NOTE 7—STOCKHOLDERS’ EQUITY

Dividends

The following is a summary of dividends and dividend equivalents paid to stockholders during the nine months ended September 30, 2018:


			Amount per		Total Amount
			Share of		Declared
Declaration Date	Record Date	Date Paid	Common Stock		(In millions)
February 28, 2018	March 12, 2018	March 26, 2018	$	0.20	$	26.0
May 3, 2018	June 11, 2018	June 25, 2018		0.20		26.0
July 24, 2018	September 10, 2018	September 24, 2018		0.20		25.8
September 14, 2018	September 25, 2018	September 28, 2018		1.55		162.9

On September 14, 2018, the Holdings’ Board of Directors declared a special cash dividend in the amount of $1.55 per share of Class A and Class B common stock, payable on September 28, 2018 to stockholders of record on September 25, 2018.

On November 1, 2018, Holdings’ Board of Directors declared a cash dividend in the amount of $0.20 per share of Class A and Class B common stock, payable on December 26, 2018 to stockholders of record on December 10, 2018.

Related Party Transactions

As of September 30, 2018 and December 31, 2017, the Company recorded a receivable due from Wanda of $0.8 million and $0.6 million, respectively, for reimbursement of general administrative and other expense incurred on behalf of Wanda. During the nine months ended September 30, 2018, the Company recorded $0.7 million of cost reductions for general and administrative services provided on behalf of Wanda. Wanda owns Legendary Entertainment, a motion picture production company. The Company will occasionally play Legendary’s films in its theatres as a result of transactions with independent film distributors.

On September 14, 2018, the Company entered into the Investment Agreement with Silver Lake Alpine, L.P., an affiliate of Silver Lake Group, L.L.C. (“Silver Lake”), relating to the issuance to Silver Lake (or its designated affiliates) of $600 million principal amount of the Convertible Notes due 2024.

On September 14, 2018, the Company, Silver Lake and Wanda entered into a Right of First Refusal Agreement (the “ ROFR Agreement ”), which provides Silver Lake certain rights to purchase shares of the Company’s common stock that Wanda proposes to sell during a period of two years from the date of execution of the ROFR Agreement or, if earlier, until such time that Wanda and its affiliates cease to beneficially own at least 50.1% of the total voting power of the Company’s voting stock. The right of first refusal applies to both registered and unregistered transfers of shares. Under the ROFR Agreement, in the event that Wanda and its affiliates cease to beneficially own at least 50.1% of the total voting power of the Company’s voting stock, then the Company will have the same right of first refusal over sales of the Company’s common stock by Wanda as described above until the expiration of the two-year period beginning on the date of execution of the ROFR Agreement. In such event, the Company may exercise such right to purchase shares from Wanda from time to time pursuant to the ROFR Agreement in its sole discretion, subject to approval by the disinterested directors of the Board. If the Company determines to exercise its right to purchase shares from Wanda pursuant to the ROFR Agreement, it will have the obligation under the Investment Agreement to offer to sell to Silver Lake a like number of shares of the Company’s Class A Common Stock, at the same per share price at which it purchased the Wanda shares.

On September 14, 2018, the Company used the proceeds from the Convertible Notes due 2024, and pursuant to a stock repurchase agreement between the Company and Wanda, repurchased 24,057,143 shares of Class B common stock at a price of $17.50 per share or $421.0 million and associated legal fees of $1.9 million. As of September 30, 2018, Wanda owns 50.01% of AMC through its 51,769,784 shares of Class B common stock. With the three-to-one voting ratio between our Class B and Class A common stock, Wanda retains voting control of AMC with 75.01% of the voting power of the Company’s common stock. As discussed in Note 6 up to 5,666,000 shares of Class B common stock are subject to forfeiture for no consideration in connection with the reset provision contained in the Indenture.

