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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



FORM 10-Q

(Mark One)    

ý

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

OR

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                             to                            

Commission file number 001-33892



AMC ENTERTAINMENT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  26-0303916
(I.R.S. Employer
Identification No.)

One AMC Way
11500 Ash Street, Leawood, KS
(Address of principal executive offices)

 

  
66211
(Zip Code)

Registrant's telephone number, including area code: (913) 213-2000



        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý    No o

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer ý   Non-accelerated filer o
(Do not check if a
smaller reporting company)
  Smaller reporting company o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

        Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Title of each class of common stock   Number of shares
outstanding as of July 17, 2015
Class A common stock
Class B common stock
  21,575,532
75,826,927

   


Table of Contents

AMC ENTERTAINMENT HOLDINGS, INC.

INDEX

 
   
  Page Number  

 

PART I—FINANCIAL INFORMATION

     

Item 1.

 

Financial Statements (Unaudited)

    1  

 

Consolidated Statements of Operations

    1  

 

Consolidated Statements of Comprehensive Income

    2  

 

Consolidated Balance Sheets

    3  

 

Consolidated Statements of Cash Flows

    4  

 

Notes to Consolidated Financial Statements

    5  

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

    27  

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

    46  

Item 4.

 

Controls and Procedures

    47  

 

PART II—OTHER INFORMATION

       

Item 1.

 

Legal Proceedings

    48  

Item 1A.

 

Risk Factors

    48  

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

    48  

Item 3.

 

Defaults Upon Senior Securities

    49  

Item 4.

 

Mine Safety Disclosures

    49  

Item 5.

 

Other Information

    49  

Item 6.

 

Exhibits

    50  

 

Signatures

    51  

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1.    Financial Statements. (Unaudited)

        


AMC ENTERTAINMENT HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

 
  Three Months Ended   Six Months Ended  
 
  June 30,
2015
  June 30,
2014
  June 30,
2015
  June 30,
2014
 
 
  (unaudited)
  (unaudited)
 

Revenues

                         

Admissions

  $ 533,382   $ 478,667   $ 952,076   $ 887,687  

Food and beverage

    250,516     211,597     451,040     393,361  

Other theatre

    37,181     36,309     71,087     68,283  

Total revenues

    821,079     726,573     1,474,203     1,349,331  

Operating costs and expenses

                         

Film exhibition costs

    295,416     257,220     518,504     469,320  

Food and beverage costs

    35,807     30,341     64,315     55,464  

Operating expense

    205,414     189,283     392,672     368,976  

Rent

    115,022     113,861     232,943     228,805  

General and administrative:

                         

Merger, acquisition and transaction costs

    261     572     1,839     934  

Other

    17,737     15,149     22,678     33,369  

Depreciation and amortization

    57,249     51,750     115,026     106,527  

Operating costs and expenses

    726,906     658,176     1,347,977     1,263,395  

Operating income

    94,173     68,397     126,226     85,936  

Other expense (income)

                         

Other expense (income)

    9,273     (4,157 )   9,273     (8,386 )

Interest expense:

                         

Corporate borrowings

    24,717     27,989     50,796     57,647  

Capital and financing lease obligations

    2,331     2,486     4,704     5,011  

Equity in earnings of non-consolidated entities           

    (9,362 )   (9,597 )   (10,686 )   (4,213 )

Investment expense (income)

    (59 )   172     (5,202 )   (7,685 )

Total other expense

    26,900     16,893     48,885     42,374  

Earnings from continuing operations before income taxes

    67,273     51,504     77,341     43,562  

Income tax provision

    23,350     20,090     27,280     16,990  

Earnings from continuing operations

    43,923     31,414     50,061     26,572  

Gain (loss) from discontinued operations, net of income taxes

        (21 )       313  

Net earnings

  $ 43,923   $ 31,393   $ 50,061   $ 26,885  

Basic earnings per share:

                         

Earnings from continuing operations

  $ 0.45   $ 0.32   $ 0.51   $ 0.27  

Earnings from discontinued operations

                0.01  

Basic earnings per share

  $ 0.45   $ 0.32   $ 0.51   $ 0.28  

Average shares outstanding-Basic

    97,978     97,507     97,949     97,505  

Diluted earnings per share:

                         

Earnings from continuing operations

  $ 0.45   $ 0.32   $ 0.51   $ 0.27  

Earnings from discontinued operations

                0.01  

Diluted earnings per share

  $ 0.45   $ 0.32   $ 0.51   $ 0.28  

Average shares outstanding-Diluted

    98,037     97,628     97,987     97,628  

Dividends declared per basic and diluted common share

  $ 0.20   $ 0.20   $ 0.40   $ 0.20  

   

See Notes to Consolidated Financial Statements.

1


Table of Contents


AMC ENTERTAINMENT HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

 
  Three Months Ended   Six Months Ended  
 
  June 30,
2015
  June 30,
2014
  June 30,
2015
  June 30,
2014
 
 
  (unaudited)
  (unaudited)
 

Net earnings

  $ 43,923   $ 31,393   $ 50,061   $ 26,885  

Foreign currency translation adjustment, net of tax

    (695 )   (599 )   281     (433 )

Pension and other benefit adjustments:

                         

Net loss arising during the period, net of tax

            (45 )    

Prior service credit arising during the period, net of tax          

            746      

Less: reclassification adjustment for net (gain) loss realized in net earnings, net of tax

    6     (210 )   (1,693 )   (421 )

Less: reclassification adjustment for prior service credit realized in net earnings, net of tax

        (254 )   (1,762 )   (508 )

Less: reclassification adjustment for curtailment gain realized in net earnings, net of tax

            (7,239 )    

Less: reclassification adjustment for settlement gain realized in net earnings, net of tax

            (175 )    

Unrealized net gain on marketable securities:

                         

Unrealized net holding gain (loss) arising during the period, net of tax

    (382 )   1,340     443     3,359  

Less: reclassification adjustment for net gain realized in net earnings, net of tax

    (145 )   (11 )   (149 )   (15 )

Unrealized net gain from equity method investees' cash flow hedge:

                         

Unrealized net holding gain arising during the period, net of tax

    (21 )   (240 )   (382 )   (272 )

Less: reclassification adjustment for net loss realized in net earnings, net of tax

    117     132     239     263  

Other comprehensive income (loss)

    (1,120 )   158     (9,736 )   1,973  

Total comprehensive income

  $ 42,803   $ 31,551   $ 40,325   $ 28,858  

   

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 
  June 30, 2015   December 31, 2014  
 
  (unaudited)
   
 

ASSETS

             

Current assets:

             

Cash and equivalents

  $ 179,340   $ 218,206  

Receivables, net

    81,849     99,252  

Deferred tax asset

    108,071     107,938  

Other current assets

    93,291     84,343  

Total current assets

    462,551     509,739  

Property, net

    1,278,216     1,247,230  

Intangible assets, net

    221,112     225,515  

Goodwill

    2,289,800     2,289,800  

Deferred tax asset

    51,445     73,844  

Other long-term assets

    436,201     417,604  

Total assets

  $ 4,739,325   $ 4,763,732  

LIABILITIES AND STOCKHOLDERS' EQUITY

             

Current liabilities:

             

Accounts payable

  $ 268,891   $ 262,635  

Accrued expenses and other liabilities

    153,604     136,262  

Deferred revenues and income

    176,806     213,882  

Current maturities of corporate borrowings and capital and financing lease obligations

    17,615     23,598  

Total current liabilities

    616,916     636,377  

Corporate borrowings

    1,748,920     1,775,132  

Capital and financing lease obligations

    97,662     101,533  

Exhibitor services agreement

    316,009     316,815  

Other long-term liabilities

    437,402     419,717  

Total liabilities

    3,216,909     3,249,574  

Commitments and contingencies

             

Class A common stock (temporary equity) ($.01 par value, 167,211 shares issued and 130,442 shares outstanding as of June 30, 2015; 173,150 shares issued and 136,381 shares outstanding as of December 31, 2014)

    1,364     1,426  

Stockholders' equity:

             

Class A common stock ($.01 par value, 524,173,073 shares authorized; 21,445,090 shares issued and outstanding as of June 30, 2015; 21,423,839 shares issued and outstanding as of December 31, 2014)

    214     214  

Class B common stock ($.01 par value, 75,826,927 shares authorized; 75,826,927 shares issued and outstanding as of June 30, 2015 and December 31, 2014)

    758     758  

Additional paid-in capital

    1,179,782     1,172,515  

Treasury stock (36,769 shares as of June 30, 2015 and December 31, 2014, at cost)

    (680 )   (680 )

Accumulated other comprehensive income

    3,108     12,844  

Accumulated earnings

    337,870     327,081  

Total stockholders' equity

    1,521,052     1,512,732  

Total liabilities and stockholders' equity

  $ 4,739,325   $ 4,763,732  

   

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
  Six Months Ended  
 
  June 30,
2015
  June 30,
2014
 
 
  (unaudited)
 

Cash flows from operating activities:

             

Net earnings

  $ 50,061   $ 26,885  

Adjustments to reconcile net earnings to net cash provided by operating activities:

             

Depreciation and amortization

    115,026     106,527  

Gain on extinguishment of debt

        (8,544 )

Amortization of net premium on corporate borrowings

    660     738  

Deferred income taxes

    28,624     15,440  

Theatre and other closure expense

    2,311     6,863  

Loss (gain) on dispositions

    281     (469 )

Stock-based compensation

    7,178     7,668  

Equity in earnings and losses from non-consolidated entities, net of distributions

