Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549  
______________________________________________________
FORM 10-Q
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017
 
Commission file number: 001-31315
______________________________________________________ 
Regal Entertainment Group
(Exact name of Registrant as Specified in Its Charter) 
Delaware
 
02-0556934
(State or Other Jurisdiction of
 
(I.R.S. Employer
Incorporation or Organization)
 
Identification No.)
 
 
 
7132 Regal Lane
 
 
Knoxville, TN
 
37918
(Address of Principal Executive Offices)
 
(Zip Code)
 
Registrant’s Telephone Number, Including Area Code: 865-922-1123
 
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 x 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 Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No  o
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act (Check one): 
Large accelerated filer  x
 
Accelerated filer  o
 
 
 
Non-accelerated filer  o (Do not check if a smaller reporting company)
 
Smaller reporting company  o
 
 
 
Emerging growth company  o
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 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  x
 
Class A Common Stock—133,307,114 shares outstanding at November 1, 2017
 
Class B Common Stock—23,708,639 shares outstanding at November 1, 2017

Table of Contents

TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

2
Table of Contents

PART I—FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
REGAL ENTERTAINMENT GROUP
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share data)
 
September 30, 2017
 
December 31, 2016
ASSETS
 

 
 

CURRENT ASSETS:
 

 
 

Cash and cash equivalents
$
189.5

 
$
246.5

Trade and other receivables, net
57.8

 
155.1

Income tax receivable
15.3

 
—

Inventories
23.9

 
20.9

Prepaid expenses and other current assets
31.7

 
23.4

Assets held for sale
0.8

 
1.0

TOTAL CURRENT ASSETS
319.0

 
446.9

PROPERTY AND EQUIPMENT:
 

 
 

Land
154.8

 
131.2

Buildings and leasehold improvements
2,454.1

 
2,319.7

Equipment
1,133.5

 
1,065.7

Construction in progress
24.2

 
20.2

Total property and equipment
3,766.6

 
3,536.8

Accumulated depreciation and amortization
(2,269.4
)
 
(2,146.7
)
TOTAL PROPERTY AND EQUIPMENT, NET
1,497.2

 
1,390.1

GOODWILL
345.8

 
327.0

INTANGIBLE ASSETS, NET
44.6

 
46.0

DEFERRED INCOME TAX ASSET
56.2

 
56.3

OTHER NON-CURRENT ASSETS
409.4

 
379.4

TOTAL ASSETS
$
2,672.2

 
$
2,645.7

LIABILITIES AND DEFICIT
 

 
 

CURRENT LIABILITIES:
 

 
 

Current portion of debt obligations
$
26.7

 
$
25.5

Accounts payable
122.4

 
194.8

Accrued expenses
69.9

 
70.7

Deferred revenue
150.2

 
192.7

Interest payable
8.9

 
19.9

Income taxes payable
—

 
6.4

TOTAL CURRENT LIABILITIES
378.1

 
510.0

LONG-TERM DEBT, LESS CURRENT PORTION
2,342.2

 
2,197.1

LEASE FINANCING ARRANGEMENTS, LESS CURRENT PORTION
78.0

 
84.8

CAPITAL LEASE OBLIGATIONS, LESS CURRENT PORTION
6.8

 
6.9

NON-CURRENT DEFERRED REVENUE
408.1

 
412.3

OTHER NON-CURRENT LIABILITIES
314.2

 
273.5

TOTAL LIABILITIES
3,527.4

 
3,484.6

COMMITMENTS AND CONTINGENCIES


 


DEFICIT:
 

 
 

Class A common stock, $0.001 par value; 500,000,000 shares authorized, 133,307,114 and 133,080,279 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively
0.1

 
0.1

Class B common stock, $0.001 par value; 200,000,000 shares authorized, 23,708,639 shares issued and outstanding at September 30, 2017 and December 31, 2016
—

 
—

Preferred stock, $0.001 par value; 50,000,000 shares authorized, none issued and outstanding
—

 
—

Additional paid-in capital (deficit)
(931.6
)
 
(934.4
)
Retained earnings
76.1

 
96.5

Accumulated other comprehensive income (loss), net
0.1

 
(1.3
)
TOTAL STOCKHOLDERS’ DEFICIT OF REGAL ENTERTAINMENT GROUP
(855.3
)
 
(839.1
)
Noncontrolling interest
0.1

 
0.2

TOTAL DEFICIT
(855.2
)
 
(838.9
)
TOTAL LIABILITIES AND DEFICIT
$
2,672.2

 
$
2,645.7

See accompanying notes to unaudited condensed consolidated financial statements.

3
Table of Contents

REGAL ENTERTAINMENT GROUP
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except share and per share data)  
 
Quarter Ended
September 30, 2017
 
Quarter Ended
September 30, 2016
 
Three Quarters Ended
September 30, 2017
 
Three Quarters Ended
September 30, 2016
REVENUES:
 

 
 

 
 

 
 

Admissions
$
455.4

 
$
525.3

 
$
1,469.8

 
$
1,546.8

Concessions
212.7

 
239.9

 
683.6

 
705.5

Other operating revenues
47.9

 
46.3

 
148.0

 
132.2

TOTAL REVENUES
716.0

 
811.5

 
2,301.4

 
2,384.5

OPERATING EXPENSES:
 

 
 

 
 

 
 

Film rental and advertising costs
236.8

 
275.6

 
778.4

 
832.0

Cost of concessions
28.1

 
31.3

 
89.5

 
90.1

Rent expense
107.0

 
107.3

 
319.2

 
321.1

Other operating expenses
227.4

 
226.3

 
665.9

 
652.6

General and administrative expenses (including share-based compensation of $2.4 and $2.5 for the quarters ended September 30, 2017 and 2016, respectively, and $6.9 and $6.6 for the three quarters ended September 30, 2017 and 2016, respectively)
19.9

 
20.5

 
65.4

 
62.6

Depreciation and amortization
62.4

 
58.5

 
186.2

 
171.1

Net loss on disposal and impairment of operating assets and other
11.9

 
4.8

 
15.8

 
10.6

TOTAL OPERATING EXPENSES
693.5

 
724.3

 
2,120.4

 
2,140.1

INCOME FROM OPERATIONS
22.5

 
87.2

 
181.0

 
244.4

OTHER EXPENSE (INCOME):
 

 
 

 
 

 
 

Interest expense, net
31.7

 
31.9

 
93.5

 
96.7

Loss on extinguishment of debt
—

 
—

 
1.3

 
1.5

Earnings recognized from NCM
(5.4
)
 
(3.6
)
 
(14.0
)
 
(18.8
)
Gain on sale of Open Road Films investment
(17.8
)
 
—

 
(17.8
)
 
—

Equity in income of non-consolidated entities and other, net
(10.0
)
 
(12.6
)
 
(26.7
)
 
(33.0
)
TOTAL OTHER EXPENSE (INCOME), NET
(1.5
)
 
15.7

 
36.3

 
46.4

INCOME BEFORE INCOME TAXES
24.0

 
71.5

 
144.7

 
198.0

PROVISION FOR INCOME TAXES
12.6

 
29.2

 
61.3

 
81.4

NET INCOME
11.4

 
42.3

 
83.4

 
116.6

NET (INCOME) LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST, NET OF TAX
—

 
—

 
—

 
(0.1
)
NET INCOME ATTRIBUTABLE TO CONTROLLING INTEREST
$
11.4

 
$
42.3

 
$
83.4

 
$
116.5

EARNINGS PER SHARE OF CLASS A AND CLASS B COMMON STOCK (NOTE 9):
 

 
 

 
 

 
 

Basic
$
0.07

 
$
0.27

 
$
0.53

 
$
0.75

Diluted
$
0.07

 
$
0.27

 
$
0.53

 
$
0.74

AVERAGE SHARES OUTSTANDING (in thousands):
 

 
 

 
 

 
 

Basic
156,350

 
156,023

 
156,332

 
155,995

Diluted
156,878

 
156,864

 
156,955

 
156,759

DIVIDENDS DECLARED PER COMMON SHARE
$
0.22

 
$
0.22

 
$
0.66

 
$
0.66

See accompanying notes to unaudited condensed consolidated financial statements.

4
Table of Contents

REGAL ENTERTAINMENT GROUP
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
 
 
Quarter Ended
September 30, 2017
 
Quarter Ended
September 30, 2016
 
Three Quarters Ended
September 30, 2017
 
Three Quarters Ended
September 30, 2016
NET INCOME
$
11.4

 
$
42.3

 
$
83.4

 
$
116.6

OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
 

 
 

 
 

 
 

Change in fair value of interest rate swap transactions
0.4

 
(0.4
)
 
(0.1
)
 
(2.5
)
Amounts reclassified to net income from interest rate swaps
0.2

 
0.9

 
1.4

 
2.9

Reclassification adjustment for gain on sale of available for sale securities recognized in net income
—

 
—

 
—

 
(0.5
)
Change in fair value of equity method investee interest rate swaps
0.1

 
0.2

 
0.1

 
(0.5
)
TOTAL OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
0.7

 
0.7

 
1.4

 
(0.6
)
TOTAL COMPREHENSIVE INCOME, NET OF TAX
12.1

 
43.0

 
84.8

 
116.0

Comprehensive (income) loss attributable to noncontrolling interest, net of tax
—

 
—

 
—

 
(0.1
)
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST, NET OF TAX
$
12.1

 
$
43.0

 
$
84.8

 
$
115.9

 
See accompanying notes to unaudited condensed consolidated financial statements.

5

REGAL ENTERTAINMENT GROUP
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
 
Three Quarters Ended
September 30, 2017
 
Three Quarters Ended
September 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
 

 
 

Net income
$
83.4

 
$
116.6

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

 
 

Depreciation and amortization
186.2

 
171.1

Amortization of debt discount
0.2

 
0.2

Amortization of debt acquisition costs
3.6

 
3.5

Share-based compensation expense
6.9

 
6.6

Deferred income tax benefit
(0.7
)
 
(2.9
)
Net loss on disposal and impairment of operating assets and other
15.8

 
10.6

Equity in income of non-consolidated entities
(24.3
)
 
(35.7
)
Gain on sale of Open Road Films investment
(17.8
)
 
—

Loss on extinguishment of debt
1.3

 
1.5

Gain on sale of available for sale securities
—

 
(1.0
)
Non-cash gain on interest rate swaps
(0.3
)
 
—

Non-cash rent income
(5.3
)
 
(4.7
)
Cash distributions on investments in other non-consolidated entities
8.4

 
0.1

Excess cash distribution on NCM shares
11.3

 
9.9

Landlord contributions
64.0

 
56.5

Proceeds from litigation settlement
1.9

 
0.6

Changes in operating assets and liabilities, net of effects of acquisitions:
 

 
 

Trade and other receivables
83.6

 
111.8

Inventories
(2.2
)
 
1.9

Prepaid expenses and other assets
(7.9
)
 
(8.5
)
Accounts payable
(64.5
)
 
(122.1
)
Income taxes payable
(6.5
)
 
3.3

Deferred revenue
(53.0
)
 
(56.2
)
Accrued expenses and other liabilities
(28.5
)
 
(15.2
)
NET CASH PROVIDED BY OPERATING ACTIVITIES
255.6

 
247.9

CASH FLOWS FROM INVESTING ACTIVITIES:
 

 
 

Capital expenditures
(175.5
)
 
(155.1
)
Proceeds from disposition of assets
13.1

 
1.3

Investment in non-consolidated entities
(11.1
)
 
(8.7
)
Net cash used for acquisitions
(171.6
)
 
—

Change in other long-term assets
(3.1
)
 
—

Proceeds from sale of Open Road Films investment
10.3

 
—

Proceeds from sale of available for sale securities
—

 
3.6

NET CASH USED IN INVESTING ACTIVITIES
(337.9
)
 
(158.9
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 

 
 

Cash used to pay dividends
(104.4
)
 
(104.4
)
Payments on long-term obligations
(15.7
)
 
(17.0
)
Landlord contributions received from lease financing arrangements
2.5

 
4.3

Cash paid for tax withholdings and other
(3.7
)
 
(3.3
)
Proceeds from Amended Senior Credit Facility
1,103.7

 
958.5

Payoff of Amended Senior Credit Facility
(953.7
)
 
(958.5
)
Payment of debt acquisition costs
(3.4
)
 
(1.3
)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
25.3

 
(121.7
)
NET DECREASE IN CASH AND CASH EQUIVALENTS
(57.0
)
 
(32.7
)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
246.5

 
219.6

CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
189.5

 
$
186.9

SUPPLEMENTAL CASH FLOW INFORMATION:
 

 
 

Cash paid for income taxes
$
83.2

 
$
76.8

Cash paid for interest, net of amounts capitalized
$
101.9

 
$
104.7

SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
 

 
 

Investment in NCM
$
6.3

 
$
9.9

Increase in property and equipment and other from lease financing arrangements
$
3.2

 
$
14.9

See accompanying notes to unaudited condensed consolidated financial statements.

6

REGAL ENTERTAINMENT GROUP
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
1. THE COMPANY AND BASIS OF PRESENTATION
 
Regal Entertainment Group (the "Company," "Regal," "we" or "us") is the parent company of Regal Entertainment Holdings, Inc. ("REH"), which is the parent company of Regal Cinemas Corporation ("Regal Cinemas") and its subsidiaries. Regal Cinemas’ subsidiaries include Regal Cinemas, Inc. ("RCI") and its subsidiaries, which include Edwards Theatres, Inc. ("Edwards") and United Artists Theatre Company ("United Artists"). The terms Regal or the Company, REH, Regal Cinemas, RCI, Edwards and United Artists shall be deemed to include the respective subsidiaries of such entities when used in discussions included herein regarding the current operations or assets of such entities. Majority-owned subsidiaries that the Company controls are consolidated, while those affiliates of which the Company owns between 20% and 50% and does not control are accounted for under the equity method. Those affiliates of which the Company owns less than 20% are generally accounted for under the cost method, unless the Company is deemed to have the ability to exercise significant influence over the affiliate, in which case the Company would account for its investment under the equity method. The results of these subsidiaries and affiliates are included in the unaudited condensed consolidated financial statements effective with their formation or from their dates of acquisition. Intercompany balances and transactions are eliminated in consolidation.
 
Regal operates one of the largest and most geographically diverse theatre circuits in the United States, consisting of 7,315 screens in 561 theatres in 43 states along with Guam, Saipan, American Samoa and the District of Columbia as of September 30, 2017 .
 
For a discussion of significant transactions that have occurred through December 31, 2016 , please refer to the notes to the consolidated financial statements included in Part II, Item 8 of our annual report on Form 10-K filed on February 27, 2017 with the Securities and Exchange Commission (the "Commission") (File No. 001-31315) for the fiscal year ended December 31, 2016 (the " 2016 Audited Consolidated Financial Statements"). For a summary of our significant accounting policies, please refer to Note 2 to the 2016 Audited Consolidated Financial Statements.

The Company has prepared the unaudited condensed consolidated balance sheet as of September 30, 2017 , the unaudited condensed consolidated statements of income and comprehensive income for the quarters and three quarters ended September 30, 2017 and September 30, 2016 , and the unaudited condensed consolidated statements of cash flows for the three quarters ended September 30, 2017 and September 30, 2016 in accordance with U.S. generally accepted accounting principles for interim financial information and the rules and regulations of the Commission. Accordingly, certain information and footnote disclosures typically included in an annual report have been condensed or omitted for this quarterly report. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly in all material respects the financial position, results of operations and cash flows for all periods presented have been made. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes.  Actual results could differ from these estimates. The December 31, 2016 unaudited condensed consolidated balance sheet information is derived from the 2016 Audited Consolidated Financial Statements. These unaudited condensed consolidated financial statements should be read in conjunction with the 2016 Audited Consolidated Financial Statements and notes thereto. The results of operations for the quarter and three quarters ended September 30, 2017 are not necessarily indicative of the operating results that may be achieved for the full 2017 year.

2. ACQUISITIONS

On April 13, 2017, the Company completed the acquisition of two theatres with 41 screens located in Houston, Texas from Santikos Theaters, Inc. for an aggregate net cash purchase price of $29.8 million . In addition, on April 18, 2017, the Company purchased a parcel of land located in Montgomery County, Texas from an entity affiliated with Santikos Theaters, Inc. for a net cash purchase price of approximately $7.3 million . On May 18, 2017, the Company completed the acquisition of seven theatres with 93 screens located in Kansas and Oklahoma from Warren Theatres for an aggregate net cash purchase price, before post-closing adjustments, of $134.5 million . The Company incurred approximately $1.7 million in transaction costs associated with these acquisitions, which are reflected in "general and administrative expenses" in the accompanying unaudited condensed consolidated statements of income for the three quarters ended September 30, 2017.

The transactions have been accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification ("ASC") 805, Business Combinations , which requires allocation of the purchase price to the estimated fair values of assets and liabilities acquired in each transaction. The allocation of purchase price is based on management’s judgment after evaluating several factors, including preliminary valuation assessments. Because the values assigned to assets

7

acquired and liabilities assumed are based on preliminary estimates of fair value available as of the date of this quarterly report on Form 10-Q, amounts may be adjusted during the measurement period of up to twelve months from the respective dates of acquisition as further information becomes available. Any changes in the fair values of assets acquired and liabilities assumed during the measurement period may result in adjustments to goodwill. The allocation of purchase price is preliminary and subject to changes as appraisals of tangible and intangible assets and liabilities including working capital are finalized, purchase price adjustments are completed and additional information regarding the tax bases of assets and liabilities at the acquisition date becomes available. The following is a summary of a preliminary allocation of the aggregate purchase price to the estimated fair values of the assets acquired and liabilities assumed at the respective dates of acquisition (in millions):

Current assets
$
2.1

Land
28.8

Buildings, equipment and leasehold improvements
115.7

Noncompete agreements
2.7

Goodwill (1)
26.2

Other assets
0.1

Current liabilities
(4.0
)
Total purchase price
$
171.6

________________________________
(1) Goodwill represents the excess aggregate purchase price over the amounts assigned to assets acquired, including intangible assets, and liabilities assumed and is fully deductible for tax purposes.

The results of operations of the acquired theatre operations have been included in the Company's consolidated financial statements for periods subsequent to the respective acquisition dates. The acquisitions contributed approximately $19.0 million and $34.2 million of total revenues for the quarter and three quarters ended September 30, 2017, respectively. Net income was an immaterial amount for the quarter and three quarters ended September 30, 2017.

The following unaudited pro forma results of operations for the three quarters ended September 30, 2017 and the quarter and three quarters September 30, 2016 assume the acquisitions occurred as of the beginning of fiscal 2016. The pro forma results have been prepared for comparative purposes only and do not purport to indicate the results of operations which would actually have occurred had the combination been in effect on the dates indicated, or which may occur in the future. Pro forma results for the quarter ended September 30, 2017 are not presented below because the results for the acquisitions are included in the September 30, 2017 unaudited condensed consolidated statement of income for the entire quarterly period.
(in millions, except per share data)
Quarter Ended
September 30, 2016
 
Three Quarters Ended
September 30, 2017
 
Three Quarters Ended
September 30, 2016
Revenues
$
836.5

 
$
2,334.4

 
$
2,458.9

Income from operations
88.1

 
181.4

 
247.2

Net income attributable to controlling interest
42.8

 
83.6

 
118.2

Diluted earnings per share
$
0.27

 
$
0.53

 
$
0.8


3. INVESTMENTS
 
Investment in National CineMedia, LLC
 
We maintain an investment in National CineMedia, LLC ("National CineMedia" or "NCM").  National CineMedia provides in-theatre advertising for its theatrical exhibition partners, which include us, AMC Entertainment, Inc. ("AMC") and Cinemark, Inc. ("Cinemark"). The formation of National CineMedia, related IPO of National CineMedia, Inc. ("NCM, Inc.") and other related transactions are further described in Note 4 to the 2016 Audited Consolidated Financial Statements.

We account for our investment in National CineMedia following the equity method of accounting and such investment is included as a component of "Other Non-Current Assets" in the accompanying unaudited condensed consolidated balance sheets. From time to time, the Company receives additional newly issued common units of National CineMedia ("Additional Investments Tranche") as a result of the adjustment provisions of the Common Unit Adjustment Agreement (as defined and more fully discussed in Note 4 to the 2016 Audited Consolidated Financial Statements). The Company follows the guidance in

8

ASC 323-10-35-29 (formerly EITF 02-18, Accounting for Subsequent Investments in an Investee after Suspension of Equity Loss Recognition ) by analogy, which also refers to AICPA Technical Practice Aid 2220.14, which indicates that if a subsequent investment is made in an equity method investee that has experienced significant losses, the investor must determine if the subsequent investment constitutes funding of prior losses. The Company concluded that the construction or acquisition of new theatres that has led to the common unit adjustments included in its Additional Investments Tranche equates to making additional investments in National CineMedia. The Company evaluated the receipt of the additional common units in National CineMedia and the assets exchanged for these additional units and has determined that the right to use its incremental new screens would not be considered funding of prior losses. As such, the Additional Investments Tranche is accounted for separately from the Company’s Initial Investment Tranche (as defined and described more fully in Note 4 to the 2016 Audited Consolidated Financial Statements) following the equity method with undistributed equity earnings included as a component of "Earnings recognized from NCM" in the accompanying unaudited condensed consolidated financial statements.

Below is a summary of activity with National CineMedia included in the Company’s unaudited condensed consolidated financial statements as of and for the three quarters ended September 30, 2017 (in millions):
 
As of the period ended
 
For the period ended
 
Investment
in
NCM
 
Deferred
Revenue
 
Cash
Received
 
Earnings
recognized
from NCM
 
Other
NCM
Revenues
Balance as of and for the period ended December 31, 2016
$
162.0

 
$
(425.0
)
 
$
—

 
$
—

 
$
—

     Receipt of additional common units(1)
6.3

 
(6.3
)
 
—

 
—

 
—

     Receipt of excess cash distributions(2)
(8.2
)
 
—

 
19.9

 
(11.7
)
 
—

     Receipt under tax receivable agreement(2)
(3.1
)
 
—

 
7.6

 
(4.5
)
 
—

     Revenues earned under ESA(3)
—

 
—

 
12.7

 
—

 
(12.7
)
     Amortization of deferred revenue(4)
—

 
9.6

 
—

 
—

 
(9.6
)
     Equity income attributable to additional common units(5)
3.4

 
—

 
—

 
(3.4
)
 
—

     Change in interest loss(6)
(5.6
)
 
—

 
—

 
5.6

 
—

Balance as of and for the period ended September 30, 2017
$
154.8

 
$
(421.7
)
 
$
40.2

 
$
(14.0
)
 
$
(22.3
)
 ________________________________
(1)
On March 16, 2017, we received from National CineMedia approximately 0.5 million newly issued common units of National CineMedia in accordance with the annual adjustment provisions of the Common Unit Adjustment Agreement. The Company recorded the additional common units (Additional Investments Tranche) at fair value using the available closing stock price of NCM, Inc. as of the date on which the units were issued. With respect to the common units issued on March 16, 2017, the Company recorded an increase to its investment in National CineMedia of $6.3 million with a corresponding increase to deferred revenue. Such deferred revenue amount is being amortized to advertising revenue over the remaining term of the exhibitor services agreement, between RCI and National CineMedia ("ESA"), following the units of revenue method as described in (4) below. This transaction increased our ownership share in National CineMedia to approximately 27.6 million common units. On a fully diluted basis, we own a 17.9% interest in NCM, Inc. as of September 30, 2017 .

(2)
During the three quarters ended September 30, 2017 , the Company received $27.5 million in cash distributions from National CineMedia, exclusive of receipts for services performed under the ESA (including payments of $7.6 million received under the tax receivable agreement described in Note 4 to the 2016 Audited Consolidated Financial Statements of the Company). Approximately $11.3 million of these cash distributions received during the three quarters ended September 30, 2017 were attributable to the Additional Investments Tranche and were recognized as a reduction in our investment in National CineMedia. The remaining amounts were recognized in equity earnings during the period and have been included as components of "Earnings recognized from NCM" in the accompanying unaudited condensed consolidated financial statements.

(3)
The Company recorded other revenues, excluding the amortization of deferred revenue, of approximately $12.7 million for the three quarters ended September 30, 2017 pertaining to our agreements with National CineMedia, including per patron and per digital screen theatre access fees (net of payments of $9.2 million for the three quarters ended September 30, 2017 for on-screen advertising time provided to our beverage concessionaire) and other NCM revenues. These advertising revenues are presented as a component of "Other operating revenues" in the Company’s unaudited condensed consolidated financial statements.

(4)
Amounts represent amortization of ESA modification fees received from NCM to advertising revenue utilizing the units of revenue amortization method. These advertising revenues are presented as a component of "Other operating revenues" in the Company’s unaudited condensed consolidated financial statements.

(5)
Amounts represent the Company’s share in the net gain (loss) of National CineMedia with respect to the Additional Investments Tranche. Such amounts have been included as a component of "Earnings recognized from NCM" in the unaudited condensed consolidated financial statements.

9


(6)
The Company recorded a non-cash change in interest loss of $5.6 million during the quarter ended March 31, 2017 to adjust the Company's investment balance due to NCM's issuance of common units to other founding members, at a price per share below the Company's average carrying amount per share. Such amount has been included as a component of "Earnings recognized from NCM" in the unaudited condensed consolidated financial statements.

As of September 30, 2017 , approximately $2.1 million and $0.7 million due from/to National CineMedia were included in "Trade and other receivables, net" and "Accounts payable," respectively. As of December 31, 2016 , approximately $2.8 million and $1.3 million due from/to National CineMedia were included in "Trade and other receivables, net" and "Accounts payable," respectively.
 
As of the date of this quarterly report on Form 10-Q (this "Form 10-Q"), no summarized financial information for National CineMedia was available for the quarterly period ended September 30, 2017 . Summarized unaudited consolidated statements of income information for National CineMedia for the quarters and two quarters ended June 29, 2017 and June 30, 2016 is as follows (in millions):
 
Quarter Ended
June 29, 2017
 
Quarter Ended
June 30, 2016
 
Two Quarters Ended
June 29, 2017
 
Two Quarters Ended
June 30, 2016
Revenues
$
97.1

 
$
115.4

 
$
169.0

 
$
191.6

Income from operations
28.3

 
46.5

 
33.4

 
52.3

Net loss
15.4

 
33.2

 
7.5

 
25.7


 
Investment in Digital Cinema Implementation Partners
 
We maintain an investment in Digital Cinema Implementation Partners, LLC, a Delaware limited liability company ("DCIP").  DCIP is a joint venture company formed by Regal, AMC and Cinemark. DCIP funds the cost of digital projection equipment principally through the collection of virtual print fees from motion picture studios and equipment lease payments from participating exhibitors, including us. In addition to its U.S. digital deployment, DCIP actively manages the deployment of over 1,800 digital systems in Canada for Canadian Digital Cinema Partnership, a joint venture between Cineplex Inc. and Empire Theatres Limited.

Regal holds a 46.7% economic interest in DCIP as of September 30, 2017 and a one-third voting interest along with each of AMC and Cinemark. Since the Company does not have a controlling financial interest in DCIP or any of its subsidiaries, it accounts for its investment in DCIP under the equity method of accounting. The Company’s investment in DCIP is included as a component of "Other Non-Current Assets" in the accompanying unaudited condensed consolidated balance sheets.  The change in the carrying amount of our investment in DCIP for the three quarters ended September 30, 2017 is as follows (in millions): 

Balance as of December 31, 2016
$
193.2

     Equity contributions
0.4

     Equity in earnings of DCIP(1)
32.2

     Receipt of cash distributions
(8.4
)
     Change in fair value of equity method investee interest rate swap transactions
0.1

Balance as of September 30, 2017
$
217.5

 ________________________________
(1)
Represents the Company’s share of the net income of DCIP. Such amount is presented as a component of “Equity in income of non-consolidated entities and other, net” in the accompanying unaudited condensed consolidated statement of income.

In accordance with the master equipment lease agreement (the "Master Lease"), the digital projection systems are leased from a subsidiary of DCIP under a twelve -year term with ten one-year fair value renewal options. The Master Lease also contains a fair value purchase option. As of September 30, 2017 , under the Master Lease, the Company pays annual minimum rent of $1,000 per digital projection system through the end of the lease term. The Company considers the $1,000 rent payment to be a minimum rental, and accordingly, records such rent on a straight-line basis in its consolidated financial statements. The Company is also subject to various types of other rent if such digital projection systems do not meet minimum performance requirements, as outlined in the Master Lease. Certain of the other rent payments are subject to either a monthly or an annual

10

maximum. The Company accounts for the Master Lease as an operating lease for accounting purposes. During each of the three quarters ended September 30, 2017 and September 30, 2016 , the Company incurred total rent expense of approximately $4.0 million associated with the leased digital projection systems. Such rent expense is presented as a component of "Other operating expenses" in the Company's unaudited consolidated statements of income.

Summarized unaudited consolidated statements of operations information for DCIP for the quarters and three quarters ended September 30, 2017 and September 30, 2016 is as follows (in millions): 
 
Quarter Ended
September 30, 2017
 
Quarter Ended
September 30, 2016
 
Three Quarters Ended
September 30, 2017
 
Three Quarters Ended
September 30, 2016
Net revenues
$
40.0

 
$
48.3

 
$
132.5

 
$
133.7

Income from operations
22.7

 
31.2

 
80.6

 
82.4

Net income
19.7

 
26.9

 
69.5

 
67.7



Investment in Open Road Films
 
On August 4, 2017, the Company sold all of its 50% equity interest in Open Road Films to a third party for total proceeds of approximately $14.0 million . In accordance with the purchase agreement, approximately $3.7 million of the net proceeds received were in satisfaction of various receivables and other amounts due to the Company related to film marketing services provided to Open Road Films prior to the closing date. As a result of the sale, the Company recorded a gain of approximately $17.8 million , representing the difference between the net proceeds received of $10.3 million (after satisfaction of the above amounts due the Company) and the carrying amount of the Company's investment in Open Road Films (approximately $(7.5) million ) as of the closing date. Also effective with closing, the Company and Open Road Films entered into a new marketing agreement with respect to films released by Open Road Films after the closing date.