Temporary Equity

Certain members of management have the right to require Holdings to repurchase the Class A common stock held by them under certain limited circumstances pursuant to the terms of a stockholders’ agreement. Beginning on January 1, 2016 (or upon the termination of a management stockholder’s employment by the Company without cause, by the management stockholder for good reason, or due to the management stockholder’s death or disability) management stockholders will have the right, in limited circumstances, to require Holdings to purchase shares that are not fully and freely tradeable at a price equal to the price per share paid by such management stockholder with appropriate adjustments for any subsequent events such as dividends, splits, or combinations. The shares of Class A common stock, subject to the stockholder agreement, are classified as temporary equity, apart from permanent equity, as a result of the contingent redemption feature contained in the stockholder agreement. The Company determined the amount reflected in temporary equity for the Class A common stock-based on the price paid per share by the management stockholders and Wanda on August 30, 2012, the date Wanda acquired Holdings.

During the nine months ended September 30, 2018, two employees who held 37,105 shares relinquished their put rights, therefore the related share amount of $0.4 million was reclassified to additional paid in capital, a component of stockholders’ equity.

Stock-Based Compensation

Holdings adopted a stock-based compensation plan in December of 2013.

The Company recognized stock-based compensation expense of $4.2 million and $(0.1) million within general and administrative: other during the three months ended September 30, 2018 and September 30, 2017, respectively. The Company recognized stock-based compensation expense of $10.9 million and $3.9 million within general and administrative: other during the nine months ended September 30, 2018 and September 30, 2017, respectively.

The components of the Company’s recorded and unrecognized stock-based compensation expense are as follows:


							Additional
					Amount		Expected to		Expected to		Expected to
	Three Months Ended		Nine Months Ended		Unrecognized		Recognize		Recognize		Recognize
Grant	September 30, 2018		September 30, 2018		September 30, 2018		2018		2019		2020
2018 Board of Directors	$	—	$	0.5	$	—	$	—	$	—	$	—
2018 RSU awards		1.0		2.4		7.8		1.0		3.4		3.4
2018 PSU awards		1.8		4.1		6.0		1.8		3.0		1.2
2017 RSU awards		0.5		1.3		2.4		0.5		1.9		—
2017 RSU NEO awards		0.3		1.0		1.7		0.3		1.4		—
2017 PSU awards (1)		—		—		—		—		—		—
2016 RSU awards		0.3		0.8		0.3		0.3		—		—
2016 RSU NEO awards		0.3		0.8		0.3		0.3		—		—
2016 PSU awards (1)		—		—		—		—		—		—
	$	4.2	$	10.9	$	18.5	$	4.2	$	9.7	$	4.6

(1)

During the year ended December 31, 2017, the Company determined that achieving the three-year performance thresholds of the 2017 Performance Stock Units and the 2016 Performance Stock Units was improbable and reversed all previously recorded expense and ceased accruing any additional expense on these units. If the Company later determines that the performance thresholds become probable, then historical expense would be reinstated, and the Company would resume recognizing expense.

Awards Granted in 2018

The Company’s Board of Directors approved awards of stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”) to certain of the Company’s employees and directors under the Plan. The fair value of the stock at the grant date of March 12, 2018 was $15.65 per share and was based on the closing price of Holdings’ stock.

The award agreements generally had the following features:

Stock Award: On March 12, 2018, five members of Holdings’ Board of Directors were granted awards of 28,055 fully vested shares of Class A common stock in the aggregate. The Company recognized approximately $0.5 million of expense in general and administrative: other expense during the nine months ended September 30, 2018, in connection with these share grants.

Restricted Stock Unit Awards: On March 12, 2018, RSU awards of 653,669 units were granted to certain members of management and executive officers. The grant date fair value was approximately $10.2 million based on a stock price of $15.65 on March 12, 2018. Each RSU represents the right to receive one share of Class A common stock at a future date. The RSUs vest over 3 years with 1/3 vesting on each of January 2, 2019, 2020, and 2021. The RSUs will be settled within 30 days of vesting. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the RSUs began to accrue with respect to the RSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the RSUs.

