred in connection with the Carmike (acquired December 2016),
Odeon (acquired
During the year ended
charges related to our long-lived assets of
the
operating lease right-of-use assets, net and other long-term assets and
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
impairment of
fair values of the
units, respectively. During the year ended
non-cash impairment charges related to our long-lived assets of
million on 101 theatres in the
million on 37 theatres in the International markets with 340 screens and
(2) recorded impairment charges related to indefinite-lived intangible assets of
respectively, in the International markets. We also recorded non-cash
impairment charges of
in the
2020. During the year ended
impairment of long-lived assets of
markets with 512 screens, 14 theatres in the International markets with
148 screens, and a
of 2018, we recorded non-cash impairment losses of
13 theatres in the
International markets with 118 screens. During calendar 2017, we recorded an
impairment of long-lived assets loss of
49
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Other income for the year ended
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
lease guarantees of
extinguishment of the Second Lien Notes due 2026 of
financing related foreign currency transaction losses. Other expense of
million during the year ended
million of expense related to the repayment of indebtedness, foreign currency
transaction losses of
of
(3) the contingent call option related to the Class B common stock purchase and
cancellation agreement of
value of our derivative liability for the embedded conversion feature in our
Convertible Notes of
other income of
for the decrease in the fair value of the derivative liability related to the
embedded conversion feature for the Convertible Notes and
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 Obligations 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
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 earnings from DCIP for the year ended
(earnings) loss of non-consolidated entities includes impairment losses in
the International markets related to equity method investments of
(5) million during the year ended
year ended
of our remaining interest in NCM and a
Screenvision merger. During the year ended
non-consolidated entity impairment losses and losses on dispositions of our
NCM ownership interests of approximately
Investment income during the year ended
sale of the Baltics theatres of
during the year ended
million related to equity interest investments without a readily determinable
(6) fair value accounted for under the cost method in the
Investment expense (income) during the year ended
a gain on the sale of our
impairment of an investment of
31, 2017, investment expense (income) includes a gain on sale of
During the year ended
to the recording of international valuation allowances against deferred tax
assets held in
offset by income tax benefit from net losses incurred in International
markets. During the year ended
allowance previously established against deferred tax assets held in
(7) was released in the fourth quarter of 2019 resulted in a
benefit to income tax expense. During the year ended
recorded the impact of the change in enacted Federal tax rates in our
jurisdictions of
on our deferred income taxes in
aggregate charge of approximately
2017. 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.
50
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(9) Includes consolidated theatres only.
Critical Accounting Estimates
Our Consolidated Financial Statements are prepared in accordance withU.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 withU.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 2021 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 andInternational Theatres . Examples of adverse events or circumstances that could change include (i) the ultimate duration of the COVID-19 pandemic and the prolonged temporary suspension of certain of our theatre operations as well as the behavior of the movie-going public as we resume operations; (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; 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 endedDecember 31, 2021 , we recorded non-cash impairment charges related to our long-lived assets of$61.3 million on 77 theatres in theU.S. markets with 805 screens which were related to property, net, operating lease right-of-use assets, 51
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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 endedDecember 31, 2020 , we recorded non-cash impairment charges related to our long-lived assets of$152.5 million on 101 theatres in theU.S. markets with 1,139 screens which were related to property, net, operating lease right-of-use assets, net and other long-term assets and$25.4 million on 37 theatres in the International markets with 340 screens which were related to property, net and operating lease right-of-use assets, net. AtDecember 31, 2021 , related cash flows were discounted at 10.0% for theDomestic Theatres and 11.5% for theInternational Theatres , atDecember 31, 2020 , related cash flows were discounted at 11.0% forDomestic Theatres and 12.5% forInternational Theatres , atSeptember 30, 2020 , related cash flows were discounted at 12.0% forDomestic Theatres and 13.0% forInternational Theatres , and atMarch 31, 2020 , related cash flows were discounted at 11.5% forDomestic Theatres and 13.0% forInternational Theatres . There were no intangible asset impairment charges incurred during the year endedDecember 31, 2021 . During the year endedDecember 31, 2020 , we recorded impairment charges related to definite-lived intangible assets of$14.4 million inU.S. markets and indefinite-lived intangible assets of$15.2 million in International markets. AtDecember 31, 2020 ,September 30, 2020 andMarch 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 endedDecember 31, 2020 . No impairment charges were recorded related to the AMC trade name for the year endedDecember 31, 2020 . AtDecember 31, 2020 ,September 30, 2020 andMarch 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. AtDecember 31, 2020 , related cash flows were discounted at 12.0% for AMC and 13.5% for Odeon and Nordic, atSeptember 30, 2020 , related cash flows were discounted at 13.0% for AMC and 14.0% for Odeon and Nordic, and atMarch 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 andInternational 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 ourDomestic Theatres andInternational 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 atDecember 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 2021 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 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 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. 52
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Declines in the operating performance of our Domestic andInternational Theatres , the fair value of our debt, and the trading price of our Common Stock, 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 ultimate duration of the COVID-19 pandemic and the prolonged temporary suspension of certain of our theatre operations as well as the behavior of the movie-going public as we resume operations; (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 our share price. 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 ofMarch 31, 2020 ,September 30, 2020 , andDecember 31, 2020 due to significant decreases in our market enterprise value. Our enterprise market capitalization increased and there were no other triggering events during 2021. At our goodwill impairment annual assessment date,October 1, 2021 , 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
Based on the suspension of operations at all of our theatres on or beforeMarch 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 ourInternational 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 ofMarch 31, 2020 ,September 30, 2020 , andDecember 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 theDomestic Theatres andInternational Theatres reporting units was less than their carrying values as ofMarch 31, 2020 andSeptember 30, 2020 , and the fair value of theInternational Theatres reporting unit was less than its fair value as ofDecember 31, 2020 and goodwill impairment charges of$1,276.1 million and$1,030.3 million , were recorded during the year endedDecember 31, 2020 for ourDomestic Theatres andInternational Theatres reporting units, respectively.
