10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on November 6, 2024
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
March 31, |
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(Mark One) |
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended | |
OR | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
Commission file number
(Exact name of registrant as specified in its charter)
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Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol |
Name of each exchange on which registered |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer ☐ |
Non-accelerated filer ☐ |
Smaller reporting company
Emerging growth company |
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standard provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Title of each class of common stock |
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Number of shares |
Class A common stock |
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AMC ENTERTAINMENT HOLDINGS, INC.
INDEX
Page Number |
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3 |
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3 |
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4 |
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5 |
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6 |
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8 |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
37 |
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73 |
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74 |
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75 |
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75 |
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77 |
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77 |
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78 |
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78 |
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79 |
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81 |
2
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements. (Unaudited)
AMC ENTERTAINMENT HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended |
Nine Months Ended |
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(In millions, except share and per share amounts) |
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September 30, 2024 |
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September 30, 2023 |
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September 30, 2024 |
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September 30, 2023 |
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(unaudited) |
(unaudited) |
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Revenues |
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Admissions |
$ |
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$ |
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$ |
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$ |
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Food and beverage |
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Other theatre |
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Total revenues |
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Operating costs and expenses |
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Film exhibition costs |
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Food and beverage costs |
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Operating expense, excluding depreciation and amortization below |
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Rent |
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General and administrative: |
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Merger, acquisition and other costs |
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Other, excluding depreciation and amortization below |
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Depreciation and amortization |
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Operating costs and expenses |
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Operating income (loss) |
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( |
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Other expense, net |
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Other income |
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( |
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( |
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( |
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( |
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Interest expense: |
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Corporate borrowings |
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Finance lease obligations |
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Non-cash NCM exhibitor services agreement |
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Investment income |
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( |
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( |
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( |
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( |
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Total other expense, net |
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Earnings (loss) before income taxes |
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( |
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( |
( |
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Income tax provision (benefit) |
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( |
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Net earnings (loss) |
$ |
( |
$ |
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$ |
( |
$ |
( |
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Net earnings (loss) per share: |
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Basic |
$ |
( |
$ |
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$ |
( |
$ |
( |
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Diluted |
$ |
( |
$ |
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$ |
( |
$ |
( |
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Average shares outstanding: |
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Basic (in thousands) |
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Diluted (in thousands) |
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See Notes to Condensed Consolidated Financial Statements.
3
AMC ENTERTAINMENT HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Three Months Ended |
Nine Months Ended |
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(In millions) |
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September 30, 2024 |
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September 30, 2023 |
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September 30, 2024 |
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September 30, 2023 |
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(unaudited) |
(unaudited) |
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Net earnings (loss) |
$ |
( |
$ |
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$ |
( |
$ |
( |
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Other comprehensive income (loss): |
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Unrealized foreign currency translation adjustments |
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( |
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( |
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Pension adjustments: |
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Net loss (gain) arising during the period |
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( |
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— |
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Other comprehensive income (loss) |
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( |
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( |
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Total comprehensive income (loss) |
$ |
( |
$ |
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$ |
( |
$ |
( |
See Notes to Condensed Consolidated Financial Statements.
4
AMC ENTERTAINMENT HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except share data) |
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September 30, 2024 |
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December 31, 2023 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
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$ |
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Restricted cash |
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Receivables, net |
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Other current assets |
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Total current assets |
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Property, net |
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Operating lease right-of-use assets, net |
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Intangible assets, net |
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Goodwill |
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Deferred tax asset, net |
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— |
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Other long-term assets |
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Total assets |
$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current liabilities: |
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Accounts payable |
$ |
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$ |
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Accrued expenses and other liabilities |
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Deferred revenues and income |
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Current maturities of corporate borrowings |
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Current maturities of finance lease liabilities |
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Current maturities of operating lease liabilities |
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Total current liabilities |
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Corporate borrowings |
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Finance lease liabilities |
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Operating lease liabilities |
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Exhibitor services agreement |
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Deferred tax liability, net |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies |
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Stockholders’ deficit: |
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AMC Entertainment Holdings, Inc.'s stockholders' deficit: |
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Preferred stock, $ |
— |
— |
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Class A common stock ($ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders' deficit |
( |
( |
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Total liabilities and stockholders’ deficit |
$ |
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$ |
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See Notes to Condensed Consolidated Financial Statements.
