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.

Temporarily suspended or limited operations. Total consolidated revenues increased $1,359.1 million for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. The increase in total consolidated revenues was primarily due to the reduced impact of the COVID-19 pandemic on the current year which resulted in increased operating capacity and increased availability of films with broad consumer appeal. As of January 1, 2021 the Company operated at 394 domestic theatres, with limited seating capacities, representing approximately 67% of its domestic theatres. As of March 31, 2021, the Company operated at 585 domestic theatres, with limited seating capacities, representing approximately 99% of its domestic theatres. As of June 30, 2021, the Company operated at 593 domestic theatres, representing approximately 100% of its domestic theatres with remaining seating capacity restrictions winding down throughout the quarter. As of January 1, 2021, the Company operated at 109 International leased and partnership theatres, with limited seating capacities, representing approximately 30% of our International theatres. As of March 31, 2021, the Company operated at 97 international theatres, with limited seating capacities, representing approximately 27% of its international theatres. As of June 30, 2021, the Company operated at 335 international theatres, with limited seating capacities, representing approximately 95% of its international theatres. Our average consolidated screens operated during the three months ended June 30, 2021 increased by 8,830 screens to 8,890 screens. During the six months ended June 30, 2022, the Company operated essentially 100% of its U.S. and International theatres. As of June 30, 2022 there are no restrictions on operations in any of the U.S. or International theatres.

Liquidity. As of June 30, 2022, the Company has cash and cash equivalents of approximately $965.2 million. In response to the COVID-19 pandemic, the Company adjusted certain elements of its business strategy and took significant steps to preserve cash. The Company is continuing to take measures to further strengthen its financial position and enhance its operations, by minimizing non-essential costs, including reductions to its variable costs and elements of its fixed cost structure, introducing new initiatives, and optimizing its theatrical footprint.

Additionally, the Company enhanced future liquidity through debt refinancing at lower interest rates and repurchasing debt at 69% of par value. See Note 6—Corporate Borrowings and Finance Lease Obligations for further information.

The table below summarizes net increase (decrease) in cash and cash equivalents and restricted cash by quarter for the year ended December 31, 2021:

The Company’s net cash used in operating activities improved by $79.1 million during the three months ended June 30, 2021 compared to the three months ended March 31, 2021, $119.9 million during the three months ended September 30, 2021 compared to the three months ended June 30, 2021, and $160.4 million during the three months ended December 31, 2021 compared to the three months ended September 30, 2021.

The table below summarizes net decrease in cash equivalents and restricted cash by quarter for the six months ended June 30, 2022:

The Company’s net cash provided by (used in) operating activities deteriorated by $341.5 million during the three months ended March 31, 2022 compared to the three months ended December 31, 2021 from $46.5 million to $(295.0) million. The decline in net cash provided by operating activities from the three months ended December 31, 2021 to the three months ended March 31, 2022 was primarily attributable to a decrease in attendance and increase in net

loss and increases in seasonal working capital uses as the Company paid for the strong late fourth quarter 2021 results in early first quarter of 2022. The Company’s net cash used in operating activities improved by $218.4 million during the three months ended June 30, 2022 compared to the three months ended March 31, 2022 from $(295.0) million to $(76.6) million. The improvement in net cash used in operating activities from the three months ended March 31, 2022 to the three months ended June 30, 2022 was primarily attributable to an increase in attendance and decrease in net loss and decreases in seasonal working capital uses as we will pay for the strong second quarter 2022 results in early third quarter of 2022. The Company has also continued to repay rent amounts that were deferred during the COVID-19 pandemic, which increases its cash outflows from operating activities. See Note 2—Leases for a summary of the estimated future repayment terms for the remaining $218.9 million of rentals that were deferred during the COVID-19 pandemic.

The Company’s net cash used in financing activities included:

●

$955.7 million of principal and premium payments of, $52.2 million of taxes paid for restricted unit withholdings, and $17.7 million of cash used to pay for deferred financing costs, partially offset by proceeds from the Company’s debt issuance of $950.0 million, during the three months ended March 31, 2022.

●

$57.9 million of principal and premium payments, $1.8 million of cash used to pay for deferred financing costs during the three months ended June 30, 2022.

The Company believes its existing cash and cash equivalents, together with cash generated from operations, will be sufficient to fund its operations, satisfy its obligations, including cash outflows to repay rent amounts that were deferred during the COVID-19 pandemic and planned capital expenditures, and comply with minimum liquidity and financial covenant requirements under its debt covenants related to borrowings pursuant to the Senior Secured Revolving Credit Facility and Odeon Term Loan Facility for at least the next 12 months. In order to achieve net positive operating cash flows and long-term profitability, the Company believes that box office revenues will need to increase significantly compared to 2021 and the combined first and second quarter of 2022 to levels in line with pre COVID-19 box office revenues. 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. The Company believes that recent attendance levels are positive signs of continued demand for the moviegoing experience. For the six months ended June 30, 2022 attendance was 98.2 million patrons, a 69.3 million patron increase from the approximately 28.9 million patrons for the six months ended June 30, 2021. 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, including a potential resurgence of COVID-19 related restrictions, potential movie-goer reluctance to attend theatres due to concerns about COVID-19 variant strains, movie studios release schedules, the production and theatrical release of fewer films compared to levels before the onset of the COVID-19 pandemic, and direct to streaming or other changing movie studio practices.