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
13.0%
Long-term growth rate September 30, 2020 1.0%
1.0%
Weighted average cost of capital/discount rate
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
53
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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 to 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. AtDecember 31, 2021 , our federal income tax loss carryforwards were approximately$1,185.5 million , our state income tax loss carryforwards were approximately$1,678.6 million , and our foreign income tax loss carryforwards were approximately$898.4 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 ofDecember 31, 2021 , we had a total valuation allowance of$1,114.1 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 inGermany andSpain 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 forGermany andSpain , respectively. AtDecember 31, 2020 , we determined that it was appropriate to record a valuation allowance on the disallowed interest carryforward inSweden 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 recorded onSweden was reduced by a charge of$3.7 million . During 2021, we recorded a valuation allowance on all other deferred tax assets inSweden , resulting in a charge of less than$1 million . With the exception ofFinland andNorway , all other international jurisdictions carried valuation allowances against their deferred tax assets at the end of 2021. OnJuly 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 atJuly 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 Obligations and Note 10-Income Taxes in the Notes to Consolidated Financial Statements under Part II, Item 8 thereof, for further information. Leases. We adopted ASC Topic 842 effectiveJanuary 1, 2019 . 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). 54 Table of Contents
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$208.7 million and a 100-basis point decrease in weighted average discount rate would have increased total operating lease liabilities by approximately$223.2 million . 55 Table of Contents Operating Results The following table sets forth our consolidated revenues, operating costs and expenses attributable to our theatrical exhibition operations and segment operating results. Reference is made to Note 13-Operating Segments in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for additional information therein: U.S. Markets International Markets Consolidated Year Ended Year Ended Year Ended December 31, December 31, December 31, (In millions) 2021 2020 % Change 2021 2020 % Change 2021 2020 % Change Revenues Admissions$ 1,016.5 $ 455.5 * % $
377.7
677.1 258.5 * % 180.2 103.9 73.4 % 857.3 362.4
* % Other theatre 182.2 112.7 61.7 % 94.2 55.2 70.7 % 276.4 167.9 64.6 % Total revenues 1,875.8 826.7 * %
652.1 415.7 56.9 % 2,527.9 1,242.4
* % Operating Costs and Expenses Film exhibition costs 460.6 223.0 * % 147.1 99.7 47.5 % 607.7 322.7 88.3 % Food and beverage costs 95.9 59.1 62.3 % 42.0 29.7 41.4 % 137.9 88.8 55.3 % Operating expense, excluding depreciation and amortization below 833.9 588.9 41.6 %
307.9 267.1 15.3 % 1,141.8 856.0 33.4 % Rent 614.2 650.7 (5.6) % 213.8 233.4 (8.4) % 828.0 884.1 (6.3) % General and administrative expense: Merger, acquisition and other costs 9.0 10.2 (11.8) % 4.7 14.4 (67.4) % 13.7 24.6 (44.3) % Other, excluding depreciation and amortization below 158.4 97.8 62.0 % 68.2 58.9 15.8 % 226.6 156.7 44.6 % Depreciation and amortization 321.2 374.5 (14.2) %
103.8 123.8 (16.2) % 425.0 498.3 (14.7) % Impairment of long-lived assets 61.3 1,443.0 (95.8) % 15.9 1,070.9 (98.5) % 77.2 2,513.9 (96.9) % Operating costs and expenses 2,554.5 3,447.2 (25.9) %
903.4 1,897.9 (52.4) % 3,457.9 5,345.1 (35.3) % Operating loss
(678.7) (2,620.5) (74.1) % (251.3) (1,482.2) (83.0) % (930.0) (4,102.7) (77.3) %
Other expense (income):
Other expense (income) 9.2 61.3 (85.0) % (97.1) (32.4) * % (87.9) 28.9 * %
Interest expense:
Corporate borrowings 349.2 306.0 14.1 % 65.7 5.0 * % 414.9 311.0 33.4 %
Finance lease obligations 0.7 1.2 (41.7) % 4.5 4.7 (4.3) % 5.2 5.9 (11.9) %
Non-cash NCM exhibitor
service agreement 38.0 40.0 (5.0) % - - - % 38.0 40.0 (5.0) %
Equity in (earnings) loss
of non-consolidated
entities (13.7) 17.6 * % 2.7 13.3 (79.7) % (11.0) 30.9 * %
Investment expense
(income) (3.7) 10.2 * % (5.5) (0.1) * % (9.2) 10.1 * %
Total other expense
(income), net 379.7 436.3 (13.0) % (29.7) (9.5) * % 350.0 426.8 (18.0) %
Net loss before income
taxes (1,058.4) (3,056.8) (65.4) % (221.6) (1,472.7) (85.0) % (1,280.0) (4,529.5) (71.7) %
Income tax provision
(benefit) (9.4) 2.4 * % (0.8) 57.5 * % (10.2) 59.9 * %
Net loss (1,049.0) (3,059.2) (65.7) % (220.8) (1,530.2) (85.6) % (1,269.8) (4,589.4) (72.3) %
Less: Net loss
attributable tononcontrolling interests - - - % (0.7) (0.3) * % (0.7) (0.3) * % Net loss attributable to AMC Entertainment Holdings, Inc.$ (1,049.0) $ (3,059.2) (65.7) %$ (220.1) $ (1,529.9) (85.6) %$ (1,269.1) $ (4,589.1) (72.3) %
*Percentage change in excess of 100%.
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U.S. Markets International Markets Consolidated
Year Ended Year Ended Year Ended
December 31, December 31, December 31,
2021 2020 2021 2020 2021 2020
Operating Data:
Screen additions 34 23 48 40 82 63
Screen
acquisitions 134 14 6 - 140 14
Screen
dispositions 66 478 100 115 166 593
Construction
openings
(closures), net (15) 15 (22) 3 (37) 18
Average
screens(1) 7,341 3,715 1,657 1,334 8,998 5,049
Number of screens
operated 7,755 5,228 2,693 820 10,448 6,048
Number of
theatres operated 593 394 337 109 930 503
Total number of
circuit screens 7,755 7,668 2,807 2,875 10,562 10,543
Total number of
circuit theatres 593 590 353 360 946 950
Screens per
theatre 13.1 13.0 8.0 8.0 11.2 11.1
Attendance (in
thousands)(1) 91,102 46,453 37,445 28,737 128,547 75,190
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 our 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.
During the year ended December 31, 2021 , Adjusted EBITDA in the U.S. markets was
$(250.6) million compared to $(768.2) million during the year ended December 31,
2020 . The year-over-year improvement was primarily due to the decreased net loss
driven by an increase in attendance as a result of the reopening of theatres
that had been temporarily closed due to the COVID-19 pandemic, lifting of
seating restrictions, increases in governmental assistance for COVID-19, and
decreases in rent expense, partially offset by increases in operating expenses
due to the increase in attendance, increases in general and administrative
expense, and decreases in cash distributions from equity method investees.
During the year ended December 31, 2021 , Adjusted EBITDA in the International
markets was $(41.1) million compared to $(231.0) million during the year ended
December 31, 2020 . The year-over-year improvement was primarily due to decreases
in net losses due to the increase in attendance, increases in governmental
assistance for COVID-19, and decreases in rent expense and increases in
attributable EBITDA from equity method investees, partially offset by the
increases in operating expenses due to the increase in attendance, increases in
general and administrative expense and an increase in foreign currency
translation rates. During the year ended December 31, 2021 , Adjusted EBITDA in
the U.S. markets and International markets was $(291.7) million compared to
$(999.2) million during the year ended December 31, 2020 , 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, 2021 December 31, 2020
U.S. markets $ (250.6) $ (768.2)
International markets (41.1) (231.0)
Total Adjusted EBITDA (1) $ (291.7) $ (999.2)
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Year Ended
(In millions) December 31, 2021 December 31, 2020
Net loss $ (1,269.8) $ (4,589.4)
Plus:Income tax provision (benefit) (1) (10.2) 59.9 Interest expense 458.1 356.9 Depreciation and amortization 425.0 498.3 Impairment of long-lived assets, definite and indefinite-lived intangible assets and goodwill (2) 77.2
2,513.9
Certain operating expense (income) (3) 0.2 (9.4) Equity in (earnings) loss of non-consolidated entities (4) (11.0) 30.9 Cash distributions from non-consolidated entities (5) 12.5 17.4 Attributable EBITDA (6) 3.7 0.2 Investment expense (income) (9.2) 10.1 Other expense (income) (7) (0.1) 66.9
Other non-cash rent benefit (8) (24.9) (4.9) General and administrative - unallocated: Merger, acquisition and other costs (9) 13.7 24.6 Stock-based compensation expense (10) 43.1
25.4
Adjusted EBITDA $ (291.7) $ (999.2)
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
charges related to our long-lived assets of
(2) the
operating lease right-of-use assets, net and other long-term assets and
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 endedDecember 31, 2020 , we recorded goodwill non-cash impairment charges of$1,276.1 million and$1,030.3 million related to the enterprise fair values of theDomestic Theatres andInternational Theatres reporting units, respectively. During the year endedDecember 31, 2020 , we recorded non-cash impairment charges related to our long-lived assets of$152.5 million on 101 theatres in theU.S. markets with 1,139 screens which were related to property, net, operating lease right-of-use assets, net and other long-term assets and$25.4 million on 37 theatres in the International markets with 340 screens which were related to property, net and operating lease right-of-use assets, net. We recorded non-cash 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 theInternational Theatres reporting unit during the year endedDecember 31, 2020 . We also recorded non-cash impairment charges of$14.4 million related to our definite-lived intangible assets in theDomestic Theatres reporting unit during the year endedDecember 31, 2020 .
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 earnings (loss) from DCIP of
(4) during the year ended
In addition, we recorded impairment losses in the International markets
during the year ended
of
Includes
(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.
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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.
