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. Examples of forward-looking statements include statements we make regarding the impact of COVID-19, future attendance levels, the sufficiency of future cash flows compliance with our debt covenants and our liquidity. These forward-looking statements are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions and speak only as of the date on which it is made. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including those discussed in "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the following:
The 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 believes it will need to
increase attendance levels significantly from their current levels to achieve
levels in line with pre COVID-19 attendance. The Company believes the global
re-opening of its 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. However, there remain significant
risks that may negatively impact attendance levels, including a resurgence of
COVID related restrictions, potential movie-goer reluctance to attend theatres
due to concerns about the COVID variant strains, movie studios release
schedules and direct to streaming or other changing movie studio practices. If
we are unable to achieve more normalized 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 variant strains on us, the motion picture exhibition
industry, and the economy in general, including our response to the COVID
? variant strains related to suspension of operations at our theatres, personnel
reductions and other cost-cutting measures and measures to maintain necessary
liquidity and increases in expenses relating to precautionary measures at our
facilities to protect the health and well-being of our customers and employees;
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;
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;
? risks relating to impairment losses, including with respect to goodwill and
other intangibles, and theatre and other closure charges;
? risks relating to motion picture production and performance;
? our lack of control over distributors of films;
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? intense competition in the geographic areas in which we operate;
? increased use of alternative film delivery methods including premium video on
demand or other forms of entertainment;
general and international economic, political, regulatory, social and financial
? market conditions and other risks, including the effects of the exit of the
? limitations on the availability of capital or poor financial results may
prevent us from deploying strategic initiatives;
? 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;
? AMC Stubs® A-List may not meet anticipated revenue projections which could
result in a negative impact upon operating results;
? 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;
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;
? the dilution caused by recent and future sales of our Class A common stock
could adversely affect the market price of the Class A common stock;
the market price and trading volume of our shares of Class A 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 Class A common stock for
? purposes of distributions or upon liquidation, could adversely affect the
market price of our Class a common stock;
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geopolitical events, including the threat of terrorism or cyber-attacks, or
? widespread health emergencies, such as the novel coronavirus or other pandemics
or epidemics, causing people to avoid our theatres or other public places where
large crowds are in attendance;
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;
an issuance of preferred stock could dilute the voting power of the common
? stockholders and adversely affect the market value of our Class A common stock;
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," and Item 1. "Business" in our Annual Report on Form 10-K for the year endedDecember 31, 2020 , 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
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 a result of these temporarily suspended or limited operations, our revenues and expenses for the six months endedJune 30, 2021 were significantly lower than the revenues and expenses for the six months endedJune 30, 2020 , with significantly lower revenues and expenses during the first quarter of 2021 compared to the first quarter of 2020, partially offset by increased revenues and expenses during the second quarter of 2021 compared to the second quarter of 2020. As ofJanuary 1, 2021 , we were operating at 394 domestic theatres with limited seating capacities, representing approximately 67% of our domestic theatres. During the first quarter endedMarch 31, 2021 , in response to eased restrictions by state and local governments, we resumed operations in key markets such asNew York andLos Angeles . As ofMarch 31, 2021 , we were operating at 585 domestic theatres with limited seating capacities, representing approximately 99% of our domestic theatres. As ofJune 30, 2021 , we were operating at 593 domestic theatres, representing approximately 100% of our domestic theatres with remaining seating capacity restrictions winding down throughout the quarter. As ofJanuary 1, 2021 , we were operating at 109 International leased and partnership theatres, with limited seating capacities, representing approximately 30% of our International theatres. As ofMarch 31, 2021 , we were operating at 97 International theatres with limited seating capacities, representing approximately 27% of our International theatres. As ofJune 30, 2021 , we were operating at 335 International theatres with limited seating capacities, representing approximately 95% of our International theatres. Our average consolidated screens operated during the three months endedMarch 31, 2021 declined by 24.2% from the prior year. Our average consolidated screens operated during the three months endedJune 30, 2021 increased by 8,830 screens to 8,890 screens from 60 36 Table of Contents screens in the prior year. 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 ofJune 30, 2021 , we owned, operated or had interests in 947 theatres and 10,552 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 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.
The combination of theatre closures, reopening restrictions, reduced new film
releases, and shortened windows of theatrical exclusivity has resulted in a
significantly lower industry box office for the six months ended June 30, 2021
compared to the six months ended June 30, 2020 . In response to the current low
attendance levels, (in addition to any local capacity restrictions) we have made
adjustments to theatre operating hours to align screen availability and
associated theatre operating costs with attendance levels for each theatre.
