REVENUE RECOGNITION

3 Months Ended

Mar. 31, 2024

REVENUE RECOGNITION

REVENUE RECOGNITION

NOTE 3—REVENUE RECOGNITION

Disaggregation of Revenue. Revenue is disaggregated in the following tables by major revenue types and by timing of revenue recognition:

	Three Months Ended
(In millions)	March 31, 2024		March 31, 2023
Major revenue types
Admissions	$	530.5	$	534.1
Food and beverage		321.2		328.7
Other theatre:
Screen advertising		30.3		30.9
Other		69.4		60.7
Other theatre		99.7		91.6
Total revenues	$	951.4	$	954.4

	Three Months Ended
(In millions)	March 31, 2024		March 31, 2023
Timing of revenue recognition
Products and services transferred at a point in time	$	858.5	$	871.8
Products and services transferred over time (1)		92.9		82.6
Total revenues	$	951.4	$	954.4

(1) Amounts primarily include subscription and advertising revenues.

The following tables provide the balances of receivables, net and deferred revenues and income as of March 31, 2024, and December 31, 2023:

(In millions)	March 31, 2024		December 31, 2023
Current assets
Receivables related to contracts with customers	$	72.0	$	113.5
Miscellaneous receivables		68.4		90.2
Receivables, net	$	140.4	$	203.7

(In millions)	March 31, 2024		December 31, 2023
Current liabilities
Deferred revenues related to contracts with customers	$	388.0	$	415.3
Miscellaneous deferred income		6.2		6.5
Deferred revenues and income	$	394.2	$	421.8

The significant changes in contract liabilities with customers included in deferred revenues and income are as follows:

	Deferred Revenues
	Related to Contracts
(In millions)	with Customers
Balance December 31, 2023	$	415.3
Cash received in advance (1)		66.3
Customer loyalty rewards accumulated, net of expirations:
Admission revenues (2)		4.5
Food and beverage (2)		7.2
Other theatre (2)		(0.5)
Reclassification to revenue as the result of performance obligations satisfied:
Admission revenues (3)		(61.2)
Food and beverage (3)		(19.0)
Other theatre (4)		(22.3)
Foreign currency translation adjustment		(2.3)
Balance March 31, 2024	$	388.0

(1) Includes movie tickets, food and beverage, gift cards, exchange tickets, subscription membership fees, and other loyalty membership fees.

(2) Amount of rewards accumulated, net of expirations, that are attributed to loyalty programs.

(3) Amount of rewards redeemed that are attributed to gift cards, exchange tickets, movie tickets, and loyalty programs.

(4) Amounts relate to income from non-redeemed or partially redeemed gift cards, non-redeemed exchange tickets, subscription membership fees, and loyalty program membership fees.

The significant changes to contract liabilities included in the exhibitor services agreement in the condensed consolidated balance sheets, are as follows:

	Exhibitor Services
(In millions)	Agreement (1)
Balance December 31, 2023	$	486.6
Reclassification of the beginning balance to other theatre revenue, as the result of performance obligations satisfied		(5.5)
Balance March 31, 2024	$	481.1

(1) Represents the carrying amount of the National CineMedia, LLC (“NCM”) common units that were previously received under the annual Common Unit Adjustment (“CUA”) and subsequent adjustments related to the NCM bankruptcy, as discussed in greater detail below. The deferred revenues are being amortized to other theatre revenues over the remainder of the 30-year term of the Exhibitor Service Agreement (“ESA”) ending in February 2037.

NCM Bankruptcy. On April 11, 2023, NCM filed a petition under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of Texas. NCM is the in-theatre advertising provider for the majority of the Company’s theatres in the United States. Under the Chapter 11 plan of reorganization, which became effective on August 7, 2023 (the “Plan”), NCM has assumed its agreements with the Company. As part of the Plan, on August 7, 2023, NCM issued 16,581,829 common units (“NCM Common Units”) that were owed to the Company as part of the annual common unit adjustment. But under the terms of the Plan and the restructuring of the equity of NCM thereunder, the NCM Common Units were immediately cancelled upon the efficacy of the Plan. The Company has filed appeals with the United States District Court for the Southern District of Texas, objecting to, among other things, certain terms of the Plan, including modification of the terms of the exhibitor services agreement with other parties that were not granted to the Company and appeal of the court’s order to approve cancellation of the NCM Common Unit issuance. The Company does not expect its bankruptcy to have a material impact on the Company.

Gift Cards and Exchange Tickets. The total amount of non-redeemed gift cards and exchange tickets included in deferred revenues and income in the condensed consolidated balance sheet as of March 31, 2024 was $299.4 million. This will be recognized as revenues as the gift cards and exchange tickets are redeemed or as the non-redeemed gift card and exchange ticket revenues are recognized in proportion to the pattern of actual redemptions, which is estimated to occur over the next 24 months.

Loyalty Programs. As of March 31, 2024, the amount of deferred revenues allocated to the loyalty programs included in deferred revenues and income in the condensed consolidated balance sheet was $73.3 million. The earned points will be recognized as revenue as the points are redeemed, which is estimated to occur over the next 24 months. Subscription membership fees and loyalty membership fees are recognized ratably over their respective membership periods.

The Company applies the practical expedient in ASC 606-10-50-14 and does not disclose information about remaining performance obligations that have original expected durations of one year or less.