Year Ended
(In millions) December 31, 2021 December 31, 2020
Equity in (earnings) loss of non-consolidated
entities $ (11.0) $ 30.9
Less:
Equity in (earnings) loss of non-consolidated entities excluding International theatre joint ventures (13.5) 27.4 Equity in earnings (loss) of International theatre joint ventures (2.5) (3.5) Income tax expense 0.3 0.1 Investment income (0.1) (0.4) Interest expense 0.2 0.1 Depreciation and amortization 5.6 3.2 Other expense 0.2 0.7 Attributable EBITDA $ 3.7 $ 0.2
Other expense (income) during the year ended
consisted of a loss on debt extinguishment of
(7) fees of
currency transaction gains of
of
Other expense (income) for the year endedDecember 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$15.0 million , partially offset due to a gain on extinguishment of the Second Lien Notes due 2026 of$(93.6) 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 withU.S. GAAP). Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. We have included Adjusted EBITDA because we believe it provides management and investors with additional information to measure our performance and estimate our value. Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported underU.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.
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Segment Information
Our historical results of operations for the years ended
Results of Operations-For the Year Ended
Consolidated Results of Operations
Revenues. Total revenues increased 103.5%, or$1,285.5 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 . Admissions revenues increased 95.8%, or$682.1 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to a 71.0% increase in attendance and a 14.5% 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 of operations at our theatres inU.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 IMAX and Premium content and lower frequency on our A-List subscription program and an increase in foreign currency translation rates, partially offset by loyalty program discounts. Food and beverage revenues increased 136.6%, or$494.9 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due the increase in attendance and the increase in food and beverage per patron. Food and beverage per patron increased 38.4% from$4.82 to$6.67 due to several contributing factors including increases in units sold per transaction and increases in the percentage of patrons making purchases due to higher child percentages, private theatre rentals, an increase in dine-in percentages, mobile orders along with price increases and reduced loyalty program penetration, partially offset by an increase in foreign currency translation rates. Total other theatre revenues increased 64.6%, or$108.5 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to increases in ticket fees, income from gift cards and package tickets and screen advertising due to the increase in attendance and the increase in foreign currency translation rates. Operating costs and expenses. Operating costs and expenses decreased$1,887.2 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to the$2,513.9 million impairment of long-lived assets charge recorded during the year endedDecember 31, 2020 , and the increase in foreign currency translation rates. Film exhibition costs increased 88.3%, or$285.0 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , due to the increase in attendance. As a percentage of admissions revenues, film exhibition costs were 43.6% for the year endedDecember 31, 2021 , and 45.3% for the year endedDecember 31, 2020 . The decrease in film exhibition cost percentage is primarily due to the concentration of box office revenues in lower grossing films and library content in the current year, which typically results in lower film exhibition costs. Additionally, lower film exhibition costs were paid on films with shorter exclusive theatrical windows. Food and beverage costs increased 55.3%, or$49.1 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 . The increase in food and beverage costs was primarily due to the increase in food and beverage revenues. As a percentage of food and beverage revenues, food and beverage costs were 16.1% for the year endedDecember 31, 2021 , and 24.5% for the year endedDecember 31, 2020 . Food and beverage costs included$22.6 million of charges for obsolete inventory during the year endedDecember 31, 2020 , due to the suspension of theatre operations. As a percentage of revenues, operating expense was 45.2% for the year endedDecember 31, 2021 , and 68.9% for the year endedDecember 31, 2020 . Rent expense decreased 6.3%, or$56.1 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , due primarily to cash rent abatements from landlords, declines in rent expense due to the impairment of right-of-use assets during the years endedDecember 31, 2019 andDecember 31, 2020 that reduce the amounts of right-of-use assets that are amortized to rent expense, and theatre closures, partially offset by the increase 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 60 Table of Contents
leases and rent obligations of approximately
Merger, acquisition, and other costs. Merger, acquisition, and other costs were$13.7 million during the year endedDecember 31, 2021 , compared to$24.6 million during the year endedDecember 31, 2020 , primarily due to higher legal and professional costs related to strategic contingent planning in the prior year. Other. Other general and administrative expense increased 44.6% or$69.9 million during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to increases in bonus expense and stock-based compensation expense as a result of improvements in expected annual performance compared to annual targets and the modification and acceleration of vesting of awards during the current and prior year and increases in insurance costs and professional expenses. 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 14.7% or$73.3 million during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to lower depreciation expense on theatres impaired during years endedDecember 31, 2019 andDecember 31, 2020 , partially offset by the increase in foreign currency translation rates. Impairment of long-lived assets, definite and indefinite-lived intangible assets, and goodwill. During the year endedDecember 31, 2021 , we recognized non-cash impairment losses of$61.3 million on 77 theatres in theU.S. markets with 805 screens (inAlabama ,Arkansas ,California ,Colorado ,Connecticut ,District of Columbia , Florida,Georgia ,Illinois ,Indiana ,Iowa ,Kansas ,Kentucky ,Louisiana ,Maryland ,Minnesota ,Mississippi ,Missouri ,Montana , NewYork, North Carolina ,North Dakota ,Ohio ,Oklahoma ,Oregon, Pennsylvania ,South Carolina ,Tennessee ,Texas ,Utah ,West Virginia , andWisconsin ) 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 (inItaly ,Norway ,Spain , and theUK ), which were related to property, net and operating lease right-of-use assets, net. During the year endedDecember 31, 2020 , we recognized non-cash impairment losses of$152.5 million on 101 theatres in theU.S. markets with 1,139 screens (inAlabama ,Arizona ,Arkansas ,California ,Colorado ,District of Columbia , Florida,Georgia ,Illinois ,Indiana ,Iowa ,Kentucky ,Massachusetts ,Michigan ,Minnesota ,Missouri ,Montana ,Nebraska ,New Hampshire ,New Jersey , NewYork, North Carolina ,North Dakota ,Ohio ,Oklahoma ,Pennsylvania ,South Dakota ,Tennessee ,Texas ,Washington ,Wisconsin andWyoming ) which were related to property, net, operating lease right-of-use assets, net and other long-term assets and$25.4 million on 37 theatres in the International markets with 340 screens (inFinland ,Germany ,Ireland ,Italy ,Norway ,Portugal ,Spain ,Sweden , andUK ), which were related to property, net and operating lease right-of-use assets, net. We performed quantitative impairment evaluations of our indefinite-lived intangible assets as ofMarch 31, 2020 ,September 30, 2020 andDecember 31, 2020 related to the AMC, Odeon and Nordic trade names and recorded impairment charges of$15.2 million related to the Odeon and Nordic trade names during the year endedDecember 31, 2020 . In addition, we performed quantitative impairment evaluations of our definite-lived intangible assets as ofMarch 31, 2020 ,September 30, 2020 andDecember 31, 2020 and recorded impairment charges of$14.4 million inU.S. markets. We performed quantitative impairment evaluations of our goodwill as ofMarch 31, 2020 ,September 20, 2020 andDecember 31, 2020 and recorded impairment charges of$1,276.1 million and$1,030.3 million during the year endedDecember 31, 2020 for ourDomestic Theatres andInternational Theatres reporting units, respectively. Other expense (income). Other income of$87.9 million during the year endedDecember 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 on the Odeon Revolving Credit Facility. Other expense of$28.9 million during the year endedDecember 31, 2020 was primarily due to third party expenses of$39.3 million related to the restructuring of our debt, the increase in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026 of$89.4 million , 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$19.6 million , estimated credit losses related to
contingent
61
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lease guarantees of $15.0 million , partially offset by government assistance
related to COVID-19 of $38.6 million and a gain on the extinguishment of our
second lien secured debt of $93.6 million . 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 $101.2 million to $458.1 million
for the year ended December 31, 2021 compared to $356.9 million during the year
ended December 31, 2020 primarily due to:
? the issuance of
2020;
? the issuance of
2020;
? the issuance of
2026 on
unamortized discount and deferred charges at the date of conversion of
? million 2.95% Convertible Notes due 2026 to 44,422,860 common shares on January
27, 2021 following the guidance in ASC 815-15-40-1; and
? the issuance of £140.0 million and €296.0 million 10.75%/11.25% Cash/PIK Term
Loans due 2023 on
partially offset by:
a reduction in the effective interest rate from 6.37% to 4.46% on
? million aggregate principal amount of our senior subordinated notes exchanged
for
31, 2020;
? the extinguishment of
14, 2020 in exchange for common shares;
? borrowings under revolving credit facilities of approximately
during the year ended
? the repayment of £89.7 million and €12.8 million outstanding amounts under the
Odeon Revolving Credit Facility on
? the conversion of
common shares on
? a decline in interest rates related to borrowings under the Senior Secured Term
Loan due 2026; and
? the repayment in
Revolving Credit Facility.