During 2020, we entered into an agreement with Universal Pictures , a subsidiary
of the NBC Universal Film and Entertainment division of Comcast Corporation
(NASDAQ:CMCSA), to theatrically license films with an accelerated home
entertainment window for premium video on demand ("PVOD"). This multi-year
agreement preserves exclusivity for theatrical viewing for at least the first
three weekends of a film's release, during which time a considerable majority of
a movie's theatrical box office revenue typically is generated. It provides
Universal the flexibility to release its movies on PVOD as early as 17 days
after theatrical release, with compensation for AMC based in part on a portion
of Universal's PVOD revenue.
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 on June 30,
2021 . This data represents available services in a pre-COVID-19 environment. Due
to mandated government attendance restrictions, the ability for guests to
utilize all these amenities was and in certain locations continues to be
significantly curtailed. In the U.S. markets, during the six months ended June
30, 2021 , the mandated government attendance restrictions have significantly
declined or were eliminated; however, mandated government attendance
restrictions continued in many of
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the countries within the International markets.
U.S. Markets International Markets
Number of Number of Number of Number of
Screens As of Screens As of Screens As of Screens As of
Format June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020
IMAX® 186 188 38 35
Dolby CinemaTM 153 150 6 5
Other Premium Large Format ("PLF") 56 55
75 71
Dine-in theatres 735 725 8 8
Premium seating 3,386 3,282 550 470
Guest Amenities
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. 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. As a result of the impact of COVID-19 on our
business, capital expenditures are currently predominantly focused on
maintenance spending.
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 of December 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 of June 30, 2021 , in our U.S. markets we featured recliner seating in
approximately 349 U.S. theatres, including Dine-in-Theatres, totaling
approximately 3,386 screens and representing 43.8% of total U.S. screens. In our
International markets, as of June 30, 2021 , we had recliner seating in
approximately 86 International theatres, totaling approximately 550 screens and
representing 19.5% of total International screens.
Open-source internet ticketing makes our AMC seats (approximately 1.1 million as
of June 30, 2021 ) in all our U.S. theatres and auditoriums, for all our
showtimes as available as possible, on as many websites as possible. Our tickets
are currently on sale either directly or through mobile apps, at our own website
and 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 across all
brands, all in an effort to reduce the number of touch-points between guests and
employees. We have also upgraded our Coca Cola Freestyle beverage machines to
include a mobile app allowing guests to dispense drinks without the need to
utilize the machine's touch screen.
Our MacGuffins Bar and Lounges ("MacGuffins") give us an opportunity to engage
our legal age customers. As of June 30, 2021 , we offer alcohol in approximately
342 AMC theatres in the U.S. markets and 241 theatres in our International
markets and continue to explore expansion globally.
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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 traditional paid tier called AMC Stubs Premiere™ for a$15 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 for$19.95 to$23.95 per month depending upon geographic market. AMC Stubs® A-List also includes premium offerings including IMAX®, Dolby Cinema™ at AMC,RealD , Prime and other proprietary PLF brands. AMC Stubs® A-List members can book tickets on-line 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 ofJune 30, 2021 , we had more than 23,800,000 member households enrolled in AMC Stubs® A-List, AMC Stubs Premiere™ and AMC Stubs Insider™ programs, combined. Our AMC Stubs® members represented approximately 37.1% of AMCU.S. markets attendance as ofJune 30, 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 11,600,000 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 continued to roll out our upgraded 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 Policies and Estimates
Long-lived assets impairments. We evaluate indefinite-lived intangible assets for impairment annually or more frequently as specific events or circumstances dictate. We operate in a very competitive business environment and our revenues are highly dependent on movie content supplied by film producers. In addition, it is common for us to closely monitor certain locations where operating performance may not meet our expectations.