    (267 )   6,360  

Landlord contributions

    23,717     20,495  

Deferred rent

    (12,220 )   (8,161 )

Net periodic benefit credit

    (18,003 )   (1,709 )

Change in assets and liabilities:

             

Receivables

    33,170     46,142  

Other assets

    (8,626 )   (1,785 )

Accounts payable

    5,754     (22,751 )

Accrued expenses and other liabilities

    (31,469 )   (88,065 )

Other, net

    (3,282 )   614  

Net cash provided by operating activities

    192,915     106,248  

Cash flows from investing activities:

             

Capital expenditures

    (143,757 )   (115,208 )

Investments in non-consolidated entities

    (192 )   (1,060 )

Proceeds from the disposition of long-term assets

    604     9  

Other, net

    (915 )   1,540  

Net cash used in investing activities

    (144,260 )   (114,719 )

Cash flows from financing activities:

             

Proceeds from issuance of Senior Subordinated Notes due 2025

    600,000      

Proceeds from issuance of Senior Subordinated Notes due 2022

        375,000  

Repurchase of Senior Subordinated Notes due 2020

    (626,114 )    

Repurchase of Senior Notes due 2019

        (639,728 )

Payment of initial public offering costs

        (281 )

Cash used to pay dividends

    (39,301 )   (19,489 )

Deferred financing costs

    (11,009 )   (7,874 )

Principal payments under capital and financing lease obligations

    (3,826 )   (3,388 )

Principal payments under Term Loan

    (3,875 )   (3,875 )

Principal amount of coupon payment under Senior Subordinated Notes due 2020

    (3,357 )   (3,052 )

Net cash used in financing activities

    (87,482 )   (302,687 )

Effect of exchange rate changes on cash and equivalents

    (39 )   9  

Net decrease in cash and equivalents

    (38,866 )   (311,149 )

Cash and equivalents at beginning of period

    218,206     546,454  

Cash and equivalents at end of period

  $ 179,340   $ 235,305  

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

             

Cash paid during the period for:

             

Interest (net of amounts capitalized of $87 and $171)

  $ 53,939   $ 56,631  

Income taxes paid (refunded), net

    (1,130 )   1,875  

Schedule of non-cash investing and financing activities:

             

Investment in NCM (See Note 2—Investments)

  $ 6,812   $ 2,137  

   

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2015

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

        AMC Entertainment Holdings, Inc. ("Holdings"), through its direct and indirect subsidiaries, including AMC Entertainment Inc. ("AMCE"), 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 primarily located in the United States. Holdings is an indirect subsidiary of Dalian Wanda Group Co., Ltd. ("Wanda"), a Chinese private conglomerate.

        As of June 30, 2015, Wanda owned approximately 77.85% of Holdings' outstanding common stock and 91.34% of the combined voting power of Holdings' outstanding common stock and has the power to control Holdings' affairs and policies, including with respect to the election of directors (and, through the election of directors, the appointment of management), entering into mergers, sales of substantially all of the Company's assets and other extraordinary transactions.

        Use of Estimates:    The preparation of financial statements in conformity with 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are used for, but not limited to: (1) Impairments, (2) Film exhibition costs, (3) Income and operating taxes, (4) Theatre and other closure expense, and (5) Gift card and packaged ticket income. Actual results could differ from those estimates.

        Principles of Consolidation:    The accompanying unaudited consolidated financial statements include the accounts of Holdings and all subsidiaries, as discussed above, and should be read in conjunction with the Company's Annual Report on Form 10-K for the twelve months ended December 31, 2014. The June 30, 2015 consolidated balance sheet data does not include all disclosures required by generally accepted accounting principles. In the opinion of management, these interim financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the Company's financial position and results of operations. All significant intercompany balances and transactions have been eliminated in consolidation. There are no noncontrolling (minority) interests in the Company's consolidated subsidiaries; consequently, all of its stockholders' equity, net earnings (loss) and comprehensive income (loss) for the periods presented are attributable to controlling interests. Due to the seasonal nature of the Company's business, results for the six months ended June 30, 2015 are not necessarily indicative of the results to be expected for the twelve months ending December 31, 2015. The Company manages its business under one reportable segment called Theatrical Exhibition.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 1—BASIS OF PRESENTATION (Continued)

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

 
  Three Months
Ended
  Six Months Ended  
(In thousands)
  June 30,
2015
  June 30,
2014
  June 30,
2015
  June 30,
2014
 

Loss on redemption of 9.75% Senior Subordinated Notes due 2020

  $ 9,273   $   $ 9,273   $  

Gain on redemption of 8.75% Senior Notes due 2019

        (4,157 )       (8,386 )

Other expense (income)

  $ 9,273   $ (4,157 ) $ 9,273   $ (8,386 )

        Presentation:    In the Consolidated Statements of Cash Flows, certain line items within operating activities have been presented separately from the "other, net" line item in the current year presentation, with conforming reclassifications made for the prior period presentation.

NOTE 2—INVESTMENTS

        Investments in non-consolidated affiliates and certain other investments accounted for under the equity method generally include all entities in which the Company or its subsidiaries have significant influence, but not more than 50% voting control, and are recorded in the Consolidated Balance Sheets in other long-term assets. Investments in non-consolidated affiliates as of June 30, 2015, include interests in National CineMedia, LLC ("NCM" or "NCM LLC") of 15.04%, Digital Cinema Implementation Partners, LLC ("DCIP") of 29%, Open Road Releasing, LLC, operator of Open Road Films, LLC ("Open Road Films") of 50%, AC JV, LLC ("AC JV"), owner of Fathom Events of 32%, and interest in two U.S. motion picture theatres and one IMAX screen of 50%. Indebtedness held by equity method investees is non-recourse to the Company.

        RealD Inc. Common Stock.    The Company holds an investment in RealD Inc. common stock, which is accounted for as an equity security, available for sale, and is recorded in the Consolidated Balance Sheets in other long-term assets at fair value (Level 1).

Equity in Earnings (Losses) of Non-Consolidated Entities

        Aggregated condensed financial information of the Company's significant non-consolidated equity method investments is shown below:

 
  Three Months
Ended
  Six Months Ended  
(In thousands)
  June 30,
2015
  June 30,
2014
  June 30,
2015
  June 30,
2014
 

Revenues

  $ 161,352   $ 143,296   $ 278,993   $ 256,184  

Operating costs and expenses

    102,431     97,831     241,328     207,991  

Net earnings

  $ 58,921   $ 45,465   $ 37,665   $ 48,193  

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 2—INVESTMENTS (Continued)

        The components of the Company's recorded equity in earnings (losses) of non-consolidated entities are as follows:

 
  Three Months
Ended
  Six Months Ended  
(In thousands)
  June 30,
2015
  June 30,
2014
  June 30,
2015
  June 30,
2014
 

National CineMedia, LLC

  $ 5,568   $ 3,129   $ (1,071 ) $ 2,009  

Digital Cinema Implementation Partners, LLC

    5,162     5,898     10,591     9,545  

Open Road Releasing, LLC

    (1,716 )       (430 )   (8,080 )

AC JV, LLC

    188     356     1,226     638  

Other

    160     214     370     101  

The Company's recorded equity in earnings

  $ 9,362   $ 9,597   $ 10,686   $ 4,213  

        NCM Transactions.    As of June 30, 2015, the Company owns 19,663,664 common membership units, or a 15.04% interest, in NCM. The estimated fair market value of the units in NCM was approximately $313,832,000, based on the publically quoted price per share of NCM, Inc. on June 30, 2015 of $15.96 per share. See Note 10—Commitments and Contingencies for information regarding the termination of the Screenvision, LLC merger agreement and the expenses associated with the termination.

        The Company recorded the following related party transactions with NCM:

(In thousands)
  June 30,
2015
  December 31,
2014
 

Due from NCM for on-screen advertising revenue

  $ 2,491   $ 2,072  

Due to NCM for Exhibitor Services Agreement

    1,826     1,784  

Promissory note payable to NCM

    6,944     6,944  

 

 
  Three Months
Ended
  Six Months Ended  
(In thousands)
  June 30,
2015
  June 30,
2014
  June 30,
2015
  June 30,
2014
 

NCM screen advertising revenues, net of screen integration fee

  $ 9,323   $ 8,744   $ 17,971   $ 17,372  

NCM beverage advertising expense

    3,001     3,281     5,515     6,190  

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 2—INVESTMENTS (Continued)

        The Company recorded the following changes in the carrying amount of its investment in NCM and equity in losses of NCM during the six months ended June 30, 2015:

(In thousands)
  Investment in
NCM(1)
  Exhibitor
Services
Agreement(2)
  Other
Comprehensive
(Income)
  Cash
Received
  Equity in
Losses
  Advertising
(Revenue)
 

Ending balance December 31, 2014

  $ 265,839   $ (316,815 ) $ (3,780 )                  

Receipt of common units(3)

    6,812     (6,812 )                      

Receipt of excess cash distributions

    (9,071 )         $ 9,071   $   $  

Amortization of deferred revenue

        7,618                 (7,618 )

Unrealized gain from cash flow hedge

    234         (234 )            

Equity in earnings and loss from amortization of basis difference(4)(5)

    (1,071 )               1,071      

For the period ended or balance as of June 30, 2015

  $ 262,743   $ (316,009 ) $ (4,014 ) $ 9,071   $ 1,071   $ (7,618 )

(1)
After Wanda acquired Holdings on August 30, 2012, the Company's investment in NCM consisted of a single investment tranche (Tranche 1 Investment) consisting of 17,323,782 membership units. Subsequent membership units received as provided under the Common Unit Adjustment Agreement dated as of February 13, 2007, are recorded in a separate tranche (Tranche 2 Investments).