4. DEBT OBLIGATIONS
 
Debt obligations at September 30, 2017 and December 31, 2016 consist of the following (in millions): 
 
September 30, 2017
 
December 31, 2016
Regal Cinemas Amended Senior Credit Facility, net of debt discount
$
1,099.9

 
$
954.7

Regal 5 3 / 4 % Senior Notes Due 2022
775.0

 
775.0

Regal 5 3 / 4 % Senior Notes Due 2025
250.0

 
250.0

Regal 5 3 / 4 % Senior Notes Due 2023
250.0

 
250.0

Lease financing arrangements, weighted average interest rate of 11.22%, maturing in various installments through November 2028
91.4

 
97.1

Capital lease obligations, 7.8% to 10.7%, maturing in various installments through December 2030
7.6

 
9.2

Other
4.2

 
4.1

Total debt obligations
2,478.1

 
2,340.1

Less current portion
26.7

 
25.5

Less debt issuance costs, net of accumulated amortization of $21.1 and $18.5, respectively
24.4

 
25.8

Total debt obligations, less current portion and debt issuance costs
$
2,427.0

 
$
2,288.8

 
Regal Cinemas Seventh Amended and Restated Credit Agreement —As described further in Note 5 to the 2016 Audited Consolidated Financial Statements, on April 2, 2015, Regal Cinemas entered into a seventh amended and restated credit agreement (the “Amended Senior Credit Facility”), with Credit Suisse AG as Administrative Agent (“Credit Suisse AG”) and the lenders party thereto, which amended, restated and refinanced the sixth amended and restated credit agreement (the “Prior Senior Credit Facility”). The Amended Senior Credit Facility consisted of a term loan facility (the “Term Facility”) in an aggregate principal amount of $965.8 million with a final maturity date in April 2022 and a revolving credit facility (the “Revolving Facility”) in an aggregate principal amount of $85.0 million with a final maturity date in April 2020. The Term Facility amortized in equal quarterly installments in an aggregate annual amount equal to 1.0% of the original principal amount of the Term Facility, with the balance payable on the Term Facility maturity date. Proceeds from the Term Facility

11

(approximately $963.3 million , net of debt discount) were applied to refinance the term loan under the Prior Senior Credit Facility, which had an aggregate outstanding principal balance of approximately $963.2 million .

On June 1, 2016, Regal Cinemas entered into a permitted secured refinancing agreement with REH, the guarantors party thereto, Credit Suisse AG and the lenders party thereto (the "June 2016 Refinancing Agreement"). Pursuant to the June 2016 Refinancing Agreement, Regal Cinemas consummated a permitted secured refinancing of the Term Facility under the Amended Senior Credit Facility, which had an aggregate principal balance of approximately $958.5 million , and in accordance therewith, received term loans in an aggregate principal amount of approximately $958.5 million with a final maturity date in April 2022. Together with other amounts provided by Regal Cinemas, proceeds of the term loans were applied to repay all of the outstanding principal and accrued and unpaid interest on the Term Facility under the Amended Senior Credit Facility. In connection with the execution of the June 2016 Refinancing Agreement, the Company recorded a loss on debt extinguishment of approximately $1.5 million during the quarter ended June 30, 2016.

On December 2, 2016, Regal Cinemas entered into a permitted secured refinancing agreement (the “December 2016 Refinancing Agreement”) with REH, the guarantors party thereto, Credit Suisse AG and the lenders party thereto. Pursuant to the December 2016 Refinancing Agreement, Regal Cinemas consummated a permitted secured refinancing of the Term Facility, which had an aggregate principal balance of approximately $956.1 million , and in accordance therewith, received term loans in an aggregate principal amount of approximately $956.1 million with a final maturity date in April 2022. Together with other amounts provided by Regal Cinemas, proceeds of the term loans were applied to repay all of the outstanding principal and accrued and unpaid interest on the Term Facility under the Amended Senior Credit Facility. In connection with the execution of the December 2016 Refinancing Agreement, the Company recorded a loss on debt extinguishment of approximately $1.4 million during the quarter ended December 31, 2016.

On June 6, 2017, Regal Cinemas entered into a permitted secured refinancing and incremental joinder agreement (the “June 2017 Refinancing Agreement”) with REH, the guarantors party thereto, Credit Suisse AG and the lenders party thereto. Pursuant to the June 2017 Refinancing Agreement, Regal Cinemas consummated a permitted secured refinancing of the Term Facility, which had an aggregate principal balance of approximately $953.7 million , and in accordance therewith, received term loans in an aggregate principal amount of approximately $953.7 million with a final maturity date in April 2022 (the “Refinanced Term Loans”). Together with other amounts provided by Regal Cinemas, proceeds of the Refinanced Term Loans were applied to repay all of the outstanding principal and accrued and unpaid interest on the existing term facility under the Amended Senior Credit Facility in effect immediately prior to the making of the Refinanced Term Loans.
    
Pursuant to the June 2017 Refinancing Agreement, Regal Cinemas also exercised the “accordion” feature under the Amended Senior Credit Facility to increase the aggregate amount of term loans thereunder by $150.0 million (the “2017 Accordion”). The “accordion” feature provides Regal Cinemas with the option to borrow additional term loans under the Amended Senior Credit Facility in an amount of up to $200.0 million , plus additional amounts as would not cause the consolidated total leverage ratio to exceed 3.00 :1.00, in each case, subject to lenders providing additional commitments for such amounts and the satisfaction of certain other customary conditions. The entire $150.0 million under the 2017 Accordion was fully drawn on June 6, 2017 on the same terms as the Refinanced Term Loans (such amounts drawn, the “Incremental Term Loans”, and together with the Refinanced Term Loans, the “New Term Loans”). A portion of the proceeds of the Incremental Term Loans were used by Regal Cinemas to pay fees and expenses related to the June 2017 Refinancing Agreement, with the remainder used to partially fund the acquisitions described in Note 2—"Acquisitions."
    
The New Term Loans amortize in equal quarterly installments in an aggregate annual amount equal to 1.0% of the original principal amount of the New Term Loans, with the balance payable on the maturity date of the New Term Loans. The June 2017 Refinancing Agreement also amends the Amended Senior Credit Facility by reducing the interest rate on the New Term Loans, by providing, at Regal Cinemas’ option, either a base rate or an adjusted LIBOR rate plus, in each case, an applicable margin. Such applicable margin will be either 1.00% in the case of base rate loans or 2.00% in the case of LIBOR rate loans. The June 2017 Refinancing Agreement also provides for a 1% prepayment premium applicable in the event that Regal Cinemas enters into a refinancing or amendment of the New Term Loans on or prior to the six-month anniversary of the closing of the June 2017 Refinancing Agreement that, in either case, has the effect of reducing the interest rate on the New Term Loans. In connection with the execution of the June 2017 Refinancing Agreement, the Company recorded a loss on debt extinguishment of approximately $1.3 million during the quarter ended June 30, 2017.

No amounts have been drawn on the Revolving Facility. As of September 30, 2017 , we had approximately $2.7 million outstanding in letters of credit, leaving approximately $82.3 million available for drawing under the Revolving Facility. The obligations of Regal Cinemas are secured by, among other things, a lien on substantially all of its tangible and intangible personal property (including but not limited to accounts receivable, inventory, equipment, general intangibles, investment

12

property, deposit and securities accounts, and intellectual property) and certain owned real property. The obligations under the Amended Senior Credit Facility are also guaranteed by certain subsidiaries of Regal Cinemas and secured by a lien on all or substantially all of such subsidiaries’ personal property and certain owned real property pursuant to that certain second amended and restated guaranty and collateral agreement, dated as of May 19, 2010, among Regal Cinemas, certain subsidiaries of Regal Cinemas party thereto and Credit Suisse AG (the “Amended Guaranty Agreement”). The obligations are further guaranteed by Regal Entertainment Holdings, Inc., on a limited recourse basis, with such guaranty being secured by a lien on the capital stock of Regal Cinemas.

Borrowings under the Amended Senior Credit Facility bear interest, at Regal Cinemas’ option, at either a base rate or an adjusted LIBOR rate (as defined in the Amended Senior Credit Facility) plus, in each case, an applicable margin of 1.00% in the case of base rate loans or 2.00% in the case of LIBOR rate loans. Interest is payable (a) in the case of base rate loans, quarterly in arrears, and (b) in the case of LIBOR rate loans, at the end of each interest period, but in no event less often than every 3 months .

As of September 30, 2017 and December 31, 2016 , borrowings of $1,099.9 million (net of debt discount) and $954.7 million (net of debt discount), respectively, were outstanding under the New Term Loans at an effective interest rate of 3.40% (as of September 30, 2017 ) and 3.56% (as of December 31, 2016 ), after the impact of the interest rate swaps described in Note 11—"Derivative Instruments" is taken into account.

For further discussion of the Amended Senior Credit Facility, please refer to Note 5 to the 2016 Audited Consolidated Financial Statements and incorporated by reference herein.

Regal 5 3 / 4 % Senior Notes Due 2022— On March 11, 2014, Regal issued $775.0 million in aggregate principal amount of its 5 3 / 4 % senior notes due 2022 (the “5 3 / 4 % Senior Notes Due 2022”) in a registered public offering. The 5 3 / 4 % Senior Notes Due 2022 bear interest at a rate of 5.75% per year, payable semiannually in arrears on March 15 and September 15 of each year, beginning September 15, 2014. The 5 3 / 4 % Senior Notes Due 2022 will mature on March 15, 2022.

The 5 3 / 4 % Senior Notes Due 2022 are the Company’s senior unsecured obligations and rank equal in right of payment with all of the Company’s existing and future senior unsecured indebtedness and prior to all of the Company’s future subordinated indebtedness. The 5 3 / 4 % Senior Notes Due 2022 are effectively subordinated to all of the Company’s future secured indebtedness to the extent of the value of the collateral securing that indebtedness and structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s subsidiaries. None of the Company’s subsidiaries guaranty any of the Company’s obligations with respect to the 5 3 / 4 % Senior Notes Due 2022.

For further discussion of the 5 3 / 4 % Senior Notes Due 2022, please refer to Note 5 to the 2016 Audited Consolidated Financial Statements and incorporated by reference herein.

Regal 5 3 / 4 % Senior Notes Due 2025— On January 17, 2013, Regal issued $250.0 million in aggregate principal amount of its 5 3 / 4 % senior notes due 2025 (the "5 3 / 4 % Senior Notes Due 2025") in a registered public offering. The 5 3 / 4 % Senior Notes Due 2025 bear interest at a rate of 5.75% per year, payable semiannually in arrears on February 1 and August 1 of each year, beginning August 1, 2013. The 5 3 / 4 % Senior Notes Due 2025 will mature on February 1, 2025.

The 5 3 / 4 % Senior Notes Due 2025 are the Company's senior unsecured obligations. They rank equal in right of payment with all of the Company's existing and future senior unsecured indebtedness and prior to all of the Company's future subordinated indebtedness. The 5 3 / 4 % Senior Notes Due 2025 are effectively subordinated to all of the Company's future secured indebtedness to the extent of the value of the collateral securing that indebtedness and structurally subordinated to all existing and future indebtedness and other liabilities of the Company's subsidiaries. None of the Company's subsidiaries guaranty any of the Company's obligations with respect to the 5 3 / 4 % Senior Notes Due 2025.

For further discussion of the 5 3 / 4 % Senior Notes Due 2025, please refer to Note 5 to the 2016 Audited Consolidated Financial Statements and incorporated by reference herein.    

Regal 5 3 / 4 % Senior Notes Due 2023— On June 13, 2013, Regal issued $250.0 million in aggregate principal amount of its 5 3 / 4 % senior notes due 2023 (the "5 3 / 4 % Senior Notes Due 2023") in a registered public offering. The 5 3 / 4 % Senior Notes Due 2023 bear interest at a rate of 5.75% per year, payable semiannually in arrears on June 15 and December 15 of each year, beginning December 15, 2013. The 5 3 / 4 % Senior Notes Due 2023 will mature on June 15, 2023.


13

The 5 3 / 4 % Senior Notes Due 2023 are the Company’s senior unsecured obligations. They rank equal in right of payment with all of the Company’s existing and future senior unsecured indebtedness and prior to all of the Company’s future subordinated indebtedness. The 5 3 / 4 % Senior Notes Due 2023 are effectively subordinated to all of the Company’s future secured indebtedness to the extent of the value of the collateral securing that indebtedness and structurally subordinated to all existing and future indebtedness and other liabilities of the Company’s subsidiaries. None of the Company’s subsidiaries guaranty any of the Company’s obligations with respect to the 5 3 / 4 % Senior Notes Due 2023.

For further discussion of the 5 3 / 4 % Senior Notes Due 2023, please refer to Note 5 to the 2016 Audited Consolidated Financial Statements and incorporated by reference herein.

Lease Financing Arrangements— These obligations primarily represent lease financing obligations resulting from the requirements of ASC Subtopic 840-40.
 
Other Long-Term Obligations— Other long-term obligations, including capital lease obligations, not explicitly discussed herein are described in Note 5 to the 2016 Audited Consolidated Financial Statements and incorporated by reference herein.

Covenant Compliance— As of September 30, 2017 , we were in full compliance with all agreements, including all related covenants, governing our outstanding debt obligations.
 
5. INCOME TAXES
 
The provision for income taxes of $12.6 million and $29.2 million for the quarters ended September 30, 2017 and September 30, 2016 , respectively, reflect effective tax rates of approximately 52.5% and 40.8% , respectively. The provision for income taxes of $61.3 million and $81.4 million for the three quarters ended September 30, 2017 and September 30, 2016 , respectively, reflect effective tax rates of approximately 42.4% and 41.1% , respectively. The increase in the effective tax rate for the quarter and three quarters ended September 30, 2017 is primarily attributable to the nondeductible goodwill impairment charge of approximately $7.3 million recorded during the quarter ended September 30, 2017 described further in Note 12—"Fair Value of Financial Instruments." The effective tax rates for all periods presented also reflect the impact of certain non-deductible expenses and income tax credits.
 
In assessing the realizable value of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible. The Company has recorded a valuation allowance against deferred tax assets of $23.5 million and $34.5 million as of September 30, 2017 and December 31, 2016, respectively, as management believes it is more likely than not that certain deferred tax assets will not be realized in future tax periods. Future reductions in the valuation allowance associated with a change in management's determination of the Company's ability to realize these deferred tax assets will result in a decrease in the provision for income taxes. During the three quarters ended September 30, 2017 , the valuation allowance was decreased by $11.0 million related to a reduction in certain state net operating losses in connection with the settlement of state tax positions.
    
Total unrecognized tax benefits at September 30, 2017 and December 31, 2016 were $6.2 million and $10.9 million , respectively. The total net unrecognized tax benefits that would affect the effective tax rate if recognized at September 30, 2017 and December 31, 2016 were $3.9 million and $5.4 million , respectively.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits as a component of income tax expense. As of September 30, 2017 and December 31, 2016, the Company has accrued gross interest and penalties of approximately $2.1 million and $1.8 million , respectively.

The Company and its subsidiaries collectively file income tax returns in the U.S. federal jurisdiction and various state and U.S. territory jurisdictions. The Company is not subject to U.S. federal or U.S. Territory examinations before 2014, and with limited exceptions, state examinations before 2012. However, the taxing authorities still have the ability to review the propriety of tax attributes created in closed tax years if such tax attributes are utilized in an open tax year. During the quarter ended September 30, 2017, the Company settled an Internal Revenue Service ("IRS") examination of its 2014 federal income tax return. The settlement did not have a material impact on the Company’s financial statements. Also during the quarter ended September 30, 2017, the Company was notified that the IRS would examine its 2015 federal tax return. The Company is in the process of providing information requested by the IRS with respect to such tax year. As the exam process is in the early stages,

14

the Company has not been notified of any items that are being disputed by the IRS. Management believes that it has provided adequate provision for income taxes relative to the tax year under examination.
   
6. CAPITAL STOCK AND SHARE-BASED COMPENSATION
 
Capital Stock
 
As of September 30, 2017 , the Company’s authorized capital stock consisted of:
 
• 500,000,000 shares of Class A common stock, par value $0.001 per share;
• 200,000,000 shares of Class B common stock, par value $0.001 per share; and
• 50,000,000 shares of preferred stock, par value $0.001 per share.
 
Of the authorized shares of Class A common stock, 18.0 million shares were sold in connection with the Company’s initial public offering in May 2002. The Company’s Class A common stock is listed on the New York Stock Exchange under the trading symbol "RGC." As of September 30, 2017 , 133,307,114 shares of Class A common stock were outstanding. Of the authorized shares of Class B common stock, 23,708,639 shares were outstanding as of September 30, 2017 , all of which are beneficially owned by The Anschutz Corporation ("Anschutz"). Each share of Class B common stock converts into a single share of Class A common stock at the option of the holder or upon certain transfers of a holder’s Class B common stock. Each holder of Class B common stock is entitled to ten votes for each outstanding share of Class B common stock owned by that stockholder on every matter properly submitted to the stockholders for their vote. Of the authorized shares of the preferred stock, no shares were issued and outstanding as of September 30, 2017 . The Class A common stock is entitled to a single vote for each outstanding share of Class A common stock on every matter properly submitted to the stockholders for a vote. Except as required by law, the Class A and Class B common stock vote together as a single class on all matters submitted to the stockholders. The material terms and provisions of the Company's certificate of incorporation affecting the relative rights of the Class A common stock and the Class B common stock are described in Note 9 to the 2016 Audited Consolidated Financial Statements, incorporated by reference herein.

As of September 30, 2017 , Anschutz owned 18,440,000 shares of our issued and outstanding Class A Common Stock, representing approximately 13.8% of our Class A common stock issued and outstanding, which together with the 23,708,639 shares of our Class B common stock owned by Anschutz, represents approximately 69.0% of the combined voting power of the outstanding shares of Class A common stock and Class B common stock as of September 30, 2017 .

Share Repurchase Program

During the quarter ended September 30, 2017, the Company's Board of Directors authorized a share repurchase program, which provided for the authorization of the Company to repurchase up to $50.0 million of its outstanding Class A common stock through the first quarter of 2019. Repurchases can be made at management's discretion from time to time as market conditions warrant, through open market purchases, privately negotiated transactions, or otherwise, in accordance with all applicable securities laws and regulations. Treasury shares are retired upon repurchase. At retirement, the Company records treasury stock purchases at cost with any excess of cost over par value recorded as a reduction of additional paid-in capital. The Company made no repurchases of its outstanding Class A common stock during the quarter ended September 30, 2017.

Warrants
 
No warrants to acquire the Company’s Class A or Class B common stock were outstanding as of September 30, 2017 .

Share-Based Compensation
 
In 2002, the Company established the Regal Entertainment Group Stock Incentive Plan (as amended, the "Incentive Plan"), which provides for the granting of incentive stock options and non-qualified stock options to officers, employees and consultants of the Company. As described below under "Restricted Stock" and "Performance Share Units," the Incentive Plan also provides for grants of restricted stock and performance shares that are subject to restrictions and risks of forfeiture.  Readers should refer to Note 9 to the 2016 Audited Consolidated Financial Statements for additional information related to these awards and the Incentive Plan.
 

15

On May 9, 2012, the stockholders of Regal approved amendments to the Incentive Plan increasing the number of shares of Class A common stock authorized for issuance under the Incentive Plan by a total of 5,000,000 shares and extending the term of the Incentive Plan to May 9, 2022.  As of September 30, 2017 , 3,776,946 shares remain available for future issuance under the Incentive Plan.

Restricted Stock
 
As described further in Note 9 to the 2016 Audited Consolidated Financial Statements, the Incentive Plan also provides for restricted stock awards to officers, directors and key employees. Under the Incentive Plan, shares of Class A common stock of the Company may be granted at nominal cost to officers, directors and key employees, subject to a continued employment/service restriction.  On January 11, 2017, 217,366 restricted shares were granted under the Incentive Plan at nominal cost to officers, directors and key employees.  These awards vest 25% at the end of each year for 4 years (in the case of officers and key employees) and vest 100% at the end of one year (in the case of directors). The closing price of the Company’s Class A common stock on the date of the grant was $22.10 per share. The Company assumed a forfeiture rate of 6% for such restricted stock awards.
 
During the three quarters ended September 30, 2017 , the Company withheld approximately 166,761 shares of restricted stock at an aggregate cost of approximately $3.6 million , as permitted by the applicable equity award agreements, to satisfy employee tax withholding requirements related to the vesting of 493,516 restricted stock awards.  In addition, during the three quarters ended September 30, 2017 , 205,677 performance shares (originally granted on January 8, 2014) were effectively converted to shares of restricted common stock, as threshold performance goals for these awards were satisfied on January 8, 2017, the calculation date. These awards are scheduled to fully vest on January 8, 2018, the one year anniversary of the calculation date.
 
During the quarters ended September 30, 2017 and September 30, 2016 , the Company recognized approximately $1.1 million and $1.2 million , respectively, of share-based compensation expense related to restricted share grants. During the three quarters ended September 30, 2017 and September 30, 2016 , the Company recognized approximately $3.2 million and $3.1 million , respectively, of share-based compensation expense related to restricted share grants.  Such expense is presented as a component of "General and administrative expenses."  The compensation expense for these awards was determined based on the market price of the Company's stock at the date of grant applied to the total numbers of shares that were anticipated to fully vest.  As of September 30, 2017 , we have unrecognized compensation expense of $5.5 million associated with restricted stock awards, which is expected to be recognized through January 11, 2021.
 
The following table represents the restricted stock activity for the three quarters ended September 30, 2017 :
Unvested shares at beginning of period
765,952

Granted during the period
217,366

Vested during the period
(493,516
)
Forfeited during the period
(29,447
)
Conversion of performance shares during the period
205,677

Unvested shares at end of period
666,032

 
During the three quarters ended September 30, 2017 , the Company paid three cash dividends of $0.22 on each share of outstanding restricted stock totaling approximately $0.5 million . During the three quarters ended September 30, 2016 , the Company paid three cash dividends of $0.22 on each share of outstanding restricted stock totaling approximately $0.6 million .
    
Performance Share Units
 
The Incentive Plan also provides for grants in the form of performance share units to officers, directors and key employees. Performance share agreements are entered into between the Company and each grantee of performance share units. 

In 2009, the Company adopted an amended and restated form of performance share agreement (each, a "Performance Agreement" and collectively, the "Performance Agreements").  Pursuant to the terms and conditions of the Performance Agreements, grantees will be issued shares of restricted common stock of the Company in an amount determined by the attainment of Company performance criteria set forth in each Performance Agreement. The shares of restricted common stock received upon attainment of the performance criteria will be subject to further vesting over a period of time, provided the grantee remains a service provider to the Company during such period. On January 11, 2017, 235,356 performance shares were

16

granted under the Incentive Plan at nominal cost to officers and key employees. Under the Performance Agreement, which is described further in the section entitled "Compensation Discussion and Analysis — Elements of Compensation — Performance Shares," of our 2017 proxy statement filed with the Commission on April 10, 2017, each performance share represents the right to receive from 0% to 150% of the target numbers of shares of restricted Class A common stock. The number of shares of restricted common stock earned will be determined based on the attainment of specified performance goals by January 11, 2020 (the third anniversary of the grant date for the January 11, 2017 grant) set forth in the applicable Performance Agreement.  Such performance shares vest on January 11, 2021 (the fourth anniversary of the grant date for the January 11, 2017 grant).  The shares are subject to the terms and conditions of the Incentive Plan. The closing price of the Company’s Class A common stock on the date of the grant was $22.10 per share, which approximates the grant date fair value of the awards.  The Company assumed a forfeiture rate of 9% for such performance share awards.
 
During each of the quarters ended September 30, 2017 and September 30, 2016 , the Company recognized approximately $1.3 million of share-based compensation expense related to performance share grants. During the three quarters ended September 30, 2017 and September 30, 2016 , the Company recognized approximately $3.7 million and $3.5 million , respectively, of share-based compensation expense related to performance share grants. Such expense is presented as a component of "General and administrative expenses."  As of September 30, 2017 , we have unrecognized compensation expense of $7.4 million associated with performance share units, which is expected to be recognized through January 11, 2021. During the three quarters ended September 30, 2017 , 205,677 performance share awards (originally granted on January 8, 2014) were converted to shares of restricted common stock, as threshold performance goals for these awards were satisfied on January 8, 2017, the calculation date.
 
The following table summarizes information about the Company’s number of performance shares for the three quarters ended September 30, 2017 :
Unvested shares at beginning of period
698,709

Granted (based on target) during the period
235,356

Cancelled/forfeited during the period
(28,333
)
Conversion to restricted shares during the period
(205,677
)
Unvested shares at end of period
700,055

 
In connection with the conversion of the above 205,677 performance shares, during the three quarters ended September 30, 2017 , the Company paid cumulative cash dividends of $3.64 (representing the sum of all cash dividends paid from January 8, 2014 through January 8, 2017) on each performance share converted, totaling approximately $0.7 million .  The above table does not reflect the maximum or minimum number of shares of restricted stock contingently issuable. An additional 0.4 million shares of restricted stock could be issued if the performance criteria maximums are met.
 
7. COMMITMENTS AND CONTINGENCIES
 
The Company is presently involved in various judicial, administrative, regulatory and arbitration proceedings concerning matters arising in the ordinary course of business operations, including but not limited to, personal injury claims, landlord-tenant, antitrust, vendor and other third party disputes, tax disputes, employment and other contractual matters, some of which are described below. Many of these proceedings are at preliminary stages, and many of these cases seek an indeterminate amount of damages. The Company's theatre operations are also subject to federal, state and local laws governing such matters as wages, working conditions, citizenship and health and sanitation and environmental protection requirements.

On October 9, 2012, staff at the San Francisco Regional Water Quality Board (the "Regional Board") notified United Artists Theatre Circuit, Inc. (“UATC”), an indirect, wholly owned subsidiary of the Company, that the Regional Board was contemplating issuing a cleanup and abatement order to UATC with respect to a property in Santa Clara, California that UATC owned and then leased during the 1960s and 1970s. On June 25, 2013, the Regional Board issued a tentative order to UATC setting out proposed site clean-up requirements for UATC with respect to the property. According to the Regional Board, the property in question has been contaminated by dry-cleaning facilities that operated at the property in question from approximately 1961 until 1996. The Regional Board also issued a tentative order to the current property owner, who has been conducting site investigation and remediation activities at the site for several years. UATC submitted comments to the Regional Board on July 28, 2013, objecting to the tentative order. The Regional Board considered the matter at its regular meeting on September 11, 2013 and adopted the tentative order with only minor changes. On October 11, 2013, UATC filed a petition with the State Water Resources Control Board (“the State Board”) for review of the Regional Board’s order. The State Board failed to act on the petition and hence by operation of law it was deemed denied, and UATC filed a petition for writ of mandamus with

17

the California Superior Court seeking review and modification of the order. On September 29, 2017, the Superior Court ruled in UATC’s favor and granted its Petition for a Writ of Mandamus challenging the cleanup and abatement order, and remanded the matter to the Regional Board for further proceedings in light of the Superior Court’s opinion. At this point, it is not known whether the Regional Board will appeal the court’s ruling or whether it will attempt to include UATC in a new order upon remand. In either case, UATC intends to continue to vigorously defend this matter. UATC has been cooperating with the Regional Board while it appeals the Regional Board's cleanup and abatement order. To that end, UATC and the current property owner jointly submitted, and on October 27, 2015, the Regional Board approved, a Remedial Action Plan (“RAP”) to remediate the dry-cleaner contamination. We believe that we are, and were during the period in question described in this paragraph, in compliance with such applicable laws and regulations.

On January 28, 2016, Regional Board staff contacted UATC’s counsel in the Santa Clara matter to ascertain whether he would be representing UATC in connection with the cleanup of a drycleaner-impacted property located in Millbrae, California that the Regional Board believes UATC or related entities formerly owned during the dry-cleaning operations. Counsel subsequently responded in the affirmative. The Company has received no further communications from the Regional Board on this matter.

On May 5, 2014, NCM, Inc. announced that it had entered into a merger agreement to acquire Screenvision, LLC ("Screenvision"). On November 3, 2014, the United States Department of Justice (the "DOJ") filed an antitrust lawsuit seeking to enjoin the proposed merger between NCM, Inc. and Screenvision. On March 16, 2015, NCM, Inc. announced that it had agreed with Screenvision to terminate the merger agreement. On March 17, 2015, the Company was notified by the DOJ that it had opened an investigation into potential anticompetitive conduct by and coordination among NCM, Inc., National CineMedia, Regal, AMC and Cinemark (the “DOJ Notice”). In addition, the DOJ Notice requested that the Company preserve all documents and information since January 1, 2011 relating to movie clearances or communications or cooperation between and among AMC, Regal and Cinemark or their participation in NCM. On May 28, 2015, the Company received a civil investigative demand (the “CID”) from the DOJ as part of an investigation into potentially anticompetitive conduct under Sections 1 and 2 of the Sherman Act, 15 U.S.C. § 1 and § 2. The Company has also received investigative demands from the antitrust sections of various state attorneys general regarding movie clearances and Regal's various joint venture investments, including National CineMedia. The CID and various state investigative demands require the Company to produce documents and answer interrogatories. The Company may receive additional investigative demands from the DOJ and state attorneys general regarding these or related matters. The Company continues to cooperate with these investigations and any other related Federal or state investigations to the extent any are undertaken. The DOJ and various state investigations may also give rise to lawsuits filed against the Company related to clearances and the Company’s investments in its various joint ventures. While we do not believe that the Company has engaged in any violation of Federal or state antitrust or competition laws during its participation in NCM and other joint ventures, we can provide no assurances as to the scope, timing or outcome of the DOJ’s or any other state or Federal governmental reviews of the Company’s conduct.

In situations where management believes that a loss arising from judicial, administrative, regulatory and arbitration proceedings 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 amount within the range is more probable than another. As additional information becomes available, any potential liability related to these proceedings is assessed and the estimates are revised, if necessary. The amounts reserved for such proceedings totaled approximately $3.3 million and $3.5 million as of September 30, 2017 and December 31, 2016, respectively. Management believes any additional liability with respect to these claims and disputes will not be material in the aggregate to the Company’s consolidated financial position, results of operations or cash flows. Under ASC Topic 450, Contingencies—Loss Contingencies , an event is "reasonably possible" if "the chance of the future event or events occurring is more than remote but less than likely" and an event is "remote" if "the chance of the future event or events occurring is slight." Thus, references to the upper end of the range of reasonably possible loss for cases in which the Company is able to estimate a range of reasonably possible loss mean the upper end of the range of loss for cases for which the Company believes the risk of loss is more than slight. Management is unable to estimate a range of reasonably possible loss for cases described herein in which damages have not been specified and (i) the proceedings are in early stages, (ii) there is uncertainty as to the likelihood of a class being certified or the ultimate size of the class, (iii) there is uncertainty as to the outcome of pending appeals or motions, (iv) there are significant factual issues to be resolved, and/or (v) there are novel legal issues presented. However, for these cases, management does not believe, based on currently available information, that the outcomes of these proceedings will have a material adverse effect on the Company’s financial condition, though the outcomes could be material to the Company’s operating results for any particular period, depending, in part, upon the operating results for such period.

Our theatres must comply with Title III of the Americans with Disabilities Act of 1990 (the "ADA") to the extent that such properties are "public accommodations" and/or "commercial facilities" as defined by the ADA. Compliance with the ADA

18

requires that public accommodations "reasonably accommodate" individuals with disabilities and that new construction or alterations made to "commercial facilities" conform to accessibility guidelines unless "structurally impracticable" for new construction or technically infeasible for alterations. Non-compliance with the ADA could result in the imposition of injunctive relief, fines, awards of damages to private litigants and additional capital expenditures to remedy such non-compliance. The Company believes that it is in substantial compliance with all current applicable regulations relating to accommodations for the disabled. The Company intends to comply with future regulations in this regard and except as set forth above, does not currently anticipate that compliance will require the Company to expend substantial funds.
 
