| OPERATING SEGMENTS |
NOTE 10—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. The Company has identified two reportable segments and reporting units for its theatrical exhibition operations, U.S. markets and International markets. The International markets reportable segment has operations in or partial interest in theatres in the United Kingdom, Germany, Spain, Italy, Ireland, Portugal, Sweden, Finland, Norway, Denmark, and Saudi Arabia. Each segment’s revenue is derived from admissions, food and beverage sales and other ancillary revenues, primarily screen advertising, AMC Stubs® membership fees and other loyalty programs, 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: | | | | | | | | | Three Months Ended | Revenues (In millions) | | March 31, 2022 | | March 31, 2021 | U.S. markets | | $ | 563.1 | | $ | 137.2 | International markets | | | 222.6 | | | 11.1 | Total revenues | | $ | 785.7 | | $ | 148.3 |
| | | | | | | | | Three Months Ended | Adjusted EBITDA (In millions) | | March 31, 2022 | | March 31, 2021 | U.S. markets | | $ | (43.4) | | $ | (200.4) | International markets | | | (18.3) | | | (94.3) | Total Adjusted EBITDA (1) | | $ | (61.7) | | $ | (294.7) |
| (1) | The Company presents Adjusted EBITDA as a supplemental measure of its performance. The Company defines Adjusted EBITDA as net earnings (loss) plus (i) income tax provision (benefit), (ii) interest expense and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certain items that the Company does not consider indicative of the Company’s ongoing operating performance and to include attributable EBITDA from equity investments in theatre operations in International markets and any cash distributions of earnings from its other 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 the Company’s debt indentures. |
| | | | | | | | | Three Months Ended | Capital Expenditures (In millions) | | March 31, 2022 | | March 31, 2021 | U.S. markets | | $ | 21.1 | | $ | 6.6 | International markets | | | 13.7 | | | 5.3 | Total capital expenditures | | $ | 34.8 | | $ | 11.9 |
| | | | | | | | | As of | | As of | Long-term assets, net (In millions) | | March 31, 2022 | | December 31, 2021 | U.S. markets | | $ | 6,508.6 | | $ | 6,434.5 | International markets | | | 2,432.3 | | | 2,516.7 | Total long-term assets (1) | | $ | 8,940.9 | | $ | 8,951.2 |
| (1) | Long-term assets are comprised of property, net, operating lease right-of-use assets, intangible assets, goodwill, deferred tax assets, net and other long-term assets. |
The following table sets forth a reconciliation of net loss to Adjusted EBITDA: | | | | | | | | | Three Months Ended | (In millions) | | March 31, 2022 | | March 31, 2021 | Net loss | | $ | (337.4) | | $ | (567.2) | Plus: | | | | | | | Income tax provision (benefit) | | | 0.1 | | | (6.8) | Interest expense | | | 92.4 | | | 162.8 | Depreciation and amortization | | | 98.7 | | | 114.1 | Certain operating expense (1) | | | 2.3 | | | 2.3 | Equity in loss of non-consolidated entities | | | 5.1 | | | 2.8 | Cash distributions from non-consolidated entities (2) | | | 0.7 | | | 0.3 | Attributable EBITDA (3) | | | 0.2 | | | (0.8) | Investment income (4) | | | (63.4) | | | (2.0) | Other expense (income) (5) | | | 139.8 | | | (4.8) | Other non-cash rent benefit (6) | | | (7.1) | | | (7.5) | General and administrative — unallocated: | | | | | | | Merger, acquisition and other costs (7) | | | 0.4 | | | 6.7 | Stock-based compensation expense (8) | | | 6.5 | | | 5.4 | Adjusted EBITDA | | $ | (61.7) | | $ | (294.7) |
| (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, 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 or are non-operating in nature. |
| (2) | Includes U.S. non-theatre distributions from equity method investments and International non-theatre distributions from equity method investments to the extent received. The Company believes including cash distributions is an appropriate reflection of the contribution of these investments to the Company’s operations. |
| (3) | Attributable EBITDA includes the EBITDA from equity investments in theatre operators in certain International markets. See below for a reconciliation of the Company’s equity in (earnings) loss of non-consolidated entities to attributable EBITDA. Because these equity investments are in theatre operators in regions where the Company holds a significant market share, the Company believes attributable EBITDA is more indicative of the performance of these equity investments and management uses this measure to monitor and evaluate these equity investments. The Company also provides services to these theatre operators including information technology systems, certain on-screen advertising services and the Company’s gift card and package ticket program. |
| | | | | | | | | Three Months Ended | (In millions) | | March 31, 2022 | | March 31, 2021 | Equity in loss of non-consolidated entities | | $ | 5.1 | | $ | 2.8 | Less: | | | | | | | Equity in loss of non-consolidated entities excluding International theatre joint ventures | | | 0.3 | | | 1.2 | Equity in loss of International theatre joint ventures | | | (4.8) | | | (1.6) | Income tax benefit | | | — | | | (0.2) | Impairment of long-lived assets | | | 4.2 | | | — | Depreciation and amortization | | | 0.8 | | | 0.9 | Other expense | | | — | | | 0.1 | Attributable EBITDA | | $ | 0.2 | | $ | (0.8) |
| (4) | Investment income during the three months ended March 31, 2022 includes appreciation in estimated fair value of the Company’s investment in common shares of Hycroft Mining Holding Corporation of $28.8 million and appreciation in estimated fair value of the Company’s investment in warrants to purchase common shares of Hycroft Mining Holdings corporation of $35.1 million. |
| (5) | Other expense during the three months ended March 31, 2022, included loss on debt extinguishment of $135.0 million and foreign currency transaction losses of $4.8 million. During the three months ended March 31, 2021, other expense (income) included foreign currency transaction gains of $3.8 million and estimated credit income of $2.0 million related to decreases in contingent lease guarantees, partially offset by financing |
| | fees of $1.0 million primarily related to deferred financing cost write-off for the Odeon revolving credit facility. |
| (6) | Reflects amortization expense for certain intangible assets reclassified from depreciation and amortization to rent expense due to the adoption of ASC 842, Leases and deferred rent benefit related to the impairment of right-of-use operating lease assets. |
| (7) | Merger, acquisition and other costs are excluded as they are non-operating in nature. |
| (8) | Non-cash or non-recurring expense included in general and administrative: other. |
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