(2)
Represents the unamortized portion of the Exhibitor Services Agreement ("ESA") with NCM. Such amounts are being amortized to other theatre revenues over the remainder of the 30 year term of the ESA ending in 2036, using a units-of-revenue method, as described in ASC 470-10-35 (formerly EITF 88-18, Sales of Future Revenues).

(3)
In March 2015, the Company received 469,163 membership units recorded at a fair value (Level 1) of $14.52 per unit with a corresponding credit to the ESA.

(4)
Reflects percentage ownership of NCM's earnings on both Tranche 1 and Tranche 2 Investments.

(5)
Certain differences between the Company's carrying value and the Company's share of NCM's membership equity have been identified and are amortized to equity in earnings over the respective lives of the assets and liabilities.

        During the six months ended June 30, 2015 and June 30, 2014, the Company received payments of $5,352,000 and $8,045,000, respectively, related to the NCM tax receivable agreement. The receipts are recorded in investment expense (income), net of related amortization, for the NCM tax receivable agreement intangible asset.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 2—INVESTMENTS (Continued)

        DCIP Transactions.    The Company will make capital contributions to DCIP for projector and installation costs in excess of an agreed upon cap ($68,000 per system for digital conversions and as of March 31, 2015, $39,000 for new build locations). The Company pays equipment rent monthly and records the equipment rental expense on a straight-line basis over 12 years.

        The Company recorded the following related party transactions with DCIP:

(In thousands)
  June 30,
2015
  December 31,
2014
 

Due from DCIP for equipment and warranty purchases

  $ 1,273   $ 1,048  

Deferred rent liability for digital projectors

    8,878     9,031  

 

 
  Three Months
Ended
  Six Months Ended  
(In thousands)
  June 30,
2015
  June 30,
2014
  June 30,
2015
  June 30,
2014
 

Digital equipment rental expense (continuing operations)

  $ 1,382   $ 1,085   $ 2,676   $ 4,002  

        Open Road Films Transactions.    For the three months and six months ended June 30, 2015 and June 30, 2014, the Company suspended equity method accounting for its investment in Open Road Films when the negative investment in Open Road Films reached the Company's capital commitment of $10,000,000.

        The Company recorded the following related party transactions with Open Road Films:

(In thousands)
  June 30,
2015
  December 31,
2014
 

Due from Open Road Films

  $ 1,616   $ 2,560  

Film rent payable to Open Road Films

    1,426     709  

 

 
  Three Months
Ended
  Six Months Ended  
(In thousands)
  June 30,
2015
  June 30,
2014
  June 30,
2015
  June 30,
2014
 

Gross film exhibition cost on Open Road Films

  $ 2,040   $ 3,400   $ 3,440   $ 9,100  

        AC JV Transactions.    The Company recorded the following related party transactions with AC JV:

(In thousands)
  June 30,
2015
  December 31,
2014
 

Due to AC JV for Fathom Events programming

  $ 494   $ 333  

 

 
  Three Months
Ended
  Six Months Ended  
(In thousands)
  June 30,
2015
  June 30,
2014
  June 30,
2015
  June 30,
2014
 

Gross exhibition cost on Fathom Events programming

  $ 1,483   $ 1,559   $ 4,069   $ 2,515  

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 3—STOCKHOLDERS' EQUITY

Common Stock Rights and Privileges

        The rights of the holders of Holdings' Class A common stock and Holdings' Class B common stock are identical, except with respect to voting and conversion applicable to the Class B common stock. Holders of Holdings' Class A common stock are entitled to one vote per share and holders of Holdings' Class B common stock are entitled to three votes per share. Holders of Class A common stock and Class B common stock will share ratably (based on the number of shares of common stock held) in any dividend declared by its board of directors, subject to any preferential rights of any outstanding preferred stock. The Class A common stock is not convertible into any other shares of Holdings' capital stock. Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock shall convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain transfers described in Holdings' certificate of incorporation.

Dividends

        The following is a summary of dividends and dividend equivalents paid to stockholders during the six months ended June 30, 2015:

Declaration Date   Record Date   Date Paid   Amount per
Share of
Common Stock
  Total Amount
Declared
(In thousands)
 
February 3, 2015   March 9, 2015   March 23, 2015   $ 0.20   $ 19,637  
April 27, 2015   June 8, 2015   June 22, 2015     0.20     19,635  

        During the six months ended June 30, 2015, the Company paid dividends and dividend equivalents of $39,301,000, increased additional paid-in capital for recognition of deferred tax assets of $134,000 related to the dividend equivalents paid and accrued $196,000 for the remaining unpaid dividends at June 30, 2015. The aggregate dividends paid for Class A common stock, Class B common stock, and dividend equivalents were approximately $8,630,000, $30,330,000, and $341,000, respectively, during the six months ended June 30, 2015.

Related Party Transaction

        As of June 30, 2015 and December 31, 2014, the Company recorded a receivable due from Wanda of $416,000 and $156,000, respectively, for reimbursement of general administrative and other expense incurred on behalf of Wanda.

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

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 3—STOCKHOLDERS' EQUITY (Continued)

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 three months ended June 30, 2015, one holder of 5,939 shares relinquished his put right, therefore the related share amount of $62,000 was reclassified to stockholders' equity.

Stock-Based Compensation

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

        The Company recognized stock-based compensation expense of $1,439,000 and $1,311,000 within general and administrative: other during the three months ended June 30, 2015 and June 30, 2014, respectively, and $7,178,000 and $7,668,000 during the six months ended June 30, 2015 and June 30, 2014, respectively. The Company's financial statements reflect an increase to additional paid-in capital related to stock-based compensation of $7,178,000 during the six months ended June 30, 2015. As of June 30, 2015, there was approximately $2,889,000 of total estimated unrecognized compensation cost, assuming attainment of the performance targets at 100%, related to stock-based compensation arrangements expected to be recognized during the remainder of calendar 2015.

2013 Equity Incentive Plan

        The 2013 Equity Incentive Plan provides for grants of non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, performance stock units, stock awards, and cash performance awards. The maximum number of shares of Holdings' common stock available for delivery pursuant to awards granted under the 2013 Equity Incentive Plan is 9,474,000 shares. At June 30, 2015, the aggregate number of shares of Holdings' common stock remaining available for grant was 8,311,476 shares.

Awards Granted in 2015

        Holdings' 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 2013 Equity Incentive Plan. The fair value of the stock at the grant dates of January 5, 2015 and March 6, 2015 was $24.97 and $33.96 per share, respectively, and was based on the closing price of Holdings' stock.

        The award agreements generally had the following features:

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 3—STOCKHOLDERS' EQUITY (Continued)

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 3—STOCKHOLDERS' EQUITY (Continued)

        The following table represents the RSU and PSU activity for the six months ended June 30, 2015:

 
  Shares of
RSU and PSU
  Weighted
Average
Grant Date
Fair Value
 

Beginning balance at January 1, 2015

      $  

Granted(1)

    286,796     33.96  

Vested(2)

    (84,649 )   33.96  

Forfeited

    (1,631 )   33.96  

Nonvested at June 30, 2015

    200,516   $ 33.96  

(1)
The number of shares granted under the PSU award, assumes Holdings will attain a performance target at 100%. The PSUs will vest ratably based on a scale ranging from 80% to 120% of the performance target with the vested amount ranging from 30% to 150%.

(2)
Includes vested units of 3,131 that were withheld to cover tax obligations and were subsequently canceled. As a result of this transaction, additional paid-in capital decreased by $107,000.

NOTE 4—CORPORATE BORROWINGS

        A summary of the carrying value of corporate borrowings and capital and financing lease obligations is as follows:

(In thousands)
  June 30,
2015
  December 31,
2014
 

Senior Secured Credit Facility-Term Loan due 2020 (3.50% as of June 30, 2015)

  $ 756,275   $ 760,018  

5% Promissory Note payable to NCM due 2019

    6,944     6,944  

9.75% Senior Subordinated Notes due 2020

    20,100     649,043  

5.875% Senior Subordinated Notes due 2022

    375,000     375,000  

5.75% Senior Subordinated Notes due 2025

    600,000      

Capital and financing lease obligations, 6.0% - 11.5%

    105,878     109,258  

    1,864,197     1,900,263  

Less: current maturities

    (17,615 )   (23,598 )

  $ 1,846,582   $ 1,876,665  

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 4—CORPORATE BORROWINGS (Continued)

AMCE's Notes due 2020

        On May 26, 2015, AMCE launched a cash tender offer for any and all of its outstanding 9.75% Senior Subordinated Notes due 2020 ("Notes due 2020") at a purchase price of $1,093 for each $1,000 principal amount of Notes due 2020 validly tendered and accepted by AMCE on or before June 2, 2015 at 8:00 a.m. New York City time (the "Expiration Date"). Holders of $581,324,000, or approximately 96.9%, of the Notes due 2020 validly tendered and did not withdraw their Notes due 2020 on or prior to the Expiration Date. The Company recorded a loss on extinguishment related to the redemption of the Notes due 2020 of approximately $9,273,000 in other expense (income) during the six months ended June 30, 2015.

        AMCE may redeem some or all of the remaining $18,676,000 principal amount of the Notes due 2020 at any time on or after December 1, 2015 at 104.875% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after December 1, 2018, plus accrued and unpaid interest to the redemption date.