8. RELATED PARTY TRANSACTIONS

During each of the quarters ended September 30, 2017 and September 30, 2016 , Regal Cinemas received less than $0.1 million from an Anschutz affiliate for rent and other expenses related to a theatre facility. During the three quarters ended September 30, 2017 and September 30, 2016 , Regal Cinemas received approximately $0.2 million and $0.1 million , respectively, from an Anschutz affiliate for rent and other expenses related to a theatre facility.
 
During each of the quarters ended September 30, 2017 and September 30, 2016 , the Company received approximately $0.1 million from an Anschutz affiliate for management fees related to a theatre site in Los Angeles, California. During each of the three quarters ended September 30, 2017 and September 30, 2016 , the Company received approximately $0.5 million from an Anschutz affiliate for management fees related to a theatre site in Los Angeles, California.

Please also refer to Note 3—"Investments" for a discussion of other related party transactions associated with our various investments in non-consolidated entities.
 
9. EARNINGS PER SHARE
 
We compute earnings per share of Class A and Class B common stock using the two-class method.  Basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common shares and, if dilutive, common stock equivalents outstanding during the period. Potential common stock equivalents consist of the incremental common shares issuable upon the vesting of restricted stock and performance share units. The dilutive effect of outstanding restricted stock and performance share units is reflected in diluted earnings per share by application of the treasury-stock method. In addition, the computation of the diluted earnings per share of Class A common stock assumes the conversion of Class B common stock, while the diluted earnings per share of Class B common stock does not assume the conversion of those shares.
    
The rights, including the liquidation and dividend rights, of the holders of our Class A and Class B common stock are identical, except with respect to voting. The earnings for the periods presented are allocated based on the contractual participation rights of the Class A and Class B common shares. As the liquidation and dividend rights are identical, the earnings are allocated on a proportionate basis. Further, as we assume the conversion of Class B common stock in the computation of the diluted earnings per share of Class A common stock, the earnings are equal to net income attributable to controlling interest for that computation.
    

19

The following table sets forth the computation of basic and diluted earnings per share of Class A and Class B common stock (in millions, except share and per share data):
 
Quarter Ended
September 30, 2017
 
Quarter Ended
September 30, 2016
 
Three Quarters Ended
September 30, 2017
 
Three Quarters Ended
September 30, 2016
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
Basic earnings per share:
 

 
 

 
 
 
 
 
 

 
 

 
 
 
 

Numerator:
 

 
 

 
 

 
 

 
 

 
 

 
 
 
 
Allocation of earnings
$
9.7

 
$
1.7

 
$
35.9

 
$
6.4

 
$
70.8

 
$
12.6

 
$
98.8

 
$
17.7

Denominator:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding (in thousands)
132,641

 
23,709

 
132,314

 
23,709

 
132,623

 
23,709

 
132,286

 
23,709

Basic earnings per share
$
0.07

 
$
0.07

 
$
0.27

 
$
0.27

 
$
0.53

 
$
0.53

 
$
0.75

 
$
0.75

Diluted earnings per share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Allocation of earnings for basic computation
$
9.7

 
$
1.7

 
$
35.9

 
$
6.4

 
$
70.8

 
$
12.6

 
$
98.8

 
$
17.7

Reallocation of earnings as a result of conversion of Class B to Class A shares
1.7

 
—

 
6.4

 
—

 
12.6

 
—

 
17.7

 
—

Reallocation of earnings to Class B shares for effect of other dilutive securities
—

 
—

 
—

 
—

 
—

 
—

 
—


(0.1
)
Allocation of earnings
$
11.4

 
$
1.7

 
$
42.3

 
$
6.4

 
$
83.4

 
$
12.6

 
$
116.5

 
$
17.6

Denominator:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares used in basic computation (in thousands)
132,641

 
23,709

 
132,314

 
23,709

 
132,623

 
23,709

 
132,286

 
23,709

Weighted average effect of dilutive securities (in thousands)
 
 
 
 
 
 
 
 
 

 
 

 
 

 
 

Add:
 
 
 
 
 
 
 
 
 

 
 

 
 

 
 

Conversion of Class B to Class A common shares outstanding
23,709

 
—

 
23,709

 
—

 
23,709

 
—

 
23,709

 
—

Restricted stock and performance shares
528

 
—

 
841

 
—

 
623

 
—

 
764

 
—

Number of shares used in per share computations (in thousands)
156,878

 
23,709

 
156,864

 
23,709

 
156,955

 
23,709

 
156,759

 
23,709

Diluted earnings per share
$
0.07

 
$
0.07

 
$
0.27

 
$
0.27

 
$
0.53

 
$
0.53

 
$
0.74

 
$
0.74


10. RECENT ACCOUNTING PRONOUNCEMENTS
 
Adoption of New Accounting Pronouncements

In March 2016, the FASB issued ASU 2016-07, Investments – Equity Method and Joint Ventures (Topic 323) . The purpose of ASU 2016-07 is to eliminate the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment was held. ASU 2016-07 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years and early adoption is permitted. The Company's adoption of ASU 2016-07 during the quarter ended March 31, 2017 had no impact on the Company's consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , which relates to the accounting for employee share-based payments. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including the income tax

20

consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years and early adoption is permitted. The Company's adoption of ASU 2016-09 had the impact of reducing income tax expense by approximately $1.3 million pertaining to excess tax benefits related to vesting of 493,516 restricted stock awards and to a lesser extent, dividends paid on restricted stock during the three quarters ended September 30, 2017. Historically, such excess tax benefits would have been recorded as a component of additional paid-in capital.

In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control , which requires when assessing which party is the primary beneficiary in a VIE, the decision maker considers interests held by entities under common control on a proportionate basis instead of treating those interests as if they were that of the decision maker itself, as current U.S. GAAP requires.  ASU 2016-17 is effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years and early adoption is permitted. The Company's adoption of ASU 2016-17 during the quarter ended March 31, 2017 had no impact on the Company's consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . The purpose of ASU 2017-04 is to simplify the subsequent measurement of goodwill by removing the second step of the two-step impairment test. The amendment should be applied on a prospective basis. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, including interim periods within that year. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company early adopted ASU 2017-04 in connection with its interim goodwill impairment test performed during the quarter ended September 30, 2017 as further described in Note 12—"Fair Value of Financial Instruments."
 
Recently Issued FASB Accounting Standard Codification Updates

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers , 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. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or modified retrospective transition method. ASU 2014-09 was originally effective for annual and interim reporting periods beginning after December 15, 2016. However, the standard was deferred by ASU 2015-14, issued by the FASB in August 2015, and is now effective for fiscal years beginning on or after December 15, 2017, including interim reporting periods within that reporting period, with early adoption permitted as of the original effective date. In addition, amendments in subsequent Accounting Standards Updates have either clarified or revised guidance as set forth in ASU 2014-09, including ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus
Agent Considerations (Reporting Revenues Gross versus Net) , ASU 2016-10, Revenue from Contracts with Customers : Identifying Performance Obligations and Licensing and ASU 2016-12, Revenue from Contracts with Customers: Narrow-Scope Improvements and Practical Expedients. The Company has selected the modified retrospective method for adoption of ASU 2014-09 and its related ASU amendments. Under this method, we will recognize the cumulative effect of the changes in retained earnings at the date of adoption (January 1, 2018), but will not restate prior periods.

The Company believes that the adoption of ASU 2014-09 and its related ASU amendments will primarily impact its accounting for its (i) loyalty program, (ii) gift cards and bulk tickets, including commissions paid to third parties, (iii) customer incentives, (iv) the classification of internet ticketing surcharges and (v) amounts recorded as deferred revenue and the method of amortization for the advanced payment received in connection with the 2007 National CineMedia ESA modification and subsequent receipts of common units of National CineMedia pursuant to the provisions of the Common Unit Adjustment Agreement. While we do not believe the adoption of ASU 2014-09 will have a material impact on our net income or cash flows from operations, we do expect the standard to materially impact the timing and classification of revenues and related expenses in the following key areas:

•
First, we believe the advanced payment received in connection with the 2007 National CineMedia ESA modification and subsequent receipts of common units of National CineMedia pursuant to the provisions of the Common Unit Adjustment Agreement, each as described in Note 3—"Investments," include a significant financing component under ASU 2014-09 and expect that as a result, advertising revenues will increase materially with a similar offsetting increase in non-cash interest expense beginning in fiscal year 2018. C urrently, the Company utilizes the units of revenue method to amortize such amounts and will change its amortization to a straight-line method under ASU 2014-09. We do not expect these changes to have a material impact on our net income or cash flows from operations.

21


•
Second, under ASU 2014-09, the Company expects to record internet ticketing surcharge fees based on the gross transaction price as opposed to current accounting where we record such fees net of third-party commission or service fees. This change will have the effect of materially increasing other operating revenues and other operating expenses, but will have no impact on net income or cash flows from operations.

•
Third, with respect to our gift card and bulk ticket programs, the adoption of ASU 2014-09 is not expected to have a material impact on the annual revenue we currently recognize from these programs, but it will change the method in which we recognize revenue from gift cards and bulk tickets. The Company currently recognizes revenue associated with gift cards and bulk tickets when redeemed, or when the likelihood of redemption becomes remote. We currently recognize unredeemed gift cards and bulk tickets as revenue (known as "breakage" in our industry) based on historical experience, when the likelihood of redemption is remote. Under ASU 2014-09, the Company expects to recognize revenue from unredeemed gift cards and bulk tickets following the proportional method where revenue is recognized in proportion to the pattern of rights exercised by the customer when the Company expects to be entitled to breakage and that it is probable that a significant revenue reversal would not occur for any estimated breakage amounts. With respect to gift card commissions paid to third parties, under ASU 2014-09, the Company will begin to amortize the commission fees over the expected redemption period as opposed to current accounting where such gift card commissions are expensed as incurred. We do not expect these changes to have a material impact on our net income or cash flows from operations.
  
•
Finally, with respect to other areas impacted by ASU 2014-09 such as our loyalty program and customer incentives, we do not expect those accounting changes to have a material impact on our net income or cash flows from operations.

The Company is currently finalizing its review of ASU 2014-09 and its related ASU amendments to determine necessary adjustments to existing accounting policies and to support an evaluation of the overall impact on the Company’s consolidated results of operations and financial condition.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . ASU 2016-02 establishes a right-of-use ("ROU") model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is evaluating the impact that ASU 2016-02 will have on its consolidated financial statements and related disclosures and believes that the significance of its future minimum rental payments will result in a material increase in ROU assets and lease liabilities.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments . The purpose of ASU 2016-15 is to reduce the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within that year. The Company is evaluating the impact that ASU 2016-15 will have on its consolidated financial statements and related disclosures.

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory , which requires that an entity recognize the income tax consequences of intra-entity transfers of assets other than inventory at the time of the transfer instead of deferring the tax consequences until the asset has been sold to an outside party, as current U.S. GAAP requires. ASU 2016-16 is effective for annual periods, and interim periods therein, beginning after December 15, 2017. Early application is permitted in any interim or annual period. The Company is evaluating the impact that ASU 2016-16 will have on its consolidated financial statements and related disclosures.

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business . The purpose of ASU 2017-01 is to clarify the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for fiscal years beginning after December 15, 2017, including interim periods within that year. The amendments in ASU 2017-01 should be applied prospectively on or after the effective date. Early adoption is permitted. The Company does not expect that the adoption of ASU 2017-01 will have a material impact on its consolidated financial statements and related disclosures.

22


In August 2017, the FASB issued ASU 2017-12,  Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities , which is intended to simplify and amend the application of hedge accounting to more clearly portray the economics of an entity’s risk management strategies in its financial statements. ASU 2017-12 also amends the presentation and disclosure requirements and changes how entities assess hedge effectiveness. The effective date of the new standard for public companies is for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition with a cumulative effect adjustment recorded to opening retained earnings as of the initial adoption date.  The Company is evaluating the impact that ASU 2017-12 will have on its consolidated financial statements and related disclosures.

11. DERIVATIVE INSTRUMENTS
    
From time to time, Regal Cinemas enters into hedging relationships via interest rate swap agreements to hedge against interest rate exposure of its variable rate debt obligations under the Amended Senior Credit Facility. Certain of these interest rate swaps qualify for cash flow hedge accounting treatment, and as such, the change in the fair values of the interest rate swaps is recorded on the Company's consolidated balance sheet as an asset or liability with the effective portion of the interest rate swaps' gains or losses reported as a component of other comprehensive income and the ineffective portion reported in earnings. As interest expense is accrued on the debt obligation, amounts in accumulated other comprehensive income/loss related to the interest rate swaps will be reclassified into earnings. In the event that an interest rate swap is terminated or de-designated prior to maturity, gains or losses accumulated in other comprehensive income or loss remain deferred and are reclassified into earnings in the periods during which the hedged forecasted transaction affects earnings. See Note 12—"Fair Value of Financial Instruments" for discussion of the Company’s interest rate swaps’ fair value estimation methods and assumptions.
        
Below is a summary of Regal Cinemas' current interest rate swap agreements as of September 30, 2017 :
Nominal Amount
 
Effective Date
 
Fixed Rate
 
Receive Rate
 
Expiration Date
Designated as Cash Flow Hedge
Gross Fair Value at September 30, 2017
Balance Sheet Location
$200.0 million
 
June 30, 2015
 
2.165%
 
1-month LIBOR
 
June 30, 2018
No
$(1.2) million
See Note 12
$250.0 million
 
June 30, 2018
 
1.908%
 
1-month LIBOR
 
June 30, 2022
Yes
$0.4 million
See Note 12
$200.0 million
 
December 31, 2018
 
1.900%
 
1-month LIBOR
 
December 31, 2021
Yes
$0.4 million
See Note 12

On April 2, 2015, Regal Cinemas amended two of its existing interest rate swap agreements originally designated as cash flow hedges on $350.0 million of variable rate debt obligations. Since the terms of the interest rate swaps designated in the original cash flow hedge relationships changed with these amendments, we de-designated the original hedge relationships and re-designated the amended interest rate swaps in new cash flow hedge relationships as of the amendment date of April 2, 2015. On December 31, 2016, one of these interest rate swap agreements designated to hedge $150.0 million of variable rate debt obligations expired.

In connection with the June 2017 Refinancing Agreement described further in Note 4—"Debt Obligations,” no amendment or modification was made to the Company's interest swap agreement expiring on June 30, 2018 (originally designated to hedge $200.0 million of variable rate debt obligations). As a result, the interest rate swap no longer met the highly effective qualification for cash flow hedge accounting and accordingly, the remaining hedge relationship was de-designated effective June 6, 2017. Since the interest rate swap no longer qualifies for cash flow hedge accounting treatment, the change in its fair value since de-designation is recorded on the Company’s unaudited condensed consolidated balance sheet as an asset or liability with the interest rate swap's gain or loss reported as a component of interest expense during the period of change. We estimate that $0.9 million of deferred pre-tax losses attributable to this interest rate swap will be reclassified into earnings as interest expense through June 30, 2018 as the underlying hedged transaction occurs.

As detailed in the table above, on August 9, 2017, Regal Cinemas entered into two additional hedging relationships via two distinct interest rate swap agreements with effective dates beginning on June 30, 2018 and December 31, 2018 and maturity terms ending on June 30, 2022 and December 31, 2021, respectively. These swaps were designated as cash flow hedges and will require Regal Cinemas to pay interest at fixed rates ranging from 1.90% to 1.908% and receive interest at a variable rate. The interest rate swaps are designated to hedge $450.0 million of variable rate debt obligations.


23

The following tables show the effective portion of gains and losses on derivative instruments designated and qualifying in cash flow hedges recognized in other comprehensive income (loss), and amounts reclassified from accumulated other comprehensive loss to interest expense for the periods indicated (in millions):

 
 
Pre-tax Gain (Loss) Recognized in Other Comprehensive Income (Loss) (Effective Portion)
 
 
Quarter Ended
September 30, 2017
Quarter Ended
September 30, 2016
Three Quarters Ended
September 30, 2017
Three Quarters Ended
September 30, 2016
Derivatives designated as cash flow hedges:
 
 
 
 
 
Interest rate swaps
 
$
0.7

$
(0.6
)
$
(0.1
)
$
(4.1
)

 
 
Pre-tax Amounts Reclassified from Accumulated Other Comprehensive Loss into Interest Expense, net
 
 
Quarter Ended
September 30, 2017
Quarter Ended
September 30, 2016
Three Quarters Ended
September 30, 2017
Three Quarters Ended
September 30, 2016
Derivatives designated as cash flow hedges:
 
 
 
 
 
Interest rate swaps
 
$
0.4

$
1.5

$
2.3

$
4.9


The changes in accumulated other comprehensive loss, net associated with the Company’s interest rate swap arrangements for the quarters and three quarters ended September 30, 2017 and September 30, 2016 were as follows (in millions):
 
 
Interest Rate Swaps
 
 
Quarter Ended
September 30, 2017
 
Quarter Ended
September 30, 2016
Accumulated other comprehensive loss, net, beginning of period
 
$
(0.7
)
 
$
(2.8
)
Change in fair value of interest rate swap transactions (effective portion), net of taxes of $0.3 and $0.2, respectively
 
0.4

 
(0.4
)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of taxes of $0.2 and $0.6, respectively
 
0.2

 
0.9

Accumulated other comprehensive loss, net, end of period
 
$
(0.1
)
 
$
(2.3
)
    
 
 
Interest Rate Swaps
 
 
Three Quarters Ended
September 30, 2017
 
Three Quarters Ended
September 30, 2016
Accumulated other comprehensive loss, net, beginning of period
 
$
(1.4
)
 
$
(2.7
)
Change in fair value of interest rate swap transactions (effective portion), net of taxes of $0 and $1.6, respectively
 
(0.1
)
 
(2.5
)
Amounts reclassified from accumulated other comprehensive loss to interest expense, net of taxes of $0.9 and $2.0, respectively
 
1.4

 
2.9

Accumulated other comprehensive loss, net, end of period
 
$
(0.1
)
 
$
(2.3
)
    
The following table sets forth the effect of our interest rate swap arrangements on our unaudited condensed statements of income for the quarters and three quarters ended September 30, 2017 and September 30, 2016 (in millions):

24

 
 
Pre-tax Gain (Loss) Recognized in Interest Expense, net
 
 
Quarter Ended
September 30, 2017
Quarter Ended
September 30, 2016
Three Quarters Ended
September 30, 2017
Three Quarters Ended
September 30, 2016
Derivatives designated as cash flow hedges (ineffective portion):
 
 
 
 
 
Interest rate swaps(1)
 
$
—

$
0.5

$
0.7

$
2.0

 
 
 
 
 
 
Derivatives not  designated as cash flow hedges:
 
 
 
 
 
Interest rate swap(2)
 
$
0.4

$
—

$
0.6

$
—

 ________________________________
(1)
Amounts represent the ineffective portion of the change in fair value of the hedging derivatives and are recorded as a reduction of interest expense in the consolidated financial statements.
(2)
Amounts represent the change in fair value of the former hedging derivative and is recorded as a reduction of interest expense in the consolidated financial statements subsequent to the de-designation date of June 6, 2017.

12. FAIR VALUE OF FINANCIAL INSTRUMENTS
 
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. 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 fair value. 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 described in ASC Topic 820, Fair Value Measurements and Disclosures:
 
Level 1 Inputs:                                Quoted market prices in active markets for identical assets or liabilities.
 
Level 2 Inputs:                                Observable market based inputs or unobservable inputs that are corroborated by market data.
 
Level 3 Inputs:                                Unobservable inputs that are not corroborated by market data.


The following tables summarize the fair value hierarchy of the Company’s financial assets and liabilities carried at fair value on a recurring basis as of September 30, 2017 and December 31, 2016:
 
 
 
 
Fair Value Measurements at September 30, 2017 
 
Balance Sheet Location
Total Carrying
Value at
September 30, 2017
 
Quoted prices in
active market
(Level 1)
 
Significant other
observable inputs
(Level 2)
 
Significant
unobservable inputs
(Level 3)
 
 
(in millions)
Assets:
 
 

 
 

 
 

 
 

Interest rate swaps designated as cash flow hedges (1)
Other Non-Current Assets
$
0.9

 
$
—

 
$
0.9

 
$
—

Total assets at fair value
 
$
0.9

 
$
—

 
$
0.9

 
$
—

Liabilities:
 
 

 
 

 
 

 
 

Interest rate swap designated as cash flow hedge(1)
Accrued Expenses
$
0.1

 
$
—

 
$
0.1

 
$
—

Interest rate swap not  designated as cash flow hedge (1)
Accrued Expenses
$
1.2

 
$
—

 
$
1.2

 
$
—

Total liabilities at fair value
 
$
1.3

 
$
—

 
$
1.3

 
$
—




25

 
 
Total Carrying
Value at
December 31, 2016
 
Fair Value Measurements at December 31, 2016
 
Balance Sheet Location
Quoted prices in
active market
(Level 1)
 
Significant other
observable inputs
(Level 2)
 
Significant
unobservable inputs
(Level 3)
 
 
 
 
(in millions)
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
 
Interest rate swap designated as cash flow hedge(1)
Accrued Expenses
$
2.3

 
$
—

 
$
2.3

 
$
—

Interest rate swap designated as cash flow hedge(1)
Other Non-Current Liabilities
$
0.7

 
$
—

 
$
0.7

 
$
—

Total liabilities at fair value
 
$
3.0

 
$
—

 
$
3.0

 
$
—

 ________________________________
(1)
The fair value of the Company’s interest rate swaps described in Note 11—"Derivative Instruments" is based on Level 2 inputs, which include observable inputs such as dealer quoted prices for similar assets or liabilities, and represents the estimated amount Regal Cinemas would receive or pay to terminate the agreement taking into consideration various factors, including current interest rates, credit risk and counterparty credit risk. The counterparty to the Company’s interest rate swaps is a major financial institution. The Company evaluates the bond rating of the financial institution and believes that credit risk is at an acceptably low level.
 
There were no changes in valuation techniques during the period.  There were no transfers in or out of Level 3 during the three quarters ended September 30, 2017 and September 30, 2016 , respectively.
 
In addition, the Company is required to disclose the fair value of financial instruments that are not recognized in the statement of financial position for which it is practicable to estimate that value. The methods and assumptions used to estimate the fair value of each class of financial instrument are as follows:
 
Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities:
 
The carrying amounts approximate fair value because of the short maturity of these instruments.
 
Long-Lived Assets, Intangible Assets and Other Investments
 
As further described in Note 2 to the 2016 Audited Consolidated Financial Statements and incorporated by reference herein, the Company regularly reviews long-lived assets (primarily property and equipment), intangible assets and investments in non-consolidated entities, for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may not be fully recoverable. When the estimated fair value is determined to be lower than the carrying value of the asset, an impairment charge is recorded to write the asset down to its estimated fair value.
 
The Company’s analysis relative to long-lived assets resulted in the recording of impairment charges of $7.0 million and $6.4 million , respectively, for the three quarters ended September 30, 2017 and September 30, 2016 .  The long-lived asset impairment charges recorded were specific to theatres that were directly and individually impacted by increased competition, adverse changes in market demographics or adverse changes in the development or the conditions of the areas surrounding the theatres we deemed other than temporary.

The Company evaluates goodwill for impairment annually or more frequently as specific events or circumstances dictate. After considering various industry specific factors, the Company conducted an interim goodwill impairment assessment during the quarter ended September 30, 2017, which indicated that the carrying value of one of its reporting units exceeded its estimated fair value. As a result, the Company recorded a goodwill impairment charge of approximately $7.3 million . Also, during the quarter ended September 30, 2017, the Company recorded a favorable lease impairment charge of approximately $1.4 million related to a theatre scheduled to be closed. The Company did not record an impairment of any other intangible assets or investments in non-consolidated subsidiaries accounted for under the equity method for the quarters and three quarters ended September 30, 2017 and September 30, 2016 .

Long term obligations, excluding capital lease obligations, lease financing arrangements and other:
 
The fair value of the Amended Senior Credit Facility described in Note 4—"Debt Obligations," which consists of the New Term Loans and the Revolving Facility, is estimated based on quoted prices (Level 2 inputs as described in ASC Topic 820) as of September 30, 2017 and December 31, 2016 . The associated interest rates are based on floating rates identified by

26

reference to market rates and are assumed to approximate fair value. The fair values of the 5 3 / 4 % Senior Notes Due 2022, the 5 3 / 4 % Senior Notes Due 2025 and the 5 3 / 4 % Senior Notes Due 2023 were estimated based on quoted prices (Level 1 inputs as described in ASC Topic 820) for these issuances as of September 30, 2017 and December 31, 2016 . The aggregate carrying values and fair values of long-term debt at September 30, 2017 and December 31, 2016 consist of the following:
        
 
September 30, 2017
 
December 31, 2016
 
(in millions)
Carrying value
$
2,374.9

 
$
2,229.7

Fair value
$
2,406.0

 
$
2,287.1


13. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS), NET
 
The following tables present for the three quarters ended September 30, 2017 and September 30, 2016 , respectively, the change in accumulated other comprehensive loss, net of tax, by component (in millions):
 
Interest rate swaps
 
Equity method investee interest rate swaps
 
Total
Balance as of December 31, 2016
$
(1.4
)
 
$
0.1

 
$
(1.3
)
Other comprehensive income (loss), net of tax
 
 
 
 
 
Change in fair value of interest rate swap transaction
(0.1
)
 
—

 
(0.1
)
Amounts reclassified to net income from interest rate swap
1.4

 
—

 
1.4

Change in fair value of equity method investee interest rate swaps
—

 
0.1

 
0.1

Total other comprehensive income (loss), net of tax
1.3

 
0.1

 
1.4

Balance as of September 30, 2017
$
(0.1
)
 
$
0.2

 
$
0.1


 
Interest rate swaps
 
Available for sale securities
 
Equity method investee interest rate swaps
 
Total
Balance as of December 31, 2015
$
(2.7
)
 
$
0.5

 
$
0.1

 
$
(2.1
)
Other comprehensive income (loss), net of tax
 
 
 
 
 
 
 
Change in fair value of interest rate swap transactions
(2.5
)
 
—

 
—

 
(2.5
)
Amounts reclassified to net income from interest rate swaps
2.9

 
—

 
—

 
2.9

Reclassification adjustment for gain on sale of available for sale securities recognized in net income
—

 
(0.5
)
 
—

 
(0.5
)
Change in fair value of equity method investee interest rate swaps
—

 
—

 
(0.5
)
 
(0.5
)
Total other comprehensive income (loss), net of tax
0.4

 
(0.5
)
 
(0.5
)
 
(0.6
)
Balance as of September 30, 2016
$
(2.3
)
 
$
—

 
$
(0.4
)
 
$
(2.7
)

14. SUBSEQUENT EVENTS

Declaration of Quarterly Dividend

On October 24, 2017 , the Company declared a cash dividend of $0.22 per share on each share of the Company’s Class A and Class B common stock (including outstanding restricted stock), payable on December 15, 2017 , to stockholders of record on December 4, 2017 .

Amended and Restated Performance Share Agreements and Amended and Restated Employment Agreements

Based on the recommendations of the Compensation Committee of the Board of Directors and our outside compensation consultant, Pay Governance, the Company amended and restated the Performance Agreements to amend the

27

number of shares of Common Stock that are to be vested in the event of termination of employment upon death, disability or a change of control. The changes to the Performance Agreements will apply to all existing performance share grants as well as any future performance share grants.  Contemporaneously with the amendment and restatement of the Performance Agreements, the Board of Directors approved changes to the employment agreements with our named executive officers.   
        

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Some of the information in this quarterly report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts included in this Form 10-Q, including, without limitation, certain statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, may constitute forward-looking statements. In some cases you can identify these “forward-looking statements” by words like “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of those words and other comparable words. These forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those indicated in these statements as a result of certain factors as more fully discussed under the heading “Risk Factors” contained in our annual report on Form 10-K filed on February 27, 2017 with the Commission (File No. 001-31315) for the Company’s fiscal year ended December 31, 2016 (our "Form 10-K"). The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included herein.

Overview and Basis of Presentation
 
We conduct our operations through our wholly owned subsidiaries. We operate one of the largest and most geographically diverse theatre circuits in the United States, consisting of 7,315 screens in 561 theatres in 43 states along with Guam, Saipan, American Samoa and the District of Columbia as of September 30, 2017 . We believe the size, reach and quality of our theatre circuit provide an exceptional platform to realize economies of scale from our theatre operations. The Company manages its business under one reportable segment: theatre exhibition operations.

We generate revenues primarily from admissions and concession sales. Additional revenues are generated by our vendor marketing programs, our gift card and bulk ticket programs, various other activities in our theatres and through our relationship with National CineMedia, which focuses on in-theatre advertising. Film rental costs depend primarily on the popularity and box office revenues of a film, and such film rental costs generally increase as the admissions revenues generated by a film increase. Because we purchase certain concession items, such as fountain drinks and popcorn, in bulk and not pre-packaged for individual servings, we are able to maximize our margins by negotiating volume discounts. Other operating expenses consist primarily of theatre labor and occupancy costs.

The timing of movie releases can have a significant effect on our results of operations, and the results of one fiscal quarter are not necessarily indicative of results for the next fiscal quarter or any other fiscal quarter. The unexpected emergence of a hit film during other periods can alter the traditional trend. The seasonality of motion picture exhibition, however, has become less pronounced as motion picture studios are releasing motion pictures somewhat more evenly throughout the year. The Company does not believe that inflation has had a material impact on its financial position or results of operations.
 
For a summary of industry trends as well as other risks and uncertainties relevant to the Company, see "Business—Industry Overview and Trends" and "Risk Factors" contained in our Form 10-K and incorporated herein by reference and "Results of Operations" below.

Critical Accounting Estimates
 
For a discussion of accounting policies that we consider critical to our business operations and the understanding of our results of operations and affect the more significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements, please refer to Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates" contained in our Form 10-K and incorporated by reference herein.  As of September 30, 2017 , there were no significant changes in our critical accounting policies or estimation procedures.




28
Table of Contents

Significant Events
 
For a discussion of other significant operating, financing and investing transactions which have occurred through December 31, 2016 , please refer to "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources" included in Part II, Item 7 of our Form 10-K and incorporated herein by reference.
 