Performance Stock Unit Award: On March 12, 2018, PSU awards of 653,669 were granted to certain members of management and executive officers, with three-year cumulative adjusted EBITDA, diluted earnings per share, and net profit performance target conditions and service conditions, covering a performance period beginning January 1, 2018 and ending on December 31, 2020. The PSUs will vest based on achieving 80% to 120% of the performance targets with the corresponding vested unit amount ranging from 30% to 200%. If the performance target is met at 100%, the PSU awards granted on March 12, 2018, will vest at 653,669 units in the aggregate. No PSUs will vest if Holdings does not achieve 80% of the three-year cumulative adjusted EBITDA, diluted earnings per share, and net profit performance target. Additionally, unvested PSU’s shall be ratably forfeited upon termination of service prior to December 31, 2020. If service terminates prior to January 2, 2019, all unvested PSU’s shall be forfeited, if service terminates prior to January 2, 2020, 2/3 of unvested PSU’s shall be forfeited and if service terminates prior to January 4, 2021, 1/3 of unvested PSU’s shall be forfeited. The vested PSUs will be settled within 30 days of vesting which will occur upon certification of performance results by the Compensation Committee of the Board of Directors. A dividend equivalent equal to the amount paid in respect of one share of Class A common stock underlying the PSUs began to accrue with respect to the PSUs on the date of grant. Such accrued dividend equivalents are paid to the holder upon vesting of the PSUs.

The following table represents the nonvested RSU and PSU activity for the nine months ended September 30, 2018:


		Weighted
		Average
	Shares of RSU	Grant Date
	and PSU	Fair Value
Beginning balance at January 1, 2018	1,083,841	$	28.61
Granted	1,313,152		15.65
Vested	(195,432)		28.46
Forfeited	(27,870)		20.49
Nonvested at September 30, 2018	2,173,691	$	20.90

Consolidated Statements of Stockholders’ Equity

For the Nine Months Ended September 30, 2018


												Accumulated
	Class A Voting			Class B Voting			Additional					Other		Accumulated		Total
	Common Stock			Common Stock			Paid-in		Treasury Stock			Comprehensive		Earnings		Stockholders’
(In millions, except share and per share data)	Shares	Amount		Shares	Amount		Capital		Shares	Amount		Income (Loss)		(Deficit)		Equity
Balances December 31, 2017	55,010,160	$	0.5	75,826,927	$	0.8	$	2,241.6	3,232,625	$	(48.2)	$	125.6	$	(207.9)	$	2,112.4
Cumulative effect adjustments for the adoption of new accounting principles (AS 606, ASU 2016-01 and ASU 2018-02)	—		—	—		—		—	—		—		4.4		(36.2)		(31.8)
Net earnings	—		—	—		—		—	—		—		—		17.7		17.7
Other comprehensive income	—		—	—		—		—	—		—		10.5		—		10.5
Dividends declared:
Class A common stock, $0.20/share	—		—	—		—		—	—		—		—		(10.8)		(10.8)
Class B common stock, $0.20/share	—		—	—		—		—	—		—		—		(15.2)		(15.2)
Reversed dividend accrual for nonvested PSU's	—		—	—		—		—	—		—		—		0.7		0.7
RSUs surrendered to pay for payroll taxes	326,005		—	—		—		(1.8)	—		—		—		—		(1.8)
Reclassification from temporary equity	27,195		—	—		—		0.3	—		—		—		—		0.3
Stock-based compensation	28,055							2.8									2.8
Balances March 31, 2018	55,391,415	$	0.5	75,826,927	$	0.8	$	2,242.9	3,232,625	$	(48.2)	$	140.5	$	(251.7)	$	2,084.8
Net earnings	—		—	—		—		—	—		—		—		22.2		22.2
Other comprehensive loss	—		—	—		—		—	—		—		(107.0)		—		(107.0)
Dividends declared:
Class A common stock, $0.20/share	—		—	—		—		—	—		—		—		(10.8)		(10.8)
Class B common stock, $0.20/share	—		—	—		—		—	—		—		—		(15.2)		(15.2)
Reclassification from temporary equity	9,910		—	—		—		0.1	—		—		—		—		0.1
Stock-based compensation	—		—	—		—		4.0	—		—		—		—		4.0
Class A common stock repurchases	—		—	—		—		—	500,000		(8.2)		—		—		(8.2)
Balances June 30, 2018	55,401,325	$	0.5	75,826,927	$	0.8	$	2,247.0	3,732,625	$	(56.4)	$	33.5	$	(255.5)	$	1,969.9
Net loss	—		—	—		—		—	—		—		—		(100.4)		(100.4)
Other comprehensive loss	—		—	—		—		—	—		—		(7.5)		—		(7.5)
Dividends declared:
Class A common stock, $0.20/share	—		—	—		—		—	—		—		—		(10.6)		(10.6)
Class B common stock, $0.20/share	—		—	—		—		—	—		—		—		(15.3)		(15.3)
Special dividend declared:
Class A common stock, $1.55/share	—		—	—		—		—	—		—		—		(82.7)		(82.7)
Class B common stock, $1.55/share	—		—	—		—		—	—		—		—		(80.2)		(80.2)
Stock-based compensation	—		—	—		—		4.2	—		—		—		—		4.2
Class B common stock repurchase and cancellation	—		—	(24,057,143)		(0.3)		(256.7)	—		—		—		(165.9)		(422.9)
Balances September 30, 2018	55,401,325	$	0.5	51,769,784	$	0.5	$	1,994.5	3,732,625	$	(56.4)	$	26.0	$	(710.6)	$	1,254.5