We review long-lived assets, including definite-lived intangible assets and theatre assets (including operating
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lease right-of-use assets) whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be fully recoverable. We identify impairments related to internal use software when management determines that the remaining carrying value of the software will not be realized through future use. We evaluate events or circumstances, including competition in the markets where we operate that would indicate the carrying value of theatre assets may not be fully recoverable. We evaluate theatres using historical and projected data of theatre level cash flow as our primary indicator of potential impairment and consider the seasonality of our business when making these evaluations. If an event or circumstance is identified indicating carrying value may not be recoverable, the sum of future undiscounted cash flows is compared to the carrying value. If carrying value exceeds the future undiscounted cash flows, the carrying value of the asset is reduced to fair value. Assets are evaluated for impairment on an individual theatre basis, which management believes is the lowest level for which there are identifiable cash flows. The fair value of assets is determined as either the expected selling price less selling costs (where appropriate) or the present value of the estimated future cash flows, adjusted as necessary for market participant factors. We recorded impairment charges primarily related to long-lived assets and definite lived intangible assets of$0 million and$106.5 million during the three and six months endedJune 30, 2020 , respectively. No impairment charges were recorded during the three and six months endedJune 30, 2021 . There are a number of estimates and significant judgments that are made by management in performing these impairment evaluations. Such judgments and estimates include estimates of future attendance, revenues, rent relief, cost savings, cash flows, capital expenditures, and the cost of capital, among others. Attendance is expected to be significantly below historical levels for the first several months following reopening but is expected to increase as customers become more comfortable with the experience. We believe we have used reasonable and appropriate business judgments. There is considerable management judgment with respect to cash flow estimates and appropriate discount rates to be used in determining fair value, and, accordingly, actual results could vary significantly from such estimates, which fall under Level 3 within the fair value measurement hierarchy. These estimates determine whether impairments have been incurred, and quantify the amount of any related impairment charge. Given the nature of our business and our recent history, future impairments are possible and they may be material, based upon business conditions that are constantly changing and the competitive business environment in which we operate. During the six months endedJune 30, 2020 , we recorded non-cash impairment charges of long-lived assets of$81.4 million on 57 theatres in theU.S. markets with 658 screens (inAlabama ,Arkansas ,California ,District of Columbia , Florida,Georgia ,Illinois ,Indiana ,Iowa ,Kentucky ,Michigan ,Minnesota ,Missouri ,Montana ,New Hampshire ,New Jersey , NewYork, North Carolina ,North Dakota ,Ohio ,Pennsylvania ,South Dakota ,Tennessee ,Texas ,Washington ,Wisconsin andWyoming ) and$9.9 million on 23 theatres in the International markets with 213 screens (inGermany ,Italy ,Spain ,UK andSweden ). During the six months endedJune 30, 2020 , we recorded impairment losses related to definite-lived intangible assets of$8.0 million . In addition, we recorded an impairment loss of$7.2 million within investment expense (income), related to equity interest investments without a readily determinable fair value accounted for under the cost method. No non-cash impairment charges of long-lived assets were recorded during the three months endedJune 30, 2020 or during the three and six months endedJune 30, 2021 . During the three months endedMarch 31, 2020 , we performed a quantitative impairment evaluation of our indefinite-lived intangible assets related to the AMC, Odeon and Nordic trade names and recorded impairment charges of$5.9 million related to Odeon trade names and$2.4 million related to Nordic trade names during the three months endedMarch 31, 2020 and six months endedJune 30, 2020 . To estimate fair value of our indefinite-lived trade names, we employed a derivation of the Income Approach known as the Royalty Savings Method. The Royalty Savings Method values an intangible asset by estimating the royalties saved through ownership of the asset. We applied royalty rates of 0.5% for AMC and Odeon trade names and 1.0% for Nordic to the related theatre revenues on an after-tax basis using effective tax rates. Related cash flows were discounted at 12.5% for AMC and 14.0% for Odeon and Nordic. No impairment charges related to our indefinite-lived trade names were recorded during the three months endedJune 30, 2020 or during the three and six months endedJune 30, 2021 .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. In accordance with ASC 350-20-35-30, we performed an assessment to determine whether there were any events or changes in circumstances that would warrant an interim ASC 350 impairment analysis as ofMarch 31, 2021 . Based on increases in our enterprise market capitalization fromDecember 31, 2020 toMarch 31, 2021 and fromDecember 31, 2020 toJune 30, 2021 , we performed a qualitative impairment test to evaluate whether it is more likely than not that the fair value of our two reporting units is less than their respective carrying amounts as ofMarch 31, 2021 andJune 30, 2021 , respectively. We concluded that it is not more likely than not that the fair value of 40 Table of Contents
our two reporting units have been reduced below their respective carrying
amounts. As a result, we concluded that interim quantitative impairment tests as
of
AtMarch 31, 2020 , we performed the Step 1 quantitative goodwill impairment test and used an enterprise value approach to measure fair value of the reporting units. The enterprise fair values of theDomestic Theatres andInternational Theatres reporting units were less than their carrying values and goodwill impairment charges of$1,124.9 million and$619.4 million , respectively, were recorded as ofMarch 31, 2020 for ourDomestic Theatres andInternational Theatres reporting units.
Significant Events
Class A common stock issuance. In December of 2020 and the first half of 2021, we entered into equity distribution agreements with sales agents to sell up to 241.6 million shares of our Class A common stock, par value$0.01 per share, through "at-the-market" offering programs. During the six months endedJune 30, 2021 , we 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$0.7 million . We intend to use the net proceeds from the sale of the Class A 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 Class A common stock during the six months endedJune 30, 2021 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)
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. 43.0 427.5
June 3, 2021 B. Riley Securities, Inc. and Citigroup Global Markets Inc. 11.55 587.4
Total 241.62 $ 1,611.8 On
sell up to 178.0 million shares of our Class A common stock, of which
(1) approximately 40.93 million shares of our Class A common stock were sold and
settled during
Class A common stock were sold and settled during the six months ended June
30, 2021.
