AMC ENTERTAINMENT HOLDINGS, INC. 
Forward-Looking Statements
In addition to historical information, this Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "may," "will," "forecast," "estimate," "project," "intend," "plan," "expect," "should," "believe" and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions and speak only as of the date on which it is made. Examples of forward-looking statements include statements we make regarding the impact of COVID-19, future attendance levels and our liquidity. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including those discussed in "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the following:
the risks and uncertainties relating to the sufficiency of our existing cash
and cash equivalents and available borrowing capacity to comply with minimum
liquidity and financial requirements under our debt covenants related to
borrowings pursuant to the Senior Secured Revolving Credit Facility and Odeon
Term Loan Facility, fund operations, and satisfy obligations including cash
outflows for deferred rent and planned capital expenditures currently and
through the next twelve months. In order to achieve net positive operating cash
flows and long-term profitability, the Company will need to continue to
increase attendance levels significantly compared to aggregate 2021 and the
first quarter of 2022. Domestic industry box office grosses increased
significantly to approximately
compared to the first quarter of 2021 of
58% of domestic box office grosses of
2019. The Company believes the anticipated volume of titles available for
? theatrical release and the anticipated broad appeal of many of those titles
will support increased attendance levels. The Company's business is seasonal,
with higher attendance and revenues generally occurring during the summer
months and holiday seasons. However, there remain significant risks that may
negatively impact attendance levels, including a resurgence of COVID-19 related
restrictions, potential movie-goer reluctance to attend theatres due to
concerns about the COVID-19 variant strains, movie studios release schedules
and direct to streaming or other changing movie studio practices and consumer
behavior. If we are unable to achieve significantly increased levels of
attendance and operating revenues, we may be required to obtain additional
liquidity. If such additional liquidity were not realized or insufficient, we
likely would seek an in-court or out-of-court restructuring of our liabilities,
and in the event of such future liquidation or bankruptcy proceeding, holders
of our Common Stock and other securities would likely suffer a total loss of
their investment;
the impact of the COVID-19 variant strains on us, the motion picture exhibition
industry, and the economy in general, including our response to the COVID-19
? variant strains and suspension of operations at our theatres, personnel
reductions and other cost-cutting measures and measures to maintain necessary
liquidity and increases in expenses relating to precautionary measures at our
facilities to protect the health and well-being of our customers and employees;
risks and uncertainties relating to our significant indebtedness, including our
? borrowings and our ability to meet our financial maintenance and other
covenants;
? shrinking exclusive theatrical release windows or release of movies to
theatrical exhibition and streaming platforms on the same date;
? increased use of alternative film delivery methods including premium video on
demand or other forms of entertainment;
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? intense competition in the geographic areas in which we operate among
exhibitors or from other forms of entertainment;
certain covenants in the agreements that govern our indebtedness may limit our
? ability to take advantage of certain business opportunities and limit or
restrict our ability to pay dividends, pre-pay debt, and also to refinance debt
and to do so at favorable terms;
risks relating to impairment losses, including with respect to goodwill and
? other intangibles, and theatre and other closure charges, and the fair value of
the investment in Hycroft common shares and warrants;
? risks relating to motion picture production and performance;
? our lack of control over distributors of films;
? general and international economic, political, regulatory, social and financial
market conditions, inflation, and other risks;
? limitations on the availability of capital or poor financial results may
prevent us from deploying strategic initiatives;
? an issuance of preferred stock could dilute the voting power of the common
stockholders and adversely affect the market value of our Common Stock;
? limitations on the authorized number of Common Stock shares prevents us from
raising additional capital through Common Stock issuances;
? our ability to achieve expected synergies, benefits and performance from our
strategic initiatives;
? our ability to refinance our indebtedness on terms favorable to us or at all;
our ability to optimize our theatre circuit through new construction, the
? transformation of our existing theatres, and strategically closing
underperforming theatres may be subject to delay and unanticipated costs;
? failures, unavailability or security breaches of our information systems;