See Note 8-Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for additional information about our indebtedness.
Equity in (earnings) loss of non-consolidated entities. Equity in (earnings) loss of non-consolidated entities was$(11.0) million for the year endedDecember 31, 2021 , compared to$30.9 million for the year endedDecember 31, 2020 . The decrease in equity in loss of$41.9 million was primarily due to decreases in equity in losses from DCIP of$26.8 million , decreases in impairment charges for equity method investments of$8.6 million and decreases in equity losses on other investments of$6.5 million . Investment (income) expense. Investment income was$(9.2) million for the year endedDecember 31, 2021 , compared to investment expense of$10.1 million for the year endedDecember 31, 2020 . Investment income includes a gain on sale of the Baltics of$5.5 million during the year endedDecember 31, 2021 . Investment expense includes an impairment charge of$15.9 million related to investments, partially offset by a payment of$3.7 million under the NCM tax receivable agreement during the year endedDecember 31, 2020 . Income tax provision (benefit). The income tax provision (benefit) was$(10.2) million and$59.9 million for the year endedDecember 31, 2021 , andDecember 31, 2020 , respectively. The decrease in income tax expense is primarily due to the recording of International valuation allowances against deferred tax assets held inSpain of$40.1 million andGermany of$33.1 million during the year endedDecember 31, 2020 . 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$1,269.8 million and$4,589.4 million during the year endedDecember 31, 2021 , andDecember 31, 2020 , respectively. Net loss during the year endedDecember 31, 2021 compared to net loss for the year 62
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endedDecember 31, 2020 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 impairment of long-lived assets, decreases in depreciation and amortization expense, decreases in rent expense, increases in other income, decreases in equity losses in non-consolidated entities, increases in investment income and decreases in income tax provision, partially offset by higher interest expense, higher general and administrative costs and an increase in foreign currency translation rates.
Theatrical Exhibition-
Revenues. Total revenues increased 126.9%, or$1,049.1 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 . Admissions revenues increased 123.2%, or$561.0 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to a 96.1% increase in attendance and a 13.8% 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 of operations at our theatres inU.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 was primarily due to strategic pricing initiatives put in place over the prior year and increases in IMAX and Premium content and lower frequency on our A-List subscription program. Food and beverage revenues increased 161.9%, or$418.6 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to the increase in attendance and food and beverage per patron. Food and beverage per patron increased 33.6% from$5.56 to$7.43 due to several contributing factors including increases in units sold per transaction and increases in the percentage of patrons making purchases due to higher child percentages, private theatre rentals, an increase in dine-in percentages, mobile orders along with price increases and reduced loyalty program penetration. Total other theatre revenues increased 61.7%, or$69.5 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to increases in ticket fees, income from gift cards and package tickets and screen advertising due to the increase in attendance. Operating costs and expenses. Operating costs and expenses decreased$892.7 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to the$1,443.0 million impairment of long-lived assets, definite-lived intangible assets and goodwill charge recorded during the year endedDecember 31, 2020 . Film exhibition costs increased 106.5%, or$237.6 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , due to the increase in admissions revenues, partially offset by a decrease in film exhibition costs as a percentage of admissions revenues. As a percentage of admissions revenues, film exhibition costs were 45.3% for the year endedDecember 31, 2021 , and 49.0% for the year endedDecember 31, 2020 . The decrease in film exhibition cost percentage is primarily due to the concentration of box office revenues in lower grossing films and library content in the current year, which typically results in lower film exhibition costs. Additionally, lower film exhibition costs were paid on films with shorter exclusive theatrical windows. Food and beverage costs increased 62.3%, or$36.8 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 . 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 14.2% for the year endedDecember 31, 2021 , and 22.9% for the year endedDecember 31, 2020 . Food and beverage costs included$17.5 million of charges for obsolete inventory during the year endedDecember 31, 2020 , due to the suspension of theatre operations. As a percentage of revenues, operating expense was 44.5% for the year endedDecember 31, 2021 , and 71.2% for the year endedDecember 31, 2020 . Rent expense decreased 5.6%, or$36.5 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , due primarily to theatre closures, declines in rent expense due to the impairment of right-of-use assets during years endedDecember 31, 2019 andDecember 31, 2020 that reduce the amounts of right-of-use assets that are amortized to rent expense, and cash rent abatements from landlords. 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$252.4 million that have been deferred to future years as ofDecember 31, 2021 . 63
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Merger, acquisition, and other costs. Merger, acquisition, and other costs were$9.0 million during the year endedDecember 31, 2021 , compared to$10.2 million during the year endedDecember 31, 2020 . Other. Other general and administrative expense increased 62.0% or$60.6 million during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to increases in bonus expense and stock-based compensation expense as a result of improvements in expected annual performance compared to annual targets and the modification and acceleration of vesting of awards during the current and prior year and increases in insurance costs and professional expenses. 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 14.2% or$53.3 million during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to lower depreciation expense on theatres impaired during years endedDecember 31, 2019 andDecember 31, 2020 . Impairment of long-lived assets, definite and indefinite-lived intangible assets, and goodwill. During the year endedDecember 31, 2021 , we recognized non-cash impairment losses of$61.3 million on 77 theatres in theU.S. markets with 805 screens (inAlabama ,Arkansas ,California ,Colorado ,Connecticut ,District of Columbia , Florida,Georgia ,Illinois ,Indiana ,Iowa ,Kansas ,Kentucky ,Louisiana ,Maryland ,Minnesota ,Mississippi ,Missouri ,Montana , NewYork, North Carolina ,North Dakota ,Ohio ,Oklahoma ,Oregon, Pennsylvania ,South Carolina ,Tennessee ,Texas ,Utah ,West Virginia , andWisconsin ) which were related to property, net, operating lease right-of-use assets, net and other long-term assets. During the year endedDecember 31, 2020 , we recognized non-cash impairment losses of$152.5 million on 101 theatres in theU.S. markets with 1,139 screens (inAlabama ,Arizona ,Arkansas ,California ,Colorado ,District of Columbia , Florida,Georgia ,Illinois ,Indiana ,Iowa ,Kentucky ,Massachusetts ,Michigan ,Minnesota ,Missouri ,Montana ,Nebraska ,New Hampshire ,New Jersey , NewYork, North Carolina ,North Dakota ,Ohio ,Oklahoma ,Pennsylvania ,South Dakota ,Tennessee ,Texas ,Washington ,Wisconsin andWyoming ) which were related to property, net, operating lease right-of-use assets, net and other long-term assets. We performed quantitative impairment evaluations of our definite-lived intangible assets as ofMarch 31, 2020 ,September 30, 2020 andDecember 31, 2020 and recorded impairment charges of$14.4 million during the year endedDecember 31, 2020 . We performed quantitative impairment evaluations of our goodwill as ofMarch 31, 2020 ,September 30, 2020 andDecember 31, 2020 and recorded impairment charges of$1,276.1 million for ourDomestic Theatres reporting unit. Other expense. Other expense of$9.2 million during the year endedDecember 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. Other expense of$61.3 million during the year endedDecember 31, 2020 was primarily due to third party expenses of$39.3 million related to the restructuring of our debt, the increase in fair value of our derivative liability for the embedded conversion feature in our Convertible Notes due 2026 of$89.4 million , 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$19.6 million , and estimated credit losses related to contingent lease guarantees of$9.2 million , partially offset by government assistance related to COVID-19 of$1.8 million and a gain on the extinguishment of our second lien secured debt of$93.6 million . 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 increased$40.7 million to$387.9 million for the year endedDecember 31, 2021 , compared to$347.2 million during the year endedDecember 31, 2020 , primarily due to:
? the issuance of
2020;
? the issuance of
2020;
? the issuance of
2026 on
the conversion of
? common shares on
expense of
date of conversion following the guidance in ASC 815-15-40-1,
64
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partially offset by:
a reduction in the effective interest rate from 6.37% to 4.46% on
? million aggregate principal amount of our senior subordinated notes exchanged
for
31, 2020;
? the extinguishment of
14, 2020, in exchange for common shares;
? borrowings under revolving credit facilities of approximately
during the year ended
? a decline in interest rates related to borrowings under the Senior Secured Term
Loan due 2026; and
? the repayment in
Revolving Credit Facility.