Our business strategy is predicated on our ability to allocate capital effectively to enhance value for our stockholders. This strategy focuses on enhancing our position in the motion picture exhibition industry by capitalizing on prudent industry consolidation and partnership opportunities, managing, expanding and upgrading our existing asset base with new technologies and customer amenities and realizing selective growth opportunities through new theatre construction. Our business strategy should enable us to continue to produce the free cash flow necessary to maintain a prudent allocation of our capital among dividend payments, debt service and repayment and investment in our theatre assets, all to provide meaningful value to our stockholders. During the three quarters ended September 30, 2017 (the "Fiscal 2017 Period"), we continued to make progress with respect to our business strategy as follows:
 
•
We demonstrated our commitment to providing incremental value to our stockholders.  Total cash dividends paid to our stockholders during the Fiscal 2017 Period totaled approximately $104.4 million . In addition, during the Fiscal 2017 Period , the Company's Board of Directors authorized a share repurchase program, which provided for the authorization to repurchase up to $50.0 million of the Company's outstanding Class A common stock through the first quarter of 2019. The Company made no repurchases of its outstanding Class A common stock during the Fiscal 2017 Period .

•
We continued to embrace innovative concepts that generate incremental revenue and cash flows for the Company and deliver a premium movie-going experience for our customers on several complementary fronts:

◦
First, we continued to improve customer amenities, primarily through the installation of luxury reclining seats. With respect to our luxury reclining seating initiative, as of September 30, 2017 , we offered luxury reclining seating in 1,833 auditoriums at 151 theatre locations. We expect to install luxury reclining seating in approximately 40-45 locations during 2017 and expect to outfit approximately 45% of the total screens in our circuit by the end of 2019. The costs of these conversions in some cases are partially covered by investments from our theatre landlords.

◦
Second, to address consumer trends and customer preferences, we have continued to expand our menu of food and alcoholic beverage products to an increasing number of attendees. The enhancement of our food and alcoholic beverage offerings has had a positive effect on our operating results, and we expect to continue to invest in such offerings in our theatres. As of September 30, 2017 , we offered an expanded menu of food in 255 locations (reaching 59% of our attendees) and alcoholic beverages in 172 locations (reaching 36% of our attendees), and we expect to offer an expanded menu of food in approximately 270 locations and alcoholic beverages in approximately 200 locations by the end of 2017.

◦
Third, we continued to implement various customer engagement initiatives aimed at delivering a premium movie-going experience for our customers in order to better compete for patrons and build brand loyalty. For example, we maintain a frequent moviegoer loyalty program, named the Regal Crown Club®, to actively engage our core customers. Regal Crown Club® members are eligible for specified awards, such as concession items, based on purchases made at our theatres. During 2016, we completed the national rollout of the new Regal Crown Club®. Members of the enhanced program can earn unlimited credits and can redeem such credits for movie tickets, concession items and movie memorabilia at the theatre or in an online reward center where members can select the rewards of their choice. We believe these changes allow us to offer more relevant offers to our members and increase customer engagement in the program. As of September 30, 2017 , approximately 14.2 million members swiped their Regal Crown Club® card in the previous 18 months. The Regal Crown Club® is the largest loyalty program in our industry.

◦
I n addition, we continued to develop and enhance other customer engagement initiatives such as mobile ticketing applications, internet ticketing, social media and other marketing initiatives. For example, we have improved the customer experience by expanding our ability to sell tickets remotely via our mobile ticketing application, which was officially launched in the Fiscal 2017 Period, and through our internet ticketing partners such as Fandango.com and Atom Tickets. Customers can choose their preferred ticketing option, which in many cases means they can pre-purchase tickets, scan their mobile device and

29
Table of Contents

proceed directly to their reserved seat without waiting in line. In addition to providing customers the ability to pre-purchase tickets, our mobile ticketing application provides customers the ability to find films, movie information, showtimes, track Regal Crown Club® credits and receive special offers from Regal. Finally, our newest ticketing partner, Atom Tickets, provides our patrons the ability to bypass concession stand lines by pre-purchasing concession items via their mobile device. We believe these technologies provide a platform for delivering a quality customer experience and will drive incremental revenues and cash flows in a cost-effective manner.

•
We continued to actively manage our asset base during the Fiscal 2017 Period by completing the acquisitions of nine theatres with 134 screens. These acquisitions enhance our presence in three U.S. states and contributed to approximately $34.2 million, or 1.5%, of total revenues during the Fiscal 2017 Period. See Note 2—"Acquisitions" for further discussion of these acquisitions. In addition, we opened two new theatres with 26 screens, closed 11 theatres with 112 screens (including the temporary closure of three theatres with 42 screens impacted by a hurricane), ending the Fiscal 2017 Period with 561 theatres and 7,315 screens.

We believe the continued rollout of premium amenities, such as luxury reclining seating and a wider array of food and alcoholic beverage offerings allows us to deliver a premium movie-going experience for a majority of our customers. We believe this strategy will enable us to better compete for patrons and build brand loyalty, which will provide us the opportunity for incremental revenue and cash flows.

Recent Developments

On October 24, 2017 , the Company declared a cash dividend of $0.22 per share on each share of the Company’s Class A and Class B common stock (including outstanding restricted stock), payable on December 15, 2017 , to stockholders of record on December 4, 2017 .

Based on the recommendations of the Compensation Committee of the Board of Directors and our outside compensation consultant, Pay Governance, the Company amended and restated the Performance Agreements to amend the number of shares of Common Stock that are to be vested in the event of termination of employment upon death, disability or a change of control. The changes to the Performance Agreements will apply to all existing performance share grants as well as any future performance share grants.  Contemporaneously with the amendment and restatement of the Performance Agreements, the Board of Directors approved changes to the employment agreements with our named executive officers.  

Results of Operations

Based on our review of industry sources, North American box office revenues for the time period that corresponds to Regal’s third quarter of 2017 were estimated to have decreased by approximately 15 percent per screen in comparison to the third quarter of 2016. The industry’s box office results for the third quarter of 2017 were negatively impacted by weaker than expected attendance generated by the overall film slate during the third quarter of 2017, particularly during the month of August 2017, which had only nine wide releases compared to twelve wide releases during the month of August 2016.
 
The following table sets forth the percentage of total revenues represented by certain items included in our unaudited condensed consolidated statements of income for the quarter ended September 30, 2017 (the " Q3 2017 Period "), the quarter ended September 30, 2016 (the " Q3 2016 Period "), the Fiscal 2017 Period , and the three quarters ended September 30, 2016 (the " Fiscal 2016 Period ") (dollars in millions, except average ticket prices and average concessions per patron): 

30
Table of Contents

 
Q3 2017 Period
 
Q3 2016 Period
 
Fiscal 2017 Period
 
Fiscal 2016 Period
 
$
 
% of
Revenue
 
$
 
% of
Revenue
 
$
 
% of
Revenue
 
$
 
% of
Revenue
Revenues:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Admissions
$
455.4

 
63.6
%
 
$
525.3

 
64.7
%
 
$
1,469.8

 
63.9
%
 
$
1,546.8

 
64.9
%
Concessions
212.7

 
29.7

 
239.9

 
29.6

 
683.6

 
29.7

 
705.5

 
29.6

Other operating revenues
47.9

 
6.7

 
46.3

 
5.7

 
148.0

 
6.4

 
132.2

 
5.5

Total revenues
716.0

 
100.0

 
811.5

 
100.0

 
2,301.4

 
100.0

 
2,384.5

 
100.0

Operating expenses:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Film rental and advertising costs(1)
236.8

 
52.0

 
275.6

 
52.5

 
778.4

 
53.0

 
832.0

 
53.8

Cost of concessions(2)
28.1

 
13.2

 
31.3

 
13.0

 
89.5

 
13.1

 
90.1

 
12.8

Rent expense(3)
107.0

 
14.9

 
107.3

 
13.2

 
319.2

 
13.9

 
321.1

 
13.5

Other operating expenses(3)
227.4

 
31.8

 
226.3

 
27.9

 
665.9

 
28.9

 
652.6

 
27.4

General and administrative expenses (including share-based compensation expense of $2.4 and $2.5 for the Q3 2017 Period and the Q3 2016 Period, respectively and $6.9 and $6.6 for the Fiscal 2017 Period and the Fiscal 2016 Period, respectively)(3)
19.9

 
2.8

 
20.5

 
2.5

 
65.4

 
2.8

 
62.6

 
2.6

Depreciation and amortization(3)
62.4

 
8.7

 
58.5

 
7.2

 
186.2

 
8.1

 
171.1

 
7.2

Net loss on disposal and impairment of operating assets(3)
11.9

 
1.7

 
4.8

 
0.6

 
15.8

 
0.7

 
10.6

 
0.4

Total operating expenses(3)
693.5

 
96.9

 
724.3

 
89.3

 
2,120.4

 
92.1

 
2,140.1

 
89.8

Income from operations(3)
22.5

 
3.1

 
87.2

 
10.7

 
181.0

 
7.9

 
244.4

 
10.2

Interest expense, net(3)
31.7

 
4.4

 
31.9

 
3.9

 
93.5

 
4.1

 
96.7

 
4.1

Loss on extinguishment of debt(3)
—

 
—

 
—

 
—

 
1.3

 
0.1

 
1.5

 
0.1

Earnings recognized from NCM(3)
(5.4
)
 
0.8

 
(3.6
)
 
0.4

 
(14.0
)
 
0.6

 
(18.8
)
 
0.8

Gain on sale of Open Road Films investment(3)
(17.8
)
 
2.5

 
—

 
—

 
(17.8
)
 
0.8

 
—

 
—

Equity in income of non-consolidated entities and other, net(3)
(10.0
)
 
1.4

 
(12.6
)
 
1.6

 
(26.7
)
 
1.2

 
(33.0
)
 
1.4

Provision for income taxes(3)
12.6

 
1.8

 
29.2

 
3.6

 
61.3

 
2.7

 
81.4

 
3.4

Net income attributable to controlling interest(3)
$
11.4

 
1.6

 
$
42.3

 
5.2

 
$
83.4

 
3.6

 
$
116.5

 
4.9

Attendance (in thousands)
44,687

 
*

 
54,513

 
*

 
145,483

 
*

 
159,056

 
*

Average ticket price(4)
$
10.19

 
*

 
$
9.64

 
*

 
$
10.10

 
*

 
$
9.72

 
*

Average concessions per patron(5)
$
4.76

 
*

 
$
4.40

 
*

 
$
4.70

 
*

 
$
4.44

 
*

_______________________________________________________________________
*             Not meaningful
 
(1)
Percentage of revenues calculated as a percentage of admissions revenues.
(2)
Percentage of revenues calculated as a percentage of concessions revenues.
(3)
Percentage of revenues calculated as a percentage of total revenues.
(4)
Calculated as admissions revenues/attendance.
(5)
Calculated as concessions revenues/attendance.
 





31
Table of Contents

Admissions

During the Q3 2017 Period , total admissions revenue decreased $69.9 million , or 13.3% , to $455.4 million , from $525.3 million in the Q3 2016 Period . An 18.0% decrease in attendance (approximately $94.5 million of total admissions revenues), partially offset by a 5.7% increase in average ticket prices (approximately $24.6 million of total admissions revenues) led to the overall decrease in the Q3 2017 Period admissions revenues. Attendance for the Q3 2017 Period in comparison to that of the Q3 2016 Period was negatively impacted by weaker than expected attendance generated by the overall film slate during the Q3 2017 Period , particularly during the month of August 2017, which had only nine wide releases compared to twelve wide releases during the month of August 2016. For the Q3 2017 Period , the 5.7% average ticket price increase was due to selective price increases identified during our ongoing periodic pricing reviews (particularly at locations featuring luxury reclining seats) and an increase in the percentage of adult-priced tickets sold during the quarter. Based on our review of certain industry sources, the decrease in our admissions revenues on a per screen basis was approximately 100 basis points less than the industry’s per screen results for the Q3 2017 Period as compared to the Q3 2016 Period . We are optimistic that the industry's investment in new theatres and customer amenities and other recent industry initiatives and trends will drive continued growth and strength for the domestic motion picture industry. To that end, our market share may be positively or negatively impacted by such initiatives and trends during any given quarter.
    
Total admissions revenues decreased $77.0 million , or 5.0% , during the Fiscal 2017 Period to $1,469.8 million , from $1,546.8 million in the Fiscal 2016 Period . An 8.5% decrease in attendance (approximately $132.3 million of total admissions revenues), partially offset by a 3.9% increase in average ticket prices (approximately $55.3 million of total admissions revenues), led to the net decline in the Fiscal 2017 Period admissions revenues. Attendance during the Fiscal 2017 Period in comparison to that of the Fiscal 2016 Period was negatively impacted by weaker than expected attendance generated by the overall film slate during the Fiscal 2017 Period , particularly during the month of August 2017, which had only nine wide releases compared to twelve wide releases during the month of August 2016. The 3.9% average ticket price increase was due to selective price increases identified during our ongoing periodic pricing reviews.

Concessions

During the Q3 2017 Period , total concessions revenues decreased $27.2 million , or 11.3% , to $212.7 million , from $239.9 million in the Q3 2016 Period . Average concessions revenues per patron during the Q3 2017 Period increased 8.2% to $4.76 , from $4.40 in the Q3 2016 Period . The 18.0% decrease in attendance (approximately $43.3 million of total concessions revenues), partially offset by the 8.2% increase in average concessions revenues per patron (approximately $16.1 of total concessions revenues), led to the overall decrease in the Q3 2017 Period concessions revenues. The increase in average concessions revenues per patron for the Q3 2017 Period was primarily attributable to selective price increases, an increase in beverage and popcorn sales volume, and the continued rollout of our expanded food and alcohol menu.
 
Total concessions revenues decreased $21.9 million , or 3.1% , to $683.6 million in the Fiscal 2017 Period , from $705.5 million in the Fiscal 2016 Period . Average concessions revenues per patron during the Fiscal 2017 Period increased 5.9% , to $4.70 , from $4.44 in the Fiscal 2016 Period . The 8.5% decrease in attendance (approximately $59.7 million of total concessions revenues), partially offset by the 5.9% increase in average concessions revenues per patron (approximately $37.8 million of total concessions revenues) led to the net decrease in the Fiscal 2017 Period concessions revenues. The increase in average concessions revenues per patron for the Fiscal 2017 Period was primarily attributable to selective price increases, an increase in popcorn sales volume, and the continued rollout of our expanded food and alcohol menu.

Other Operating Revenues
 
During the Q3 2017 Period , other operating revenues      increased $1.6 million , or 3.5% , to $47.9 million , from $46.3 million in the Q3 2016 Period . Included in other operating revenues are revenues from our vendor marketing programs, other theatre revenues (consisting primarily of internet ticketing surcharges, theatre rentals and arcade games), theatre access fees paid by National CineMedia (net of payments for on-screen advertising time provided to our beverage concessionaire) and revenues related to our gift card and bulk ticket programs. The increase in other operating revenues during the Q3 2017 Period was due to an increase in internet ticketing surcharges (approximately $3.0 million), partially offset by a decrease in revenues from our vendor marketing programs (approximately $1.3 million).

Other operating revenues increased $15.8 million , or 12.0% , to $148.0 million during the Fiscal 2017 Period , from $132.2 million in the Fiscal 2016 Period . The increase in other operating revenues during the Fiscal 2017 Period was due to an increase in internet ticketing surcharges (approximately $7.7 million), an increase in revenues from our vendor marketing programs (approximately $4.8 million), increased revenues related to our gift card and bulk ticket programs (approximately $1.7 million), and incremental National CineMedia revenues (approximately $1.0 million).

32
Table of Contents

Film Rental and Advertising Costs
 
Film rental and advertising costs as a percentage of admissions revenues for the Q3 2017 Period decreased to 52.0% from 52.5% in the Q3 2016 Period . Film rental and advertising costs as a percentage of admissions revenues for the Fiscal 2017 Period decreased to 53.0% from 53.8% in the Fiscal 2016 Period . The decrease in film rental and advertising costs as a percentage of admissions revenues during the Q3 2017 Period was primarily attributable to lower film costs associated with the lackluster results generated by the overall film slate exhibited during the quarter. The decrease in film rental and advertising costs as a percentage of admissions revenues during the Fiscal 2017 Period was primarily attributable to weaker than expected attendance generated by the overall film slate during the Fiscal 2017 Period

Cost of Concessions

 Cost of concessions decreased $3.2 million , or 10.2% , to $28.1 million during the Q3 2017 Period , from $31.3 million in the Q3 2016 Period . Cost of concessions decreased $0.6 million , or 0.7% , to $89.5 million during the Fiscal 2017 Period , from $90.1 million in the Fiscal 2016 Period . Cost of concessions as a percentage of concessions revenues for the Q3 2017 Period was approximately 13.2% compared to 13.0% during the Q3 2016 Period . Cost of concessions as a percentage of concessions revenues for the Fiscal 2017 Period was approximately 13.1% compared to 12.8% in the Fiscal 2016 Period . The increase in cost of concessions as a percentage of concessions revenues during the Q3 2017 Period and the Fiscal 2017 Period was primarily related to increases in packaged goods and raw material costs and the impact of incremental expanded food and alcohol sales during such periods, partially offset by selective price increases during such periods.

Rent Expense
 
Rent expense decreased $0.3 million , or 0.3% , to $107.0 million during the Q3 2017 Period , from $107.3 million in the Q3 2016 Period . During the Fiscal 2017 Period , rent expense totaled $319.2 million , a decrease of $1.9 million , or 0.6% , from $321.1 million in the Fiscal 2016 Period . Rent expense during the Q3 2017 Period and the Fiscal 2017 Period was primarily impacted by the permanent closure of 12 theatres with 115 screens subsequent to the end of the Q3 2016 Period along with reductions in contingent rent, partially offset by incremental rent from the opening of two new theatres with 28 screens and the acquisition of nine theatres with 134 screens subsequent to the end of the Q3 2016 Period .
 
Other Operating Expenses
 
Other operating expenses of $227.4 million during the Q3 2017 Period increased $1.1 million , or 0.5% , from $226.3 million in the Q3 2016 Period . The increase in other operating expenses during the Q3 2017 Period was primarily due to an increase in other operating expenses from the Fiscal 2017 Period acquisitions (approximately $6.9 million), partially offset by a decrease in theatre-level payroll and benefit costs (approximately $4.4 million), decreased costs associated with lower premium format film revenues (approximately $1.2 million) and reductions in non-rent occupancy and other costs (approximately $0.4 million) during the Q3 2017 Period .

During the Fiscal 2017 Period , other operating expenses increased $13.3 million , or 2.0% , to $665.9 million , from $652.6 million in the Fiscal 2016 Period . The increase in other operating expenses during the Fiscal 2017 Period was primarily due to an increase in other operating expenses from the Fiscal 2017 Period acquisitions (approximately $10.8 million), increases in in non-rent occupancy and other costs (approximately $6.5 million) and increased theatre-level payroll and benefit costs (approximately $0.4 million), partially offset by decreased costs associated with lower premium format film revenues (approximately $4.4 million) during the Fiscal 2017 Period .

General and Administrative Expenses

For the Q3 2017 Period , general and administrative expenses decreased $0.6 million , or 2.9% , to $19.9 million as compared to $20.5 million in the Q3 2016 Period . General and administrative expenses increased $2.8 million , or 4.5% , to $65.4 million during the Fiscal 2017 Period , from $62.6 million in the Fiscal 2016 Period . During the Q3 2017 Period , the decrease in general and administrative expenses was primarily attributable to lower legal and professional fees (approximately $2.2 million), partially offset by higher non-personnel costs ($0.8 million), higher acquisition related expenses (approximately $0.7 million) and slightly higher corporate payroll costs (approximately $0.2 million). The increase in general and administrative expenses during the Fiscal 2017 Period was primarily attributable to higher acquisition related expenses (approximately $1.7 million), higher non-personnel costs ($1.3 million), higher corporate payroll costs (approximately $1.1 million) and increased share-based compensation expense (approximately $0.3 million), partially offset by lower legal and professional fees (approximately $1.6 million).


33
Table of Contents

Depreciation and Amortization
 
Depreciation and amortization expense increased $3.9 million , or 6.7% , to $62.4 million during the Q3 2017 Period , from $58.5 million in the Q3 2016 Period . During the Fiscal 2017 Period , depreciation and amortization expense increased $15.1 million , or 8.8% , to $186.2 million , from $171.1 million in the Fiscal 2016 Period . The increase in depreciation and amortization expense during the Q3 2017 Period and the Fiscal 2017 Period was primarily related to incremental depreciation and amortization expense associated with increased capital expenditures related to the installation of luxury reclining seats, the opening of two new theatres with 28 screens and acquisition of nine theatres with 134 screens subsequent to the end of the Q3 2016 Period , and accelerated depreciation on certain identified assets, partially offset by permanent closure of 12 theatres with 115 screens subsequent to the end of the Q3 2016 Period .
 
Interest Expense, net
 
Net interest expense decreased $0.2 million , or 0.6% , to $31.7 million during the Q3 2017 Period , from $31.9 million in the Q3 2016 Period . During the Fiscal 2017 Period , net interest expense decreased $3.2 million , or 3.3% , to $93.5 million , from $96.7 million in the Fiscal 2016 Period . The decrease in net interest expense during the Q3 2017 Period and the Fiscal 2017 Period was primarily due to the impact of a lower effective interest rate under the Amended Senior Credit Facility during such periods, partially offset by additional interest expense attributable to incremental borrowings under the Amended Senior Credit Facility in connection with the June 2017 Refinancing Agreement.

Loss on Extinguishment of Debt

As described more fully in Note 4 — "Debt Obligations," during the Fiscal 2017 Period, the Company recorded a loss on debt extinguishment of $1.3 million in connection with the June 2017 Refinancing Agreement. During the Fiscal 2016 Period, the Company recorded a loss on debt extinguishment of $1.5 million in connection with the June 2016 Refinancing Agreement also described in Note 4 — "Debt Obligations."

Earnings Recognized from NCM
 
During the Q3 2017 Period , earnings recognized from NCM increased $1.8 million , or 50.0% , to $5.4 million , from $3.6 million in the Q3 2016 Period . Earnings recognized from NCM decreased $4.8 million , or 25.5% , to $14.0 million in the Fiscal 2017 Period , from $18.8 million in the Fiscal 2016 Period . The increase in earnings recognized from National CineMedia during the Q3 2017 Period was primarily attributable to an increase in cash distributions from National CineMedia during the Q3 2017 Period as compared to that of the Q3 2016 Period , and higher equity income from National CineMedia. The decrease in earnings recognized from National CineMedia during the Fiscal 2017 Period was primarily attributable to lower equity income (including a $5.6 million change in interest loss as described further in Note 3—"Investments") from National CineMedia, partially offset by an increase in cash distributions from National CineMedia during the Fiscal 2017 Period as compared to that of the Fiscal 2016 Period .

Gain on Sale of Open Road Films Investment

As described more fully in Note 3 — "Investments," during the Q3 2017 Period , the Company recorded a gain on the sale of its investment in Open Road Films of $17.8 million.

Income Taxes
 
The provision for income taxes of $12.6 million and $29.2 million for the Q3 2017 Period and the Q3 2016 Period , respectively, reflect effective tax rates of approximately 52.5% and 40.8% , respectively. The provision for income taxes of $61.3 million and $81.4 million for the Fiscal 2017 Period and the Fiscal 2016 Period , respectively, reflect effective tax rates of approximately 42.4% and 41.1% , respectively. The increase in the effective tax rate for the Q3 2017 Period and the Fiscal 2017 Period is primarily attributable to the nondeductible goodwill impairment charge of approximately $7.3 million recorded during the Q3 2017 Period, described further in Note 12—"Fair Value of Financial Instruments." The effective tax rates for all periods presented also reflect the impact of certain non-deductible expenses and income tax credits.
 
Liquidity and Capital Resources
 
On a consolidated basis, we expect our primary uses of cash to be for operating expenses, capital expenditures, investments, acquisitions, general corporate purposes related to corporate operations, debt service, share repurchases and the Company's dividend payments. The principal sources of liquidity are cash generated from operations, cash on hand and

34
Table of Contents

borrowings under the Amended Senior Credit Facility described below. Under the terms of the Amended Senior Credit Facility, Regal Cinemas is restricted as to how much it can advance or distribute to Regal, its indirect parent. Since Regal is a holding company with no significant assets other than the stock of its subsidiaries, this restriction could impact Regal's ability to effect future debt or dividend payments, pay corporate expenses, repurchase or retire for cash its 5 3 / 4 % Senior Notes Due 2022, its 5 3 / 4 % Senior Notes Due 2023 and its 5 3 / 4 % Senior Notes Due 2025. In addition, as described further below, the indentures under which the 5 3 / 4 % Senior Notes Due 2022, the 5 3 / 4 % Senior Notes Due 2023, and the 5 3 / 4 % Senior Notes Due 2025 are issued limit the Company's (and its restricted subsidiaries') ability to, among other things, incur additional indebtedness, pay dividends on or make other distributions in respect of its capital stock, purchase or redeem capital stock, make loans or advances to its subsidiaries, or purchase, redeem or otherwise acquire or retire certain subordinated obligations.

Operating Activities
 
Our revenues are generated principally through admissions and concessions sales with proceeds received in cash or via credit cards at the point of sale and through our internet ticketing partners. Our operating expenses are primarily related to film and advertising costs, rent and occupancy and payroll. Film costs are ordinarily paid to distributors within 30 days following receipt of admissions revenues and the cost of the Company’s concessions are generally paid to vendors approximately 30 to 35 days from purchase. Our current liabilities include items that will become due within 12 months. In addition, from time to time, we use cash from operations to fund dividends in excess of net income attributable to controlling interest and to fund dividends in excess of cash flows from operating activities less capital expenditures (net of proceeds from asset sales). As a result, at any given time, our balance sheet may reflect a working capital deficit.
 
Net cash flows provided by operating activities totaled approximately $255.6 million and $247.9 million for the Fiscal 2017 Period and the Fiscal 2016 Period , respectively. The increase in net cash flows generated by operating activities for the Fiscal 2017 Period as compared to the Fiscal 2016 Period was primarily caused by a positive fluctuation in working capital activity (primarily related to the timing of vendor payments, including film payables, as a result of increased attendance and admissions revenues at our theatres during the latter part of September 2017 and fluctuations in accounts receivable activity) and an increase in landlord contributions related to our luxury reclining seating initiative, partially offset by a decrease in net income excluding non-cash items.

Investing Activities
 
Our capital requirements have historically arisen principally in connection with acquisitions of theatres, new theatre construction, strategic partnerships, the addition of luxury amenities in select theatres, other upgrades to the Company’s theatre facilities and equipment replacement. We fund the cost of capital expenditures through internally generated cash flows, cash on hand, landlord contributions, proceeds from the disposition of assets and financing activities.

We intend to continue to grow our theatre circuit through selective expansion and acquisition opportunities. The Company has a formal and intensive review procedure for the authorization of capital projects, with the most important financial measure of acceptability for a discretionary non-maintenance capital project being whether its projected discounted cash flow return on investment meets or exceeds the Company’s internal rate of return targets. We currently expect capital expenditures (net of proceeds from asset sales and landlord contributions) for theatre development, expansion, maintenance, upgrades and replacements to be in the range of approximately $130.0 million to $145.0 million in 2017, exclusive of acquisitions.

On March 16, 2017, we received approximately 0.5 million newly issued common units of National CineMedia in accordance with the annual adjustment provisions of the Common Unit Adjustment Agreement. This transaction increased our ownership share in National CineMedia to approximately 27.6 million common units. On a fully diluted basis, we own a 17.9% interest in NCM, Inc. as of September 30, 2017 .

As described further in Note 2—"Acquisitions," on April 13, 2017, the Company completed the acquisition of two theatres with 41 screens located in Houston, Texas from Santikos Theaters, Inc. for an aggregate net cash purchase price of $29.8 million . In addition, on April 18, 2017, the Company purchased a parcel of land located in Montgomery County, Texas from an entity affiliated with Santikos Theaters, Inc. for a net cash purchase price, before post-closing adjustments, of approximately $7.3 million . Finally, on May 18, 2017, the Company completed the acquisition of seven theatres with 93 screens located in Kansas and Oklahoma from Warren Theatres for an aggregate net cash purchase price, before post-closing adjustments, of $134.5 million .

On August 4, 2017, the Company sold all of its 50% equity interest in Open Road Films to a third party for total proceeds of approximately $14.0 million. In accordance with the purchase agreement, approximately $3.7 million of the net

35
Table of Contents

proceeds received were in satisfaction of various receivables and other amounts due to the Company related to film marketing services provided to Open Road Films prior to the closing date. As a result of the sale, the Company recorded a gain of approximately $17.8 million, representing the difference between the net proceeds received of $10.3 million (after satisfaction of the above amounts due the Company) and the carrying amount of the Company's investment in Open Road Films (approximately $(7.5) million) as of the closing date. Also effective with closing, the Company and Open Road Films entered into a new marketing agreement with respect to films released by Open Road Films after the closing date.

Net cash flows used in investing activities totaled approximately $337.9 million and $158.9 million for the Fiscal 2017 Period and the Fiscal 2016 Period , respectively. The $179.0 million increase in cash flows used in investing activities during the Fiscal 2017 Period as compared to the Fiscal 2016 Period was primarily attributable to $171.6 million of net cash used to fund acquisitions described further in Note 2—"Acquisitions," an $8.6 million increase in capital expenditures (net of proceeds from disposals) and higher capital investments in certain non-consolidated entities during the Fiscal 2017 Period , partially offset by approximately $10.3 million of proceeds received from the sale of our Open Road Films investment.

Financing Activities
 
As described further in Note 4—"Debt Obligations," on June 1, 2016, Regal Cinemas entered into a permitted secured refinancing agreement with REH, the guarantors party thereto, Credit Suisse AG and the lenders party thereto (the "June 2016 Refinancing Agreement"). Pursuant to the June 2016 Refinancing Agreement, Regal Cinemas consummated a permitted secured refinancing of the Term Facility under the Amended Senior Credit Facility, which had an aggregate principal balance of approximately $958.5 million, and in accordance therewith, received term loans in an aggregate principal amount of approximately $958.5 million with a final maturity date in April 2022. Together with other amounts provided by Regal Cinemas, proceeds of the term loans were applied to repay all of the outstanding principal and accrued and unpaid interest on the Term Facility under the Amended Senior Credit Facility. In connection with the execution of the June 2016 Refinancing Agreement, the Company recorded a loss on debt extinguishment of approximately $1.5 million during the quarter ended June 30, 2016.

On December 2, 2016, Regal Cinemas entered into a permitted secured refinancing agreement (the “December 2016 Refinancing Agreement”) with REH, the guarantors party thereto, Credit Suisse AG and the lenders party thereto. Pursuant to the December 2016 Refinancing Agreement, Regal Cinemas consummated a permitted secured refinancing of the Term Facility, which had an aggregate principal balance of approximately $956.1 million , and in accordance therewith, received term loans in an aggregate principal amount of approximately $956.1 million with a final maturity date in April 2022. Together with other amounts provided by Regal Cinemas, proceeds of the term loans were applied to repay all of the outstanding principal and accrued and unpaid interest on the Term Facility under the Amended Senior Credit Facility. In connection with the execution of the December 2016 Refinancing Agreement, the Company recorded a loss on debt extinguishment of approximately $1.4 million during the quarter ended December 31, 2016.