AMCE's Notes due 2025

        On June 5, 2015, AMCE issued $600,000,000 aggregate principal amount of its 5.75% Senior Subordinated Notes due 2025 (the "Notes due 2025") in a private offering. AMCE capitalized deferred financing costs of approximately $11,730,000, related to the issuance of the Notes due 2025, during the six months ended June 30, 2015. The Notes due 2025 mature on June 15, 2025. AMCE will pay interest on the Notes due 2025 at 5.75% per annum, semi-annually in arrears on June 15th and December 15th, commencing on December 15, 2015. AMCE may redeem some or all of the Notes due 2025 at any time on or after June 15, 2020 at 102.875% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after June 15, 2023, plus accrued and unpaid interest to the redemption date. Prior to June 15, 2020, AMCE may redeem the Notes due 2025 at par plus a make-whole premium. AMCE used the net proceeds from the Notes due 2025 private offering and cash on hand, to pay the consideration for the tender offer for the Notes due 2020, plus any accrued and unpaid interest and related transaction fees and expenses.

        The Notes due 2025 are general unsecured senior subordinated obligations of AMCE and are fully and unconditionally guaranteed on a joint and several senior subordinated unsecured basis by all of its existing and future domestic restricted subsidiaries that guarantee its other indebtedness. The Notes due 2025 are not guaranteed by Holdings.

        The indenture governing the Notes due 2025 contains covenants limiting other indebtedness, dividends, purchases or redemptions of stock, transactions with affiliates and mergers and sales of assets.

        On June 5, 2015, in connection with the issuance of the Notes due 2025, AMCE entered into a registration rights agreement. Subject to the terms of the registration rights agreement, AMCE filed a registration statement on June 19, 2015 pursuant to the Securities Act of 1933, as amended, relating to an offer to exchange the original Notes due 2025 for exchange Notes due 2025 registered pursuant to an effective registration statement; the registration statement was declared effective on June 29, 2015, and AMCE commenced the exchange offer. The exchange notes have terms substantially identical to the original notes except that the exchange notes do not contain terms with respect to transfer

14


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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 4—CORPORATE BORROWINGS (Continued)

restrictions and registration rights and additional interest payable for the failure to consummate the exchange offer within 210 days after the issue date. After the exchange offer expired on July 27, 2015, all of the original Notes due 2025 were exchanged.

        As of June 30, 2015, AMCE was in compliance with all financial covenants relating to the Senior Secured Credit Facility, the Notes due 2020, the Notes due 2022, and the Notes due 2025.

NOTE 5—INCOME TAXES

        The Company's effective income tax rate is based on expected income, statutory rates and tax planning opportunities available in the various jurisdictions in which it operates. For interim financial reporting, the Company estimates the annual income tax rate based on projected taxable income for the full year and records a quarterly income tax provision or benefit in accordance with the anticipated annual rate, adjusted for discrete items, if any. The Company refines the estimates of the year's taxable income as new information becomes available, including actual year-to-date financial results. This continual estimation process often results in a change to the expected effective income tax rate for the year. When this occurs, the Company adjusts the income tax provision during the quarter in which the change in estimate occurs so that the year-to-date provision reflects the expected income tax rate. Significant judgment is required in determining the effective tax rate and in evaluating tax positions.

        The effective tax rate based on the projected annual taxable income for the year ended December 31, 2015 is 39%. During the three months ended June 30, 2015, the Company received a favorable state ruling that resulted in a reduction of uncertain tax positions and as a result, the Company recorded a net discrete tax benefit of approximately $2,900,000. The discrete item reduces the Company's annual effective rate for the year to 37.6% and the actual rate for the six months ended June 30, 2015 to 35.3%.

        The Company's tax rate for the six months ended June 30, 2014 differs from the statutory tax rate primarily due to state income taxes.

NOTE 6—FAIR VALUE MEASUREMENTS

        Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts business. The inputs used to develop these fair value measurements are established in a hierarchy, which ranks the quality and reliability of the information used to determine the fair values. The fair value classification is based on levels of inputs. Assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:

Level 1:   Quoted market prices in active markets for identical assets or liabilities.
Level 2:   Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3:   Unobservable inputs that are not corroborated by market data.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 6—FAIR VALUE MEASUREMENTS (Continued)

        Recurring Fair Value Measurements.    The following table summarizes the fair value hierarchy of the Company's financial assets carried at fair value on a recurring basis as of June 30, 2015:

 
   
  Fair Value Measurements at June 30, 2015 Using  
(In thousands)
  Total Carrying
Value at
June 30, 2015(1)
  Quoted prices in
active market
(Level 1)
  Significant other
observable inputs
(Level 2)
  Significant
unobservable inputs
(Level 3)
 

Other long-term assets:

                         

Money market mutual funds

  $ 134   $ 134   $   $  

Equity securities, available-for-sale:

                         

RealD Inc. common stock

    15,077     15,077          

Mutual fund large U.S. equity

    1,983     1,983          

Mutual fund small/mid U.S. equity

    2,206     2,206          

Mutual fund international

    889     889          

Mutual fund balance

    765     765          

Mutual fund fixed income

    722     722          

Total assets at fair value

  $ 21,776   $ 21,776   $   $  

(1)
Except for the investment in RealD Inc. common stock, the investments relate to a non-qualified deferred compensation arrangement on behalf of certain management. The Company has an equivalent liability for this related-party transaction recorded in other long-term liabilities for the deferred compensation obligation.

        Valuation Techniques.    The Company's money market mutual funds are invested in funds that seek to preserve principal, are highly liquid, and therefore are recorded on the balance sheet at the principal amounts deposited, which equals fair value. The equity securities, available-for-sale, primarily consist of common stock and mutual funds invested in equity, fixed income, and international funds and are measured at fair value using quoted market prices. See Note 8—Accumulated Other Comprehensive Income for the unrealized gain on the equity securities recorded in accumulated other comprehensive income.

        Other Fair Value Measurement Disclosures.    The Company is required to disclose the fair value of financial instruments that are not recognized at fair value in the statement of financial position for which it is practicable to estimate that value:

 
   
  Fair Value Measurements at June 30, 2015 Using  
(In thousands)
  Total Carrying
Value at
June 30, 2015
  Quoted prices in
active market
(Level 1)
  Significant other
observable inputs
(Level 2)
  Significant
unobservable inputs
(Level 3)
 

Current maturities of corporate borrowings

  $ 9,399   $   $ 7,996   $ 1,389  

Corporate borrowings

    1,748,920         1,730,259     5,555  

        Valuation Technique.    Quoted market prices and observable market based inputs were used to estimate fair value for Level 2 inputs. The Level 3 fair value measurement represents the transaction price of the corporate borrowings under market conditions.

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Table of Contents


AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 7—THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS

        A rollforward of reserves for theatre and other closure and disposition of assets is as follows:

 
  Six Months Ended  
(In thousands)
  June 30,
2015
  June 30,
2014
 

Beginning balance

  $ 52,835   $ 55,163  

Theatre and other closure expense

    2,311     6,863  

Transfer of assets and liabilities

    59     2,439  

Foreign currency translation adjustment

    (744 )   538  

Cash payments

    (6,046 )   (5,794 )

Ending balance

  $ 48,415   $ 59,209  

        In the accompanying Consolidated Balance Sheets, the current portion of the ending balance totaling $7,679,000 is included with accrued expenses and other liabilities and the long-term portion of the ending balance totaling $40,736,000 is included with other long-term liabilities. Theatre and other closure reserves for leases that have not been terminated were recorded at the present value of the future contractual commitments for the base rents, taxes and maintenance.

        During the three months ended June 30, 2015 and the three months ended June 30, 2014, the Company recognized theatre and other closure expense of $1,184,000 and $5,498,000, respectively, and during the six months ended June 30, 2015 and the six months ended June 30, 2014, the Company recognized theatre and other closure expense of $2,311,000 and $6,863,000, respectively. Theatre and other closure expense included the accretion on previously closed properties with remaining lease obligations. In May 2014, one theatre with 13 screens in Canada was permanently closed.

NOTE 8—ACCUMULATED OTHER COMPREHENSIVE INCOME

        The following table presents the change in accumulated other comprehensive income (loss) by component:

(In thousands)
  Foreign
Currency
  Pension and
Other Benefits
  Unrealized Net
Gain on
Marketable
Securities
  Unrealized Net
Gain from Equity
Method Investees'
Cash Flow Hedge
  Total  

Balance, December 31, 2014

  $ 627   $ 5,564   $ 3,812   $ 2,841   $ 12,844  

Other comprehensive income (loss) before reclassifications

    281     701     443     (382 )   1,043  

Amounts reclassified from accumulated other comprehensive income

        (10,869 )   (149 )   239     (10,779 )

Other comprehensive income (loss)

    281     (10,168 )   294     (143 )   (9,736 )

Balance, June 30, 2015

  $ 908   $ (4,604 ) $ 4,106   $ 2,698   $ 3,108  

17


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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 8—ACCUMULATED OTHER COMPREHENSIVE INCOME (Continued)

        The following table presents the change in accumulated other comprehensive income (loss) by component:

(In thousands)
  Foreign
Currency
  Pension and
Other Benefits
  Unrealized Net
Gain on
Marketable
Securities
  Unrealized Net
Gain from Equity
Method Investees'
Cash Flow Hedge
  Total  

Balance, December 31, 2013

  $ (351 ) $ 20,967   $ 1,216   $ 2,372   $ 24,204  

Other comprehensive income (loss) before reclassifications

    (433 )       3,359     (272 )   2,654  

Amounts reclassified from accumulated other comprehensive income

        (929 )   (15 )   263     (681 )

Other comprehensive income (loss)