See Note 8-Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for additional information about our indebtedness.
Equity in (earnings) loss of non-consolidated entities. Equity in (earnings) loss of non-consolidated entities was$(13.7) million for the year endedDecember 31, 2021 , compared to$17.6 million for the year endedDecember 31, 2020 . The decrease in equity in loss of$31.3 million was primarily due to decreases in equity in losses from DCIP of$26.8 million and decreases in equity losses on other investments of$4.5 million . Investment (income) expense. Investment income was$(3.7) million for the year endedDecember 31, 2021 , compared to investment expense of$10.2 million for the year endedDecember 31, 2020 . Investment expense includes impairment charges of$15.9 million related to investments, partially offset by a payment of$3.7 million under the NCM tax receivable agreement during the year endedDecember 31, 2020 .
Income tax provision (benefit). The income tax provision (benefit) was
Net loss. Net loss was$1,049.0 million and$3,059.2 million during the year endedDecember 31, 2021 , andDecember 31, 2020 , respectively. Net loss during the year endedDecember 31, 2021 compared to net loss for the year endedDecember 31, 2020 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 impairment of long-lived assets, decreases in depreciation and amortization expense, decreases in rent expense decreases in other expense, decreases in equity losses in non-consolidated entities, increases in investment income, decreases in income tax provision, partially offset by higher interest expense and higher general and administrative costs.
Theatrical Exhibition - International Markets
Revenues. Total revenues increased 56.9%, or$236.4 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 . Admissions revenues increased 47.2%, or$121.1 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to a 30.3% increase in attendance and a 13.0% increase in average ticket price. The increase in attendance was primarily the 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. The increase in average ticket price includes the impact of the increase in foreign currency translation rates and reflects minimal volumes of attendance in the prior year. Food and beverage revenues increased 73.4% or$76.3 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to the increase in attendance and food and beverage per patron. Food and beverage per patron increased 32.9% from$3.62 to$4.81 and includes the impact of the increase in foreign currency translation rates. Total other theatre revenues increased 70.7%, or$39.0 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to increases in ticket fees, income from gift cards and package tickets, screen advertising and theatre rentals due to the increase in attendance and the increase in foreign currency translation rates. 65
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Operating costs and expenses. Operating costs and expenses decreased$994.5 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to a$1,070.9 million impairment of long-lived assets, indefinite-lived intangible assets and goodwill charge, recorded during the year endedDecember 31, 2020 , and an increase in foreign currency translation rates. Film exhibition costs increased 47.5%, or$47.4 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , due to the increase in admissions revenues. As a percentage of admissions revenues, film exhibition costs were 38.9% for the years endedDecember 31, 2021 and 2020. Food and beverage costs increased 41.4%, or$12.3 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 . 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 23.3% for the year endedDecember 31, 2021 , and 28.6% for the year endedDecember 31, 2020 . Food and beverage costs included$5.1 million of charges for obsolete inventory during the year endedDecember 31, 2020 , due to the suspension of theatre operations. As a percentage of revenues, operating expense was 47.2% for the year endedDecember 31, 2021 , and 64.3% for the year endedDecember 31, 2020 . Rent expense decreased 8.4%, or$19.6 million , during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , due primarily to cash rent abatements from landlords, declines in rent expense due to the impairment of right-of-use assets during the years endedDecember 31, 2019 andDecember 31, 2020 that reduce the amounts of right-of-use assets that are amortized to rent expense, and theatre closures, partially offset by the increase 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$62.7 million that have been deferred to future years as ofDecember 31, 2021 . Merger, acquisition, and other costs. Merger, acquisition, and other costs were$4.7 million during the year endedDecember 31, 2021 , compared to$14.4 million during the year endedDecember 31, 2020 , primarily due to legal and professional costs related to strategic planning in the prior year. Other. Other general and administrative expense increased 15.8% or$9.3 million during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to increases in bonus expense and stock-based compensation expense as a result of improvements in expected annual performance compared to annual targets and the modification and acceleration of vesting of awards during the current and prior year and increases 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 16.2% or$20.0 million during the year endedDecember 31, 2021 , compared to the year endedDecember 31, 2020 , primarily due to lower depreciation expense on theatres impaired in years endedDecember 31, 2019 andDecember 31, 2020 , partially offset by the increase in foreign currency translation rates. Impairment of long-lived assets, definite and indefinite-lived intangible assets, and goodwill. During the year endedDecember 31, 2021 , we recognized non-cash impairment losses of$15.9 million on 14 theatres in the International markets with 118 screens (inItaly ,Norway ,Spain , andUK ), which were related to property, net, and operating lease right-of-use assets, net.
During the year ended
We performed quantitative impairment evaluations of our indefinite-lived intangible assets related to the Odeon and Nordic trade names as ofMarch 31, 2020 ,September 30, 2020 andDecember 31, 2020 and recorded impairment charges of$15.2 million related to these assets during the year endedDecember 31, 2020 . We performed a quantitative impairment evaluation of our goodwill as ofMarch 31, 2020 ,September 30, 2020 andDecember 31, 2020 and recorded impairment charges of$1,030.3 million for ourInternational Theatres reporting unit during the year endedDecember 31, 2020 . 66
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Other income. Other income of$97.1 million during the year endedDecember 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. Other income of$32.4 million during the year endedDecember 31, 2020 , was primarily due to the international government assistance related to COVID-19 of$36.8 million , partially offset by estimated credit losses related to contingent lease guarantees of$5.8 million . 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$60.5 million to$70.2 million for the year endedDecember 31, 2021 compared to$9.7 million during the year endedDecember 31, 2020 , primarily due to:
? the issuance of £140.0 million and €296.0 million 10.75%/11.25% Cash/PIK Term
Loans due 2023 on
partially offset by:
? the repayment of £89.7 million and €12.8 million outstanding amounts under the
Odeon Revolving Credit Facility on
See Note 8-Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II Item 8 thereof for additional information about our indebtedness.
Equity in loss of non-consolidated entities. Equity in loss of non-consolidated
entities was
Investment (income) expense. Investment income was$(5.5) million for the year endedDecember 31, 2021 , compared to investment income of$(0.1) million for the year endedDecember 31, 2020 . Investment income includes a gain on sale of the Baltics of$5.5 million during the year endedDecember 31, 2021 . Income tax provision (benefit). The income tax provision (benefit) was$(0.8) million and$57.5 million for the year endedDecember 31, 2021 , andDecember 31, 2020 , respectively. The decrease in income tax expense is primarily due to the recording of International valuation allowances against deferred tax assets held inSpain of$40.1 million andGermany of$33.1 million during the year endedDecember 31, 2020 . 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$220.8 million and$1,530.2 million during the year endedDecember 31, 2021 , andDecember 31, 2020 , respectively. Net loss during the year endedDecember 31, 2021 declined compared to net loss for the year endedDecember 31, 2020 due to increases 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 impairment of long-lived assets, decreases in depreciation and amortization expense, increases in other income, increases in investment income, decreases in equity losses in non-consolidated entities, decreases in income tax provision, decreases in rent expense, partially offset by higher interest expense, higher general and administrative costs and an increase in foreign currency translation rates.