On June 6, 2017, Regal Cinemas entered into a permitted secured refinancing and incremental joinder agreement (the “June 2017 Refinancing Agreement”) with REH, the guarantors party thereto, Credit Suisse AG and the lenders party thereto. Pursuant to the June 2017 Refinancing Agreement, Regal Cinemas consummated a permitted secured refinancing of the Term Facility, which had an aggregate principal balance of approximately $953.7 million, and in accordance therewith, received term loans in an aggregate principal amount of approximately $953.7 million with a final maturity date in April 2022 (the “Refinanced Term Loans”). Together with other amounts provided by Regal Cinemas, proceeds of the Refinanced Term Loans were applied to repay all of the outstanding principal and accrued and unpaid interest on the existing term facility under the Amended Senior Credit Facility in effect immediately prior to the making of the Refinanced Term Loans.
    
Pursuant to the June 2017 Refinancing Agreement, Regal Cinemas also exercised the “accordion” feature under the Amended Senior Credit Facility to increase the aggregate amount of term loans thereunder by $150.0 million (the “2017 Accordion”). The “accordion” feature provides Regal Cinemas with the option to borrow additional term loans under the Amended Senior Credit Facility in an amount of up to $200.0 million, plus additional amounts as would not cause the consolidated total leverage ratio to exceed 3.00:1.00, in each case, subject to lenders providing additional commitments for such amounts and the satisfaction of certain other customary conditions. The entire $150.0 million under the 2017 Accordion was fully drawn on June 6, 2017 on the same terms as the Refinanced Term Loans (such amounts drawn, the “Incremental Term Loans”, and together with the Refinanced Term Loans, the “New Term Loans”). A portion of the proceeds of the Incremental Term Loans were used by Regal Cinemas to pay fees and expenses related to the June 2017 Refinancing Agreement, with the remainder to be used for general corporate purposes of Regal Cinemas and its subsidiaries.
    
The New Term Loans amortize in equal quarterly installments in an aggregate annual amount equal to 1.0% of the original principal amount of the New Term Loans, with the balance payable on the maturity date of the New Term Loans. The

36
Table of Contents

June 2017 Refinancing Agreement also amends the Amended Senior Credit Facility by reducing the interest rate on the New Term Loans, by providing, at Regal Cinemas’ option, either a base rate or an adjusted LIBOR rate plus, in each case, an applicable margin. Such applicable margin will be either 1.00% in the case of base rate loans or 2.00% in the case of LIBOR rate loans. The June 2017 Refinancing Agreement also provides for a 1% prepayment premium applicable in the event that Regal Cinemas enters into a refinancing or amendment of the New Term Loans on or prior to the six-month anniversary of the closing of the June 2017 Refinancing Agreement that, in either case, has the effect of reducing the interest rate on the New Term Loans. In connection with the execution of the June 2017 Refinancing Agreement, the Company recorded a loss on debt extinguishment of approximately $1.3 million during the quarter ended June 30, 2017.

As of September 30, 2017 , we had approximately $1,099.9 million aggregate principal amount outstanding (net of debt discount) under the New Term Loans, $775.0 million aggregate principal amount outstanding under the 5 3 / 4 % Senior Notes Due 2022, $250.0 million aggregate principal amount outstanding under the 5 3 / 4 % Senior Notes Due 2023, and $250.0 million aggregate principal amount outstanding under the 5 3 / 4 % Senior Notes Due 2025. As of September 30, 2017 , we had approximately $2.7 million outstanding in letters of credit, leaving approximately $82.3 million available for drawing under the Revolving Facility. As of September 30, 2017 , we are in full compliance with all agreements, including all related covenants, governing our outstanding debt obligations.
 
During the quarter ended September 30, 2017, the Company's Board of Directors authorized a share repurchase program, which provided for the authorization to repurchase up to $50.0 million of the Company's outstanding Class A common stock within a twelve month period. Repurchases can be made from time to time as market conditions warrant, through open market purchases, negotiated transactions, or in such a manner deemed appropriate by the Company. Treasury shares are retired upon repurchase. At retirement, the Company records treasury stock purchases at cost with any excess of cost over par value recorded as a reduction of additional paid-in capital. The Company made no repurchases of its outstanding Class A common stock during the quarter ended September 30, 2017.

During the Fiscal 2017 Period, Regal paid three quarterly cash dividends of $0.22 per share on each outstanding share of the Company's Class A and Class B common stock, or approximately $103.7 million in the aggregate. In addition, in connection with the conversion of 205,677 performance shares during the quarter ended September 30, 2017 , the Company paid cumulative cash dividends of $3.64 (representing the sum of all cash dividends paid from January 8, 2014 through January 8, 2017) on each performance share converted, totaling approximately $0.7 million . Finally, on October 24, 2017 , the Company declared a cash dividend of $0.22 per share on each share of the Company’s Class A and Class B common stock (including outstanding restricted stock), payable on December 15, 2017 , to stockholders of record on December 4, 2017 . Declared dividends have been or will be funded through cash flow from operations and available cash on hand. We, at the discretion of our Board of Directors and subject to applicable law, anticipate paying regular quarterly dividends on our Class A and Class B common stock for the foreseeable future. The amount, if any, of the dividends to be paid in the future will depend upon our then available cash, anticipated cash needs, overall financial condition, loan agreement restrictions, future prospects for earnings and cash flows, as well as other relevant factors.

Net cash flows provided by (used in) financing activities were approximately $25.3 million and $(121.7) million for the Fiscal 2017 Period and the Fiscal 2016 Period , respectively. The $147.0 million net increase in cash flows provided by financing activities during the Fiscal 2017 Period as compared to the Fiscal 2016 Period was primarily attributable to incremental borrowings under the Amended Senior Credit Facility in connection with the June 2017 Refinancing Agreement.
 
EBITDA
 
Net income attributable to controlling interest adjusted for interest expense, net, provision for income taxes and depreciation and amortization ("EBITDA") was approximately $118.1 million , $161.9 million , $424.4 million and $465.7 million for the Q3 2017 Period , the Q3 2016 Period , the Fiscal 2017 Period and the Fiscal 2016 Period, respectively.

The Company uses EBITDA as a supplemental liquidity and performance measure because we find it useful to understand and evaluate our capacity, excluding the impact of interest, taxes, and non-cash depreciation and amortization charges, for servicing our debt, paying dividends and otherwise meeting our cash needs, prior to our consideration of the impacts of other potential sources and uses of cash, such as working capital items. We believe that EBITDA is useful to investors for these purposes as well. EBITDA should not be considered an alternative to, or more meaningful than, net cash provided by or used in operating activities, as determined in accordance with U.S. GAAP, since it omits the impact of interest, taxes and changes in working capital that use or provide cash (such as receivables, payables and inventories) as well as the sources or uses of cash associated with changes in other balance sheet items (such as long-term loss accruals and deferred items). Because EBITDA excludes depreciation and amortization, EBITDA does not reflect any cash requirements for the

37
Table of Contents

replacement of the assets being depreciated and amortized, which assets will often have to be replaced in the future. Further, EBITDA, because it also does not reflect the impact of debt service, income taxes, cash dividends, capital expenditures and other cash commitments from time to time as described in more detail elsewhere in this Form 10-Q, does not represent how much discretionary cash we have available for other purposes. Nonetheless, EBITDA is a key measure expected by and useful to our fixed income investors, rating agencies and the banking community, all of whom believe, and we concur, that these measures are critical to the capital markets’ analysis of our ability to service debt, fund capital expenditures, pay dividends and otherwise meet cash needs, respectively. We also evaluate EBITDA because it is clear that movements in this non-GAAP measure impact our ability to attract financing and pay dividends. EBITDA, as calculated, may not be comparable to similarly titled measures reported by other companies. A reconciliation of net income attributable to controlling interest to EBITDA to net cash provided by operating activities is calculated as follows (in millions):

 
Q3 2017 Period
 
Q3 2016 Period
 
Fiscal 2017 Period
 
Fiscal 2016 Period
Net income attributable to controlling interest
$
11.4

 
$
42.3

 
$
83.4

 
$
116.5

Interest expense, net
31.7

 
31.9

 
93.5

 
96.7

Provision for income taxes
12.6

 
29.2

 
61.3

 
81.4

Depreciation and amortization
62.4

 
58.5

 
186.2

 
171.1

EBITDA
118.1

 
161.9

 
424.4

 
465.7

Interest expense, net
(31.7
)
 
(31.9
)
 
(93.5
)
 
(96.7
)
Provision for income taxes
(12.6
)
 
(29.2
)
 
(61.3
)
 
(81.4
)
Deferred income taxes
7.0

 
1.7

 
(0.7
)
 
(2.9
)
Changes in operating assets and liabilities
(32.3
)
 
(99.9
)
 
(79.0
)
 
(85.0
)
Loss on extinguishment of debt
—

 
—

 
1.3

 
1.5

Gain on sale of Open Road Films investment
(17.8
)
 
—

 
(17.8
)
 
—

Landlord contributions
14.1

 
12.7

 
64.0

 
56.5

Other items, net
3.0

 
(6.2
)
 
18.2

 
(9.8
)
Net cash provided by operating activities
$
47.8

 
$
9.1

 
$
255.6

 
$
247.9


Contractual Cash Obligations and Commitments
 
For a summary of our contractual cash obligations and commitments and off-balance sheet arrangements as of December 31, 2016 , please refer to Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations—Contractual Cash Obligations and Commitments” contained in our Form 10-K and incorporated by reference herein. For a discussion of material changes outside the ordinary course of our business in our contractual cash obligations and commitments during the quarter ended September 30, 2017 , please refer to “Liquidity and Capital Resources” above. We believe that the amount of cash and cash equivalents on hand, cash flow expected from operations and availability under our Revolving Facility will be adequate for the Company to execute its business strategy and meet anticipated requirements for lease obligations, capital expenditures, working capital and debt service for the next 12 months.

Recent Accounting Pronouncements
 
For a discussion of the recent accounting pronouncements relevant to our operations, please refer to the information provided under Note 10—"Recent Accounting Pronouncements" of our notes to the accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 (Financial Statements) of this Form 10-Q, which information is incorporated herein by reference.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
The Company’s interest rate risk is confined to interest rate exposure of its and its wholly owned subsidiaries’ debt obligations that bear interest based on floating rates. The Amended Senior Credit Facility provides variable rate interest that could be adversely affected by an increase in interest rates. Borrowings under the New Term Loans bear interest, at Regal Cinemas’ option, at either a base rate or an adjusted LIBOR rate plus, in each case, an applicable margin as described in Note 4 —"Debt Obligations."
 
Under the terms of the Company’s effective interest rate swap agreement (which hedges an aggregate of $200.0 million of variable rate debt obligations as of September 30, 2017 ) described in Note 11 —"Derivative Instruments," Regal Cinemas pays interest at a fixed rate of 2.165% and receives interest at a variable rate.


38
Table of Contents

As of September 30, 2017 and December 31, 2016 , borrowings of $1,099.9 million (net of debt discount) and $954.7 million (net of debt discount), respectively, were outstanding under the New Term Loans at an effective interest rate of 3.40% (as of September 30, 2017 ) and 3.56% (as of December 31, 2016 ), after the impact of the interest rate swaps described in Note 11—"Derivative Instruments" is taken into account. A hypothetical change of 10% in the Company’s effective interest rate under the New Term Loans as of September 30, 2017 , would increase or decrease interest expense by approximately $0.9 million for the quarter ended September 30, 2017 .
    

  Item 4. CONTROLS AND PROCEDURES
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Commission under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the Commission’s rules and forms, and that information is accumulated and communicated to our management, including our principal executive, principal financial and principal accounting officers (whom we refer to in this periodic report as our Certifying Officers), as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our Certifying Officers, the effectiveness of our disclosure controls and procedures as of September 30, 2017 , pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of September 30, 2017 , our disclosure controls and procedures were effective.
 
There were no changes in our internal control over financial reporting that occurred during our most recently completed quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
  

PART II—OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS
 
Information required to be furnished by us under this Part II, Item 1 (Legal Proceedings) is incorporated by reference to Note 7—"Commitments and Contingencies" of our notes to the accompanying unaudited condensed consolidated financial statements included in Part I, Item 1 (Financial Statements) of this Form 10-Q.

Item 1A. RISK FACTORS
 
There have been no material changes from risk factors as previously disclosed in our Form 10-K.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
ISSUER PURCHASES OF EQUITY SECURITIES FOR THE QUARTER ENDED SEPTEMBER 30, 2017

Period
 
(a)
Total Number of Shares Purchased
 
(b)
Average Price Paid per Share
 
(c)
Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs
 
(d)
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet be Purchased Under the Plans or Programs
July 1, 2017 - July 31, 2017
 
680

 
$
20.56

 
—

 
—

August 1, 2017 - August 31, 2017
 
—

 
—

 
—

 
—

September 1, 2017 - September 30, 2017
 
—

 
—

 
—

 
—

Total
 
680

 
$
20.56

 
—

 
—

    
During the quarter ended September 30, 2017, the Company withheld approximately 680 shares of restricted stock at an aggregate cost of less than $0.1 million, as permitted by the applicable equity award agreements, to satisfy employee tax withholding requirements related to the vesting of restricted stock awards.



39
Table of Contents

Share Repurchase Program

During the quarter ended September 30, 2017, the Company's Board of Directors authorized a share repurchase program, which provided for the authorization of the Company to repurchase up to $50.0 million of its outstanding Class A common stock through the first quarter of 2019. Repurchases can be made at management's discretion from time to time as market conditions warrant, through open market purchases, privately negotiated transactions, or otherwise, in accordance with all applicable securities laws and regulations. Treasury shares are retired upon repurchase. At retirement, the Company records treasury stock purchases at cost with any excess of cost over par value recorded as a reduction of additional paid-in capital. The Company made no repurchases of its outstanding Class A common stock during the quarter ended September 30, 2017.


Item 6. EXHIBITS

Exhibit
Number
 
Description
 
 
 
10.1

*
 
 
 
10.2

*
 
 
 
10.3

*
 
 
 
10.4

*
 
 
 
10.5

*
 
 
 
31.1

 
 
 
 
31.2

 
 
 
 
32

 
 
 
 
101

 
Financial statements from the quarterly report on Form 10-Q of Regal Entertainment Group for the quarter ended September 30, 2017, filed on November 8, 2017, formatted in XBRL: (i) the Unaudited Condensed Consolidated Balance Sheets, (ii) the Unaudited Condensed Consolidated Statements of Income, (iii) the Unaudited Condensed Consolidated Statements of Comprehensive Income, (iv) the Unaudited Condensed Consolidated Statements of Cash Flows and (v) the Notes to Unaudited Condensed Consolidated Financial Statements tagged as detailed text
_______________________________________________________________________________
*
Identifies each management contract or compensatory plan or arrangement.


40
Table of Contents

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
REGAL ENTERTAINMENT GROUP
 
 
 
Date: November 8, 2017
By:
/s/ AMY E. MILES
 
 
Amy E. Miles
 
 
Chief Executive Officer (Principal Executive Officer) and Chair of the Board of Directors
 
 
 
Date: November 8, 2017
By:
/s/ DAVID H. OWNBY
 
 
David H. Ownby
 
 
Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)


41
Table of Contents

EXHIBIT INDEX
 
Exhibit
Number
 
Description
 
 
 
10.1

*
 
 
 
10.2

*
 
 
 
10.3

*
 
 
 
10.4

*
 
 
 
10.5

*
 
 
 
31.1

 
 
 
 
31.2

 
 
 
 
32

 
 
 
 
101

 
Financial statements from the quarterly report on Form 10-Q of Regal Entertainment Group for the quarter ended September 30, 2017, filed on November 8, 2017, formatted in XBRL: (i) the Unaudited Condensed Consolidated Balance Sheets, (ii) the Unaudited Condensed Consolidated Statements of Income, (iii) the Unaudited Condensed Consolidated Statements of Comprehensive Income, (iv) the Unaudited Condensed Consolidated Statements of Cash Flows and (v) the Notes to Unaudited Condensed Consolidated Financial Statements tagged as detailed text
_______________________________________________________________________________
*
Identifies each management contract or compensatory plan or arrangement.


42



Exhibit 10.1

Grant No.:                       

REGAL ENTERTAINMENT GROUP
2002 STOCK INCENTIVE PLAN, AS AMENDED
PERFORMANCE SHARE AGREEMENT 

        Regal Entertainment Group, a Delaware corporation (the “Company”), hereby grants performance shares relating to restricted shares of its class A common stock, $.001 par value (the “Common Stock”), to the Grantee named below, the shares of restricted stock subject thereto being subject to achieving the performance criteria and the vesting conditions set forth in the attached agreement (the “Agreement”). Additional terms and conditions of the grant are set forth in this cover sheet to the Agreement, in the Agreement, and in the Company's 2002 Stock Incentive Plan, as amended (the “Plan”).

Grant Date:
 
 
Name of Grantee:
 
 
Grantee's Social Security Number:
 
 

Maximum No. of Shares of Common Stock
(150% of Target LTI (defined below)):
 
 
Vesting Date:
 
 
Purchase Price per share of Common Stock:
 
$0.001
 
 
 
 
         By signing this cover sheet, you agree to all of the terms and conditions described in the attached Agreement and in the Plan, a copy of which is also attached. You acknowledge that you have carefully reviewed the Plan, and agree that the Plan will control in the event any provision of this Agreement should be or appear to be inconsistent .
Grantee:
 
 
 
Name:
 
 
Signature:
 
Company:
 
 
By:
 
 
 
Name
 
 
Signature:
 
 
Title:
 


Attachment
This is neither a stock certificate nor a negotiable instrument.






















REGAL ENTERTAINMENT GROUP
2002 STOCK INCENTIVE PLAN, AS AMENDED
PERFORMANCE SHARE AGREEMENT

Award of Performance Shares/Number of Shares of Restricted Stock Issuable upon Achievement of Performance Criteria
 
This grant is an award of performance shares (the “Performance Shares”) entitling the Grantee hereof to the number of shares of Common Stock to be determined as set forth below, at the Purchase Price set forth on the cover sheet, which shares of Common Stock when issued will be subject to the vesting conditions described below (such shares when issued and subject to the vesting conditions, the “Restricted Stock”). The Purchase Price for the Performance Shares and the Restricted Stock is deemed paid by your services to the Company.

The number of shares of Restricted Stock, if any, that may be issued pursuant to the terms of this Agreement shall be calculated based on the attainment of specified performance goals, as set forth on the attached  Exhibit A , by the third anniversary of the Grant Date (the “Calculation Date”). The maximum number of shares of Restricted Stock that may be issued to you hereunder shall be as set forth on the cover sheet, which number has been determined by multiplying __________________ shares (such number of shares, your “Target Long Term Incentive” or “Target LTI”) by 150%.
Nontransferability and Forfeiture
 
Neither your Performance Shares granted hereby nor any shares of Restricted Stock issued hereunder prior to the vesting thereof may be transferred, assigned, pledged or hypothecated, whether by operation of law or otherwise, nor may your Performance Shares or shares of Restricted Stock, if any, be made subject to execution, attachment or similar process. Except as otherwise provided in this Agreement, if your service terminates for any reason prior to the Calculation Date, you will forfeit your Performance Shares and not have any right to receive any Restricted Stock or Common Stock in respect of this award of Performance Shares.
Issuance and Vesting of Restricted Stock
 
The Performance Shares awarded hereby are evidenced solely by this Agreement and the cover sheet. The Company will issue any Restricted Stock earned pursuant hereto in your name as of the Calculation Date.

Except as otherwise set forth herein, your right to the Common Stock, after the issuance of the Restricted Stock as of the Calculation Date pursuant to this grant, vests as to 100% of the total number of shares of Restricted Stock issued pursuant to this grant on ___________________, provided you then continue in service (the “Vesting Date”). If the Vesting Date would otherwise occur during a period in which you are: (a) subject to a lock-up agreement restricting your ability to sell shares of Common Stock in the open market or (b) restricted from selling shares of Common Stock in the open market because you are not then eligible to sell under the Company's insider trading or similar plan as then in effect (whether because a trading window is not open or you are otherwise restricted from trading), the Vesting Date will be delayed until the first date on which you are no longer prohibited from selling shares of Common Stock due to a lock-up agreement or insider trading plan restriction; provided, however, you shall not be deemed to be restricted pursuant to subparagraph (b) above if you have in place at the Vesting Date an enforceable 10b5-1 trading plan. You cannot vest in more than the number of shares covered by this grant.
Book Entry Restrictions/Escrow
 
Any Restricted Stock issued hereunder may be issued in book entry form. In such event, the Company shall cause the transfer agent for the shares of its Common Stock to make a book entry record showing ownership for the shares of Restricted Stock in your name subject to the terms and conditions of this Agreement. The Company shall issue or cause to be issued to you an account statement acknowledging your ownership of the shares of such Restricted Stock.

In the event that certificates are issued evidencing the shares of Restricted Stock issued hereunder, the certificates for the Restricted Stock shall be deposited in escrow with the Secretary of the Company to be held in accordance with the provisions of this paragraph. Each such deposited certificate shall be accompanied by a duly executed Assignment Separate from Certificate in the form attached hereto as  Exhibit B . The deposited certificates shall remain in escrow until such time or times as the certificates are to be released or otherwise surrendered for cancellation as discussed elsewhere herein. Upon delivery of the certificates to the Company, you shall be issued an instrument of deposit acknowledging the number of shares of Restricted Stock delivered in escrow to the Secretary of the Company.

Not later than 30 days after the Vesting Date, the Company shall release from escrow and deliver to you any certificates representing Common Stock held by it in escrow.





Dividend Equivalents
 
Upon the Calculation Date or as soon as reasonably practicable thereafter (the “Initial Dividend Payment Date”), provided you then continue in service, the Company shall pay to you in cash a single lump sum amount equal to (1) the total dividends paid by the Company with respect to a single share of Common Stock from the Grant Date to the Calculation Date times (2) the number of shares of Restricted Stock issued hereunder as determined above in respect of the Performance Shares as to which the performance goals have been satisfied as of the Calculation Date.

If the Company pays a dividend with respect to its Common Stock after the Initial Dividend Payment Date, the Company shall pay to you as soon as reasonably practicable thereafter, provided you then continue in service, an amount equal to (1) the amount of such dividend with respect to a single share of Common Stock times (2) the number of shares of Restricted Stock issued hereunder as determined above in respect of the Performance Shares as to which the performance goals have been satisfied as of the Calculation Date.
Lapse of Common Stock Restrictions on Death, Disability, or Retirement or Termination Without Cause
 
Prior to the Calculation Date, if your service is terminated due to death or Disability, you shall be entitled to receive a number of fully vested shares of Common Stock in respect of your Performance Shares equal to the Target LTI, pro-rated for the number of days you were employed from the Grant date to and including the date the termination occurs. In addition, you shall be entitled to the dividends paid with respect to such shares from the Grant Date to and including the date the termination occurs. Such shares of Common Stock and dividends shall be paid to you (or your estate) within sixty (60) days of the date of your termination due to death or Disability.

On or after the Calculation Date, your right to any Common Stock hereunder vests as to 100% of the total number of shares of Restricted Stock issued pursuant to this grant, such number as determined on the Calculation Date, if your service is terminated due to death, Disability or Retirement, or by the Company without Cause.
Forfeiture of Unvested Common Stock
 
In the event that your service is terminated on or after the Calculation Date but before the Vesting Date for any reason other than due to death, Disability or Retirement, or by the Company without Cause, you will forfeit to the Company all of the shares of Restricted Stock subject to this grant, which shares if certificated will be in such event surrendered by the Secretary to the Company on your behalf for cancellation.
Withholding Taxes
 
You agree, as a condition of this grant, that you will make acceptable arrangements to pay any withholding or other taxes that may be due as a result of the grant of the Performance Shares, your acquisition of Restricted Stock or Common Stock under this grant, or the payment to you of any dividends hereunder. In the event that the Company determines that any federal, state, local or foreign tax or withholding payment is required relating to this grant, the Company will have the right to: (1) require that you arrange such payments to the Company; (2) withhold such amounts from other payments due to you from the Company or any affiliate; or (3) cause an immediate forfeiture of shares of Restricted Stock or Common Stock subject to the Performance Shares granted pursuant to this Agreement in an amount equal to the withholding or other taxes due.
Section 83(b) Election
 
If you file an election with respect to the shares of Common Stock covered by this grant under Section 83(b) of the Internal Revenue Code with the Internal Revenue Service, you will immediately forfeit to the Company all of the shares of Common Stock subject to this grant.
Retention Rights
 
This Agreement does not give you the right to be retained by the Company (or any parent, Subsidiaries or affiliates) in any capacity. The Company (and any parent, Subsidiaries or affiliates) reserves the right to terminate your service at any time and for any reason.
Shareholder Rights
 
You have the right to vote the Restricted Stock and to receive any dividends declared or paid on such Restricted Stock. Any distributions you receive as a result of any stock split, stock dividend, combination of shares or other similar transaction shall be deemed to be a part of the Restricted Stock and subject to the same conditions and restrictions applicable thereto. Except as described herein and in the Plan, no adjustments are made for dividends or other rights if the applicable record date occurs before your Restricted Stock certificate is issued or book entry made.





Adjustments
 
In the event of any stock dividend, stock split, change in the corporate structure affecting the Common Stock, or any change in the corporate structure (including any event contemplated by Section 5(a) of the Plan) that is not a Change in Control, the number or kind of shares covered by this grant may be adjusted pursuant to the Plan so that thereafter, subject to the terms and conditions of the adjusted Awards, such Awards shall entitle the Grantee to receive the kind and amount of securities or property or cash receivable upon any such event by a holder of the number of Shares that would have been receivable with respect to such Award immediately prior thereto.

Your Performance Shares and Restricted Stock, as applicable, shall be subject to the terms of any such agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity.
Change in Control
 
In the event of a Change in Control prior to the Calculation Date, you will be entitled to receive a number of shares of Restricted Stock in respect of your Performance Shares equal to the Target LTI immediately prior to the Change in Control.

All shares of Restricted Stock issued hereunder in respect of a Change in Control shall for purposes of the Plan be deemed to have been issued and outstanding and shall vest immediately prior to the effective time of any such Change in Control.

In addition, you shall be entitled to the dividends paid with respect to such shares from the Grant Date to the time immediately prior to the effective time of any such Change in Control. Such dividends shall be paid to you within sixty (60) days of the effective time of any such Change in Control.
Legends
 
All certificates representing the Restricted Stock issued in connection with this grant shall, where applicable, have endorsed thereon the following legend:

“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS CERTIFICATE.”
Applicable Law
 
This Agreement will be interpreted and enforced under the laws of the State of Delaware, other than any conflicts or choice of law rule or principle that might otherwise refer construction or interpretation of this Agreement to the substantive law of another jurisdiction.
Market Stand-Off
 
In connection with any underwritten public offering by the Company of the Company's securities pursuant to an effective registration statement filed under the Securities Act of 1933, for such period as the underwriters may request (such period not to exceed 180 days following the date of the applicable offering), you shall not, directly or indirectly, sell, make any short sale of, loan, hypothecate, pledge, offer, grant or sell any option or other contract for the purchase of, purchase any option or other contract for the sale of, loan, hypothecate, pledge, offer, grant or dispose of or transfer, or agree to engage in any of the foregoing transactions with respect to, any shares of capital stock of the Company covered by this grant without the prior written consent of the underwriters of such public offering.
The Plan
 
The text of the Plan is incorporated in this Agreement by reference. Certain capitalized terms used in this Agreement are defined in the Plan, and have the meaning set forth in the Plan.

This Agreement, the cover page and the Plan constitute the entire understanding between you and the Company regarding this grant of Performance Shares and any shares of underlying Restricted Stock and Common Stock. Any prior agreements, commitments or negotiations concerning this grant are superseded.





Data Privacy
 
In order to administer the Plan, the Company may process personal data about you. Such data includes, but is not limited to, the information provided in this Agreement and any changes thereto, other appropriate personal and financial data about you such as home address and business addresses and other contact information, payroll information and any other information that might be deemed appropriate by the Company to facilitate the administration of the Plan.

By accepting this grant, you give explicit consent to the Company to process any such personal data. You also give explicit consent to the Company to transfer any such personal data outside the country in which you work or are employed, including, with respect to non-U.S. resident Grantees, to the United States, to transferees who shall include the Company and other persons who are designated by the Company to administer the Plan.
Consent to Electronic Delivery
 
The Company may choose to deliver certain statutory materials relating to the Plan in electronic form. By accepting this grant, you agree that the Company may deliver the Plan prospectus and the Company's annual report to you in an electronic format. If at any time you would prefer to receive paper copies of these documents, as you are entitled to, the Company would be pleased to provide copies. Please contact the Company Secretary at 865/922-1123 to request paper copies of these documents.
Stock Ownership Guidelines
 
If applicable, your right to sell, exchange, transfer, gift, pledge, alienate or otherwise dispose of the vested shares of Common Stock awarded to you pursuant to this Agreement is subject to your compliance with the stock ownership guidelines (“Stock Ownership Guidelines”) that the Company has adopted as of the Grant Date, a copy of which has been delivered to you together with this Agreement. The Company shall have the right to enforce the Stock Ownership Guidelines through the use of an escrow arrangement or through restrictions communicated to the Company's transfer agent limiting transfers of your shares of Common Stock. This provision is not intended to prohibit you from exercising your previously granted stock options of disposing of the shares of Common Stock acquired upon exercise of such options.

By signing the cover sheet of this Agreement, you agree to all of the terms and conditions
described above and in the Plan.






EXHIBIT A


PERFORMANCE GOALS
AND NUMBER OF SHARES OF RESTRICTED STOCK

 
 
 
Actual Performance Percentage *
 
Shares of Restricted Stock
Actual Performance Percentage<90%
 
0% of Target LTI
90% < Actual Performance Percentage<110%
 
100% of Target LTI
Actual Performance Percentage > 110%
 
150% of Target LTI

*During the first quarter of each year, the Board of Directors will determine a projected Adjusted EBITDA (as defined in the Company's quarterly earnings releases) for such year (the “Annual EBITDA Target”). During the first quarter of the following year, the Annual EBITDA Target will automatically adjust based upon any differences between forecasted attendance for the prior year and actual attendance for the prior year based on reported nation box office revenue for such year (the “Adjusted Annual EBITDA Target”). The goal of this year-end adjustment to the Annual EBITDA Target is to neither penalize nor reward the Grantee for non-controllable industry results.


On the Calculation Date, the Compensation Committee of the Board of Directors will determine the “Actual Performance Percentage” by calculating for each of the three fiscal years prior to the Calculation Date the percentage by which the Company's actual Adjusted EBITDA met or exceeded the Adjusted Annual EBITDA Target for each such fiscal year, respectively, and averaging such performance percentages over such three fiscal year period.

By way of illustration, if (x) in year 1 the Company's actual Adjusted EBITDA exceeded the Adjusted Annual EBITDA Target for year 1 by 105%, (y) in year 2 the Company's actual Adjusted EBITDA was 90% of the Adjusted Annual EBITDA Target for year 2, and (z) in year 3 the Company's actual Adjusted EBITDA exceeded the Adjusted Annual EBITDA Target for year 3 by 120%, then the Actual Performance Percentage would be 105% (or 315% divided by 3) and the Grantee would vest 100% of the Target LTI.