    (433 )   (929 )   3,344     (9 )   1,973  

Balance, June 30, 2014

  $ (784 ) $ 20,038   $ 4,560   $ 2,363   $ 26,177  

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 8—ACCUMULATED OTHER COMPREHENSIVE INCOME (Continued)

        The tax effects allocated to each component of other comprehensive loss during the three months ended June 30, 2015 and the three months ended June 30, 2014 is as follows:

 
  Three Months Ended  
 
  June 30, 2015   June 30, 2014  
(In thousands)
  Pre-Tax
Amount
  Tax
(Expense)
Benefit
  Net-of-Tax
Amount
  Pre-Tax
Amount
  Tax
(Expense)
Benefit
  Net-of-Tax
Amount
 

Foreign currency translation adjustment

  $ (1,139 ) $ 444   $ (695 ) $ (982 ) $ 383   $ (599 )

Pension and other benefit adjustments:

                                     

Less: reclassification adjustment for net (gain) loss realized in net earnings

    11     (5 )   6     (345 )   135     (210 )

Less: reclassification adjustment for prior service credit realized in net earnings

                (416 )   162     (254 )

Unrealized net gain on marketable securities:

                                     

Unrealized net holding gain (loss) arising during the period

    (626 )   244     (382 )   2,197     (857 )   1,340  

Less: reclassification adjustment for net gain realized in net earnings

    (239 )   94     (145 )   (18 )   7     (11 )

Unrealized net gain from equity method investees' cash flow hedge:

                                     

Unrealized net holding gain arising during the period

    (34 )   13     (21 )   (393 )   153     (240 )

Less: reclassification adjustment for net loss realized in net earnings

    192     (75 )   117     216     (84 )   132  

Other comprehensive income (loss)

  $ (1,835 ) $ 715   $ (1,120 ) $ 259   $ (101 ) $ 158  

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 8—ACCUMULATED OTHER COMPREHENSIVE INCOME (Continued)

        The tax effects allocated to each component of other comprehensive income during the six months ended June 30, 2015 and the six months ended June 30, 2014 is as follows:

 
  Six Months Ended  
 
  June 30, 2015   June 30, 2014  
(In thousands)
  Pre-Tax
Amount
  Tax
(Expense)
Benefit
  Net-of-Tax
Amount
  Pre-Tax
Amount
  Tax
(Expense)
Benefit
  Net-of-Tax
Amount
 

Foreign currency translation adjustment

  $ 461   $ (180 ) $ 281   $ (710 ) $ 277   $ (433 )

Pension and other benefit adjustments:

                                     

Net loss arising during the period

    (73 )   28     (45 )            

Prior service credit arising during the period          

    1,223     (477 )   746              

Less: reclassification adjustment for net gain realized in net earnings

    (2,775 )   1,082     (1,693 )   (691 )   270     (421 )

Less: reclassification adjustment for prior service credit realized in net earnings

    (2,888 )   1,126     (1,762 )   (832 )   324     (508 )

Less: reclassification adjustment for curtailment gain realized in net earnings

    (11,867 )   4,628     (7,239 )            

Less: reclassification adjustment for settlement gain realized in net earnings

    (288 )   113     (175 )            

Unrealized net gain on marketable securities:

                                     

Unrealized net holding gain (loss) arising during the period

    726     (283 )   443     5,507     (2,148 )   3,359  

Less: reclassification adjustment for net gain realized in net earnings

    (245 )   96     (149 )   (25 )   10     (15 )

Unrealized net gain from equity method investees' cash flow hedge:

                                     

Unrealized net holding gain arising during the period

    (626 )   244     (382 )   (446 )   174     (272 )

Less: reclassification adjustment for net loss realized in net earnings

    392     (153 )   239     431     (168 )   263  

Other comprehensive income (loss)

  $ (15,960 ) $ 6,224   $ (9,736 ) $ 3,234   $ (1,261 ) $ 1,973  

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Table of Contents


AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 8—ACCUMULATED OTHER COMPREHENSIVE INCOME (Continued)

        The following table presents details about amounts reclassified out of each component of accumulated other comprehensive income:

 
  Three Months
Ended
   
(In thousands)
  June 30,
2015
  June 30,
2014
  Affected Line Item in the
Consolidated Statements of
Operations

Pension and other benefit adjustments:

             

 

Less: reclassification adjustment for net (gain) loss realized in net earnings

  $ 11   $ (345 )

General and administrative: Other

Less: reclassification adjustment for prior service credit realized in net earnings

        (416 )

General and administrative: Other

    11     (761 )

Total expense (income), before tax

    (5 )   297  

Tax expense (benefit)

  $ 6   $ (464 )

Total expense (income), net of tax

Unrealized net gain on marketable securities:

             

 

Less: reclassification adjustment for net gain realized in net earnings

  $ (239 ) $ (18 )

Investment income

    (239 )   (18 )

Total expense (income), before tax

    94     7  

Tax expense

  $ (145 ) $ (11 )

Total expense (income), net of tax

Unrealized net gain from equity method investees' cash flow hedge:

             

 

Less: reclassification adjustment for net loss realized in net earnings

  $ 192   $ 216  

Equity in earnings of non-consolidated entities

    192     216  

Total expense, before tax

    (75 )   (84 )

Tax benefit

  $ 117   $ 132  

Total expense, net of tax

Total reclassifications

  $ (22 ) $ (343 )

Total income, net of tax

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 8—ACCUMULATED OTHER COMPREHENSIVE INCOME (Continued)

        The following table presents details about amounts reclassified out of each component of accumulated other comprehensive income:

 
  Six Months Ended    
(In thousands)
  June 30,
2015
  June 30,
2014
  Affected Line Item in the
Consolidated Statements of
Operations

Pension and other benefit adjustments:

             

 

Less: reclassification adjustment for net gain realized in net earnings

  $ (2,775 ) $ (691 )

General and administrative: Other

Less: reclassification adjustment for prior service credit realized in net earnings

    (2,888 )   (832 )

General and administrative: Other

Less: reclassification adjustment for curtailment gain realized in net earnings

    (11,867 )    

General and administrative: Other

Less: reclassification adjustment for settlement gain realized in net earnings

    (288 )    

General and administrative: Other

    (17,818 )   (1,523 )

Total income, before tax

    6,949     594  

Tax expense

  $ (10,869 ) $ (929 )

Total income, net of tax

Unrealized net gain on marketable securities:

             

 

Less: reclassification adjustment for net gain realized in net earnings

  $ (245 ) $ (25 )

Investment income

    (245 )   (25 )

Total income, before tax

    96     10  

Tax expense

  $ (149 ) $ (15 )

Total income, net of tax

Unrealized net gain from equity method investees' cash flow hedge:

             

 

Less: reclassification adjustment for net loss realized in net earnings

  $ 392   $ 431  

Equity in earnings of non-consolidated entities

    392     431  

Total expense, before tax

    (153 )   (168 )

Tax benefit

  $ 239   $ 263  

Total expense, net of tax

Total reclassifications

  $ (10,779 ) $ (681 )

Total income, net of tax

NOTE 9—EMPLOYEE BENEFIT PLANS

        The Company sponsors frozen non-contributory qualified and non-qualified defined benefit pension plans generally covering all employees who, prior to the freeze, were age 21 or older and had completed at least 1,000 hours of service in their first twelve months of employment, or in a calendar

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 9—EMPLOYEE BENEFIT PLANS (Continued)

year ending thereafter, and who were not covered by a collective bargaining agreement. The Company also offered eligible retirees the opportunity to participate in a health plan. Certain employees were eligible for subsidized postretirement medical benefits. The eligibility for these benefits was based upon a participant's age and service as of January 1, 2009. The Company also sponsors a postretirement deferred compensation plan.

        On January 12, 2015, the Compensation Committee and all of the Board of Directors of AMC Entertainment Holdings, Inc. adopted resolutions to terminate the AMC Postretirement Medical Plan with an effective date of March 31, 2015. During the three months ended March 31, 2015, the Company notified eligible associates that their retiree medical coverage under the plan will terminate after March 31, 2015. Payments to eligible associates were approximately $4,300,000 during the six months ended June 30, 2015. The Company recorded net periodic benefit credits of $18,118,000, including curtailment gains, settlement gains, amortization of unrecognized prior service credits and amortization of actuarial gains recorded in accumulated other comprehensive income related to the termination and settlement of the plan during the six months ended June 30, 2015.