Results of Operations-For the Year Ended
For a comparison of our results of operations for the year endedDecember 31, 2020 , compared to the year endedDecember 31, 2019 , 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 endedDecember 31, 2020 , filed with theSecurities and Exchange Commission onMarch 12, 2021 , which is incorporated herein by reference.
Liquidity and Capital Resources-For the Year Ended
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 resume, we are starting to see this float resume. Film distributors generally release the films which
they
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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 ofDecember 31, 2021 andDecember 31, 2020 of$54.6 million and$(1,104.6) million , respectively. As ofDecember 31, 2021 andDecember 31, 2020 , working capital included$605.2 million and$583.6 million , respectively, of operating lease liabilities and$408.6 million and$405.4 million , respectively, of deferred revenues. AtDecember 31, 2021 , we had$209.1 million unused borrowing capacity, net of letters of credit, under our$225.0 million Senior Secured Revolving Credit Facility. As ofDecember 31, 2020 , we had borrowed$212.2 million (the full availability net of standby letters of credit) under our$225.0 million Senior Secured Revolving Credit Facility. We also maintained a revolving credit facility dueFebruary 14, 2022 at our Odeon subsidiary (the "Odeon Revolving Credit Facility"). This facility was replaced onFebruary 15, 2021 by the Odeon Term Loan Facility. Reference is made to Note 8-Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Statements under Part II, Item 8 thereof, for further information about the Odeon Term Loan Facility. As ofDecember 31, 2020 , we had borrowed$120.8 million (the full availability net of standby letters of credit) under our £100.0 million Odeon Revolving Credit Facility ($136.3 million based on the foreign currency translation rate of 1.3628 onDecember 31, 2020 ). Reference is made to Note 8-Corporate Borrowings and Finance Lease Obligations in the Notes to Consolidated Financial Statements under Part II, Item 8 thereof, for further information about our outstanding indebtedness. As ofDecember 31, 2021 , we had cash and cash equivalents of approximately$1.6 billion . 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 issuances, debt exchanges and equity sales. See Note 8-Corporate Borrowings and Finance Lease Obligations, 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.
The table below summarizes net increase (decrease) in cash equivalents and
restricted cash by quarter for the year ended
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 Our net cash used in operating activities improved by$79.1 million during the three months endedJune 30, 2021 compared to the three months endedMarch 31, 2021 ,$119.9 million during the three months endedSeptember 30, 2021 compared to the three months endedJune 30, 2021 , and$160.4 million during the three months endedDecember 31, 2021 compared to the three months endedSeptember 30, 2021 . This is primarily attributable to continued increases in attendance and industry box office revenues during the year endedDecember 31, 2021 . We will continue to repay rent amounts that were deferred during the pandemic, which will increase our cash outflows from operating activities. See 68
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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 remaining$315.1 million of rentals that were deferred during the COVID-19 pandemic.
Our net cash provided by (used in) investing activities included:
? non-consolidated entities, partially offset by proceeds from the disposition of
the
long-term assets of
? partially offset by
months endedJune 30, 2021 ;$(24.1) million of capital expenditures,$(5.8) million related to the
acquisition of assets at two theatres and
? related to the
proceeds from disposition of long-term assets during the three months ended
? acquisition of assets at two theatres, partially offset by
proceeds from disposition of long-term assets during the three months ended
Our net cash provided by (used in) financing activities included:
? Net proceeds from our debt and equity issuances of
three months ended
? Net proceeds from our equity issuances of
months ended
Principal and premium payments of
? redemption of our First Lien Toggle Notes due 2026 during the three months
ended
? Taxes paid for restricted stock withholdings of
three months ended
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 for increased rent 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 and Odeon Term Loan Facility for at least the next twelve months. In order to achieve net positive operating cash flows and long-term profitability, we believe we will need to continue to increase attendance levels significantly compared to 2021 and achieve levels in line with pre COVID-19 attendance. We believe the global re-opening of our theatres, the anticipated volume of titles available for theatrical release, and the anticipated broad appeal of many of those titles will support increased attendance levels. We believe that the sequential increases in attendance experienced each quarter as 2021 progressed are positive signs of continued demand for the moviegoing experience. However, there remain significant risks that may negatively impact attendance, including a resurgence of COVID-19 related restrictions, potential movie-goer reluctance to attend theatres due to concerns about COVID-19 variant strains, movie studios release schedules and direct to streaming or other changing movie studio practices. We entered the Ninth Amendment (as defined in Note 8-Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof) pursuant to which the requisite revolving lenders party thereto agreed to extend the fixed date for the termination of the suspension period for the financial covenant (the secured leverage ratio) applicable to the Senior Secured Revolving Credit Facility (as defined in Note 8-Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof) fromMarch 31, 2021 toMarch 31, 2022 , which was further extended by the Eleventh Amendment (as defined in Note 8-Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof) fromMarch 31, 2022 toMarch 31, 2023 , as described, and on the terms and conditions specified, therein. We are currently subject to minimum liquidity requirements of approximately$144 million , of which$100 million is required under the conditions for the Extended Covenant 69
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Suspension Period endingMarch 31, 2023 , as amended, under the Senior Secured Revolving Credit Facility, and £32.5 million (approximately$44 million ) of which is required under the Odeon Term Loan Facility. Following the expiration of the Extended Covenant Suspension Period endingMarch 31, 2023 , we will be subject to the financial covenant under the Senior Secured Revolving Credit Facility as of the last day of each quarter on which the aggregate principal amount of revolving loans, and letters of credit (excluding letters of credit that are cash collateralized) in excess of$25 million , outstanding under the Senior Secured Revolving Credit Facility exceeds 35% of the principal amount of commitments under the Senior Secured Revolving Credit Facility then in effect, beginning with the quarter endingJune 30, 2023 . We currently expect we will be able to comply with this financial covenant, however, we do not anticipate the need to borrow under the Senior Secured Revolving Credit Facility during the next twelve months. See Note 8-Corporate Borrowings and Finance Lease Obligations for further information. Our liquidity needs thereafter will depend, among other things, on the timing of movie releases and our ability to generate cash from operations. It is very difficult to estimate our liquidity requirements, future cash burn rates and future 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. Similarly, it is very difficult to predict when theatre attendance levels will return to pre COVID-19 levels, which we expect will depend on the continued widespread availability and use of effective vaccines for the coronavirus, and eventual abatement of more virulent strains of the virus, related government mandates on social distancing and mask use, and the supply of movie titles for theatrical exhibition. While our current cash burn rates have improved, these levels 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 ("day and 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 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 the unknown magnitude and duration of the COVID-19 pandemic. 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. We realized$1.2 billion of 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.
Cash Flows from Operating Activities
Net cash used in operating activities, as reflected in the consolidated statements of cash flows, were$614.1 million and$1,129.5 million during the years endedDecember 31, 2021 andDecember 31, 2020 , respectively. The decrease in cash flows used in operating activities was primarily due to increased attendance levels, which resulted in improved operating results during the year endedDecember 31, 2021 .