EXHIBIT B

ASSIGNMENT SEPARATE FROM CERTIFICATE

        FOR VALUE RECEIVED,___________________ hereby sells, assigns and transfers to Regal Entertainment Group, a Delaware corporation (the “Company”),______________( _________________________ ) shares of the Company’s class A common stock represented by Certificate No. __________ and does hereby irrevocably constitute and appoint _______________________ to transfer the said common stock on the books of the Company with full power of substitution in the premises.
        
Dated:__________________ , 20_________           
 
 
 
 
 
Print Name
 
 
 
 
 
Signature


Spousal Consent (if applicable)
                                            
 (Purchaser’s spouse) indicates by the execution of this Assignment his or her consent to be bound by the terms herein as to his or her interests, whether as community property or otherwise, if any, in the shares of class A common stock of the Company.
 
 
 
 
 
Signature

INSTRUCTIONS: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE. THE PURPOSE OF THIS ASSIGNMENT IS TO ENABLE THE COMPANY TO CAUSE THE FORFEITURE OF YOUR UNVESTED SHARES AS SET FORTH IN THE AGREEMENT WITHOUT REQUIRING ADDITIONAL SIGNATURES ON THE PART OF PURCHASE





Exhibit 10.2
 
  
 
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
 
This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “ Agreement ”) is made as of November 7, 2017, by and between Regal Entertainment Group, a Delaware corporation (the “ Company ”), and Amy E. Miles (“ Executive ”).
 
RECITALS
 
WHEREAS , Executive and the Company previously entered into an Amended and Restated Employment Agreement, as further amended from time to time, dated May 5, 2009; and
WHEREAS , the Company and Executive desire to amend and restate the Amended and Restated Employment Agreement on the terms and conditions set forth herein.
NOW, THEREFORE , in consideration of the mutual covenants contained herein, Executive and the Company agree upon the following terms of employment of Executive by the Company:
 
1.
Employment.

1.1     Position. Subject to the terms and conditions of this Agreement, the Company agrees to employ Executive during the Term (as defined herein) as its Chief Executive Officer. In her capacity as the Chief Executive Officer of the Company, Executive shall report to the Board of Directors of the Company (the “ Board ”), and shall have the powers, responsibilities and authorities of chief executive officers of corporations of the size, type and nature of the Company, as it exists from time to time, as are assigned by the Board consistent with Executive's position. In her capacity as Chief Executive Officer of the Company's subsidiary, Regal Cinemas Corporation, Executive shall report to the Board of Directors of Regal Cinemas Corporation and shall have the powers, responsibilities and authorities of chief executive officers of corporations of the size, type and nature of Regal Cinemas Corporation, as it exists from time to time, as are assigned by the Board of Directors of Regal Cinemas Corporation consistent with Executive's position. At the request of the Company, Executive will serve as an officer and/or director of any of the Company's other subsidiaries for no additional compensation.

1.2     Duties. Subject to the terms and conditions of this Agreement, Executive hereby agrees to be employed as the Chief Executive Officer of the Company and to serve as the Chief Executive Officer of Regal Cinemas Corporation, and agrees to devote such working time and efforts (except for permitted vacation periods and reasonable periods of illness and other incapacity), to the best of her ability, experience and talent, to the performance of services, duties and responsibilities in connection therewith so that such performance shall be her primary business activity. Executive shall perform such duties and exercise such powers with respect to the activities of the Company, commensurate with her positions, as the Chief Executive Officer of the Company and as a member of the Board, as the Board shall from time to time reasonably delegate to her. Executive will be responsible for the selection of the members of the management team for the Company's theatre operations, including Regal Cinemas Corporation and its subsidiaries, subject in each instance to the good faith approval of the Board.

1.3     Other Service.   Nothing in this Agreement shall preclude Executive from serving on boards of directors of other companies or trade organizations and participating in charitable, community or religious activities that do not substantially interfere with her duties and responsibilities hereunder or conflict with the interest of the Company.





1.4     Office.   Executive’s primary office will be located in the Company’s office facility located in Knoxville, Tennessee, or any other location acceptable to Executive.
 
2.
Term.
 
2.1     Term of Employment.   Executive’s term of employment under this Agreement shall continue on and from the Effective Date, and, subject to the terms hereof, shall terminate on the earlier of (i) the third anniversary of the Effective Date, or (ii) termination of Executive’s employment pursuant to this Agreement (the “ Term ”);  provided, however,  that any termination of employment by Executive (other than for death or Permanent Disability) or by the Company may only be made upon 90 days prior written notice to the other party hereto. Executive shall resign from any and all positions, including board memberships, held by her with the Company or any subsidiary of the Company upon any termination of employment.

2.2     Extensions.   On each anniversary of the date hereof, commencing in 2018, one year shall be added to the termination date specified in Section 2.1(i) hereof, so that as of each anniversary of the date hereof the remaining Term of Executive’s employment as determined under Section 2.1(i) hereof shall be three (3) years.

2.3     Effective Date.   This Agreement shall only be effective and enforceable by the Company or Executive as of November 7, 2017 (the “ Effective Date ”).
 
3.
Compensation.
 
3.1     Salary.   The Company shall pay Executive a base salary (“ Base Salary ”) at the rate of $1,055,600 per annum commencing on the beginning of Executive’s term of employment hereunder. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. The Compensation Committee of the Board will review Executive’s salary at least annually and may increase (but not reduce) Executive’s Base Salary in its sole discretion. Once increased, such Base Salary shall not be reduced and, as so increased, shall constitute “Base Salary” hereunder.

3.2     Annual Bonus.   In addition to her Base Salary, Executive shall, commencing with the 2017 fiscal year and continuing each fiscal year during the Term hereafter, be afforded a reasonable opportunity to earn an annual cash bonus (the “ Bonus ”).  The Company shall be deemed to have provided Executive with such opportunity by establishing one or more reasonable annual performance goals for the Company (the “ Annual Performance Goals ”) under an annual executive incentive plan (a “ Bonus Plan ”) designed to pay a bonus should the Company meet or exceed such goals.  In determining Executive’s Bonus, Executive’s target Bonus shall be at least 100% of Base Salary (the “ Target Bonus ”).  If in any year the Annual Performance Goals for the Company are exceeded by a material amount, the Company shall award Executive a “stretch” Bonus of up to an additional 50% of Base Salary (for a total Bonus of up to 150% of Base Salary) as determined by the Compensation Committee of the Board.  For 2017, Executive’s Bonus shall be calculated in accordance with the Company’s 2017 Bonus Plan as adopted by the Board prior to the date hereof.  After 2017, the Compensation Committee of the Board, after consultation with management, will in the last quarter of each year establish reasonable eligibility requirements and Annual Performance Goals for the Bonus Plan for the next year based on the actual and projected performance of the Company. Executive shall be deemed to have earned an annual Bonus under the Company’s Bonus Plan so long as Executive meets the Annual Performance Goals established thereunder and is employed by the Company as of the last day of the Company’s fiscal year.
 
4.
Employee Benefits.
 
4.1     Employee Benefit Programs , Plans and Practices.   The Company shall during the Term provide Executive with coverage under all employee pension and welfare benefit programs, plans and practices (to the extent permitted under any employee benefit plan) in accordance with the terms thereof, which the Company generally makes available to its senior executives.





4.2     Vacation.   While employed hereunder, Executive shall be entitled to no less than 20 business days paid vacation in each calendar year, which shall be taken at such times as are consistent with Executive’s responsibilities hereunder.
 
5. Expenses.   Executive is authorized to incur reasonable expenses in carrying out her duties and responsibilities under this Agreement. The Company will reimburse Executive for such expenses upon presentation by Executive from time to time of appropriately itemized and approved (consistent with the Company’s policy) accounts of such expenditures.
 
6.
Termination of Employment.
 
6.1     Termination Without Cause.   Except as provided in Section 6.3, if Executive’s employment is terminated by the Company (other than for Permanent Disability, death or Cause), Executive shall receive such payments, if any, under applicable plans or programs, including but not limited to those referred to in Section 4.1 hereof, to which she is entitled pursuant to the terms of such plans or programs, and any unpaid payments of Base Salary previously earned, any unpaid Bonus earned or awarded for prior periods, accrued vacation and expense incurred for which Executive is entitled to reimbursement hereunder. If Executive is terminated under this Section 6.1, Executive shall also be entitled to receive:

(a) an amount in lieu of any other cash compensation beyond that provided in the immediately preceding sentence, which amount shall be equal to the sum of:

(i) the actual bonus, if any, she would have received in respect of the fiscal year in which her termination occurs, prorated by a fraction, the numerator of which is the number of days in such fiscal year prior to the date of Executive’s termination and the denominator of which is 365, payable at the same time as bonuses are paid to other executives;

(ii) two times Executive’s annual Base Salary; plus one times Executive’s Target Bonus; payable in a lump sum within 30 days following such termination of employment; provided that if such termination occurs within 90 days prior to calendar year end, amount shall be payable on January 1 of the year following the date of Executive’s termination; and

(b) continued coverage for a 24-month period under any employee medical, health and life insurance plans in accordance with the respective terms thereof applicable to active employees (other than the requirement of continued employment); provided, however, that payments and benefits due hereunder shall be reduced by any amounts owed by Executive to the Company.

In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment.

6.2     Termination For Good Reason.   Except as provided in Section 6.3, Executive may resign for Good Reason (as defined below) if Executive provides written notification to the Company of the existence of a condition constituting Good Reason (“ Notification ”) within ninety (90) days of the initial existence of such condition (“ Existence Date ”) and the resignation occurs within two (2) years of the Existence Date.  If Executive resigns for Good Reason, Executive shall receive such payments, if any, under applicable plans or programs, including but not limited to those referred to in Section 4.1 hereof, to which she is entitled pursuant to the terms of such plans or programs, and any unpaid payments of Base Salary previously earned, any unpaid Bonus earned or awarded for prior periods, accrued vacation and expense incurred for which Executive is entitled to reimbursement hereunder. If Executive resigns under this Section 6.2, Executive shall also be entitled to receive:
 




(a) an amount in lieu of any other cash compensation beyond that provided in the immediately preceding sentence, which amount shall be equal to the sum of:

(i) the actual bonus, if any, she would have received in respect of the fiscal year in which her resignation occurs, prorated by a fraction, the numerator of which is the number of days in such fiscal year prior to the date of Executive’s resignation and the denominator of which is 365, payable at the same time as bonuses are paid to other executives;

(ii) two times Executive’s annual Base Salary; plus one times Executive’s Target Bonus; payable in a lump sum within 30 days following such resignation of employment; provided that if such resignation occurs within 90 days prior to calendar year end, amount shall be payable on January 1 of the year following the date of Executive’s resignation; and

(b) continued coverage for a 24-month period under any employee medical, health and life insurance plans in accordance with the respective terms thereof applicable to active employees (other than the requirement of continued employment); provided, however, that payments and benefits due hereunder shall be reduced by any amounts owed by Executive to the Company.

Good Reason  shall be defined as one or more of the following conditions arising without the consent of Executive and which has not been remedied by the Company within thirty (30) days after receipt of the Notification:  (i) a material reduction in Executive’s Base Salary or the establishment of or any amendment to the annual cash bonus plan which would materially impair the ability of Executive to receive the Target Bonus (other than the establishment of reasonable EBITDA or other reasonable performance targets to be set annually in good faith by the Board), (ii) a material diminution of Executive’s titles, offices, positions or authority, excluding for this purpose an action not taken in bad faith; or the assignment to Executive of any duties inconsistent with Executive’s position (including status or reporting requirements), authority, or material responsibilities, or the removal of Executive’s authority or material responsibilities, excluding for this purpose an action not taken in bad faith, (iii) a transfer of Executive’s primary workplace by more than fifty (50) miles from the current workplace, (iv) a material breach of this Agreement by the Company, (v) Executive is not the Chief Executive Officer of Regal Cinemas Corporation, or (vi) Executive is not the Chief Executive Officer of the Company and a member of the Board.
 
6.3     Termination During a Change of Control.   Notwithstanding Section 6.1 or 6.2, if within three months prior to or one year after a Change of Control (as defined below), Executive’s employment is terminated by the Company (other than for Permanent Disability, death or Cause) or Executive resigns for Good Reason, Executive shall receive such payments, if any, under applicable plans or programs, including but not limited to those referred to in Section 4.1 hereof, to which she is entitled pursuant to the terms of such plans or programs, and any unpaid payments of Base Salary previously earned, any unpaid Bonus earned or awarded for prior periods, accrued vacation and expense incurred for which Executive is entitled to reimbursement hereunder. If Executive is terminated or resigns under this Section 6.3, Executive shall also be entitled to receive:

(a) an amount in lieu of any other cash compensation beyond that provided in the immediately preceding sentence, which amount shall be equal to the sum of:

(i) the actual bonus, if any, she would have received in respect of the fiscal year in which her termination or resignation occurs, prorated by a fraction, the numerator of which is the number of days in such fiscal year prior to the date of Executive’s termination or resignation and the denominator of which is 365, payable at the same time as bonuses are paid to other executives; and

(ii) two and one half times Executive’s annual Base Salary; plus two times Executive’s Target Bonus payable in a lump sum within 30 days following such termination or resignation of employment; provided that if such termination or resignation occurs within 90 days prior to calendar




year end, amount shall be payable on January 1 of the year following the date of Executive’s termination or resignation; and

(b) continued coverage for a 30-month period under any employee medical, health and life insurance plans in accordance with the respective terms thereof applicable to active employees (other than the requirement of continued employment); provided, however, that payments and benefits due hereunder shall be reduced by any amounts owed by Executive to the Company.
 
A  Change of Control  shall be deemed to have occurred upon both of the following occurring (A) any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”)), other than Anschutz Company, The Anschutz Corporation, or any entity or organization controlled by Philip F. Anschutz (collectively, the “ Anschutz Entities ”), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) acquires 20% or more of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (“ Voting Power ”); and (B) such beneficial ownership (as so defined) by such individual, entity or group of more than 20% of the Voting Power then exceeds the beneficial ownership (as so defined) by the Anschutz Entities of the Voting Power.
 
6.4     Permanent Disability.   If Executive is unable to engage in the activities required by Executive’s job by reason of any medically determined physical or mental impairment which has lasted or can be expected to last for a continuous period of not less than six (6) consecutive months (“ Permanent Disability ”), the Company or Executive may terminate Executive’s employment on written notice thereof, and Executive shall receive or commence receiving, as soon as practicable:

(a) the actual bonus, if any, she would have received in respect of the fiscal year in which her termination occurs, prorated by a fraction, the numerator of which is the number of days of the fiscal year until termination and the denominator of which is 365, payable at the same time as bonuses are paid to other executives; and

(b) accrued but unpaid Base Salary and such payments under applicable plans or programs, including but not limited to those referred to in Sections 4 and 5 hereof, to which she is entitled pursuant to the terms of such plans or programs.

6.5      Death. In the event of Executive’s death during the Term, Executive’s estate or designated beneficiaries shall receive or commence receiving, as soon as practicable:

(a) the actual bonus, if any, she would have received in respect of the fiscal year in which her death occurs, prorated by a fraction, the numerator of which is the number of days of the fiscal year until her death and the denominator of which is 365, payable at the same time as bonuses are paid to other executives; and

(b) accrued but unpaid Base Salary and such payments under applicable plans or programs, including but not limited to those referred to in Sections 4 and 5 hereof, to which Executive’s estate or designated beneficiaries are entitled pursuant to the terms of such plans or programs.
 
6.6     Termination for Cause: Resignation by Executive.
 
(a) The Company shall have the right to terminate the employment of Executive for Cause. In the event that Executive’s employment is terminated by the Company for Cause or by Executive for any reason (other than by Executive for Good Reason or as a result of Executive’s Permanent Disability or death) during the Term, Executive shall not be entitled to the payment of any compensation otherwise included under this Agreement. After the termination of Executive’s employment under this Section 6.6, the obligations of the




Company under this Agreement to make any further payments, or provide any benefits specified herein, to Executive shall thereupon cease and terminate.

(b) As used herein, the term “Cause” shall be limited to (i) any willful breach of any material written policy of the Company that results in material and demonstrable liability or loss to the Company; (ii) the engaging by Executive in conduct involving moral turpitude that causes material and demonstrable injury, monetarily or otherwise, to the Company, including, but not limited to, misappropriation or conversion of assets of the Company (other than immaterial assets); (iii) conviction of or entry of a plea of nolo contendere to a felony; or (iv) a material breach of this Agreement by engaging in action in violation of the restrictive covenants in this Agreement. No act or failure to act by Executive shall be deemed “willful” if done, or omitted to be done, by her in good faith and with the reasonable belief that her action or omission was in the best interest of the Company.

7. Golden Parachute Excise Tax Provisions. Notwithstanding any other provision of this Agreement or any other plan, arrangement, or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to the Executive or for the Executive’s benefit pursuant to the terms of this Agreement or otherwise (“ Covered Payments ”) constitute parachute payments within the meaning of Code Section 280G (“ Parachute Payments ”) and would, but for this Section 7 be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “ Code ”) (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “ Excise Tax ”), then the Covered Payments shall be payable either (i) in full or (ii) reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax, whichever of the foregoing (i) or (ii) results in the Executive’s receipt on an after-tax basis of the greatest amount of benefits after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax). Any such reduction shall be made by the Company in its sole discretion consistent with the requirements of Section 409A of the Code. Any determination required under this Section 7 shall be made in writing by the Company or by an accounting or consulting firm selected and paid for by the Company. The Executive shall provide the Company with such information and documents as the Company may reasonably request in order to make a determination under this Section 7. Such determination shall be binding upon the Executive and the Company.

8. Indemnification.   To the fullest extent permitted by the indemnification provisions of the articles of incorporation and bylaws of the Company in effect as of the date of this Agreement and the indemnification provisions of the corporation statute of the jurisdiction of the Company’s incorporation in effect from time to time (collectively, the “ Indemnification Provisions ”), and in each case subject to the conditions hereof, the Company shall (i) indemnify Executive, as a director and officer of the Company or a subsidiary of the Company or a trustee or fiduciary of an employee benefit plan of the Company or a subsidiary of the Company, or, if Executive shall be serving in such capacity at the Company’s written request, as a director or officer of any other corporation (other than a subsidiary of the Company) or as a trustee or fiduciary of an employee benefit plan not sponsored by the Company or a subsidiary of the Company, against all liabilities and reasonable expenses that may be incurred by Executive in any threatened, pending, or completed action, suit or proceeding, whether civil, criminal or administrative, or investigative and whether formal or informal, because Executive is or was a director or officer of the Company, a director or officer of such other corporation or a trustee or fiduciary of such employee benefit plan, and against which Executive may be indemnified by the Company, and (ii) pay for or reimburse the reasonable expenses incurred by Executive in the defense of any proceeding to which Executive is a party because Executive is or was a director or officer of the Company, a director or officer of such other corporation or a trustee or fiduciary of such employee benefit plan. The rights of Executive under the Indemnification Provisions shall survive the termination of the employment of Executive by the Company.

9.   Notices.   All notices or communications hereunder shall be in writing, addressed as follows:

To the Company:




 
Regal Entertainment Group
7132 Regal Lane 
Knoxville, TN 37918
Attn: Peter B. Brandow, Esq., General Counsel
 
To Executive:
 
Ms. Amy E. Miles
7132 Regal Lane 
Knoxville, TN 37918
 
Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of mailing shall constitute the time at which notice was given.

10. Separability; Legal Fees.   If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. The non-prevailing party shall bear the costs of any legal fees and other fees and expenses which may be incurred by the prevailing party in respect of enforcing its respective rights under this Agreement.

11. Assignment.   This contract shall be binding upon and inure to the benefit of the heirs and representatives of Executive and the assigns, and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by Executive (except by will or by operation of the laws of intestate succession) or by the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise) to all or substantially all of the stock, assets or businesses of the Company, if such successor expressly agrees to assume the obligations of the Company hereunder.

12. Amendment.   This Agreement may only be amended by written agreement of the parties hereto.

13. Nondisclosure of Confidential Information: Non-Competition.

(a) Executive shall not, without the prior written consent of the Company, use, divulge, disclose or make accessible to any other person, firm, partnership, corporation or other entity any Confidential Information pertaining to the business of the Company or any of its affiliates, except (i) while employed by the Company, in the business of and for the benefit of the Company, or (ii) as required by law. For purposes of this Section 13(a), “Confidential Information” shall mean non-public information concerning the financial data, strategic business plans, product development (or other proprietary product data), customer lists, marketing, acquisition and divestiture plans and other non-public, proprietary and confidential information of the Company, its subsidiaries, its theater affiliates (the “ Restricted Group ”) or suppliers (including, without limitation, any motion picture distributor or exhibitor) or vendors, that, in any case, is not otherwise available to the public (other than by Executive’s breach of the terms hereof).

(b) During the period of her employment hereunder and for one year thereafter (except in the case where Executive terminates her employment with the Company for the Good Reason event described in clause (v) of the definition of “Good Reason”), Executive agrees that, without the prior written consent of the Company, (A) she will not, directly or indirectly, either as principal, manager, agent, consultant, officer, stockholder, partner, investor, lender or employee or in any other capacity, carry on, be engaged in, or have any financial interest in, any business in Competition (as defined in Section 13(c)) with the business of the Restricted Group and (B) she shall not, on her own behalf or on behalf of any person, firm or company, directly or indirectly, solicit or hire for the benefit of anyone, other than the Restricted Group, any person who is, or




was at any time during the six (6) months immediately preceding the time of the solicitation or hiring by Executive employed by the Restricted Group (other than Executive’s secretary or other administrative employee who worked directly for her).

(c) For purposes of this Section 13, a business shall be deemed to be in “Competition” with the Restricted Group if it operates a first-run movie theater with a minimum of six (6) screens within ten (10) miles of any first-run movie theater with a minimum of six (6) screens operated by a member of the Restricted Group. Nothing in this Section 13 shall be construed so as to preclude Executive from investing in a publicly or privately held company, provided Executive’s beneficial ownership of any class of such company’s securities does not exceed 1% of the outstanding securities of such class.

(d) Executive and the Company agree that this covenant not to compete is a reasonable covenant under the circumstances, and further agree that if in the opinion of any court of competent jurisdiction such restraint is not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of this covenant as to the court shall appear not reasonable and to enforce the remainder of the covenant as so amended. Executive agrees that any breach of the covenants contained in this Section 13 would irreparably injure the Company. Accordingly, Executive agrees that the Company may, in addition to pursuing any other remedies it may have in equity, obtain an injunction against Executive from any court having jurisdiction over the matter restraining any further violation of this Agreement by Executive and cease making any payments otherwise required by this Agreement;  provided, however,  that in the event a court of competent jurisdiction, which recognizes the validity of the provisions of this Section 13, finds Executive not to be in violation of the provisions of this Section 13, then the Company shall pay to Executive, in a lump sum, within ten days of such determination, all amounts that would have been payable to Executive hereunder through the date of such determination and continue making any other payments due with respect to periods of time subsequent to such determination in accordance with the provisions of this Agreement.

14. Beneficiaries: References   Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive’s death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive’s death or a judicial determination of her incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to her beneficiary, estate or other legal representative, and the Company shall pay amounts payable under this Agreement, unless otherwise provided herein, in accordance with the terms of this Agreement, to Executive’s personal or legal representatives, executors, administrators, heirs, distributees, devisees, legatees or estate, as the case may be. Any reference to the feminine gender in this Agreement shall include, where appropriate, the masculine.

15. Survival.   The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. The provisions of this Section 15 are in addition to the survivorship provisions of any other section of this Agreement.

16.   Governing Law.  This Agreement shall be construed, interpreted and governed in accordance with the laws of the state of Tennessee, without reference to rules relating to conflicts of law.

17. Effect on Prior Agreements.   Except for amendments to this Agreement, this Agreement contains the entire understanding between the parties hereto and supersedes in all respects any prior or other agreement or understanding between the Company or any affiliate of the Company and Executive.

18. Withholding.   The Company shall be entitled to withhold all applicable tax withholdings, FICA, FUTA and all other required withholdings of the Company from any and all payments made under any provision of this Agreement.





19. Counterparts.   This Agreement may be executed in two or more counterparts, each of which will be deemed an original.






 
*    *    *    *
 
[Signature Page Follows]




 

IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date set forth in the first paragraph.
 
 
REGAL ENTERTAINMENT GROUP
 
 
 
 
 
By:
/s/ GREGORY W. DUNN
 
Name:
Gregory W. Dunn
 
Title:
President and Chief Operating Officer
 
 
 
 
 
 
EXECUTIVE
 
 
 
/s/ AMY E. MILES
 
Amy E. Miles
 
 
 
 
 
 





Exhibit 10.3
  
 
 
SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this " Agreement ") is made as of November 7, 2017, by and between Regal Entertainment Group, a Delaware corporation (the " Company "), and Gregory W. Dunn (" Executive ").
RECITALS
WHEREAS , Executive and the Company previously entered into an Amended and Restated Employment Agreement, as further amended from time to time, dated May 5, 2009; and
WHEREAS , the Company and Executive desire to amend and restate the Amended and Restated Employment Agreement on the terms and conditions set forth herein.
NOW, THEREFORE , in consideration of the mutual covenants contained herein, Executive and the Company agree upon the following terms of employment of Executive by the Company:
1.     Employment.
1.1     Position. Subject to the terms and conditions of this Agreement, the Company agrees to employ Executive during the Term (as defined herein) as its President and Chief Operating Officer. In his capacity as the President and Chief Operating Officer of the Company, Executive shall have the powers, responsibilities and authorities of presidents and chief operating officers of corporations of the size, type and nature of the Company, as it exists from time to time, as are assigned by the Chief Executive Officer consistent with Executive's position. In his capacity as President and Chief Operating Officer of the Company's subsidiary, Regal Cinemas Corporation, Executive shall report to the Chief Executive Officer of Regal Cinemas Corporation and shall have the powers, responsibilities and authorities of presidents and chief operating officers of corporations of the size, type and nature of Regal Cinemas Corporation, as it exists from time to time, as are assigned by the Chief Executive Officer of Regal Cinemas Corporation consistent with Executive's position. At the request of the Company, Executive will serve as an officer and/or director of any of the Company's other subsidiaries for no additional compensation.
1.2     Duties. Subject to the terms and conditions of this Agreement, Executive hereby agrees to be employed as the President and Chief Operating Officer of the Company and as the President and Chief Operating Officer of Regal Cinemas Corporation, and agrees to devote such working time and efforts (except for permitted vacation periods and reasonable periods of illness and other incapacity), to the best of his ability, experience and talent, to the performance of services, duties and responsibilities in connection therewith so that such performance shall be his primary business activity. Executive shall perform such duties and exercise such powers with respect to the activities of the Company, commensurate with his position, as the President and Chief Operating Officer of the Company, as the Chief Executive Officer shall from time to time reasonably delegate to him.
1.3     Other Service. Nothing in this Agreement shall preclude Executive from serving on boards of directors of other companies or trade organizations and participating in charitable, community or religious activities that do not substantially interfere with his duties and responsibilities hereunder or conflict with the interest of the Company.
1.4     Reporting. Executive shall report directly to (a) Amy E. Miles, Chief Executive Officer of the Company or (b) if Ms. Miles is no longer employed by the Company, the then existing Chief Executive Officer of the Company.
2.     Term.
2.1     Term of Employment. Executive's term of employment under this Agreement shall continue on and from the Effective Date (as defined below), and, subject to the terms hereof, shall terminate on the earlier of (i) the third anniversary of the Effective Date, or (ii) termination of Executive's employment pursuant to this Agreement (the