? our ability to utilize interest expense deductions may be limited annually due
to Section 163(j) of the Tax Cuts and Jobs Act of 2017;
? our ability to recognize interest deduction carryforwards, net operating loss
carryforwards and other tax attributes to reduce our future tax liability;
? our ability to recognize certain international deferred tax assets which
currently do not have a valuation allowance recorded;
? impact of the elimination of the calculation of USD LIBOR rates on our
contracts indexed to USD LIBOR;
? review by antitrust authorities in connection with acquisition opportunities;
? risks relating to the incurrence of legal liability, including costs associated
with the ongoing securities class action lawsuits;
dependence on key personnel for current and future performance and our ability
? to attract and retain senior executives and other key personnel, including in
connection with any future acquisitions;
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increased costs in order to comply or resulting from a failure to comply with
? governmental regulation, including the General Data Protection Regulation
("GDPR"), the California Consumer Privacy Act ("CCPA") and pending future
domestic privacy laws and regulations;
? supply chain disruptions may negatively impact our operating results;
? the dilution caused by recent and potential future sales of our Common Stock
could adversely affect the market price of the Common Stock;
the market price and trading volume of our shares of Common Stock has been and
? may continue to be volatile, and purchasers of our securities could incur
substantial losses;
future offerings of debt, which would be senior to our Common Stock for
? purposes of distributions or upon liquidation, could adversely affect the
market price of our Common Stock;
the geopolitical events, including the threat of political, social, or economic
unrest, terrorism, hostilities, cyber-attacks, war, including the conflict
between
operate approximately 100 theatres) have recently agreed to submit simultaneous
? applications to the
deterioration in the relationship each country has with
health emergencies, such as the COVID-19 or other pandemics or epidemics,
causing people to avoid our theatres or other public places where large crowds
are in attendance;
anti-takeover protections in our amended and restated certificate of
? incorporation and our amended and restated bylaws may discourage or prevent a
takeover of our Company, even if an acquisition would be beneficial to our
stockholders; and
? other risks referenced from time to time in filings with the
This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative but not exhaustive. In addition, new risks and uncertainties may arise from time to time. Accordingly, all forward-looking statements should be evaluated with an understanding of their inherent uncertainty and we caution accordingly against relying on forward-looking statements. Readers are urged to consider these factors carefully in evaluating the forward-looking statements. For further information about these and other risks and uncertainties as well as strategic initiatives, see Item 1A. "Risk Factors" of this Form 10-Q, Item 1. "Business" in our Annual Report on Form 10-K for the year endedDecember 31, 2021 , and our other public filings. All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included herein are made only as of the date of this Quarterly Report on Form 10-Q, and we do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Temporarily Suspended or Limited Operations
Total consolidated revenues increased$637.4 million for the three months endedMarch 31, 2022 , compared to the three months endedMarch 31, 2021 . The increase in total consolidated revenues 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. As ofMarch 31, 2021 , the Company operated at 585 domestic theatres with limited seating capacities, representing approximately 99% of its domestic theatres. As ofMarch 31, 2021 , the Company operated at 97 international theatres, with limited seating capacities, representing approximately 27% of its international theatres. During the three months endedMarch 31, 2022 , the Company operated essentially 100% of itsU.S. and International theatres. 32 Table of Contents 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 is 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 ofMarch 31, 2022 , we owned, operated or had interests in 938 theatres and 10,493 screens.
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 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 offices 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 and film production
industry suffers from COVID-19 impacts. As a result of the reduction in
theatrical film releases in 2021, we licensed and exhibited a larger number of
previously released films that had lower film rental terms during the three
months ended March 31, 2021 . 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 and also the first quarter of 2022.
Our revenues attributable to individual distributors may vary significantly from
year to year depending upon the commercial success of each distributor's films
in any given year. Our results of operations may vary significantly from quarter
to quarter and from year to year based on the timing and popularity of film
releases.