        Net periodic benefit credit recognized for the plans during the three months ended June 30, 2015 and the three months ended June 30, 2014 consisted of the following:

 
  Pension Benefits   Other Benefits  
(In thousands)
  June 30,
2015
  June 30,
2014
  June 30,
2015
  June 30,
2014
 

Components of net periodic benefit cost:

                         

Service cost

  $   $   $   $ 9  

Interest cost

    1,070     1,152         53  

Expected return on plan assets

    (1,167 )   (1,307 )        

Amortization of net (gain) loss

    11     (258 )       (87 )

Amortization of prior service credit

                (416 )

Net periodic benefit credit

  $ (86 ) $ (413 ) $   $ (441 )

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 9—EMPLOYEE BENEFIT PLANS (Continued)

        Net periodic benefit cost (credit) recognized for the plans during the six months ended June 30, 2015 and the six months ended June 30, 2014 consisted of the following:

 
  Pension Benefits   Other Benefits  
(In thousands)
  June 30,
2015
  June 30,
2014
  June 30,
2015
  June 30,
2014
 

Components of net periodic benefit cost:

                         

Service cost

  $   $   $ 2   $ 18  

Interest cost

    2,139     2,304     7     106  

Expected return on plan assets

    (2,333 )   (2,614 )        

Amortization of net (gain) loss

    22     (517 )   (2,797 )   (174 )

Amortization of prior service credit

            (2,888 )   (832 )

Curtailment gain

            (11,867 )    

Settlement (gain) loss

    287         (575 )    

Net periodic benefit cost (credit)

  $ 115   $ (827 ) $ (18,118 ) $ (882 )

NOTE 10—COMMITMENTS AND CONTINGENCIES

        The Company, in the normal course of business, is a party to various ordinary course claims from vendors (including food and beverage suppliers and film distributors), landlords, competitors, and other legal proceedings. If management believes that a loss arising from these actions is probable and can reasonably be estimated, the Company records the amount of the loss, or the minimum estimated liability when the loss is estimated using a range and no point is more probable than another. As additional information becomes available, any potential liability related to these actions is assessed and the estimates are revised, if necessary. Management believes that the ultimate outcome of such matters, individually and in the aggregate, will not have a material adverse effect on the Company's financial position or overall trends in results of operations. However, litigation and claims are subject to inherent uncertainties and unfavorable outcomes can occur. An unfavorable outcome might include monetary damages. If an unfavorable outcome were to occur, there exists the possibility of a material adverse impact on the results of operations in the period in which the outcome occurs or in future periods.

        On May 5, 2014, NCM, Inc., the sole manager of NCM LLC, announced that it had entered into a merger agreement to acquire Screenvision, LLC for $375,000,000, consisting of cash and NCM, Inc. common stock. Consummation of the transaction was subject to regulatory approvals and other customary closing conditions. On November 3, 2014, the U.S. Department of Justice filed an antitrust lawsuit seeking to enjoin the transaction. On March 16, 2015, NCM, Inc. and Screenvision, LLC decided to terminate the merger agreement. The termination of the merger agreement was effective upon NCM, Inc.'s payment of a $26,840,000 termination payment. The estimated legal and other transaction expenses were approximately $14,930,000. NCM LLC of which AMC was an approximate 15.05% owner at March 31, 2015, had agreed to indemnify NCM, Inc. and bear a pro rata portion of the termination fee and other transaction expenses. Accordingly, the Company recorded expense of approximately $6,300,000 in equity in (earnings) losses of non-consolidated entities associated with these transaction expenses recorded by NCM LLC during the six months ended June 30, 2015.

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 10—COMMITMENTS AND CONTINGENCIES (Continued)

        On May 28, 2015, the Company received a Civil Investigative Demand ("CID") from the Antitrust Division of the United States Department of Justice in connection with an investigation under Sections 1 and 2 of the Sherman Antitrust Act. On May 29, 2015, June 12, 2015, June 26, 2015, and July 15, 2015, the Company also received CIDs from the Attorneys General for the States of Ohio, Texas, Washington, and Florida, respectively, regarding a similar inquiry under those states' antitrust laws. The CIDs request the production of documents and answers to interrogatories concerning potentially anticompetitive conduct, including film clearances and participation in certain joint ventures. The Company may receive additional CIDs from antitrust authorities in other jurisdictions in which it operates. The Company does not believe it has violated federal or state antitrust laws and is cooperating with the relevant governmental authorities. However, the Company cannot predict the ultimate scope, duration or outcome of these investigations.

        Starplex Cinemas.    On July 13, 2015, the Company entered into a stock purchase agreement (the "Agreement") with SMH Theatres,  Inc. ("Starplex Cinemas"), the shareholders of Starplex Cinemas and the shareholder representative named in the Agreement. Under the terms of the Agreement, the Company will acquire all of the outstanding common stock of Starplex Cinemas (the "Transaction") for $171,800,000 in cash, subject to working capital and other adjustments. Starplex Cinemas operates 33 theatres with 346 screens in small and mid-size markets in 12 states, which further complements the Company's large market portfolio. The Company expects to acquire Starplex Cinemas on a cash-free, debt-free basis. The Company expects to consummate the Transaction by the end of 2015, subject to customary closing conditions, including the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

NOTE 11—NEW ACCOUNTING PRONOUNCEMENTS

        In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30)—Simplifying the Presentation of Debt Issuance Costs ("ASU 2015-03"), which requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this standard. ASU 2015-03 is effective for fiscal years beginning after December 15, 2015 and interim periods within those fiscal years. The Company will adopt ASU 2015-03 as of the beginning of 2016 and will change the presentation of the debt issuance costs in the Consolidated Balance Sheets by reclassifying the amount from other long-term assets to corporate borrowings.

        In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), ("ASU 2014-09"), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in GAAP when it becomes effective. On July 9, 2015, FASB decided to delay the effective date of ASU 2014-09 by one year. The new standard is effective for the Company on January 1, 2018. Companies may elect to adopt this application as of the original effective date for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. The standard permits the use of either the retrospective or cumulative effect

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AMC ENTERTAINMENT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

June 30, 2015

(Unaudited)

NOTE 11—NEW ACCOUNTING PRONOUNCEMENTS (Continued)

transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures and has not yet selected a transition method.

NOTE 12—EARNINGS PER SHARE

        Basic earnings per share is computed by dividing net earnings from continuing operations by the weighted-average number of common shares outstanding. Diluted earnings per share includes the effects of contingently issuable RSUs and PSUs, if dilutive.

        The following table sets forth the computation of basic and diluted earnings from continuing operations per common share:

 
  Three Months Ended   Six Months Ended  
(In thousands)
  June 30,
2015
  June 30,
2014
  June 30,
2015
  June 30,
2014
 

Numerator:

                         

Earnings from continuing operations

  $ 43,923   $ 31,414   $ 50,061   $ 26,572  

Denominator (shares in thousands):

                         

Weighted average shares for basic earnings per common share

    97,978     97,507     97,949     97,505  

Common equivalent shares for restricted stock units

    59     121     38     123  

Shares for diluted earnings per common share

    98,037     97,628     97,987     97,628  

Basic earnings from continuing operations per common share

  $ 0.45   $ 0.32   $ 0.51   $ 0.27  

Diluted earnings from continuing operations per common share

  $ 0.45   $ 0.32   $ 0.51   $ 0.27  

        Vested RSUs have dividend rights identical to the Company's Class A and Class B common stock and are treated as outstanding shares for purposes of computing basic and diluted earnings per share. Unvested RSUs and unvested PSUs are subject to performance conditions and are included in diluted earnings per share, if dilutive, using the treasury stock method based on the number of shares, if any, that would be issuable under the terms of the Company's 2013 Equity Incentive Plan ("Plan") if the end of the reporting period were the end of the contingency period. During both the three months ended June 30, 2015 and the six months ended June 30, 2015, unvested PSUs of 43,062 at the minimum performance target, were not included in the computation of diluted earnings per share since the shares would not be issuable under the terms of the Plan, if the end of the reporting period were the end of the contingency period.

NOTE 13—SUBSEQUENT EVENT

        On July 28, 2015, 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 September 21, 2015 to stockholders of record on September 8, 2015.

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Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

        In addition to historical information, this Report on Form 10-Q contains "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "may," "will," "forecast," "estimate," "project," "intend," "plan," "expect," "should," "believe" and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Similarly, statements made herein and elsewhere regarding pending acquisitions are also forward-looking statements, including statements regarding the anticipated closing date of the acquisition, the ability to obtain required regulatory approvals, or to satisfy closing conditions, the costs of the acquisition and the source of the financing, the expected benefits of the acquisition on our future business, operations and financial performance and our ability to successfully integrate the recently acquired business. These forward looking statements are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including those discussed in "Management's Discussion and Analysis of Financial Condition and Results of Operations," which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the following:

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Table of Contents

        This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative but not exhaustive. In addition, new risks and uncertainties may arise from time to time. Accordingly, all forward-looking statements should be evaluated with an understanding of their inherent uncertainty.

        Readers are urged to consider these factors carefully in evaluating the forward-looking statements. For further information about these and other risks and uncertainties as well as strategic initiatives, see Item 1A. "Risk Factors" and Item 1. "Business" in our Annual Report on Form 10-K for the year ended December 31, 2014 and our other public filings.

        All subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements included herein are made only as of the date of this Quarterly Report on Form 10-Q, and we do not undertake any obligation to release publicly any revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Overview

        We are one of the world's leading theatrical exhibition companies and an industry leader in innovation and operational excellence. Our Theatrical Exhibition revenues are generated primarily from box office admissions and theatre food and beverage sales. The balance of our revenues are generated from ancillary sources, including on-screen advertising, fees earned from our AMC Stubs™ customer frequency membership program, rental of theatre auditoriums, gift card and packaged ticket income, on-line ticketing fees and arcade games located in theatre lobbies. As of June 30, 2015, we owned, operated or had interests in 350 theatres and 5,031 screens.

        During the six months ended June 30, 2015, we opened 12 newly built screens and acquired 40 screens in the U.S., and temporarily closed 179 screens and reopened 211 screens in the U.S. to implement our strategy and install consumer experience upgrades.

        Box office admissions are our largest source of revenue. We predominantly license "first-run" films from distributors owned by major film production companies and from independent distributors. We license films on a film-by-film and theatre-by-theatre basis. Film exhibition costs are accrued based on the applicable admissions revenues and estimates of the final settlement pursuant to our film licenses. Licenses that we enter into typically state that rental fees are based on aggregate terms established prior to the opening of the picture. In certain circumstances and less frequently, our rental fees are based on a mutually agreed settlement upon the conclusion of the picture. Under an aggregate terms formula, we pay the distributor a specified percentage of box office gross or pay based on a scale of percentages tied to different amounts of box office gross. The settlement process allows for negotiation based upon how a film actually performs.