" Term "); provided, however, that any termination of employment by Executive (other than for death or Permanent Disability) or by the Company may only be made upon 90 days prior written notice to the other party hereto. Executive shall resign from any and all positions, including board memberships, held by him with the Company or any subsidiary of the Company upon any termination of employment.
2.2     Extensions. On each anniversary of the date hereof, commencing in 2018, one year shall be added to the termination date specified in Section 2.1(i) hereof, so that as of each anniversary of the date hereof the remaining Term of Executive's employment as determined under Section 2.1(i) hereof shall be three (3) years.
2.3     Effective Date. This Agreement shall only be effective and enforceable by the Company or Executive as of November 7, 2017 (the " Effective Date ").
3.     Compensation.
3.1     Salary. The Company shall pay Executive a base salary (" Base Salary ") at the rate of $631,000 per annum commencing on the beginning of Executive's term of employment hereunder. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. The Compensation Committee of the Board of Directors of the Company will review Executive's salary at least annually and may increase (but not reduce) Executive's Base Salary in its sole discretion. Once increased such Base Salary shall not be reduced, and, as so increased, shall constitute "Base Salary" hereunder.
3.2     Annual Bonus. In addition to his Base Salary, Executive shall, commencing with the 2017 fiscal year and continuing each fiscal year during the Term hereafter, be afforded a reasonable opportunity to earn an annual cash bonus (the " Bonus "). The Company shall be deemed to have provided Executive with such opportunity by establishing one or more reasonable annual performance goals for the Company (the " Annual Performance Goals ") under an annual executive incentive plan (a " Bonus Plan ") designed to pay a bonus should the Company meet or exceed such goals. In determining Executive's Bonus, Executive's target Bonus shall be at least 100% of Base Salary (the " Target Bonus "). If in any year the Annual Performance Goals for the Company are exceeded by a material amount, the Company shall award Executive a “stretch” Bonus of up to an additional 50% of Base Salary (for a total Bonus of up to 150% of Base Salary) as determined by the Compensation Committee of the Board. For 2017, Executive's Bonus shall be calculated in accordance with the Company's 2017 Bonus Plan as adopted by the Board prior to the date hereof. After 2017, the Compensation Committee of the Board, after consultation with management, will in the last quarter of each year establish reasonable eligibility requirements and Annual Performance Goals for the Bonus Plan for the next year based on the actual and projected performance of the Company. Executive shall be deemed to have earned an annual Bonus under the Company's Bonus Plan so long as Executive meets the Annual Performance Goals established thereunder and is employed by the Company as of the last day of the Company's fiscal year.
4.     Employee Benefits.
4.1     Employee Benefit Programs , Plans and Practices . The Company shall during the Term provide Executive with coverage under all employee pension and welfare benefit programs, plans and practices (to the extent permitted under any employee benefit plan) in accordance with the terms thereof, which the Company generally makes available to its senior executives.
4.2     Vacation. While employed hereunder, Executive shall be entitled to no less than 20 business days paid vacation in each calendar year, which shall be taken at such times as are consistent with Executive's responsibilities hereunder.
5.     Expenses. Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this Agreement. The Company will reimburse Executive for such expenses upon presentation by Executive from time to time of appropriately itemized and approved (consistent with the Company's policy) accounts of such expenditures.
6.     Termination of Employment.
6.1     Termination Without Cause. Except as provided in Section 6.3, if Executive's employment is terminated by the Company (other than for Permanent Disability, death or Cause), Executive shall receive such payments, if any, under applicable plans or programs, including but not limited to those referred to in Section 4.1




hereof, to which he is entitled pursuant to the terms of such plans or programs, and any unpaid payments of Base Salary previously earned, any unpaid Bonus earned or awarded for prior periods, accrued vacation and expense incurred for which Executive is entitled to reimbursement hereunder. If Executive is terminated under this Section 6.1, Executive shall also be entitled to receive:
(a) an amount in lieu of any other cash compensation beyond that provided in the immediately preceding sentence, which amount shall be equal to the sum of:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his termination occurs, prorated by a fraction, the numerator of which is the number of days in such fiscal year prior to the date of Executive's termination and the denominator of which is 365, payable at the same time as bonuses are paid to other executives;
(ii) two times Executive's annual Base Salary; plus one times Executive's Target Bonus; payable in a lump sum within 30 days following such termination of employment; provided that if such termination occurs within 90 days prior to calendar year end, amount shall be payable on January 1 of the year following the date of Executive’s termination; and
(b) continued coverage for a 24-month period under any employee medical, health and life insurance plans in accordance with the respective terms thereof applicable to active employees (other than the requirement of continued employment); provided, however, that payments and benefits due hereunder shall be reduced by any amounts owed by Executive to the Company.
In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment.
6.2     Termination For Good Reason. Except as provided in Section 6.3, Executive may resign for Good Reason (as defined below) if Executive provides written notification to the Company of the existence of a condition constituting Good Reason (" Notification ") within ninety (90) days of the initial existence of such condition (" Existence Date ") and the resignation occurs within two (2) years of the Existence Date. If Executive resigns for Good Reason, Executive shall receive such payments, if any, under applicable plans or programs, including but not limited to those referred to in Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs, and any unpaid payments of Base Salary previously earned, any unpaid Bonus earned or awarded for prior periods, accrued vacation and expense incurred for which Executive is entitled to reimbursement hereunder. If Executive resigns under this Section 6.2, Executive shall also be entitled to receive:
(a) an amount in lieu of any other cash compensation beyond that provided in the immediately preceding sentence, which amount shall be equal to the sum of:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his resignation occurs, prorated by a fraction, the numerator of which is the number of days in such fiscal year prior to the date of Executive's resignation and the denominator of which is 365, payable at the same time as bonuses are paid to other executives;
(ii) two times Executive's annual Base Salary; plus one times Executive's Target Bonus; payable in a lump sum within 30 days following such resignation of employment; provided that if such resignation occurs within 90 days prior to calendar year end, amount shall be payable on January 1 of the year following the date of Executive’s resignation; and
(b) continued coverage for a 24-month period under any employee medical, health and life insurance plans in accordance with the respective terms thereof applicable to active employees (other than the requirement of continued employment); provided, however, that payments and benefits due hereunder shall be reduced by any amounts owed by Executive to the Company.
Good Reason shall be defined as one or more of the following conditions arising without the consent of Executive and which has not been remedied by the Company within thirty (30) days after receipt of the Notification: (i) a material reduction in Executive's Base Salary or the establishment of or any amendment to the annual cash bonus plan which would materially impair the ability of Executive to receive the Target Bonus (other than the establishment of




reasonable EBITDA or other reasonable performance targets to be set annually in good faith by the Board), (ii) a material diminution of Executive's titles, offices, positions or authority, excluding for this purpose an action not taken in bad faith; or the assignment to Executive of any duties inconsistent with Executive's position (including status or reporting requirements), authority, or material responsibilities, or the removal of Executive's authority or material responsibilities, excluding for this purpose an action not taken in bad faith, (iii) a transfer of Executive's primary workplace by more than fifty (50) miles from the current workplace, (iv) a material breach of this Agreement by the Company, (v) Executive is not the President and Chief Operating Officer of Regal Cinemas Corporation; or (vi) Executive is not the President and Chief Operating Officer of the Company.
6.3     Termination During a Change of Control. Notwithstanding Section 6.1 or 6.2, if within three months prior to or one year after a Change of Control (as defined below), Executive's employment is terminated by the Company (other than for Permanent Disability, death or Cause) or Executive resigns for Good Reason, Executive shall receive such payments, if any, under applicable plans or programs, including but not limited to those referred to in Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs, and any unpaid payments of Base Salary previously earned, any unpaid Bonus earned or awarded for prior periods, accrued vacation and expense incurred for which Executive is entitled to reimbursement hereunder. If Executive is terminated or resigns under this Section 6.3, Executive shall also be entitled to receive:
(a) an amount in lieu of any other cash compensation beyond that provided in the immediately preceding sentence, which amount shall be equal to the sum of:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his termination or resignation occurs, prorated by a fraction, the numerator of which is the number of days in such fiscal year prior to the date of Executive's termination or resignation and the denominator of which is 365, payable at the same time as bonuses are paid to other executives; and
(ii) two times Executive's annual Base Salary; plus one and one half times Executive's Target Bonus payable in a lump sum within 30 days following such termination or resignation of employment; provided that if such termination or resignation occurs within 90 days prior to calendar year end, amount shall be payable on January 1 of the year following the date of Executive’s termination or resignation; and
(b) continued coverage for a 30-month period under any employee medical, health and life insurance plans in accordance with the respective terms thereof applicable to active employees (other than the requirement of continued employment); provided, however, that payments and benefits due hereunder shall be reduced by any amounts owed by Executive to the Company.
A Change of Control shall be deemed to have occurred upon both of the following occurring: (A) any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the " Exchange Act ")), other than Anschutz Company, The Anschutz Corporation, or any entity or organization controlled by Philip F. Anschutz (collectively, the " Anschutz Entities "), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) acquires 20% or more of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (" Voting Power "); and (B) such beneficial ownership (as so defined) by such individual, entity or group of more than 20% of the Voting Power then exceeds the beneficial ownership (as so defined) by the Anschutz Entities of the Voting Power.
6.4     Permanent Disability. If Executive is unable to engage in the activities required by Executive's job by reason of any medically determined physical or mental impairment which has lasted or can be expected to last for continuous period of not less than six (6) consecutive months (" Permanent Disability "), the Company or Executive may terminate Executive's employment on written notice thereof, and Executive shall receive or commence receiving, as soon as practicable:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his termination occurs, prorated by a fraction, the numerator of which is the number of days of the fiscal year until termination and the denominator of which is 365, payable at the same time as bonuses are paid to other executives; and
(ii) accrued but unpaid Base Salary and such payments under applicable plans or programs, including but not limited to those referred to in Sections 4 and 5 hereof, to which he is entitled pursuant to the terms of such plans or programs.




6.5      Death. In the event of Executive's death during the Term, Executive's estate or designated beneficiaries shall receive or commence receiving, as soon as practicable:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his death occurs, prorated by a fraction, the numerator of which is the number of days of the fiscal year until his death and the denominator of which is 365, payable at the same time as bonuses are paid to other executives; and
(ii) accrued but unpaid Base Salary and such payments under applicable plans or programs, including but not limited to those referred to in Sections 4 and 5 hereof, to which Executive's estate or designated beneficiaries are entitled pursuant to the terms of such plans or programs.
6.6     Termination for Cause: Resignation by Executive.
(a) The Company shall have the right to terminate the employment of Executive for Cause. In the event that Executive's employment is terminated by the Company for Cause or by Executive for any reason (other than by Executive for Good Reason or as a result of Executive's Permanent Disability or death) during the Term, Executive shall not be entitled to the payment of any compensation otherwise included under this Agreement. After the termination of Executive's employment under this Section 6.6, the obligations of the Company under this Agreement to make any further payments, or provide any benefits specified herein, to Executive shall thereupon cease and terminate.
(b) As used herein, the term "Cause" shall be limited to (i) any willful breach of any material written policy of the Company that results in material and demonstrable liability or loss to the Company; (ii) the engaging by Executive in conduct involving moral turpitude that causes material and demonstrable injury, monetarily or otherwise, to the Company, including, but not limited to, misappropriation or conversion of assets of the Company (other than immaterial assets); (iii) conviction of or entry of a plea of nolo contendere to a felony; or (iv) a material breach of this Agreement by engaging in action in violation of the restrictive covenants in this Agreement. No act or failure to act by Executive shall be deemed "willful" if done, or omitted to be done, by him in good faith and with the reasonable belief that his action or omission was in the best interest of the Company.
7.     Golden Parachute Excise Tax Provisions . Notwithstanding any other provision of this Agreement or any other plan, arrangement, or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to the Executive or for the Executive’s benefit pursuant to the terms of this Agreement or otherwise (“ Covered Payments ”) constitute parachute payments within the meaning of Code Section 280G (“ Parachute Payments ”) and would, but for this Section 7 be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “ Code ”) (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “ Excise Tax ”), then the Covered Payments shall be payable either (i) in full or (ii) reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax, whichever of the foregoing (i) or (ii) results in the Executive’s receipt on an after-tax basis of the greatest amount of benefits after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax). Any such reduction shall be made by the Company in its sole discretion consistent with the requirements of Section 409A of the Code. Any determination required under this Section 7 shall be made in writing by the Company or by an accounting or consulting firm selected and paid for by the Company. The Executive shall provide the Company with such information and documents as the Company may reasonably request in order to make a determination under this Section 7. Such determination shall be binding upon the Executive and the Company.
8.     Indemnification. To the fullest extent permitted by the indemnification provisions of the articles of incorporation and bylaws of the Company in effect as of the date of this Agreement and the indemnification provisions of the corporation statute of the jurisdiction of the Company's incorporation in effect from time to time (collectively, the " Indemnification Provisions "), and in each case subject to the conditions thereof, the Company shall (i) indemnify Executive, as a director and officer of the Company or a subsidiary of the Company or a trustee or fiduciary of an employee benefit plan of the Company or a subsidiary of the Company, or, if Executive shall be serving in such capacity at the Company's written request, as a director or officer of any other corporation (other than a subsidiary of the Company) or as a trustee or fiduciary of an employee benefit plan not sponsored by the Company or a subsidiary of the Company, against all liabilities and reasonable expenses that may be incurred by Executive in any threatened, pending, or completed action, suit or proceeding, whether civil, criminal or administrative, or investigative and whether formal or informal, because Executive is or was a director or officer of the Company, a director or officer of such other corporation or a trustee or fiduciary of such employee benefit plan, and against which Executive may be




indemnified by the Company, and (ii) pay for or reimburse the reasonable expenses incurred by Executive in the defense of any proceeding to which Executive is a party because Executive is or was a director or officer of the Company, a director or officer of such other corporation or a trustee or fiduciary of such employee benefit plan. The rights of Executive under the Indemnification Provisions shall survive the termination of the employment of Executive by the Company.
9.     Notices. All notices or communications hereunder shall be in writing, addressed as follows:
To the Company:
Regal Entertainment Group
7132 Regal Lane
Knoxville, TN 37918
Attn: Peter B. Brandow, Esq., General Counsel

To Executive:
Mr. Gregory W. Dunn
7132 Regal Lane 
Knoxville, TN 37918

Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of mailing shall constitute the time at which notice was given.
10.     Separability; Legal Fees If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. The non-prevailing party shall bear the costs of any legal fees and other fees and expenses which may be incurred by the prevailing party in respect of enforcing its respective rights under this Agreement.
11.     Assignment. This contract shall be binding upon and inure to the benefit of the heirs and representatives of Executive and the assigns and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by Executive (except by will or by operation of the laws of intestate succession) or by the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise) to all or substantially all of the stock, assets or businesses of the Company, if such successor expressly agrees to assume the obligations of the Company hereunder.
12.     Amendment. This Agreement may only be amended by written agreement of the parties hereto.
13.     Nondisclosure of Confidential Information; Non-Competition.
(a) Executive shall not, without the prior written consent of the Company, use, divulge, disclose or make accessible to any other person, firm, partnership, corporation or other entity any Confidential Information pertaining to the business of the Company or any of its affiliates, except (i) while employed by the Company, in the business of and for the benefit of the Company, or (ii) as required by law. For purposes of this Section 13(a), "Confidential Information" shall mean non-public information concerning the financial data, strategic business plans, product development (or other proprietary product data), customer lists, marketing, acquisition and divestiture plans and other non-public, proprietary and confidential information of the Company, its subsidiaries, its theater affiliates (the " Restricted Group ") or suppliers (including, without limitation, any motion picture distributor or exhibitor) or vendors, that, in any case, is not otherwise available to the public (other than by Executive's breach of the terms hereof).
(b) During the period of his employment hereunder and for one year thereafter (except in the case where Executive terminates his employment with the Company for the Good Reason event described in clause (v) of the definition of "Good Reason"), Executive agrees that, without the prior written consent of the Company, (A) he will




not, directly or indirectly, either as principal, manager, agent, consultant, officer, stockholder, partner, investor, lender or employee or in any other capacity, carry on, be engaged in, or have any financial interest in, any business in Competition (as defined in Section 13(c)) with the business of the Restricted Group and (B) he shall not, on his own behalf or on behalf of any person, firm or company, directly or indirectly, solicit or hire for the benefit of anyone, other than the Restricted Group, any person who is, or was at any time during the six (6) months immediately preceding the time of the solicitation or hiring by Executive employed by the Restricted Group (other than Executive's secretary or other administrative employee who worked directly for him).
(c) For purposes of this Section 13, a business shall be deemed to be in "Competition" with the Restricted Group if it operates any first-run movie theater with a minimum of six (6) screens within ten (10) miles of any first-run movie theater with a minimum of six (6) screens operated by a member of the Restricted Group. Nothing in this Section 13 shall be construed so as to preclude Executive from investing in any publicly or privately held company, provided Executive's beneficial ownership of any class of such company's securities does not exceed 1% of the outstanding securities of such class.
(d) Executive and the Company agree that this covenant not to compete is a reasonable covenant under the circumstances, and further agree that if in the opinion of any court of competent jurisdiction such restraint is not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of this covenant as to the court shall appear not reasonable and to enforce the remainder of the covenant as so amended. Executive agrees that any breach of the covenants contained in this Section 13 would irreparably injure the Company. Accordingly, Executive agrees that the Company may, in addition to pursuing any other remedies it may have in law or in equity, obtain an injunction against Executive from any court having jurisdiction over the matter restraining any further violation of this Agreement by Executive and cease making any payments otherwise required by this Agreement; provided, however, that in the event a court of competent jurisdiction, which recognizes the validity of the provisions of this Section 13, finds Executive not to be in violation of the provisions of this Section 13, then the Company shall pay to Executive, in a lump sum, within ten days of such determination, all amounts that would have been payable to Executive hereunder through the date of such determination and continue making any other payments due with respect to periods of time subsequent to such determination in accordance with the provisions of this Agreement.
14.     Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative, and the Company shall pay amounts payable under this Agreement, unless otherwise provided herein, in accordance with the terms of this Agreement, to Executive's personal or legal representatives, executors, administrators, heirs, distributees, devisees, legatees or estate, as the case may be. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine.
15.     Survival.      The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. The provisions of this Section 15 are in addition to the survivorship provisions of any other section of this Agreement.
16.     Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the state of Tennessee, without reference to rules relating to conflicts of law.
17.     Effect on Prior Agreements. Except for amendments to this Agreement, this Agreement contains the entire understanding between the parties hereto and supersedes in all respects any prior or other agreement or understanding between the Company or any affiliate of the Company and Executive.
18.     Withholding. The Company shall be entitled to withhold all applicable tax withholdings, FICA, FUTA and all other required withholdings of the Company from any and all payments made under any provision of this Agreement.
19.     Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original.





* * * *
[Signature Page Follows]





IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date set forth in the first paragraph.
 
REGAL ENTERTAINMENT GROUP
 
 
 
 
 
 
By:
/s/ AMY E. MILES
 
Name:
 
Amy E. Miles
 
Title:
 
Chief Executive Officer and Chair of the Board
 
EXECUTIVE
 
/s/ GREGORY W. DUNN
 
Gregory W. Dunn







Exhibit 10.4
 
 
 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this " Agreement ") is made as of November 7, 2017, by and between Regal Entertainment Group, a Delaware corporation (the " Company "), and David H. Ownby (" Executive ").
RECITALS
WHEREAS , Executive and the Company previously entered into an Employment Agreement, as amended from time to time, dated May 5, 2009; and
WHEREAS , the Company and Executive desire to amend and restate the Employment Agreement on the terms and conditions set forth herein.
NOW, THEREFORE , in consideration of the mutual covenants contained herein, Executive and the Company agree upon the following terms of employment of Executive by the Company:
1.     Employment.
1.1     Position. Subject to the terms and conditions of this Agreement, the Company agrees to employ Executive during the Term (as defined herein) as its Executive Vice President and Chief Financial Officer. In his capacity, as Executive Vice President and Chief Financial Officer of the Company, Executive shall have the powers, responsibilities and authorities of chief financial officers of corporations of the size, type and nature of the Company, as it exists from time to time, as are assigned by the Chief Executive Officer consistent with Executive's position. At the request of the Company, Executive will serve as an officer and/or director of any of the Company's other subsidiaries for no additional compensation.
1.2     Duties. Subject to the terms and conditions of this Agreement, Executive hereby agrees to be employed as Executive Vice President and Chief Financial Officer of the Company and agrees to devote such working time and efforts (except for permitted vacation periods and reasonable periods of illness and other incapacity), to the best of his ability, experience and talent, to the performance of services, duties and responsibilities in connection therewith so that such performance shall be his primary business activity. Executive shall perform such duties and exercise such powers with respect to the activities of the Company, commensurate with his position, as Executive Vice President and Chief Financial Officer of the Company, as the Chief Executive Officer shall from time to time reasonably delegate to him.
1.3     Other Service. Nothing in this Agreement shall preclude Executive from serving on boards of directors of other companies or trade organizations and participating in charitable, community or religious activities that do not substantially interfere with his duties and responsibilities hereunder or conflict with the interest of the Company.
1.4     Reporting. Executive shall report directly to (a) Amy E. Miles, Chief Executive Officer of the Company or (b) if Ms. Miles is no longer employed by the Company, the then existing Chief Executive Officer of the Company.
2.     Term.
2.1     Term of Employment. Executive's term of employment under this Agreement shall continue on and from the Effective Date (as defined below), and, subject to the terms hereof, shall terminate on the earlier of (i) the third anniversary of the Effective Date, or (ii) termination of Executive's employment pursuant to this Agreement (the " Term "); provided, however, that any termination of employment by Executive (other than for death or Permanent Disability) or by the Company may only be made upon 90 days prior written notice to the other party hereto. Executive shall resign from any and all positions, including board memberships, held by him with the Company or any subsidiary of the Company upon any termination of employment.




2.2     Extensions. On each anniversary of the date hereof, commencing in 2018, one year shall be added to the termination date specified in Section 2.1(i) hereof, so that as of each anniversary of the date hereof the remaining Term of Executive's employment as determined under Section 2.1(i) hereof shall be three (3) years.
2.3     Effective Date. This Agreement shall only be effective and enforceable by the Company or Executive as of November 7, 2017 (the " Effective Date ").
3.     Compensation.
3.1     Salary. The Company shall pay Executive a base salary (" Base Salary ") at the rate of $584,000 per annum commencing on the beginning of Executive's term of employment hereunder. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. The Compensation Committee of the Board of Directors of the Company will review Executive's salary at least annually and may increase (but not reduce) Executive's Base Salary in its sole discretion. Once increased such Base Salary shall not be reduced, and, as so increased, shall constitute "Base Salary" hereunder.
3.2     Annual Bonus. In addition to his Base Salary, Executive shall, commencing with the 2017 fiscal year and continuing each fiscal year during the Term hereafter, be afforded a reasonable opportunity to earn an annual cash bonus (the " Bonus "). The Company shall be deemed to have provided Executive with such opportunity by establishing one or more reasonable annual performance goals for the Company (the " Annual Performance Goals ") under an annual executive incentive plan (a " Bonus Plan ") designed to pay a bonus should the Company meet or exceed such goals. In determining Executive's Bonus, Executive's target Bonus shall be at least 85% of Base Salary (the " Target Bonus "). If in any year the Annual Performance Goals for the Company are exceeded by a material amount, the Company shall award Executive a “stretch” Bonus of up to an additional 42.5% of Base Salary (for a total Bonus of up to 117.5% of Base Salary) as determined by the Compensation Committee of the Board. For 2017, Executive's Bonus shall be calculated in accordance with the Company's 2017 Bonus Plan as adopted by the Board prior to the date hereof. After 2017, the Compensation Committee of the Board, after consultation with management, will in the last quarter of each year establish reasonable eligibility requirements and Annual Performance Goals for the Bonus Plan for the next year based on the actual and projected performance of the Company. Executive shall be deemed to have earned an annual Bonus under the Company's Bonus Plan so long as Executive meets the Annual Performance Goals established thereunder and is employed by the Company as of the last day of the Company's fiscal year.
4.     Employee Benefits.
4.1     Employee Benefit Programs, Plans and Practices. The Company shall during the Term provide Executive with coverage under all employee pension and welfare benefit programs, plans and practices (to the extent permitted under any employee benefit plan) in accordance with the terms thereof, which the Company generally makes available to its senior executives.
4.2     Vacation. While employed hereunder, Executive shall be entitled to no less than 20 business days paid vacation in each calendar year, which shall be taken at such times as are consistent with Executive's responsibilities hereunder.
5.     Expenses. Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this Agreement. The Company will reimburse Executive for such expenses upon presentation by Executive from time to time of appropriately itemized and approved (consistent with the Company's policy) accounts of such expenditures.
6.     Termination of Employment.
6.1     Termination Without Cause. Except as provided in Section 6.3, if Executive's employment is terminated by the Company (other than for Permanent Disability, death or Cause), Executive shall receive such payments, if any, under applicable plans or programs, including but not limited to those referred to in Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs, and any unpaid payments of Base Salary previously earned, any unpaid Bonus earned or awarded for prior periods, accrued vacation and expense incurred for which Executive is entitled to reimbursement hereunder. If Executive is terminated under this Section 6.1, Executive shall also be entitled to receive:




(a) an amount in lieu of any other cash compensation beyond that provided in the immediately preceding sentence, which amount shall be equal to the sum of:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his termination occurs, prorated by a fraction, the numerator of which is the number of days in such fiscal year prior to the date of Executive's termination and the denominator of which is 365, payable at the same time as bonuses are paid to other executives;
(ii) two times Executive's annual Base Salary; plus one times Executive's Target Bonus; payable in a lump sum within 30 days following such termination of employment; provided that if such termination occurs within 90 days prior to calendar year end, amount shall be payable on January 1 of the year following the date of Executive’s termination; and
(b) continued coverage for a 24-month period under any employee medical, health and life insurance plans in accordance with the respective terms thereof applicable to active employees (other than the requirement of continued employment); provided, however, that payments and benefits due hereunder shall be reduced by any amounts owed by Executive to the Company.
In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment.
6.2     Termination For Good Reason. Except as provided in Section 6.3, Executive may resign for Good Reason (as defined below) if Executive provides written notification to the Company of the existence of a condition constituting Good Reason (" Notification ") within ninety (90) days of the initial existence of such condition (" Existence Date ") and the resignation occurs within two (2) years of the Existence Date. If Executive resigns for Good Reason, Executive shall receive such payments, if any, under applicable plans or programs, including but not limited to those referred to in Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs, and any unpaid payments of Base Salary previously earned, any unpaid Bonus earned or awarded for prior periods, accrued vacation and expense incurred for which Executive is entitled to reimbursement hereunder. If Executive resigns under this Section 6.2, Executive shall also be entitled to receive:
(a) an amount in lieu of any other cash compensation beyond that provided in the immediately preceding sentence, which amount shall be equal to the sum of:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his resignation occurs, prorated by a fraction, the numerator of which is the number of days in such fiscal year prior to the date of Executive's resignation and the denominator of which is 365, payable at the same time as bonuses are paid to other executives;
(ii) two times Executive's annual Base Salary; plus one times Executive's Target Bonus; payable in a lump sum within 30 days following such resignation of employment; provided that if such resignation occurs within 90 days prior to calendar year end, amount shall be payable on January 1 of the year following the date of Executive’s resignation; and
(b) continued coverage for a 24-month period under any employee medical, health and life insurance plans in accordance with the respective terms thereof applicable to active employees (other than the requirement of continued employment); provided, however, that payments and benefits due hereunder shall be reduced by any amounts owed by Executive to the Company.
Good Reason shall be defined as one or more of the following conditions arising without the consent of Executive and which has not been remedied by the Company within thirty (30) days after receipt of the Notification: (i) a material reduction in Executive's Base Salary or the establishment of or any amendment to the annual cash bonus plan which would materially impair the ability of Executive to receive the Target Bonus (other than the establishment of reasonable EBITDA or other reasonable performance targets to be set annually in good faith by the Board), (ii) a material diminution of Executive's titles, offices, positions or authority, excluding for this purpose an action not taken in bad faith; or the assignment to Executive of any duties inconsistent with Executive's position (including status or reporting requirements), authority, or material responsibilities, or the removal of Executive's authority or material responsibilities, excluding for this purpose an action not taken in bad faith, (iii) a transfer of Executive's primary




workplace by more than fifty (50) miles from the current workplace, (iv) a material breach of this Agreement by the Company; or (v) Executive is not the Executive Vice President and Chief Financial Officer of the Company.
6.3     Termination During a Change of Control. Notwithstanding Section 6.1 or 6.2, if within three months prior to or one year after a Change of Control (as defined below), Executive's employment is terminated by the Company (other than for Permanent Disability, death or Cause) or Executive resigns for Good Reason, Executive shall receive such payments, if any, under applicable plans or programs, including but not limited to those referred to in Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs, and any unpaid payments of Base Salary previously earned, any unpaid Bonus earned or awarded for prior periods, accrued vacation and expense incurred for which Executive is entitled to reimbursement hereunder. If Executive is terminated or resigns under this Section 6.3, Executive shall also be entitled to receive:
(a) an amount in lieu of any other cash compensation beyond that provided in the immediately preceding sentence, which amount shall be equal to the sum of:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his termination or resignation occurs, prorated by a fraction, the numerator of which is the number of days in such fiscal year prior to the date of Executive's termination or resignation and the denominator of which is 365, payable at the same time as bonuses are paid to other executives; and
(ii) two times Executive's annual Base Salary; plus one and one half times Executive's Target Bonus payable in a lump sum within 30 days following such termination or resignation of employment; provided that if such termination or resignation occurs within 90 days prior to calendar year end, amount shall be payable on January 1 of the year following the date of Executive’s termination or resignation; and
(b) continued coverage for a 30-month period under any employee medical, health and life insurance plans in accordance with the respective terms thereof applicable to active employees (other than the requirement of continued employment); provided, however, that payments and benefits due hereunder shall be reduced by any amounts owed by Executive to the Company.
A Change of Control shall be deemed to have occurred upon both of the following occurring: (A) any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the " Exchange Act ")), other than Anschutz Company, The Anschutz Corporation, or any entity or organization controlled by Philip F. Anschutz (collectively, the " Anschutz Entities "), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) acquires 20% or more of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (" Voting Power "); and (B) such beneficial ownership (as so defined) by such individual, entity or group of more than 20% of the Voting Power then exceeds the beneficial ownership (as so defined) by the Anschutz Entities of the Voting Power.
6.4     Permanent Disability. If Executive is unable to engage in the activities required by Executive's job by reason of any medically determined physical or mental impairment which has lasted or can be expected to last for continuous period of not less than six (6) consecutive months (" Permanent Disability "), the Company or Executive may terminate Executive's employment on written notice thereof, and Executive shall receive or commence receiving, as soon as practicable:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his termination occurs, prorated by a fraction, the numerator of which is the number of days of the fiscal year until termination and the denominator of which is 365, payable at the same time as bonuses are paid to other executives; and
(ii) accrued but unpaid Base Salary and such payments under applicable plans or programs, including but not limited to those referred to in Sections 4 and 5 hereof, to which he is entitled pursuant to the terms of such plans or programs.
6.5     Death. In the event of Executive's death during the Term, Executive's estate or designated beneficiaries shall receive or commence receiving, as soon as practicable:




(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his death occurs, prorated by a fraction, the numerator of which is the number of days of the fiscal year until his death and the denominator of which is 365, payable at the same time as bonuses are paid to other executives; and
(ii) accrued but unpaid Base Salary and such payments under applicable plans or programs, including but not limited to those referred to in Sections 4 and 5 hereof, to which Executive's estate or designated beneficiaries are entitled pursuant to the terms of such plans or programs.
6.6     Termination for Cause: Resignation by Executive.
(a) The Company shall have the right to terminate the employment of Executive for Cause. In the event that Executive's employment is terminated by the Company for Cause or by Executive for any reason (other than by Executive for Good Reason or as a result of Executive's Permanent Disability or death) during the Term, Executive shall not be entitled to the payment of any compensation otherwise included under this Agreement. After the termination of Executive's employment under this Section 6.6, the obligations of the Company under this Agreement to make any further payments, or provide any benefits specified herein, to Executive shall thereupon cease and terminate.
(b) As used herein, the term "Cause" shall be limited to (i) any willful breach of any material written policy of the Company that results in material and demonstrable liability or loss to the Company; (ii) the engaging by Executive in conduct involving moral turpitude that causes material and demonstrable injury, monetarily or otherwise, to the Company, including, but not limited to, misappropriation or conversion of assets of the Company (other than immaterial assets); (iii) conviction of or entry of a plea of nolo contendere to a felony; or (iv) a material breach of this Agreement by engaging in action in violation of the restrictive covenants in this Agreement. No act or failure to act by Executive shall be deemed "willful" if done, or omitted to be done, by him in good faith and with the reasonable belief that his action or omission was in the best interest of the Company.
7.     Golden Parachute Excise Tax Provisions . Notwithstanding any other provision of this Agreement or any other plan, arrangement, or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to the Executive or for the Executive’s benefit pursuant to the terms of this Agreement or otherwise (“ Covered Payments ”) constitute parachute payments within the meaning of Code Section 280G (“ Parachute Payments ”) and would, but for this Section 7 be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “ Code ”) (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “ Excise Tax ”), then the Covered Payments shall be payable either (i) in full or (ii) reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax, whichever of the foregoing (i) or (ii) results in the Executive’s receipt on an after-tax basis of the greatest amount of benefits after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax). Any such reduction shall be made by the Company in its sole discretion consistent with the requirements of Section 409A of the Code. Any determination required under this Section 7 shall be made in writing by the Company or by an accounting or consulting firm selected and paid for by the Company. The Executive shall provide the Company with such information and documents as the Company may reasonably request in order to make a determination under this Section 7. Such determination shall be binding upon the Executive and the Company.
8.     Indemnification. To the fullest extent permitted by the indemnification provisions of the articles of incorporation and bylaws of the Company in effect as of the date of this Agreement and the indemnification provisions of the corporation statute of the jurisdiction of the Company's incorporation in effect from time to time (collectively, the " Indemnification Provisions "), and in each case subject to the conditions thereof, the Company shall (i) indemnify Executive, as a director and officer of the Company or a subsidiary of the Company or a trustee or fiduciary of an employee benefit plan of the Company or a subsidiary of the Company, or, if Executive shall be serving in such capacity at the Company's written request, as a director or officer of any other corporation (other than a subsidiary of the Company) or as a trustee or fiduciary of an employee benefit plan not sponsored by the Company or a subsidiary of the Company, against all liabilities and reasonable expenses that may be incurred by Executive in any threatened, pending, or completed action, suit or proceeding, whether civil, criminal or administrative, or investigative and whether formal or informal, because Executive is or was a director or officer of the Company, a director or officer of such other corporation or a trustee or fiduciary of such employee benefit plan, and against which Executive may be indemnified by the Company, and (ii) pay for or reimburse the reasonable expenses incurred by Executive in the defense of any proceeding to which Executive is a party because Executive is or was a director or officer of the Company, a director or officer of such other corporation or a trustee or fiduciary of such employee benefit plan. The




rights of Executive under the Indemnification Provisions shall survive the termination of the employment of Executive by the Company.
9.     Notices. All notices or communications hereunder shall be in writing, addressed as follows:
To the Company:
Regal Entertainment Group
7132 Regal Lane
Knoxville, TN 37918
Attn: Peter B. Brandow, Esq., General Counsel