Movie Screens
The following table provides detail with respect to digital delivery, 3D enabled
projection, large screen formats, such as IMAX® and our proprietary Dolby
Cinema™, other Premium Large Format ("PLF") screens, enhanced food and beverage
offerings and our premium seating as deployed throughout our circuit:
U.S. Markets International Markets
Number of Screens Number of Screens Number of Screens Number of Screens
As of As of As of As of
Format March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021
IMAX® 185 185 37 37
Dolby CinemaTM 154 153 8 6
Other Premium Large Format ("PLF") 56 55 77 74
Dine-in theatres 729 735 13 8
Premium seating 3,395 3,339 579 531
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.
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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 ofMarch 31, 2022 , in ourU.S. markets, we featured recliner seating in approximately 351 U.S. theatres, includingDine-in Theatres , totaling approximately 3,395 screens and representing 44.0% of totalU.S. screens. In our International markets, as ofMarch 31, 2022 , we had recliner seating in approximately 90 International theatres, totaling approximately 579 screens and representing 20.8% of total International screens. Open-source internet ticketing makes our AMC seats (approximately 1.1 million as ofMarch 31, 2022 ) 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 mobile apps and other third-party ticketing vendors. 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, all in an effort to reduce the number of touch-points 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 ofMarch 31, 2022 , we offer alcohol in approximately 350 AMC theatres in theU.S. markets and 241 theatres in our International markets and continue to explore expansion globally.
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 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 34
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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 ofMarch 31, 2022 , we had more than 25,700,000 member households enrolled in AMC Stubs® A-List, AMC Stubs Premiere™ and AMC Stubs Insider™ programs, combined. Our AMC Stubs® members represented approximately 41% of AMCU.S. markets attendance during the three months endedMarch 31, 2022 . Our large database of identified movie-goers also provides us with additional insight into our customers' movie preferences. This enables us to have a larger, more personalized and targeted marketing effort. In our International markets, we currently have loyalty programs in the major territories in which we operate. The movie-goers can earn points for spending money at the theatre, and those points can be redeemed for tickets and concession items at a later date. We currently have more than 13,100,000 members in our various International loyalty programs. Our marketing efforts are not limited to our loyalty program as we continue to improve our customer connections through our website and mobile apps and expand our online and movie offerings. We upgraded our mobile applications across 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. Critical Accounting Estimate Hycroft common stock and warrants fair value measurement. OnMarch 14, 2022 , we purchased 23.4 million units of Hycroft, with each unit consisting of one common share of Hycroft and one common share purchase warrant. The units were priced at$1.193 per unit. We elected the fair value option in accordance with ASC 825-10, and therefore, the fair value of the investment in common stock of Hycroft is remeasured at each subsequent reporting period and unrealized gains and losses are reported in investment income. During the three months endedMarch 31, 2022 , we recorded appreciation in estimated fair value of our investment in warrants to purchase common shares of Hycroft of$35.1 million in investment income following ASC 815, which fall under Level 3 within the fair value measurement hierarchy and appreciation in estimated fair value of our investment in common shares of Hycroft of$28.8 million in investment income, which fall under Level 1 within the fair value measurement hierarchy.
Critical estimates. There is considerable management judgment with respect to volatility used in determining fair value of the warrants that is used by management in performing the fair value measurement. Such judgments and estimates include selecting a group of comparable companies in the mining industry.
Assumptions and judgment. Our valuation methodology for the fair value measurements requires management to make judgments and assumptions based on comparable companies to include in the historical volatility input.
Impact if actual results differ from assumptions. Although we believe that our
estimates and judgments are reasonable, actual results may differ from these
estimates, which fall under Level 3 within the fair value measurement hierarchy.
For a discussion of our critical accounting policies and the means by which we
develop estimates therefore, see "Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations" in our 2021 Annual
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Report on Form 10-K. Other than as discussed above, there have been no material changes from critical accounting estimates described in our Form 10-K.