5
AMC ENTERTAINMENT HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended |
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(In millions) |
September 30, 2024 |
September 30, 2023 |
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Cash flows from operating activities: |
(unaudited) |
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Net loss |
$ |
( |
$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Gain on extinguishment of debt |
( |
( |
||||
Gain on derivative liability |
( |
— |
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Deferred income taxes |
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Unrealized loss on investments in Hycroft |
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Amortization of net premium on corporate borrowings to interest expense |
( |
( |
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Amortization of deferred financing costs to interest expense |
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Non-cash portion of stock-based compensation |
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Gain on disposition of Saudi Cinema Company |
— |
( |
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Equity in (earnings) from non-consolidated entities, net of distributions |
( |
( |
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Landlord contributions |
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Deferred rent |
( |
( |
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Net periodic benefit cost |
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Non-cash shareholder litigation expense |
— |
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Change in assets and liabilities: |
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Receivables |
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Other assets |
( |
( |
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Accounts payable |
( |
( |
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Accrued expenses and other liabilities |
( |
( |
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Other, net |
( |
( |
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Net cash used in operating activities |
( |
( |
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Cash flows from investing activities: |
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Capital expenditures |
( |
( |
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Acquisition of theatre assets |
— |
( |
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Proceeds from disposition of Saudi Cinema Company |
— |
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Proceeds from disposition of long-term assets |
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Other, net |
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Net cash used in investing activities |
( |
( |
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Cash flows from financing activities: |
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Repurchase of Senior Subordinated Notes due 2025 |
( |
— |
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Repurchase of Senior Subordinated Notes due 2026 |
( |
( |
||||
Repurchase of Second Lien Notes due 2026 |
( |
( |
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Scheduled principal payments under Term Loan borrowings |
( |
( |
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Principal payments under Term Loan due 2026 |
( |
— |
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Proceeds from issuance of Term Loan due 2029 |
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— |
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Net proceeds from equity issuances |
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Principal payments under finance lease obligations |
( |
( |
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Cash used to pay for deferred financing costs |
( |
( |
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Debt extinguishment costs |
( |
— |
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Taxes paid for restricted unit withholdings |
( |
( |
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Net cash provided by financing activities |
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Effect of exchange rate changes on cash and cash equivalents and restricted cash |
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( |
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Net increase (decrease) in cash and cash equivalents and restricted cash |
( |
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Cash and cash equivalents and restricted cash at beginning of period |
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Cash and cash equivalents and restricted cash at end of period |
$ |
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$ |
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: |
6
Cash paid during the period for: |
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Interest |
$ |
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$ |
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Income taxes (received) paid, net |
$ |
( |
$ |
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Schedule of non-cash activities: |
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Construction payables at period end |
$ |
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$ |
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Other third-party equity issuance costs payable |
$ |
— |
$ |
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Deferred financing costs payable |
$ |
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$ |
— |
||
Extinguishment of Second Lien Notes due 2026 in exchange for share issuance (1) |
$ |
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$ |
|
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Extinguishment of the 2025 Notes in exchange for share issuance (1) |
$ |
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$ |
— |
||
Extinguishment of the 2026 Notes in exchange for share issuance (1) |
$ |
|
$ |
— |
||
Extinguishment of Second Lien Notes due 2026 in exchange for Term Loans due 2029 (1) |
$ |
|
$ |
— |
||
Extinguishment of principal amount of the Second Lien Notes in exchange for Term Loan due 2029 (1) |
$ |
|
$ |
— |
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Extinguishment of principal amount of the Second Lien Notes in exchange for Exchangeable Notes due 2030 (1) |
$ |
|
$ |
— |
(1) |
See Notes to Condensed Consolidated Financial Statements.