To Executive:
Mr. David H. Ownby
7132 Regal Lane 
Knoxville, TN 37918

Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of mailing shall constitute the time at which notice was given.
10.     Separability; Legal Fees. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. The non-prevailing party shall bear the costs of any legal fees and other fees and expenses which may be incurred by the prevailing party in respect of enforcing its respective rights under this Agreement.
11.     Assignment. This contract shall be binding upon and inure to the benefit of the heirs and representatives of Executive and the assigns and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by Executive (except by will or by operation of the laws of intestate succession) or by the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise) to all or substantially all of the stock, assets or businesses of the Company, if such successor expressly agrees to assume the obligations of the Company hereunder.
12.     Amendment. This Agreement may only be amended by written agreement of the parties hereto.
13.     Nondisclosure of Confidential Information; Non-Competition.
(a) Executive shall not, without the prior written consent of the Company, use, divulge, disclose or make accessible to any other person, firm, partnership, corporation or other entity any Confidential Information pertaining to the business of the Company or any of its affiliates, except (i) while employed by the Company, in the business of and for the benefit of the Company, or (ii) as required by law. For purposes of this Section 13(a), "Confidential Information" shall mean non-public information concerning the financial data, strategic business plans, product development (or other proprietary product data), customer lists, marketing, acquisition and divestiture plans and other non-public, proprietary and confidential information of the Company, its subsidiaries, its theater affiliates (the " Restricted Group ") or suppliers (including, without limitation, any motion picture distributor or exhibitor) or vendors, that, in any case, is not otherwise available to the public (other than by Executive's breach of the terms hereof).
(b) During the period of his employment hereunder and for one year thereafter (except in the case where Executive terminates his employment with the Company for the Good Reason event described in clause (v) of the definition of "Good Reason"), Executive agrees that, without the prior written consent of the Company, (A) he will not, directly or indirectly, either as principal, manager, agent, consultant, officer, stockholder, partner, investor, lender or employee or in any other capacity, carry on, be engaged in or have any financial interest in, any business in Competition (as defined in Section 13(c)) with the business of the Restricted Group and (B) he shall not, on his own




behalf or on behalf of any person, firm or company, directly or indirectly, solicit or hire for the benefit of anyone, other than the Restricted Group, any person who is, or was at any time during the six (6) months immediately preceding the time of the solicitation or hiring by Executive employed by the Restricted Group (other than Executive's secretary or other administrative employee who worked directly for him).
(c) For purposes of this Section 13, a business shall be deemed to be in "Competition" with the Restricted Group if it operates any first-run movie theater with a minimum of six (6) screens within ten (10) miles of any first-run movie theater with a minimum of six (6) screens operated by a member of the Restricted Group. Nothing in this Section 13 shall be construed so as to preclude Executive from investing in any publicly or privately held company, provided Executive's beneficial ownership of any class of such company's securities does not exceed 1% of the outstanding securities of such class.
(d) Executive and the Company agree that this covenant not to compete is a reasonable covenant under the circumstances, and further agree that if in the opinion of any court of competent jurisdiction such restraint is not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of this covenant as to the court shall appear not reasonable and to enforce the remainder of the covenant as so amended. Executive agrees that any breach of the covenants contained in this Section 13 would irreparably injure the Company. Accordingly, Executive agrees that the Company may, in addition to pursuing any other remedies it may have in law or in equity, obtain an injunction against Executive from any court having jurisdiction over the matter restraining any further violation of this Agreement by Executive and cease making any payments otherwise required by this Agreement; provided, however, that in the event a court of competent jurisdiction, which recognizes the validity of the provisions of this Section 13, finds Executive not to be in violation of the provisions of this Section 13, then the Company shall pay to Executive, in a lump sum, within ten days of such determination, all amounts that would have been payable to Executive hereunder through the date of such determination and continue making any other payments due with respect to periods of time subsequent to such determination in accordance with the provisions of this Agreement.
14.     Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative, and the Company shall pay amounts payable under this Agreement, unless otherwise provided herein, in accordance with the terms of this Agreement, to Executive's personal or legal representatives, executors, administrators, heirs, distributees, devisees, legatees or estate, as the case may be. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine.
15.     Survival. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. The provisions of this Section 15 are in addition to the survivorship provisions of any other section of this Agreement.
16.     Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the state of Tennessee, without reference to rules relating to conflicts of law.
17.     Effect on Prior Agreements. Except for amendments to this Agreement, this Agreement contains the entire understanding between the parties hereto and supersedes in all respects any prior or other agreement or understanding between the Company or any affiliate of the Company and Executive.
18.     Withholding. The Company shall be entitled to withhold all applicable tax withholdings, FICA, FUTA and all other required withholdings of the Company from any and all payments made under any provision of this Agreement.
19.     Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original.





* * * *
[Signature Page Follows]





IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date set forth in the first paragraph.
 
REGAL ENTERTAINMENT GROUP
 
 
 
 
 
 
By:
/s/ AMY E. MILES
 
Name:
 
Amy E. Miles
 
Title:
 
Chief Executive Officer and Chair of the Board
 
 
 
 
 
 
 
EXECUTIVE
 
/s/ DAVID H. OWNBY
 
David H. Ownby







Exhibit 10.5
 
 
 
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this " Agreement ") is made as of November 7, 2017, by and between Regal Entertainment Group, a Delaware corporation (the " Company "), and Peter B. Brandow (" Executive ").
RECITALS
WHEREAS , Executive and the Company previously entered into an Employment Agreement, as amended from time to time, dated January 13, 2010; and
WHEREAS , the Company and Executive desire to amend and restate the Employment Agreement on the terms and conditions set forth herein.
NOW, THEREFORE , in consideration of the mutual covenants contained herein, Executive and the Company agree upon the following terms of employment of Executive by the Company:
1.     Employment.
1.1     Position. Subject to the terms and conditions of this Agreement, the Company agrees to employ Executive during the Term (as defined herein) as its Executive Vice President, General Counsel and Secretary. In his capacity as Executive Vice President, General Counsel and Secretary of the Company, Executive shall have the powers, responsibilities and authorities of general counsels of corporations of the size, type and nature of the Company, as it exists from time to time, as are assigned by the Chief Executive Officer consistent with Executive's position. At the request of the Company, Executive will serve as an officer and/or director of any of the Company's other subsidiaries for no additional compensation.
1.2     Duties. Subject to the terms and conditions of this Agreement, Executive hereby agrees to be employed as Executive Vice President, General Counsel and Secretary of the Company and agrees to devote such working time and efforts (except for permitted vacation periods and reasonable periods of illness and other incapacity), to the best of his ability, experience and talent, to the performance of services, duties and responsibilities in connection therewith so that such performance shall be his primary business activity. Executive shall perform such duties and exercise such powers with respect to the activities of the Company, commensurate with his position, as Executive Vice President, General Counsel and Secretary of the Company, as the Chief Executive Officer shall from time to time reasonably delegate to him.
1.3     Other Service. Nothing in this Agreement shall preclude Executive from serving on boards of directors of other companies or trade organizations and participating in charitable, community or religious activities that do not substantially interfere with his duties and responsibilities hereunder or conflict with the interest of the Company.
1.4     Reporting. Executive shall report directly to (a) Amy E. Miles, Chief Executive Officer of the Company or (b) if Ms. Miles is no longer employed by the Company, the then existing Chief Executive Officer of the Company.
2.     Term.
2.1     Term of Employment. Executive's term of employment under this Agreement shall commence as of the Effective Date (as defined below), and, subject to the terms hereof, shall terminate on the earlier of (i) the third anniversary of the Effective Date, or (ii) termination of Executive's employment pursuant to this Agreement (the " Term "); provided, however, that any termination of employment by Executive (other than for death or Permanent Disability) or by the Company may only be made upon 90 days prior written notice to the other party hereto. Executive shall resign from any and all positions, including board memberships, held by him with the Company or any subsidiary of the Company upon any termination of employment.




2.2     Extensions. On each anniversary of the date hereof, commencing in 2018, one year shall be added to the termination date specified in Section 2.1(i) hereof, so that as of each anniversary of the date hereof the remaining Term of Executive's employment as determined under Section 2.1(i) hereof shall be three (3) years.
2.3     Effective Date. This Agreement shall only be effective and enforceable by the Company or Executive as of the date hereof (the " Effective Date ").
3.     Compensation.
3.1     Salary. The Company shall pay Executive a base salary (" Base Salary ") at the rate of $520,000 per annum commencing on the beginning of Executive's term of employment hereunder. Base Salary shall be payable in accordance with the ordinary payroll practices of the Company. The Compensation Committee of the Board of Directors of the Company will review Executive's salary at least annually and may increase (but not reduce) Executive's Base Salary in its sole discretion. Once increased such Base Salary shall not be reduced, and, as so increased, shall constitute "Base Salary" hereunder.
3.2     Annual Bonus. In addition to his Base Salary, Executive shall, commencing with the 2017 fiscal year and continuing each fiscal year during the Term hereafter, be afforded a reasonable opportunity to earn an annual cash bonus (the " Bonus "). The Company shall be deemed to have provided Executive with such opportunity by establishing one or more reasonable annual performance goals for the Company (the " Annual Performance Goals ") under an annual executive incentive plan (a " Bonus Plan ") designed to pay a bonus should the Company meet or exceed such goals. In determining Executive's Bonus, Executive's target Bonus shall be at least 85% of Base Salary (the " Target Bonus "). If in any year the Annual Performance Goals for the Company are exceeded by a material amount, the Company shall award Executive a “stretch” Bonus of up to an additional 42.5% of Base Salary (for a total Bonus of up to 117.5% of Base Salary) as determined by the Compensation Committee of the Board. For 2017, Executive's Bonus shall be calculated in accordance with the Company's 2010 Bonus Plan as adopted by the Board prior to the date hereof. After 2017, the Compensation Committee of the Board, after consultation with management, will in the last quarter of each year establish reasonable eligibility requirements and Annual Performance Goals for the Bonus Plan for the next year based on the actual and projected performance of the Company. Executive shall be deemed to have earned an annual Bonus under the Company's Bonus Plan so long as Executive meets the Annual Performance Goals established thereunder and is employed by the Company as of the last day of the Company's fiscal year.
4.     Employee Benefits.
4.1     Employee Benefit Programs, Plans and Practices. The Company shall during the Term provide Executive with coverage under all employee pension and welfare benefit programs, plans and practices (to the extent permitted under any employee benefit plan) in accordance with the terms thereof, which the Company generally makes available to its senior executives.
4.2     Vacation. While employed hereunder, Executive shall be entitled to no less than 20 business days paid vacation in each calendar year, which shall be taken at such times as are consistent with Executive's responsibilities hereunder.
5.     Expenses. Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this Agreement. The Company will reimburse Executive for such expenses upon presentation by Executive from time to time of appropriately itemized and approved (consistent with the Company's policy) accounts of such expenditures.
6.     Termination of Employment.
6.1     Termination Without Cause. Except as provided in Section 6.3, if Executive's employment is terminated by the Company (other than for Permanent Disability, death or Cause), Executive shall receive such payments, if any, under applicable plans or programs, including but not limited to those referred to in Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs, and any unpaid payments of Base Salary previously earned, any unpaid Bonus earned or awarded for prior periods, accrued vacation and expense incurred for which Executive is entitled to reimbursement hereunder. If Executive is terminated under this Section 6.1, Executive shall also be entitled to receive:




(a) an amount in lieu of any other cash compensation beyond that provided in the immediately preceding sentence, which amount shall be equal to the sum of:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his termination occurs, prorated by a fraction, the numerator of which is the number of days in such fiscal year prior to the date of Executive's termination and the denominator of which is 365, payable at the same time as bonuses are paid to other executives;
(ii) two times Executive's annual Base Salary; plus one times Executive's Target Bonus; payable in a lump sum within 30 days following such termination of employment; provided that if such termination occurs within 90 days prior to calendar year end, amount shall be payable on January 1 of the year following the date of Executive’s termination; and
(b) continued coverage for a 24-month period under any employee medical, health and life insurance plans in accordance with the respective terms thereof applicable to active employees (other than the requirement of continued employment); provided, however, that payments and benefits due hereunder shall be reduced by any amounts owed by Executive to the Company.
In no event shall Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not Executive obtains other employment.
6.2     Termination For Good Reason. Except as provided in Section 6.3, Executive may resign for Good Reason (as defined below) if Executive provides written notification to the Company of the existence of a condition constituting Good Reason (" Notification ") within ninety (90) days of the initial existence of such condition (" Existence Date ") and the resignation occurs within two (2) years of the Existence Date. If Executive resigns for Good Reason, Executive shall receive such payments, if any, under applicable plans or programs, including but not limited to those referred to in Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs, and any unpaid payments of Base Salary previously earned, any unpaid Bonus earned or awarded for prior periods, accrued vacation and expense incurred for which Executive is entitled to reimbursement hereunder. If Executive resigns under this Section 6.2, Executive shall also be entitled to receive:
(a) an amount in lieu of any other cash compensation beyond that provided in the immediately preceding sentence, which amount shall be equal to the sum of:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his resignation occurs, prorated by a fraction, the numerator of which is the number of days in such fiscal year prior to the date of Executive's resignation and the denominator of which is 365, payable at the same time as bonuses are paid to other executives;
(ii) two times Executive's annual Base Salary; plus one times Executive's Target Bonus; payable in a lump sum within 30 days following such resignation of employment; provided that if such resignation occurs within 90 days prior to calendar year end, amount shall be payable on January 1 of the year following the date of Executive’s resignation; and
(b) continued coverage for a 24-month period under any employee medical, health and life insurance plans in accordance with the respective terms thereof applicable to active employees (other than the requirement of continued employment); provided, however, that payments and benefits due hereunder shall be reduced by any amounts owed by Executive to the Company.
Good Reason shall be defined as one or more of the following conditions arising without the consent of Executive and which has not been remedied by the Company within thirty (30) days after receipt of the Notification: (i) a material reduction in Executive's Base Salary or the establishment of or any amendment to the annual cash bonus plan which would materially impair the ability of Executive to receive the Target Bonus (other than the establishment of reasonable EBITDA or other reasonable performance targets to be set annually in good faith by the Board), (ii) a material diminution of Executive's titles, offices, positions or authority, excluding for this purpose an action not taken in bad faith; or the assignment to Executive of any duties inconsistent with Executive's position (including status or reporting requirements), authority, or material responsibilities, or the removal of Executive's authority or material responsibilities, excluding for this purpose an action not taken in bad faith, (iii) a transfer of Executive's primary




workplace by more than fifty (50) miles from the current workplace, (iv) a material breach of this Agreement by the Company; or (v) Executive is not the Executive Vice President, General Counsel and Secretary of the Company.
6.3     Termination During a Change of Control. Notwithstanding Section 6.1 or 6.2, if within three months prior to or one year after a Change of Control (as defined below), Executive's employment is terminated by the Company (other than for Permanent Disability, death or Cause) or Executive resigns for Good Reason, Executive shall receive such payments, if any, under applicable plans or programs, including but not limited to those referred to in Section 4.1 hereof, to which he is entitled pursuant to the terms of such plans or programs, and any unpaid payments of Base Salary previously earned, any unpaid Bonus earned or awarded for prior periods, accrued vacation and expense incurred for which Executive is entitled to reimbursement hereunder. If Executive is terminated or resigns under this Section 6.3, Executive shall also be entitled to receive:
(a) an amount in lieu of any other cash compensation beyond that provided in the immediately preceding sentence, which amount shall be equal to the sum of:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his termination or resignation occurs, prorated by a fraction, the numerator of which is the number of days in such fiscal year prior to the date of Executive's termination or resignation and the denominator of which is 365, payable at the same time as bonuses are paid to other executives; and
(ii) two times Executive's annual Base Salary; plus one and one half times Executive's Target Bonus payable in a lump sum within 30 days following such termination or resignation of employment; provided that if such termination or resignation occurs within 90 days prior to calendar year end, amount shall be payable on January 1 of the year following the date of Executive’s termination or resignation; and
(b) continued coverage for a 30-month period under any employee medical, health and life insurance plans in accordance with the respective terms thereof applicable to active employees (other than the requirement of continued employment); provided, however, that payments and benefits due hereunder shall be reduced by any amounts owed by Executive to the Company.
A Change of Control shall be deemed to have occurred upon both of the following occurring: (A) any individual, entity, or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the " Exchange Act ")), other than Anschutz Company, The Anschutz Corporation, or any entity or organization controlled by Philip F. Anschutz (collectively, the " Anschutz Entities "), of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) acquires 20% or more of the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (" Voting Power "); and (B) such beneficial ownership (as so defined) by such individual, entity or group of more than 20% of the Voting Power then exceeds the beneficial ownership (as so defined) by the Anschutz Entities of the Voting Power.
6.4     Permanent Disability. If Executive is unable to engage in the activities required by Executive's job by reason of any medically determined physical or mental impairment which has lasted or can be expected to last for continuous period of not less than six (6) consecutive months (" Permanent Disability "), the Company or Executive may terminate Executive's employment on written notice thereof, and Executive shall receive or commence receiving, as soon as practicable:
(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his termination occurs, prorated by a fraction, the numerator of which is the number of days of the fiscal year until termination and the denominator of which is 365, payable at the same time as bonuses are paid to other executives; and
(ii) accrued but unpaid Base Salary and such payments under applicable plans or programs, including but not limited to those referred to in Sections 4 and 5 hereof, to which he is entitled pursuant to the terms of such plans or programs.
6.5     Death. In the event of Executive's death during the Term, Executive's estate or designated beneficiaries shall receive or commence receiving, as soon as practicable:




(i) the actual bonus, if any, he would have received in respect of the fiscal year in which his death occurs, prorated by a fraction, the numerator of which is the number of days of the fiscal year until his death and the denominator of which is 365, payable at the same time as bonuses are paid to other executives; and
(ii) accrued but unpaid Base Salary and such payments under applicable plans or programs, including but not limited to those referred to in Sections 4 and 5 hereof, to which Executive's estate or designated beneficiaries are entitled pursuant to the terms of such plans or programs.
6.6     Termination for Cause: Resignation by Executive.
(a) The Company shall have the right to terminate the employment of Executive for Cause. In the event that Executive's employment is terminated by the Company for Cause or by Executive for any reason (other than by Executive for Good Reason or as a result of Executive's Permanent Disability or death) during the Term, Executive shall not be entitled to the payment of any compensation otherwise included under this Agreement. After the termination of Executive's employment under this Section 6.6, the obligations of the Company under this Agreement to make any further payments, or provide any benefits specified herein, to Executive shall thereupon cease and terminate.
(b) As used herein, the term "Cause" shall be limited to (i) any willful breach of any material written policy of the Company that results in material and demonstrable liability or loss to the Company; (ii) the engaging by Executive in conduct involving moral turpitude that causes material and demonstrable injury, monetarily or otherwise, to the Company, including, but not limited to, misappropriation or conversion of assets of the Company (other than immaterial assets); (iii) conviction of or entry of a plea of nolo contendere to a felony; or (iv) a material breach of this Agreement by engaging in action in violation of the restrictive covenants in this Agreement. No act or failure to act by Executive shall be deemed "willful" if done, or omitted to be done, by him in good faith and with the reasonable belief that his action or omission was in the best interest of the Company.
7.     Golden Parachute Excise Tax Provisions . Notwithstanding any other provision of this Agreement or any other plan, arrangement, or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to the Executive or for the Executive’s benefit pursuant to the terms of this Agreement or otherwise (“ Covered Payments ”) constitute parachute payments within the meaning of Code Section 280G (“ Parachute Payments ”) and would, but for this Section 7 be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986, as amended (the “ Code ”) (or any successor provision thereto) or any similar tax imposed by state or local law or any interest or penalties with respect to such taxes (collectively, the “ Excise Tax ”), then the Covered Payments shall be payable either (i) in full or (ii) reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax, whichever of the foregoing (i) or (ii) results in the Executive’s receipt on an after-tax basis of the greatest amount of benefits after taking into account the applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax). Any such reduction shall be made by the Company in its sole discretion consistent with the requirements of Section 409A of the Code. Any determination required under this Section 7 shall be made in writing by the Company or by an accounting or consulting firm selected and paid for by the Company. The Executive shall provide the Company with such information and documents as the Company may reasonably request in order to make a determination under this Section 7. Such determination shall be binding upon the Executive and the Company.
8.     Indemnification. To the fullest extent permitted by the indemnification provisions of the articles of incorporation and bylaws of the Company in effect as of the date of this Agreement and the indemnification provisions of the corporation statute of the jurisdiction of the Company's incorporation in effect from time to time (collectively, the " Indemnification Provisions "), and in each case subject to the conditions thereof, the Company shall (i) indemnify Executive, as a director and officer of the Company or a subsidiary of the Company or a trustee or fiduciary of an employee benefit plan of the Company or a subsidiary of the Company, or, if Executive shall be serving in such capacity at the Company's written request, as a director or officer of any other corporation (other than a subsidiary of the Company) or as a trustee or fiduciary of an employee benefit plan not sponsored by the Company or a subsidiary of the Company, against all liabilities and reasonable expenses that may be incurred by Executive in any threatened, pending, or completed action, suit or proceeding, whether civil, criminal or administrative, or investigative and whether formal or informal, because Executive is or was a director or officer of the Company, a director or officer of such other corporation or a trustee or fiduciary of such employee benefit plan, and against which Executive may be indemnified by the Company, and (ii) pay for or reimburse the reasonable expenses incurred by Executive in the defense of any proceeding to which Executive is a party because Executive is or was a director or officer of the Company, a director or officer of such other corporation or a trustee or fiduciary of such employee benefit plan. The




rights of Executive under the Indemnification Provisions shall survive the termination of the employment of Executive by the Company.
9.     Notices. All notices or communications hereunder shall be in writing, addressed as follows:
To the Company:
Regal Entertainment Group
7132 Regal Lane
Knoxville, TN 37918
Attn: Amy E. Miles, Chief Executive Counsel

To Executive:

Peter B. Brandow
7132 Regal Lane
Knoxville, TN 37918

Any such notice or communication shall be delivered by hand or by courier or sent certified or registered mail, return receipt requested, postage prepaid, addressed as above (or to such other address as such party may designate in a notice duly delivered as described above), and the third business day after the actual date of mailing shall constitute the time at which notice was given.
10.     Separability; Legal Fees. If any provision of this Agreement shall be declared to be invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain in full force and effect. The non-prevailing party shall bear the costs of any legal fees and other fees and expenses which may be incurred by the prevailing party in respect of enforcing its respective rights under this Agreement.
11.     Assignment. This contract shall be binding upon and inure to the benefit of the heirs and representatives of Executive and the assigns and successors of the Company, but neither this Agreement nor any rights or obligations hereunder shall be assignable or otherwise subject to hypothecation by Executive (except by will or by operation of the laws of intestate succession) or by the Company, except that the Company may assign this Agreement to any successor (whether by merger, purchase or otherwise) to all or substantially all of the stock, assets or businesses of the Company, if such successor expressly agrees to assume the obligations of the Company hereunder.
12.     Amendment. This Agreement may only be amended by written agreement of the parties hereto.
13.     Nondisclosure of Confidential Information; Non-Competition.
(a) Executive shall not, without the prior written consent of the Company, use, divulge, disclose or make accessible to any other person, firm, partnership, corporation or other entity any Confidential Information pertaining to the business of the Company or any of its affiliates, except (i) while employed by the Company, in the business of and for the benefit of the Company, or (ii) as required by law. For purposes of this Section 13(a), "Confidential Information" shall mean non-public information concerning the financial data, strategic business plans, product development (or other proprietary product data), customer lists, marketing, acquisition and divestiture plans and other non-public, proprietary and confidential information of the Company, its subsidiaries, its theater affiliates (the " Restricted Group ") or suppliers (including, without limitation, any motion picture distributor or exhibitor) or vendors, that, in any case, is not otherwise available to the public (other than by Executive's breach of the terms hereof).
(b) During the period of his employment hereunder and for one year thereafter (except in the case where Executive terminates his employment with the Company for the Good Reason event described in clause (v) of the definition of "Good Reason"), Executive agrees that, without the prior written consent of the Company, (A) he will not, directly or indirectly, either as principal, manager, agent, consultant, officer, stockholder, partner, investor, lender or employee or in any other capacity, carry on, be engaged in or have any financial interest in, any business in Competition (as defined in Section 13(c)) with the business of the Restricted Group and (B) he shall not, on his own behalf or on behalf of any person, firm or company, directly or indirectly, solicit or hire for the benefit of anyone, other than the Restricted Group, any person who is, or was at any time during the six (6) months immediately




preceding the time of the solicitation or hiring by Executive employed by the Restricted Group (other than Executive's secretary or other administrative employee who worked directly for him).
(c) For purposes of this Section 13, a business shall be deemed to be in "Competition" with the Restricted Group if it operates any first-run movie theater with a minimum of six (6) screens within ten (10) miles of any first-run movie theater with a minimum of six (6) screens operated by a member of the Restricted Group. Nothing in this Section 13 shall be construed so as to preclude Executive from investing in any publicly or privately held company, provided Executive's beneficial ownership of any class of such company's securities does not exceed 1% of the outstanding securities of such class.
(d) Executive and the Company agree that this covenant not to compete is a reasonable covenant under the circumstances, and further agree that if in the opinion of any court of competent jurisdiction such restraint is not reasonable in any respect, such court shall have the right, power and authority to excise or modify such provision or provisions of this covenant as to the court shall appear not reasonable and to enforce the remainder of the covenant as so amended. Executive agrees that any breach of the covenants contained in this Section 13 would irreparably injure the Company. Accordingly, Executive agrees that the Company may, in addition to pursuing any other remedies it may have in law or in equity, obtain an injunction against Executive from any court having jurisdiction over the matter restraining any further violation of this Agreement by Executive and cease making any payments otherwise required by this Agreement; provided, however, that in the event a court of competent jurisdiction, which recognizes the validity of the provisions of this Section 13, finds Executive not to be in violation of the provisions of this Section 13, then the Company shall pay to Executive, in a lump sum, within ten days of such determination, all amounts that would have been payable to Executive hereunder through the date of such determination and continue making any other payments due with respect to periods of time subsequent to such determination in accordance with the provisions of this Agreement.
14.     Beneficiaries; References. Executive shall be entitled to select (and change, to the extent permitted under any applicable law) a beneficiary or beneficiaries to receive any compensation or benefit payable hereunder following Executive's death, and may change such election, in either case by giving the Company written notice thereof. In the event of Executive's death or a judicial determination of his incompetence, reference in this Agreement to Executive shall be deemed, where appropriate, to refer to his beneficiary, estate or other legal representative, and the Company shall pay amounts payable under this Agreement, unless otherwise provided herein, in accordance with the terms of this Agreement, to Executive's personal or legal representatives, executors, administrators, heirs, distributees, devisees, legatees or estate, as the case may be. Any reference to the masculine gender in this Agreement shall include, where appropriate, the feminine.
15.     Survival. The respective rights and obligations of the parties hereunder shall survive any termination of this Agreement to the extent necessary to the intended preservation of such rights and obligations. The provisions of this Section 15 are in addition to the survivorship provisions of any other section of this Agreement.
16.     Governing Law. This Agreement shall be construed, interpreted and governed in accordance with the laws of the state of Tennessee, without reference to rules relating to conflicts of law.
17.     Effect on Prior Agreements. Except for amendments to this Agreement, this Agreement contains the entire understanding between the parties hereto and supersedes in all respects any prior or other agreement or understanding between the Company or any affiliate of the Company and Executive.
18.     Withholding. The Company shall be entitled to withhold all applicable tax withholdings, FICA, FUTA and all other required withholdings of the Company from any and all payments made under any provision of this Agreement.
19.     Counterparts. This Agreement may be executed in two or more counterparts, each of which will be deemed an original.





* * * *
[Signature Page Follows]





IN WITNESS WHEREOF , the parties hereto have executed this Agreement as of the date set forth in the first paragraph.
 
REGAL ENTERTAINMENT GROUP
 
 
 
 
 
 
By:
/s/ AMY E. MILES
 
Name:
 
Amy E. Miles
 
Title:
 
Chief Executive Officer and Chair of the Board
 
 
 
 
 
 
 
EXECUTIVE
 
/s/ PETER B. BRANDOW
 
Peter B. Brandow







Exhibit 31.1
 
CERTIFICATIONS
 
I, Amy E. Miles, certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q of Regal Entertainment Group;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 
Date: November 8, 2017
By:
/s/ AMY E. MILES
 
 
Amy E. Miles
 
 
Chief Executive Officer
 
 
(Principal Executive Officer)





Exhibit 31.2
 
CERTIFICATIONS
 
I, David H. Ownby, certify that:
 
1.
I have reviewed this quarterly report on Form 10-Q of Regal Entertainment Group;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. 
Date: November 8, 2017
By:
/s/ DAVID H. OWNBY
 
 
David H. Ownby
 
 
Chief Financial Officer
 
 
(Principal Financial Officer)





Exhibit 32
 
Written Statement of Chief Executive Officer and Chief Financial Officer
Pursuant to Section 906
of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
 
The undersigned, the Chief Executive Officer and the Chief Financial Officer of Regal Entertainment Group, a Delaware corporation (the “Company”), each hereby certifies that, to his/her knowledge on the date hereof:
 
(a)
the Form 10-Q of the Company for the third quarter ended September 30, 2017 , filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b)
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
  
/s/ AMY E. MILES
Amy E. Miles
Chief Executive Officer
Date: November 8, 2017
 
/s/ DAVID H. OWNBY
David H. Ownby
Chief Financial Officer
Date: November 8, 2017