Consolidated Statements of Stockholder’s Equity

For the Nine Months Ended September 30, 2017


												Accumulated
	Class A Voting			Class B Voting			Additional					Other		Accumulated		Total
	Common Stock			Common Stock			Paid-in		Treasury Stock			Comprehensive		Earnings		Stockholders’
(In millions, except share and per share data)	Shares	Amount		Shares	Amount		Capital		Shares	Amount		Income (Loss)		(Deficit)		Equity
Balances December 31, 2016	34,236,561	$	0.3	75,826,927	$	0.8	$	1,627.3	36,769	$	(0.7)	$	(2.5)	$	384.4	$	2,009.6
Net earnings	—		—	—		—		—	—		—		—		8.4		8.4
Other comprehensive loss	—		—	—		—		—	—		—		(1.9)		—		(1.9)
Dividends declared:
Class A common stock, $0.20/share	—		—	—		—		—	—		—		—		(11.1)		(11.1)
Class B common stock, $0.20/share	—		—	—		—		—	—		—		—		(15.2)		(15.2)
Additional offering	20,330,874		0.2	—		—		617.5	—		—		—		—		617.7
RSUs surrendered to pay for payroll taxes	393,413		—	—		—		(6.5)	—		—		—		—		(6.5)
Stock-based compensation	13,684		—	—		—		(0.4)	—		—		—		—		(0.4)
Balances March 31, 2017	54,974,532	$	0.5	75,826,927	$	0.8	$	2,237.9	36,769	$	(0.7)	$	(4.4)	$	366.5	$	2,600.6
Net loss	—		—	—		—		—	—		—		—		(176.5)		(176.5)
Other comprehensive income	—		—	—		—		—	—		—		76.5		—		76.5
Dividends declared:
Class A common stock, $0.20/share	—		—	—		—		—	—		—		—		(11.2)		(11.2)
Class B common stock, $0.20/share	—		—	—		—		—	—		—		—		(15.2)		(15.2)
Additional offering	—		—	—		—		(0.9)	—		—		—		—		(0.9)
Stock-based compensation			—	—		—		3.0	—		—		—		—		3.0
RSUs surrendered to pay for payroll taxes	795		—	—		—		—	—		—		—		—		—
Reclassification from temporary equity	27,197		—	—		—		0.3	—		—		—		—		0.3
Balances June 30, 2017	55,002,524	$	0.5	75,826,927	$	0.8	$	2,240.3	36,769	$	(0.7)	$	72.1	$	163.6	$	2,476.6
Net loss	—		—	—		—		—	—		—		—		(42.7)		(42.7)
Other comprehensive income	—		—	—		—		—	—		—		33.7		—		33.7
Dividends declared:
Class A common stock, $0.20/share	—		—	—		—		—	—		—		—		(11.2)		(11.2)
Class B common stock, $0.20/share	—		—	—		—		—	—		—		—		(15.2)		(15.2)
Stock-based compensation	—		—	—		—		(0.3)	—		—		—		—		(0.3)
Class A common stock repurchases	—		—	—		—		—	1,068,300		(16.5)		—		—		(16.5)
Balances September 30, 2017	55,002,524	$	0.5	75,826,927	$	0.8	$	2,240.0	1,105,069	$	(17.2)	$	105.8	$	94.5	$	2,424.4