Cash Flows from Investing Activities
Net cash used in investing activities, as reflected in the consolidated statements of cash flows, were$68.2 million and$154.6 million during the years endedDecember 31, 2021 andDecember 31, 2020 , respectively. Cash outflows from investing activities for capital expenditures during the years endedDecember 31, 2021 andDecember 31, 2020 were$92.4 million and$173.8 million , respectively. During the year endedDecember 31, 2021 , cash flows used in investing activities included proceeds from the disposition of Baltics of$34.2 million , primarily from the sale of our remaining equity interest inEstonia of$3.7 million andLithuania 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 endedDecember 31, 2021 , we made an additional investment of$9.3 million inSaudi Cinema Company LLC and acquired theatre assets of$8.2 million related to two theatres. During the year endedDecember 31, 2020 , cash flows used in investing activities included proceeds from the disposition of assets of$28.5 million , primarily related to 10 properties and other asset sales of$19.8 million and the 70
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sale of our remaining interest in one of the
We fund the costs of constructing, maintaining and remodeling our theatres through existing cash balances, cash generated from operations, landlord contributions, or borrowed funds, as necessary. We generally lease our theatres pursuant to long-term, non-cancelable operating leases which may require the developer, who owns the property, to reimburse us for the construction costs. We may decide to own the real estate assets of new theatres and following construction, sell and leaseback the real estate assets pursuant to long-term non-cancelable operating leases. In addition, we estimate that our cash outflows for capital expenditures, net of landlord contributions, will be approximately$150 million to$200 million for the year endingDecember 31, 2022 to maintain and enhance operations.
Cash Flows from Financing Activities
Net cash provided by financing activities, as reflected in the consolidated statements of cash flows, were$1,990.7 million and$1,330.3 million , during the years endedDecember 31, 2021 andDecember 31, 2020 , respectively. The increase in cash flows from financing activities during the year endedDecember 31, 2021 compared toDecember 31, 2020 was primarily due to 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$19.9 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 . During the year endedDecember 31, 2020 , borrowings, net of discounts, under our First Lien Notes due 2025, First Lien Notes due 2026, and revolving credit facilities were$490.0 million ,$270.0 million , and$321.8 million , respectively. Proceeds from the sale of Common Stock were$264.7 million during the year endedDecember 31, 2020 . OnAugust 28, 2020 , we entered into an agreement to sell our equity interest in Forum Cinemas OU, which consists of nine theatres located in theBaltic region (Latvia ,Lithuania andEstonia ) in several steps. For further information, see Note 1-The Company and Significant Accounting Policies in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof. We received$37.0 million cash consideration, net of transaction costs, and transferred an equity interest of 49% in Forum Cinemas OU to the purchaser during the year endedDecember 31, 2020 . We and our subsidiaries may from time to time seek to retire or repurchase our outstanding debt through cash purchases, in open market purchases, privately negotiated transactions, by tender offer or otherwise. Such repurchases, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material. Dividends. The following is a summary of dividends and dividend equivalents declared to stockholders: Amount per Total Amount Share of Declared Declaration Date Record Date Date Paid Common Stock (In millions) February 26, 2020 March 9, 2020 March 23, 2020 $ 0.03 $ 3.2 During the year endedDecember 31, 2020 , we paid dividends and dividend equivalents of$6.5 million . As ofDecember 31, 2021 andDecember 31, 2020 , we accrued$0.7 million and$0.4 million , respectively, for the remaining unpaid dividends.
Future Contractual Obligations
Our estimated future obligations as ofDecember 31, 2021 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$16.3 million , obligation for unrecognized tax benefits of$0.2 million , minimum operating lease obligations of$1,039.5 million , finance lease obligations of$13.9 million , contractual cash rent amounts that were due and not paid of$41.8 million recorded in accounts payable, and corporate borrowings principal and interest payments of$20.0 million and$385.0 million , respectively. 71
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Capital related betterments. AtDecember 31, 2021 , we have short-term committed capital expenditures, investments, and betterments to our circuit, which do not include planned, but non-committed capital expenditures of$16.3 million . Pension funding. OurU.S. ,U.K. , andSweden defined benefit plans are frozen. We fund ourU.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 endedDecember 31, 2022 . Obligation for unrecognized tax benefits. As ofDecember 31, 2021 , our recorded obligation for unrecognized tax benefits is$8.3 million . There are currently unrecognized tax benefits of$0.2 million , 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$1,039.5 million and$7,139.9 million , respectively. We have current and long-term minimum cash requirements for finance lease payments of$13.9 million and$97.9 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$41.8 million . Our cash expenditures for rent increased significantly in the second, third, and fourth quarters of 2021 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$5,149.1 million , respectively. The total amount does not equal the carrying amount due to unamortized discounts, premiums and deferred charges. See Note 16-Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for information regarding the new 7.5% First Lien Senior Secured Notes due 2029 and redemptions of First Lien Toggle Notes due 2026, First Lien Notes due 2025 and First Lien Notes due 2026. We have current and long-term cash interest payment requirements related to our corporate borrowings of$385.0 million and$1,078.3 million , respectively. The cash interest payment requirements for our Senior Secured Term Loans due 2026 was estimated at 3.1% based on the interest rate in effect as ofDecember 31, 2021 . See Note 8-Corporate Borrowings and Finance Lease Obligations 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 ofDecember 31, 2021 . Senior Secured Credit Facilities (Senior Secured Revolving Credit Facility and Senior Secured Term Loan due 2026). OnMarch 8, 2021 , we entered the Ninth Amendment (as defined in Note 8-Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof), pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant under our Credit Agreement (as defined in Note 8-Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof) from a period ending onMarch 31, 2021 to a period ending onMarch 31, 2022 , which was further extended by the Eleventh Amendment (as defined in Note 8-Corporate Borrowings and Finance Lease Obligations in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof) fromMarch 31, 2022 toMarch 31, 2023 , as described, and on the terms and conditions specified, therein. As an ongoing condition to the suspension of the financial covenant, we also agreed to (i) a minimum liquidity test of$100 million , (ii) an anti-cash hoarding test at any time Revolving Loans are outstanding and (iii) additional reporting obligations. OnMarch 8, 2021 , we entered into the Tenth Amendment (as defined in Note 8-Corporate Borrowings and Finance Lease Obligations 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. Senior Secured Term Loans bear 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 forU.S. dollar deposits for an interest period of one month adjusted for certain additional costs, plus 1.00% or (2) an 72 Table of Contents
applicable margin plus LIBOR determined by reference to the costs of funds forU.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs. As ofDecember 31, 2021 , we had$209.1 million unused borrowing capacity, net of letters of credit, under our$225.0 million Senior Secured Revolving Credit Facility. Odeon Term Loan Facility. OnFebruary 15, 2021 ,Odeon Cinemas Group Limited ("Odeon"), a wholly-owned subsidiary of the Company entered into a new £140.0 million and €296.0 million term loan facility agreement (the "Odeon Term Loan Facility"), by and among Odeon, the subsidiaries of Odeon party thereto, the lenders and other loan parties thereto andLucid Agency Services Limited as agent andLucid Trustee Services Limited as security agent. Approximately £89.7 million and €12.8 million of the net proceeds from the Odeon Term Loan Facility were used to repay in full Odeon's obligations (including principal, interest, fees and cash collateralized letters of credit) under its existing revolving credit facility and the remaining net proceeds will be used for general corporate purposes. The Odeon Term Loan Facility has a maturity ofAugust 19, 2023 (2.5 years from the date on which it is first drawn). Borrowings under the Odeon Term Loan Facility bear interest at a rate equal to 10.75% per annum during the first year and 11.25% thereafter and each interest period is 3 months, or such other period agreed between us and the Agent. The interest is capitalized on the last day of each interest period and added to the outstanding principal amount, however, Odeon has the option to elect to pay interest in cash. All obligations under the Odeon Term Loan Facility are guaranteed by certain subsidiaries of Odeon. We are subject to minimum liquidity requirements of £32.5 million (approximately$44 million ) required under the Odeon Term Loan Facility, measured at each quarter end date. First Lien Toggle Notes due 2026. OnJanuary 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 