Class A common stock issuance to Mudrick. OnJune 1, 2021 , we issued to Mudrick 8.5 million shares of our Class A 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. OnAugust 28, 2020 , we entered into an agreement to sell our equity interest in Forum Cinemas OU, which consisted of nine theatres located in the Baltics' region (Latvia ,Lithuania andEstonia ) and was included in our International markets reportable segment. The completion of the sale took place in several steps and was contingent upon clearance from each regulatory competition council in each country. InOctober 2020 , we completed the divestiture of our equity interest inLatvia . InFebruary 2021 , we received cash consideration for the remaining equity interest inEstonia of$3.8 million (€3.2 million), net of cash of$0.3 million . InMay 2021 , we received cash consideration of$31.4 million (€26.2 million), net of cash of$0.1 million and transaction costs of$0.3 million , which completed the sale of our remaining 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 income, during the three and six months endedJune 30, 2021 . 41 Table of Contents Operating Results The following table sets forth our consolidated revenues, operating costs and expenses. Three Months Ended Six Months Ended
(In millions) June 30, 2021 June 30, 2020 % Change June 30, 2021 June 30, 2020 % Change Revenues Admissions $ 233.0 $ 0.9 * % $ 302.5 $ 568.9 (46.8) % Food and beverage 161.5 0.4 * % 211.6 288.5 (26.7) % Other theatre 50.2 17.6 * % 78.9 103.0 (23.4) % Total revenues 444.7 18.9 * % 593.0 960.4 (38.3) % Operating Costs and Expenses Film exhibition costs 98.9 0.2 * % 120.9 271.9 (55.5) % Food and beverage costs 26.3 4.5 * % 36.0 57.9 (37.8) % Operating expense, excluding depreciation and amortization below 246.2 114.8 * % 425.9 471.7 (9.7) % Rent 205.5 224.1 (8.3) % 397.6 461.9 (13.9) % General and administrative: Merger, acquisition and other costs 4.3 1.8 * % 11.0 2.0 * % Other, excluding depreciation and amortization below 54.4 25.4 * % 106.2 58.6 81.2 % Depreciation and amortization 105.7 119.7 (11.7) % 219.8 242.2 (9.2) % Impairment of long-lived assets, definite and indefinite-lived intangible assets and goodwill - - * % - 1,851.9 * % Operating costs and expenses 741.3 490.5 51.1 % 1,317.4 3,418.1 (61.5) % Operating loss (296.6) (471.6) (37.1) % (724.4) (2,457.7) (70.5) % Other expense (income): Other expense (income) (42.7) (6.6) * % (60.1) 20.3 * % Interest expense: Corporate borrowings 88.1 79.6 10.7 % 239.6 150.9 58.8 % Finance lease obligations 1.4 1.5 (6.7) % 2.8 3.1 (9.7) % Non-cash NCM exhibitor service agreement 9.4 10.1 (6.9) % 19.3 20.0 (3.5) % Equity in loss of non-consolidated entities 2.7 12.4 (78.2) % 5.5 15.3 (64.1) %
Investment expense (income) (6.3) (1.3) * % (8.3) 8.1 * % Total other expense, net 52.6 95.7 (45.0) % 198.8 217.7 (8.7) % Net loss before income taxes (349.2) (567.3) (38.4) % (923.2) (2,675.4) (65.5) % Income tax provision (benefit) (5.2) (6.1) (14.8) % (12.0) 62.1 * % Net loss (344.0) (561.2)
(38.7) % (911.2) (2,737.5) (66.7) % Less: Net loss attributable to noncontrolling interests
(0.4) - * % (0.7) - * %
Net loss attributable to
* Percentage change in excess of 100%
42
Table of Contents
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
Operating Data: 2021 2020 2021 2020
Screen additions 19 - 51 13
Screen acquisitions 62 - 62 -
Screen dispositions 39 140 102 214Construction openings (closures), net (8) - (2)
(7)
Average screens (1) 8,890 60 7,812 4,467
Number of screens operated 10,452 - 10,452 -
Number of theatres operated 928 - 928 -Total number of circuit screens 10,552 10,833 10,552
10,833
Total number of circuit theatres 947 978 947
978
Screens per theatre 11.1 11.1 11.1 11.1
Attendance (in thousands) (1) 22,068 100 28,865 60,595
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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Table of Contents© Edgar Online, source
