OPERATING SEGMENT

NOTE 15 – OPERATING SEGMENTS

The Company reports information about operating segments in accordance with ASC 280-10, Segment Reporting, which requires financial information to be reported based on the way management organizes segments within a company for making operating decisions and evaluating performance. Beginning with the Company’s acquisition of Odeon in 2016, the Company has identified two reportable segments for its theatrical exhibition operations, U.S. markets and International markets. The International markets segment consists of operations in the United Kingdom, Germany, Spain, Italy, Ireland, Austria and Portugal. Each segment’s revenue is derived from admissions, food and beverage sales and other ancillary revenues, primarily screen advertising, AMC Stubs® membership fees, ticket sales, gift card income and exchange ticket income. The measure of segment profit and loss the Company uses to evaluate performance and allocate its resources is Adjusted EBITDA, as defined in the reconciliation table below. The Company does not report asset information by segment because that information is not used to evaluate the performance of or allocate resources between segments.

Below is a breakdown of select financial information by reportable operating segment:


	Year Ended		Year Ended		Year Ended
Revenues (In thousands)	December 31, 2016		December 31, 2015		December 31, 2014
U.S. markets	$	3,116,983	$	2,940,012	$	2,688,230
International markets		118,863		6,888		7,160
Total revenues	$	3,235,846	$	2,946,900	$	2,695,390


	Year Ended		Year Ended		Year Ended
Adjusted EBITDA (1) (In thousands)	December 31, 2016		December 31, 2015		December 31, 2014
U.S. markets	$	573,618	$	536,811	$	464,555
International markets		28,412		(357)		(630)
Total Adjusted EBITDA	$	602,030	$	536,454	$	463,925


	Year Ended		Year Ended		Year Ended
Capital Expenditures (In thousands)	December 31, 2016		December 31, 2015		December 31, 2014
U.S. markets	$	412,752	$	333,423	$	270,734
International markets		8,961		—		—
Total capital expenditures	$	421,713	$	333,423	$	270,734

(1)

The Company presents Adjusted EBITDA as a supplemental measure of its performance. The Company defines Adjusted EBITDA as net earnings plus (i) income tax provision, (ii) interest expense and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance and to include any cash distributions of earnings from our equity method investees. The measure of segment profit and loss the Company uses to evaluate performance and allocate its resources is Adjusted EBITDA, which is consistent with how Adjusted EBITDA is defined in our debt indentures.

(2)

Distributions from NCM are reported entirely within the U.S. markets segment.

Financial Information About Geographic Area:


	Year Ended		Year Ended		Year Ended
Revenues	December 31, 2016		December 31, 2015		December 31, 2014
United States	$	3,116,983	$	2,940,012	$	2,688,230
United Kingdom		56,876		6,888		7,160
Italy		20,984		—		—
Spain		19,989		—		—
Germany		14,128		—		—
Other foreign countries		6,886		—		—
Total	$	3,235,846	$	2,946,900	$	2,695,390


	As of		As of
Long-term assets, net (In thousands)	December 31, 2016		December 31, 2015
United States	$	6,156,885	$	4,673,756
International		1,801,313		194
Total long-term assets (1)	$	7,958,198	$	4,673,950

(1)

Long-term assets are comprised of property, intangible assets, goodwill, deferred income tax assets and other long-term assets.

The following table sets forth a reconciliation of net earnings to Adjusted EBITDA:


	Year Ended		Year Ended		Year Ended
	December 31,		December 31,		December 31,
(In thousands)	2016		2015		2014
Net earnings	$	111,667	$	103,856	$	63,767
Plus:
Income tax provision		37,972		59,675		33,470
Interest expense		121,537		106,088		120,939
Depreciation and amortization		268,243		232,961		216,321
Impairment of long-lived assets		5,544		1,702		3,149
Certain operating expenses(1)		20,117		16,773		21,686
Equity in earnings of non-consolidated entities		(47,718)		(37,131)		(26,615)
Cash distributions from non-consolidated entities		40,052		34,083		35,243
Investment expense (income)		(10,154)		(6,115)		(8,145)
Other expense (income)(2)		32		10,684		(8,344)
General and administrative expense—unallocated:
Merger, acquisition and transaction costs(3)		47,895		3,398		1,161
Stock-based compensation expense(4)		6,843		10,480		11,293
Adjusted EBITDA	$	602,030	$	536,454	$	463,925

(1)

Amounts represent preopening expense related to temporarily closed screens under renovation, theatre and other closure expense for the permanent closure of screens including the related accretion of interest, non-cash deferred digital equipment rent expense, and disposition of assets and other non-operating gains or losses included in operating expenses. The Company has excluded these items as they are non-cash in nature, include components of interest cost for the time value of money or are non-operating in nature.

(2)

Other expense for the prior year periods related to the cash tender offer and redemption of the 9.75% Senior Subordinated Notes due 2020. The Company has excluded other expense and income related to financing activities as the amounts are similar to interest expense or income and are non-operating in nature.

(3)

Merger, acquisition and transition costs are excluded as it is non-operating in nature.

(4)

Non-cash or non-recurring expense included in general and administrative: other.

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 35
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 29
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599

+ Details