The Company entered the Ninth Amendment to the Credit Agreement, dated as of March 8, 2021, pursuant to which the requisite revolving lenders party thereto agreed to extend the suspension period for the financial covenant (the secured leverage ratio) applicable to the Senior Secured Revolving Credit Facility from March 31, 2021 to March 31, 2022, which was further extended from March 31, 2022 to March 31, 2023 by the Eleventh Amendment, dated as of December 20, 2021, as described, and on the terms and conditions specified, therein. The Company is currently subject to minimum liquidity requirements of approximately $139.5 million, of which $100 million is required under the conditions for the Extended Covenant Suspension Period, as amended, under the Senior Secured Revolving Credit Facility, and £32.5 million (approximately $39.5 million) of which is required under the Odeon Term Loan Facility. Following the expiration of the Extended Covenant Suspension Period ending March 31, 2023, the Company will be subject to the financial covenant under the Senior Secured Revolving Credit Facility as of the last day of each quarter on

which the aggregate principal amount of revolving loans and letters of credit (excluding letters of credit that are cash collateralized) in excess of $25 million outstanding under the Senior Secured Revolving Credit Facility exceeds 35% of the principal amount of commitments under the Senior Secured Revolving Credit facility then in effect, beginning with the quarter ending June 30, 2023. The Company currently expects it will be able to comply with this financial covenant; however, the Company does not anticipate the need to borrow under the Senior Secured Revolving Credit Facility during the next twelve months.

The 11.25% Odeon Term Loan due 2023 matures on August 19, 2023 during the third fiscal quarter of the Company’s next calendar year. The Company is currently negotiating terms of new debt intended to refinance the existing £147.6 million and €312.2 million aggregate principal amounts of Odeon Term Loan due 2023. While the Company intends to fully refinance the 11.25% Odeon Term Loan due 2023 and extend current maturity dates, there are no assurances that the Company will be able to do so. If the Company is unable to refinance these amounts, the principal amounts will be reported as current maturities which may increase uncertainty regarding its ability to meet future commitments.

The Company may, at any time and from time to time, 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 amounts involved may be material.

The Company received rent concessions provided by the lessors that aided in mitigating the economic effects of COVID-19 during the pandemic. These concessions primarily consisted of rent abatements and the deferral of rent payments. As a result, deferred lease amounts were approximately $218.9 million as of June 30, 2022. The Company’s cash expenditures for rent increased significantly during the six months ended June 30, 2022, compared to the six months ended June 30, 2021. See Note 2—Leases for a summary of the estimated future repayment terms for the deferred lease amounts due to COVID-19.

Use of estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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.

Principles of consolidation. The accompanying unaudited condensed consolidated financial statements include the accounts of AMC, as discussed above, and should be read in conjunction with the Company’s Annual Report on Form 10–K for the year ended December 31, 2021. The accompanying condensed consolidated balance sheet as of December 31, 2021, 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. All significant intercompany balances and transactions have been eliminated in consolidation. Due to the seasonal nature of the Company’s business and the recovery of the industry from the global COVID-19 pandemic, results for the six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022. The Company manages its business under two reportable segments for its theatrical exhibition operations, U.S. markets and International markets.

Cash and equivalents. At June 30, 2022, cash and cash equivalents for the U.S. markets and International markets were $812.8 million and $152.4 million respectively, and at December 31, 2021, cash and cash equivalents were $1,311.4 million and $281.1 million, respectively.

Restricted cash. Restricted cash is cash held in the Company’s bank accounts in International markets as a guarantee for certain landlords.

Accumulated other comprehensive loss. The following table presents the change in accumulated other comprehensive loss by component:


	Foreign
(In millions)	Currency		Pension Benefits		Total
Balance December 31, 2021	$	(19.0)	$	(9.1)	$	(28.1)
Other comprehensive income (loss)		(52.3)		0.2		(52.1)
Balance June 30, 2022	$	(71.3)	$	(8.9)	$	(80.2)

Accumulated depreciation and amortization. Accumulated depreciation was $2,680.0 million and $2,583.4 million at June 30, 2022 and December 31, 2021, respectively, related to property. Accumulated amortization of intangible assets was $42.0 million and $41.2 million at June 30, 2022 and December 31, 2021, respectively.

Other expense (income). The following table sets forth the components of other expense (income):


	Three Months Ended				Six Months Ended
(In millions)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Decreases related to contingent lease guarantees	$	—	$	(3.7)	$	(0.1)	$	(5.7)
Governmental assistance due to COVID-19 - International markets		(8.5)		(42.2)		(10.8)		(50.4)
Governmental assistance due to COVID-19 - U.S. markets		—		—		(1.1)		(4.2)
Foreign currency transaction (gains) losses		3.6		3.4		8.4		(0.4)
Non-operating components of net periodic benefit income		(0.2)		(0.2)		(0.2)		(0.4)
(Gain) Loss on extinguishment of debt		(38.6)		—		96.4		—
Financing fees related to modification of debt agreements		—		—		—		1.0
Total other expense (income)	$	(43.7)	$	(42.7)	$	92.6	$	(60.1)

Accounting Pronouncements Recently Adopted

Government Assistance. In November 2021, the Financial Accounting Standards Board (“FASB”) issued ASU 2021-10, Government Assistance (Topic 832) Disclosures by Business Entities about Government Assistance (“ASU 2021-10”). The amendments in ASU 2021-10 require annual disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy, including (1) information about the nature of the transactions and the related accounting policy used to account for the transactions, (2) the line items on the balance sheet and income statement that are affected by the transactions and the amounts applicable to each financial statement line item, and (3) significant terms and conditions of the transactions, including commitments and contingencies. The Company is applying the amendments in ASU 2021-10 prospectively as of January 1, 2022 and the annual government assistance disclosure requirements are effective for the Company during the year ending December 31, 2022.