7
AMC ENTERTAINMENT HOLDINGS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2024
(Unaudited)
NOTE 1—BASIS OF PRESENTATION
AMC Entertainment Holdings, Inc. (“Holdings”), through its direct and indirect subsidiaries, including American Multi-Cinema, Inc. and its subsidiaries, (collectively with Holdings, unless the context otherwise requires, the “Company” or “AMC”), is principally involved in the theatrical exhibition business and owns, operates, or has interests in theatres located in the United States and Europe. The condensed consolidated financial statements include the accounts of Holdings and all subsidiaries and should be read in conjunction with the Company’s Annual Report on Form 10–K for the year ended December 31, 2023. All significant intercompany balances and transactions have been eliminated in consolidation. The Company manages its business under
The accompanying condensed consolidated balance sheet as of December 31, 2023, which was derived from audited financial statements, and the unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10–Q. Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America for complete consolidated financial statements. In the opinion of management, these interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the Company’s financial position and results of operations. Due to the seasonal nature of the Company’s business, results for the nine months ended September 30, 2024, are not necessarily indicative of the results to be expected for the year ending December 31, 2024.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Liquidity. The Company believes its existing cash and cash equivalents, together with cash generated from operations, will be sufficient to fund its operations and satisfy its obligations currently and through the next twelve months. The Company’s cash burn rates are not sustainable long-term. In order to achieve sustainable net positive cash flows provided by operating activities and long-term profitability, the Company believes that revenues will need to increase to levels at least in line with pre-COVID-19 revenues. North American box office grosses were down approximately
There can be no assurance that the revenues, attendance levels, and other assumptions used to estimate the Company’s liquidity requirements and future cash burn rates will be correct, and the ability to be predictive is uncertain due to limited ability to predict studio film release dates, the overall production and theatrical release levels, and success of individual titles. Additionally, the effects of labor stoppages that occurred during 2023 had a negative impact in 2024 on the film slate for exhibition, the Company’s liquidity and cash burn rates. Further, there can be no assurances that the Company will be successful in generating the additional liquidity necessary to meet the Company’s obligations beyond twelve months from the issuance of these financial statements on terms acceptable to the Company or at all.
The Company expects, from time to time, to continue to seek to retire or purchase its outstanding debt through cash purchases and/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as it may determine, and will depend on prevailing market conditions, its liquidity requirements, contractual restrictions and other factors. The
8
amounts involved may be material and to the extent equity is used, dilutive. See Note 6—Corporate Borrowings and Finance Lease Liabilities for a summary of debt transactions that occurred during the nine months ended September 30, 2024 and September 30, 2023, respectively. See Note 13—Subsequent Events for further information about various debt exchanges that occurred subsequent to September 30, 2024. Additionally, the Company has bolstered its liquidity through at-the-market offerings of its Class A Common Stock (“Common Stock”), see Note 7—Stockholders’ Deficit for further information on these offerings.
As of April 19, 2024, and in anticipation of the maturity of the Senior Secured Revolving Credit Facility, the Company voluntarily terminated the commitments under the Senior Secured Revolving Credit Facility in full and paid off any remaining obligations with respect to the Senior Secured Revolving Credit Facility. The financial covenants and related covenant suspension conditions are no longer in effect pursuant to the terms of the Credit Agreement dated as of April 30, 2013 (as amended, restated, amended and restated, supplemented or otherwise modified). The Company currently does not expect to replace the Senior Secured Revolving Credit Facility. The Company has entered into a new letter of credit facility in order to continue to provide letters of credit in the ordinary course of business following the termination of the Senior Secured Revolving Credit Facility.
Cash and Cash Equivalents. As of September 30, 2024, cash and cash equivalents for the U.S. markets and International markets were $
Restricted Cash. Restricted cash includes cash held in the Company’s bank accounts as a guarantee for certain landlords and cash collateralized letters of credit relating to the Company’s insurance and utilities programs. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the condensed consolidated balance sheets to the total of the amounts in the condensed consolidated statements of cash flows.