withMudrick Capital Management, LP ("Mudrick"), dated as ofDecember 10, 2020 . The First Lien Toggle Notes due 2026 were issued pursuant to an indenture dated as ofJanuary 15, 2021 among us, the guarantors named therein and theU.S. Bank National Association , as trustee and collateral agent. OnSeptember 30, 2021 , we exercised an option to repurchase$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 endedDecember 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 onJanuary 15 andJuly 15 , beginning onJuly 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 onApril 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 Credit Facilities, the First Lien Notes due 2026, the First Lien Notes due 2025, and the Convertible Notes due 2026. OnDecember 14, 2020 , Mudrick received a total of 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 endedDecember 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 endedDecember 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 . See Note 16-Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for further information. Convertible Notes. OnJanuary 27, 2021 , affiliates ofSilver 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$13.51 per share. The Conversion settled onJanuary 29, 2021 and resulted in the issuance of 44,422,860 shares of our Common Stock to the Noteholders. The Conversion reduced our first-lien indebtedness by$600.0 million . Pursuant to the Stock Repurchase and cancellation agreement withDalian Wanda Group Co., Ltd. ("Wanda") dated as ofSeptember 14, 2018 , 5,666,000 shares of our Class B common stock held by Wanda were forfeited and cancelled in connection with the Conversion. 73
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First Lien Notes due 2025. OnApril 24, 2020 , we issued$500.0 million aggregate principal amount of our 10.5% First Lien Notes due 2025, with an original issue discount of$10.0 million . The First Lien Notes due 2025 bear interest at a rate of 10.5% per annum, payable semi-annually onApril 15 andOctober 15 each year, commencingOctober 15, 2020 and are secured on a pari passu basis with the Senior Secured Credit Facilities. The First Lien Notes due 2025 will mature onApril 15, 2025 . See Note 16-Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for further information. Senior Subordinated Debt Exchange Offers. OnJuly 31, 2020 , we closed our previously announced private offers to exchange (the "Exchange Offers") any and all of our outstanding 6.375% Senior Subordinated Notes due 2024, 5.75% Senior Subordinated Notes due 2025, 5.875% Senior Subordinated Notes due 2026 and 6.125% Senior Subordinated Notes due 2027 (together the "Existing Subordinated Notes") for approximately$1.46 billion in aggregate principal amount of newly issued 10%/12% Cash/PIK Toggle Second Lien Subordinated Secured Notes due 2026. The aggregate principal amounts of the Existing Subordinated Notes set forth in the table below were validly tendered and subsequently accepted. Such accepted Existing Subordinated Notes were retired and cancelled. Percentage of Outstanding Existing Total Aggregate Subordinated Principal Amount Notes Validly (In thousands) Validly Tendered Tendered
6.375% Senior Subordinated Notes due 2024 (£496,014 par value) $ 632,145 99.20 % 5.75% Senior Subordinated Notes due 2025 $ 501,679 83.61 % 5.875% Senior Subordinated Notes due 2026 $ 539,393 90.65 % 6.125% Senior Subordinated Notes due 2027 $
344,279 72.48 %
The Exchange Offers reduced the principal amounts of our debt by approximately$555 million , which represented approximately 23.9% of the principal amount of the Existing Subordinated Notes. We raised$300 million in additional cash from the issuance of the incremental First Lien Notes due 2026, prior to deducting$36 million related to discounts and deferred financing costs paid to the lenders. Additionally, certain holders of the Existing Subordinated Notes that agreed to backstop the rights offering for$200 million of the First Lien Notes due 2026 received five million common shares. The closing of the Exchange Offers also allowed us to extend maturities on approximately$1.7 billion of debt to 2026, most of which was maturing in 2024 and 2025 previously. Interest due for 12 to 18 months after issuance on the Second Lien Notes due 2026 is expected to be paid all or in part on an in-kind basis, thereby generating a further near-term cash savings for us of between approximately$120 million and$180 million . In connection with the Exchange Offers, we also received consents from eligible holders of the Existing Subordinated Notes to amend the indentures governing the Existing Subordinated Notes to among other things, (i) release the existing subsidiary guarantees of the Existing Subordinated Notes, (ii) eliminate substantially all of the restrictive covenants, certain affirmative covenants and certain events of default contained in the indentures governing the Existing Subordinated Notes, and (iii) make other conforming changes to internally conform to certain proposed amendments. We performed an assessment on a lender by lender basis to identify certain lenders that met the criteria for a 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 both the year endedDecember 31, 2020 .
Convertible Notes. On
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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 toSilver Lake and others pursuant to which the maturity of the Convertible Notes due 2024 were extended toMay 1, 2026 (the "Convertible Notes due 2026") and a first-priority lien on the collateral securing our 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
Second Lien Notes due 2026. In connection with the Exchange Offers onJuly 31, 2020 , we issued$1,462.3 million aggregate principal amount of the new Second Lien Notes due 2026 in exchange for the Existing Subordinated Notes. We have reflected a premium of$535.1 million on the Second Lien Notes due 2026 as the difference between the principal balance of the Second Lien Notes due 2026 and the$1,997.4 million carrying value of the Existing Subordinated Notes exchanged. The premium will be amortized to interest expense over the term of the Second Lien Notes due 2026 using the effective interest method. In connection with the Exchange Offers and the First Lien Notes due 2026, we issued five million shares of Common Stock to certain holders of subordinated notes as consideration for their commitment to backstop the issuance of$200 million of the First Lien Notes due 2026. Pursuant to the Backstop Commitment Agreement datedJuly 10, 2020 , certain of the actual or beneficial holders of Existing Subordinated Notes agreed to purchase 100% of the First Lien Notes due 2026 that were not subscribed for in connection with the$200 million rights offering to holders of the existing Subordinated Notes participating in the Exchange Offers. Those providing a backstop commitment pursuant to the Backstop Commitment Agreement received their pro-rata share of five million shares of the Common Stock, or 4.6% of AMC's outstanding shares as ofJuly 31, 2020 , worth$20.2 million at the market closing price onJuly 31, 2020 . The equity issuance was recorded by us in stockholders' deficit with an offset in corporate borrowings as a discount. The discount will be amortized to interest expense over the term of the Second Lien Notes due 2026 using the effective interest method. As part of the registration rights agreement related to the issuance of the Common Stock, we filed a shelf registration statement inAugust 2020 providing for the resale of the shares of Common Stock issued as consideration for the backstop commitment described above. First Lien Notes due 2026. In connection with the Exchange Offers, certain holders of the Existing Subordinated Notes purchased 10.5% First Lien Notes due 2026 in an aggregate principal amount of$200 million . The 10.5% First Lien Notes due 2026 issued to certain holders of the Existing Subordinated Notes were issued pursuant to an indenture, dated as ofJuly 31, 2020 , among the Company, the guarantors named therein andGLAS Trust Company LLC , as trustee and collateral agent. Separately, upon the closing of its private debt exchange,Silver Lake Alpine, L.P. and Silver Lake Alpine (Offshore Master), L.P., each affiliates ofSilver Lake Group, L.L.C. ("Silver Lake"), purchased from us$100 million principal amount of First Lien Notes due 2026. The 10.5% First Lien Notes due 2026 issued to affiliates ofSilver Lake were issued pursuant to an indenture, dated as ofJuly 31, 2020 , among the Company, the guarantors named therein andU.S. Bank National Association , as trustee and collateral agent. The terms of the 10.5% First Lien Notes due 2026 issued to the holders of the Existing Subordinated Notes and the 10.5% First Lien Notes due 2026 issued toSilver Lake are substantially identical. The$300 million principal amount of new funding is prior to deducting discounts of$30.0 million and deferred financing costs paid to lenders of$6.0 million related to the First Lien Notes due 2026. The discount and deferred financing costs will be amortized to interest expense over the term using the effective interest method. See Note 16-Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for further information.
See Note 8-Corporate Borrowings and Finance Lease Obligations and Note 16-Subsequent Events in the Notes to the Consolidated Financial Statements under Part II, Item 8 thereof, for further information regarding the above.
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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.
Liquidity and Capital Resources-For the Year Ended
For a comparison of our liquidity and capital resources for the year endedDecember 31, 2020 , compared to the year endedDecember 31, 2019 , 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 endedDecember 31, 2020 , filed with theSecurities and Exchange Commission onMarch 12, 2021 , which is incorporated herein by reference.
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