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        Recliner seating is the key feature of full theatre renovations. These exhaustive theatre renovations involve stripping theatres to their basic structure in order to replace finishes throughout, upgrade the sight and sound experience, install modernized points of sale and, most importantly, replace traditional theatre seats with plush, electric recliners that allow customers to deploy a leg rest and fully recline at the push of a button. The renovation process typically involves losing up to two-thirds of a given auditorium's seating capacity. For an industry historically focused on quantity, this reduction in seating capacity could be viewed as counter-intuitive and harmful to revenues. However, the quality improvement in the customer experience is driving, on average, an 80% increase in attendance at these locations. Our customers have responded favorably to the significant personal space gains from ample row depths, ability to recline or stretch their legs, extra-wide pillowed chaise and oversized armrests. The reseated theatres attract more midweek audiences than normal theatres and tend to draw more adults who pay higher ticket prices than teens or young children. We typically do not change ticket prices in the first year after construction, however, in subsequent years we typically increase our ticket prices at our reseated theatres.

        Rebalancing of the new supply-demand relationship created by recliner seating presents us two further opportunities to improve customer convenience and maximize operating results: open-source internet ticketing and reserved seating.

        Open-source internet ticketing makes all our seats (over 850,000) in all our theatres and auditoriums for all our showtimes as available as possible, on as many websites as possible. This is a significant departure from the prior ten-year practice, when tickets to any one of our buildings were only available on one website. We believe increased online access is important because it captures customers' purchase intent more immediately and directly than if we had to wait until they showed up at the theatre box office to make a purchase. Once our customers buy a ticket, they are less likely to change their mind. Carefully monitoring internet pre-sales also lets us adjust capacity in real time, moving movies that are poised to over perform to larger capacity or more auditoriums, thereby maximizing yield.

        Reserved seating, at our busiest theatres, allows our customers to choose a specific seat in advance of the movie. We believe that knowing there is a specifically chosen seat waiting for a show that promises to be a sellout is comforting to our customers, and removes anxiety around the experience. We believe reserved seating will become increasingly prevalent to the point of being a pre-requisite in the medium-term future.

        We believe the comfort and personal space gains from recliner seating, coupled with the immediacy of demand captured from open-source internet ticketing and the anxiety removal of reserved seating make a powerful economic combination for us that none of our peer set is exploiting as aggressively as we are.

        Technical innovation has allowed us to enhance the consumer experience through premium formats such as IMAX, 3D and other large screen formats. When combined with our major markets' customer base, the operating flexibility of digital technology enhances our capacity utilization and dynamic pricing capabilities. This enables us to achieve higher ticket prices for premium formats and provide incremental revenue from the exhibition of alternative content such as live concerts, sporting events, Broadway shows, opera and other non-traditional programming. Within each of our major markets, we are able to charge a premium for these services relative to our smaller markets. We intend to continue to broaden our content offerings and enhance the customer experience through the installation of additional IMAX and Dolby Cinema at AMC Prime (our proprietary large screen format) screens and the presentation of attractive alternative content.

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Table of Contents

        Food and beverage sales are our second largest source of revenue after box office admissions. Food and beverage items traditionally include popcorn, soft drinks, candy and hot dogs. Different varieties of food and beverage items are offered at our theatres based on preferences in the particular geographic region. Our traditional food and beverage strategy emphasizes prominent and appealing food and beverage counters designed for rapid service and efficiency, including a customer friendly self-serve experience. We design our theatres to have more food and beverage capacity to make it easier to serve larger numbers of customers. Strategic placement of large food and beverage stands within theatres increases their visibility, aids in reducing the length of lines, allows flexibility to introduce new concepts and improves traffic flow around the food and beverage stands.

        To address recent consumer trends, we are expanding our menu of enhanced food and beverage products to include made-to-order drinks and meals, customized coffee, healthy snacks, premium beers, wine and mixed drinks and other gourmet products. We plan to invest across a spectrum of enhanced food and beverage formats, ranging from simple, less capital-intensive food and beverage design improvements to the development of new dine-in theatre options to rejuvenate theatres approaching the end of their useful lives as traditional movie theatres and, in some of our larger theatres, to more efficiently monetize attendance. The costs of these conversions in some cases are partially covered by investments from the theatre landlord. Building on the success of our full-service Dine-In Theatres, we have completed construction of a new concept, AMC Red Kitchen, which emphasizes freshness, speed and convenience. Customers place their orders at a central station and the order is delivered to our customers at their reserved seat. As of June 30, 2015, we have successfully implemented our dine-in theatre concepts at 18 locations, which feature full kitchen facilities, seat-side servers and a separate bar and lounge area.

        Our revenues are dependent upon the timing and popularity of film releases by distributors. The most marketable films are usually released during the summer and the calendar year-end holiday seasons. Therefore, our business is highly seasonal, with higher attendance and revenues generally occurring during the summer months and holiday seasons. Our results of operations may vary significantly from quarter to quarter and from year to year.

        During the 2014 calendar year, films licensed from our seven largest distributors based on revenues accounted for approximately 89% of our U.S. admissions revenues. Our revenues attributable to individual distributors may vary significantly from year to year depending upon the commercial success of each distributor's films in any given year.

        During the period from 1990 to 2014, the annual number of first-run films released by distributors in the United States ranged from a low of 370 in 1995 to a high of 707 in 2014, according to Motion Picture Association of America 2014 Theatrical Market Statistics and prior reports. The number of digital 3D films released annually increased to a high of 47 in 2014 from a low of 0 during this same time period.

        We continually upgrade the quality of our theatre circuit by adding new screens through new builds (including expansions) and acquisitions, substantial upgrades to seating concepts, expansion of food and beverage offerings, including dine-in theatres, and by disposing of older screens through closures and sales. We are an industry leader in the development and operation of theatres. Typically, our theatres have 12 or more screens and offer amenities to enhance the movie-going experience, such as stadium seating providing unobstructed viewing, digital sound and premium seat design.

        As of June 30, 2015, we had 2,290 3D enabled screens, including 20 AMC Prime and ETX 3D enabled screens, and 150 IMAX 3D enabled screens; approximately 48.5% of our screens were 3D enabled screens, including IMAX 3D enabled screens, and approximately 3% of our screens were IMAX 3D enabled screens. Our IMAX screen count as of June 30, 2015, does not include one IMAX auditorium that was temporarily closed for repairs. We are the largest IMAX exhibitor in the world

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with a 45% market share in the United States and each of our IMAX local installations is protected by geographic exclusivity. The following table summarizes our 3D enabled number of screens:

Format
  Number of
Screens As of
June 30, 2015
 

3D enabled

    2,290  

IMAX (3D enabled)

    150  

AMC Prime/ETX (3D enabled)

    20  

        On April 1, 2011, we launched AMC Stubs, a customer frequency program, which allows members to earn rewards, including $10 for each $100 spent, redeemable on future purchases at AMC locations. The portion of the admissions and food and beverage revenues attributed to the rewards is deferred as a reduction of admissions and food and beverage revenues and is allocated between admissions and food and beverage revenues based on expected member redemptions. Rewards must be redeemed no later than 90 days from the date of issuance. Upon redemption, deferred rewards are recognized as revenues along with associated cost of goods. Rewards not redeemed within 90 days are forfeited and recognized as admissions or food and beverage revenues. Progress rewards (member expenditures toward earned rewards) for expired memberships are forfeited upon expiration of the membership and recognized as admissions or food and beverage revenues. The program's annual membership fee is deferred, net of estimated refunds, and is recognized ratably over the one-year membership period.

        The following tables reflect AMC Stubs activity during the three month period and six month period ended June 30, 2015:

 
   
   
  AMC Stubs Revenue for Three Months
Ended June 30, 2015
 
(In thousands)
  Deferred
Membership
Fees
  Deferred
Rewards
  Other Theatre
Revenues
(Membership
Fees)
  Admissions
Revenues
  Food and
Beverage
Revenues
 

Balance, March 31, 2015

  $ 11,239   $ 15,708                    

Membership fees received

    7,815       $   $   $  

Rewards accumulated, net of expirations:

                               

Admissions

        5,886         (5,886 )    

Food and beverage

        8,622             (8,622 )

Rewards redeemed:

                               

Admissions

        (4,838 )       4,838      

Food and beverage

        (7,406 )           7,406  

Amortization of deferred revenue

    (6,138 )       6,138          

For the period ended or balance as of June 30, 2015

  $ 12,916   $ 17,972   $ 6,138   $ (1,048 ) $ (1,216 )

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  AMC Stubs Revenue for Six Months
Ended June 30, 2015
 
(In thousands)
  Deferred
Membership
Fees
  Deferred
Rewards
  Other Theatre
Revenues
(Membership
Fees)
  Admissions
Revenues
  Food and
Beverage
Revenues
 

Balance, December 31, 2014

  $ 11,408   $ 16,129                    

Membership fees received

    13,757       $   $   $  

Rewards accumulated, net of expirations:

                               

Admissions

        10,126         (10,126 )    

Food and beverage

        14,466             (14,466 )

Rewards redeemed:

                               

Admissions

        (9,286 )       9,286      

Food and beverage

        (13,463 )           13,463  

Amortization of deferred revenue

    (12,249 )       12,249          

For the period ended or balance as of June 30, 2015

  $ 12,916   $ 17,972   $ 12,249   $ (840 ) $ (1,003 )