As of |
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(In millions) |
September 30, 2024 |
December 31, 2023 |
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Cash and cash equivalents |
$ |
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$ |
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Restricted cash |
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Total cash and cash equivalents and restricted cash in the statement of cash flows |
$ |
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$ |
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As of September 30, 2024, restricted cash for the U.S. markets and International markets were $
Accumulated Other Comprehensive Loss. The following table presents the change in accumulated other comprehensive loss by component:
Foreign |
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(In millions) |
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Currency |
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Pension Benefits |
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Total |
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Balance December 31, 2023 |
$ |
( |
$ |
( |
$ |
( |
|||
Other comprehensive income (loss) |
( |
|
( |
||||||
Balance September 30, 2024 |
$ |
( |
$ |
( |
$ |
( |
Accumulated Depreciation and Amortization. Accumulated depreciation was $
9
Other Expense (Income). The following table sets forth the components of other expense (income):
Three Months Ended |
Nine Months Ended |
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(In millions) |
September 30, 2024 |
September 30, 2023 |
September 30, 2024 |
September 30, 2023 |
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Foreign currency transaction (gains) losses |
$ |
( |
|
$ |
( |
( |
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Non-operating components of net periodic benefit cost |
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Gain on extinguishment - Senior Subordinated Notes due 2025 |
( |
— |
( |
— |
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Gain on extinguishment - Senior Subordinated Notes due 2026 |
( |
— |
( |
( |
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(Gain) loss on extinguishment - Second Lien Notes due 2026 |
|
( |
( |
( |
||||||||
Term Loan modification - third party fees |
|
— |
|
— |
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Derivative liability fair value decrease for embedded conversion feature in the Exchangeable Notes due 2030 |
( |
— |
( |
— |
||||||||
Equity in earnings of non-consolidated entities |
( |
( |
( |
( |
||||||||
Derivative stockholder settlement |
— |
— |
— |
( |
||||||||
Shareholder litigation expense and (recoveries) |
( |
( |
( |
|
||||||||
Vendor dispute settlement |
— |
— |
( |
— |
||||||||
Other settlement proceeds |
— |
— |
( |
— |
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|
— |
|
( |
|||||||||
Total other income |
$ |
( |
$ |
( |
$ |
( |
$ |
( |
NOTE 2—LEASES
The Company leases theatres and equipment under operating and finance leases. The Company typically does not believe that exercise of the renewal options is reasonably certain at the lease commencement and, therefore, considers the initial base term as the lease term. Lease terms vary but generally the leases provide for fixed and escalating rentals, contingent escalating rentals based on the Consumer Price Index or other indexes not to exceed certain specified amounts and variable rentals based on a percentage of revenues. The Company often receives contributions from landlords for renovations at existing locations. The Company records the amounts received from landlords as an adjustment to the right-of-use asset and amortizes the balance as a reduction to rent expense over the base term of the lease agreement. Equipment leases primarily consist of sight and sound and food and beverage equipment.
10
The following table reflects the lease costs for the periods presented:
Three Months Ended |
Nine Months Ended |
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September 30, |
September 30, |
September 30, |
September 30, |
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(In millions) |
Consolidated Statements of Operations |
2024 |
2023 |
2024 |
2023 |
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Operating lease cost |
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Theatre properties |
Rent |
$ |
|
$ |
|
$ |
|
$ |
|
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Theatre properties |
Operating expense |
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Equipment |
Operating expense |
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Office and other |
General and administrative: other |
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Finance lease cost |
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Amortization of finance lease assets |
Depreciation and amortization |
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Interest expense on lease liabilities |
Finance lease obligations |
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Variable lease cost |
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Theatre properties |
Rent |
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Equipment |
Operating expense |
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Total lease cost |
$ |
|
$ |
|
$ |
|
$ |
|
Cash flow and supplemental information is presented below:
Nine Months Ended |
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September 30, |
September 30, |
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(In millions) |
2024 |
2023 |
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Cash paid for amounts included in the measurement of lease liabilities: |
||||||
Operating cash flows used in finance leases |
$ |
( |
$ |
( |
||
Operating cash flows used in operating leases |
( |
( |
||||
Financing cash flows used in finance leases |
( |
( |
||||
Landlord contributions: |
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Operating cash flows provided by operating leases |
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|
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Supplemental disclosure of noncash leasing activities: |
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Right-of-use assets obtained in exchange for new operating lease liabilities (1) |
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(1) | Includes lease extensions and option exercises. |
The following table represents the weighted-average remaining lease term and discount rate as of September 30, 2024:
Weighted Average |
Weighted Average |
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Remaining |
Discount |
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Lease Term and Discount Rate |
Lease Term (years) |
Rate |
||||
Operating leases |
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Finance leases |
11