Significant Events
Investment in Hycroft. OnMarch 14, 2022 , we purchased 23.4 million units of Hycroft Mining Holding Corporation (NASDAQ: HYMC) ("Hycroft") for$27.9 million , with each unit consisting of one common share of Hycroft and one common share purchase warrant. The units were priced at$1.193 per unit. Each warrant is exercisable for one common share of Hycroft at a price of$1.068 per share over a 5-year term throughMarch 2027 . We account for the common shares of Hycroft under the equity method and we have elected the fair value option in accordance with ASC 825-10. We account for the warrants as derivatives in accordance with ASC 815. Accordingly, the fair value of the investments in Hycroft are remeasured at each subsequent reporting period and unrealized gains and losses are reported in investment income. During the three months endedMarch 31, 2022 , the Company recorded unrealized gains related to the investment in Hycroft of$63.9 million in investment income. See Note 9-Fair Value Measurements in the Notes to the Condensed Consolidated Financial Statements in Item 1 of Part I in this Form 10-Q for further information. Debt refinancing. We enhanced liquidity through debt refinancing at lower interest rates. 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"), pursuant to an indenture, dated as ofFebruary 14, 2022 , among us, the guarantors named therein andU.S. Bank Trust Company, National Association , as trustee and collateral agent. We used the net proceeds from the sale of the notes, and cash on hand, to fund the full redemption of the then outstanding$500 million aggregate principal amount of our 10.5% First Lien Notes due 2025 ("First Lien Notes due 2025"), the then outstanding$300 million aggregate principal amount of our 10.5% First Lien Notes due 2026 ("First Lien Notes due 2026"), and the then outstanding$73.5 million aggregate principal amount of our 15%/17% Cash/PIK Toggle First Lien Secured Notes due 2026 ("First Lien Toggle Notes due 2026") and to pay related accrued interest, fees, costs, premiums and expenses. We recorded a loss on debt extinguishment related to this transaction of$135.0 million in other expense, during the three months endedMarch 31, 2022 . 36 Table of Contents Operating Results The following table sets forth our consolidated revenues, operating costs and expenses: Three Months Ended (In millions) March 31, 2022 March 31, 2021 % Change Revenues Admissions $ 443.8 $ 69.5 * % Food and beverage 252.5 50.1 * % Other theatre 89.4 28.7 * % Total revenues 785.7 148.3 * % Operating Costs and Expenses Film exhibition costs 189.8 22.0 * % Food and beverage costs 42.6 9.7 * % Operating expense, excluding depreciation and amortization below 344.8 179.7 91.9 % Rent 223.2 192.1 16.2 % General and administrative: Merger, acquisition and other costs 0.4 6.7 (94.0) % Other, excluding depreciation and amortization below 53.1 51.8 2.5 % Depreciation and amortization 98.7 114.1 (13.5) % Operating costs and expenses 952.6 576.1
65.4 %
Operating loss (166.9) (427.8) (61.0) %
Other expense (income):
Other expense (income) 136.3 (17.4) * %
Interest expense:
Corporate borrowings 82.0 151.5 (45.9) %
Finance lease obligations 1.2 1.4 (14.3) %
Non-cash NCM exhibitor service
agreement 9.2 9.9 (7.1) %
Equity in loss of non-consolidated
entities 5.1 2.8 82.1 %
Investment income (63.4) (2.0) * %
Total other expense, net 170.4 146.2 16.6 %
Net loss before income taxes (337.3) (574.0) (41.2) %Income tax provision (benefit) 0.1 (6.8) * % Net loss (337.4) (567.2) (40.5) % Less: Net loss attributable to noncontrolling interests - (0.3) (100.0) % Net loss attributable to AMC Entertainment Holdings, Inc.$ (337.4) $ (566.9) (40.5) % * Percentage change in excess of 100% Three Months Ended March 31, March 31, Operating Data: 2022 2021 Screen additions 7 32 Screen acquisitions 30 - Screen dispositions 118 63 Construction openings (closures), net 12 6 Average screens (1) 10,099 6,724 Number of screens operated 10,493 8,329 Number of theatres operated 938 682 Total number of circuit screens 10,493 10,518 Total number of circuit theatres 938 945 Screens per theatre 11.2 11.1 Attendance (in thousands) (1) 39,075 6,797
Includes consolidated theatres only and excludes screens offline due to
(1) construction and temporary suspension of operations as consequence of the
COVID-19 pandemic.
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