        The following tables reflect AMC Stubs activity during the three month period and six month period ended June 30, 2014:

 
   
   
  AMC Stubs Revenue for Three Months
Ended June 30, 2014
 
(In thousands)
  Deferred
Membership
Fees
  Deferred
Rewards
  Other Theatre
Revenues
(Membership
Fees)
  Admissions
Revenues
  Food and
Beverage
Revenues
 

Balance, March 31, 2014

  $ 12,160   $ 16,977                    

Membership fees received

    7,457       $   $   $  

Rewards accumulated, net of expirations:

                               

Admissions

        5,121         (5,121 )    

Food and beverage

        8,435             (8,435 )

Rewards redeemed:

                               

Admissions

        (4,937 )       4,937      

Food and beverage

        (7,999 )           7,999  

Amortization of deferred revenue

    (7,010 )       7,010          

For the period ended or balance as of June 30, 2014

  $ 12,607   $ 17,597   $ 7,010   $ (184 ) $ (436 )

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  AMC Stubs Revenue for Six Months
Ended June 30, 2014
 
(In thousands)
  Deferred
Membership
Fees
  Deferred
Rewards
  Other Theatre
Revenues
(Membership
Fees)
  Admissions
Revenues
  Food and
Beverage
Revenues
 

Balance, December 31, 2013

  $ 14,258   $ 17,117                    

Membership fees received

    12,352       $   $   $  

Rewards accumulated, net of expirations:

                               

Admissions

        9,137         (9,137 )    

Food and beverage

        15,294             (15,294 )

Rewards redeemed:

                               

Admissions

        (9,460 )       9,460      

Food and beverage

        (14,491 )           14,491  

Amortization of deferred revenue

    (14,003 )       14,003          

For the period ended or balance as of June 30, 2014

  $ 12,607   $ 17,597   $ 14,003   $ 323   $ (803 )

Significant and Subsequent Events

        Starplex Cinemas.    On July 13, 2015, we entered into a stock purchase agreement (the "Agreement") with SMH Theatres, Inc. ("Starplex Cinemas"), the shareholders of Starplex Cinemas and the shareholder representative named in the Agreement. Under the terms of the Agreement, we will acquire all of the outstanding common stock of Starplex Cinemas (the "Transaction") for $171,800,000 in cash, subject to working capital and other adjustments. Starplex Cinemas operates 33 theatres with 346 screens in small and mid-size markets in 12 states, which further complements the Company's large market portfolio. We expect to acquire Starplex Cinemas on a cash-free, debt-free basis. We plan to fund the acquisition using cash on our balance sheet and availability under our existing revolving credit facility, if necessary. We expect to consummate the Transaction by the end of 2015, subject to customary closing conditions, including the expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

        Corporate Borrowings.    On May 26, 2015, AMCE launched a cash tender offer for any and all of its outstanding 9.75% Senior Subordinated Notes due 2020 ("Notes due 2020") at a purchase price of $1,093 for each $1,000 principal amount of Notes due 2020 validly tendered and accepted by AMCE on or before June 2, 2015 at 8:00 a.m. New York City time (the "Expiration Date"). Holders of $581,324,000, or approximately 96.9%, of the Notes due 2020 validly tendered and did not withdraw their Notes due 2020 on or prior to the Expiration Date. We recorded a loss on extinguishment related to the redemption of the Notes due 2020 of approximately $9,273,000 in other expense (income) during the six months ended June 30, 2015. AMCE may redeem some or all of the remaining $18,676,000 principal amount of the Notes due 2020 at any time on or after December 1, 2015 at 104.875% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after December 1, 2018, plus accrued and unpaid interest to the redemption date.

        On June 5, 2015, AMCE issued $600,000,000 aggregate principal amount of its 5.75% Senior Subordinated Notes due 2025 (the "Notes due 2025") in a private offering. AMCE capitalized deferred financing costs of approximately $11,730,000, related to the issuance of the Notes due 2025, during the six months ended June 30, 2015. The Notes due 2025 mature on June 15, 2025. AMCE will pay interest on the Notes due 2025 at 5.75% per annum, semi-annually in arrears on June 15th and December 15th, commencing on December 15, 2015. AMCE may redeem some or all of the Notes due 2025 at any time on or after June 15, 2020 at 102.875% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after June 15, 2023, plus accrued and unpaid interest to the

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redemption date. Prior to June 15, 2020, AMCE may redeem the Notes due 2025 at par plus a make-whole premium. AMCE used the net proceeds from the Notes due 2025 private offering and cash on hand, to pay the consideration for the tender offer for the Notes due 2020, plus any accrued and unpaid interest and related transaction fees and expenses.

        On June 5, 2015, in connection with the issuance of the Notes due 2025, AMCE entered into a registration rights agreement. Subject to the terms of the registration rights agreement, AMCE filed a registration statement on June 19, 2015 pursuant to the Securities Act of 1933, as amended, relating to an offer to exchange the original Notes due 2025 for exchange Notes due 2025 registered pursuant to an effective registration statement; the registration statement was declared effective on June 29, 2015, and AMCE commenced the exchange offer. The exchange notes have terms substantially identical to the original notes except that the exchange notes do not contain terms with respect to transfer restrictions and registration rights and additional interest payable for the failure to consummate the exchange offer within 210 days after the issue date. After the exchange offer expired on July 27, 2015, all of the original Notes due 2025 were exchanged.

        Postretirement Medical Plan Termination.    On January 12, 2015, the Compensation Committee and all of our Board of Directors of AMC Entertainment Holdings, Inc. adopted resolutions to terminate the AMC Postretirement Medical Plan with an effective date of March 31, 2015. During the three months ended March 31, 2015, the Company notified eligible associates that their retiree medical coverage under the plan will terminate after March 31, 2015. Payments to eligible associates were approximately $4,300,000 during the six months ended June 30, 2015. We recorded net periodic benefit credits of $18,118,000, including curtailment gains, settlement gains, amortization of unrecognized prior service credits and amortization of actuarial gains recorded in accumulated other comprehensive income related to the termination and settlement of the plan during the six months ended June 30, 2015.

        NCM.    On May 5, 2014, NCM, Inc., the sole manager of NCM LLC, announced that it had entered into a merger agreement to acquire Screenvision, LLC for $375,000,000, consisting of cash and NCM, Inc. common stock. Consummation of the transaction was subject to regulatory approvals and other customary closing conditions. On November 3, 2014, the U.S. Department of Justice filed an antitrust lawsuit seeking to enjoin the transaction. On March 16, 2015, NCM, Inc. and Screenvision, LLC decided to terminate the merger agreement. The termination of the merger agreement was effective upon NCM, Inc.'s payment of a $26,840,000 termination payment. The estimated legal and other transaction expenses are approximately $14,930,000. NCM LLC of which AMC is an approximate 15.05% owner at March 31, 2015, had agreed to indemnify NCM, Inc. and bear a pro rata portion of the termination fee and other transaction expenses. Accordingly, we recorded expense of approximately $6,300,000 in equity in earnings of non-consolidated entities associated with these transaction expenses recorded by NCM LLC during the six months ended June 30, 2015.

        Dividends.    On February 3, 2015, our 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 March 23, 2015 to stockholders of record on March 9, 2015. On April 27, 2015, our 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 June 22, 2015 to stockholders of record on June 8, 2015. We paid dividends and dividend equivalents of $39,301,000 during the six months ended June 30, 2015 and accrued $196,000 for the remaining unpaid dividends at June 30, 2015.

        On July 28, 2015, 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 September 21, 2015 to stockholders of record on September 8, 2015.

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        Dolby Cinema™ at AMC Prime®.    On April 9, 2015, we, along with Dolby Laboratories, Inc., announced Dolby Cinema at AMC Prime, a premium cinema offering for moviegoers that combines spectacular image and sound technologies with design and comfort. Dolby Cinema at AMC Prime will include Dolby Vision™ laser projection and Dolby Atmos® sound, as well as AMC Prime power reclining seats with seat transducers that vibrate with the action on screen. As of June 30, 2015, we have 4 fully operational Dolby Cinema at AMC Prime screens and we expect to have a minimum of 4 additional screens in operation by the end of 2015. We intend to expand to operating 50 Dolby Cinema at AMC Prime locations by December 2018 and up to 100 Dolby Cinema at AMC Prime locations by December 2024.

        Executive Officers.    On July 17, 2015, Gerardo I. Lopez provided us with notice of his resignation from his positions as Chief Executive officer, President and Director, effective August 6, 2015. On July 19, 2015, the Holdings' Board of Directors appointed Craig R. Ramsey, Holdings' current Executive Vice President and Chief Financial Officer, to serve in the additional capacities of Interim Chief Executive Officer and Interim President of Holdings, effective August 7, 2015.

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Operating Results

        The following table sets forth our revenues, operating costs and expenses attributable to our theatrical exhibition operations.

 
  Three Months Ended    
  Six Months Ended    
 
(In thousands)
  June 30,
2015
  June 30,
2014
  % Change   June 30,
2015
  June 30,
2014
  % Change  

Revenues

                                     

Theatrical exhibition

                                     

Admissions

  $ 533,382   $ 478,667     11.4 % $ 952,076   $ 887,687     7.3 %

Food and beverage

    250,516     211,597     18.4 %   451,040     393,361     14.7 %

Other theatre

    37,181     36,309     2.4 %   71,087     68,283     4.1 %

Total revenues

  $ 821,079   $ 726,573     13.0 % $ 1,474,203   $ 1,349,331     9.3 %

Operating Costs and Expenses

                                     

Theatrical exhibition

            <