Delaware
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20-5665602
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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6300 S. Syracuse Way, Suite 300
Centennial, Colorado
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80111
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(Address of Principal Executive Offices)
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(Zip Code)
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Large accelerated filer
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☐
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Accelerated filer
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x
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Non-accelerated filer
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☐
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(Do not check if a smaller reporting company)
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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June 28,
2018 |
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December 28,
2017 |
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ASSETS
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CURRENT ASSETS:
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Cash and cash equivalents
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$
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34.4
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$
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30.2
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Short-term marketable securities
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18.0
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13.1
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|
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Receivables, net of allowance of $5.7 and $6.0, respectively
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125.7
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160.6
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Prepaid expenses
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4.8
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4.2
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Income tax receivable
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0.2
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0.2
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Amounts due from founding members, net
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3.1
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—
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Current portion of notes receivable - founding members
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4.2
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4.2
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Other current assets
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0.3
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0.1
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Total current assets
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190.7
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212.6
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NON-CURRENT ASSETS:
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Property and equipment, net of accumulated depreciation of $69.3 and $70.4, respectively
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32.0
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30.7
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Intangible assets, net of accumulated amortization of $159.0 and $145.4, respectively
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711.8
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717.2
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Deferred tax assets, net of valuation allowance of $86.1 and $98.1, respectively
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170.9
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186.0
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Long-term notes receivable, net of current portion - founding members
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4.1
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4.1
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Other investments
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3.2
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3.5
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Long-term marketable securities
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13.2
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16.2
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Debt issuance costs, net
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5.6
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1.3
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Other assets
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1.2
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1.5
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Total non-current assets
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942.0
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960.5
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TOTAL ASSETS
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$
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1,132.7
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$
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1,173.1
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LIABILITIES AND EQUITY/(DEFICIT)
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CURRENT LIABILITIES:
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Amounts due to founding members, net
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$
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19.5
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$
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32.7
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Payable to founding members under tax receivable agreement
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14.5
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19.6
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Accrued expenses
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15.4
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19.9
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Accrued payroll and related expenses
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12.0
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11.1
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Accounts payable
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16.5
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19.3
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Deferred revenue
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10.2
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7.1
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Short-term debt
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2.0
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—
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Total current liabilities
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90.1
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109.7
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NON-CURRENT LIABILITIES:
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Long-term debt, net of debt issuance costs of $8.7 and $8.7, respectively
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939.5
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923.3
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Income tax payable
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—
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0.3
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Payable to founding members under tax receivable agreement
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193.9
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212.6
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Other liabilities
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4.3
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2.0
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Total non-current liabilities
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1,137.7
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1,138.2
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Total liabilities
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1,227.8
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1,247.9
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COMMITMENTS AND CONTINGENCIES (NOTE 8)
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EQUITY/(DEFICIT):
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NCM, Inc. Stockholders’ Equity/(Deficit):
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Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding, respectively
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—
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—
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Common stock, $0.01 par value; 175,000,000 shares authorized, 76,915,532 and 76,242,222 issued and outstanding, respectively
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0.8
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0.8
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Additional paid in capital/(deficit)
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(227.1
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)
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(233.1
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)
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Retained earnings (distributions in excess of earnings)
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(154.9
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)
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(130.2
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)
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Total NCM, Inc. stockholders’ equity/(deficit)
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(381.2
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)
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(362.5
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)
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Noncontrolling interests
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286.1
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287.7
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Total equity/(deficit)
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(95.1
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)
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(74.8
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)
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TOTAL LIABILITIES AND EQUITY/(DEFICIT)
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$
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1,132.7
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$
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1,173.1
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Three Months Ended
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Six Months Ended
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||||||||||||
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June 28,
2018 |
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June 29,
2017 |
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June 28,
2018 |
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June 29,
2017 |
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REVENUE (including revenue from founding members of $8.6, $7.6, $16.6 and
$16.0, respectively)
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$
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113.7
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$
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97.1
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$
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193.9
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$
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169.0
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OPERATING EXPENSES:
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Advertising operating costs
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9.2
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7.5
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16.2
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12.5
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Network costs
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3.3
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4.0
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6.8
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8.2
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Theater access fees—founding members
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21.5
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18.7
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42.1
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39.3
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Selling and marketing costs
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16.7
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18.9
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32.7
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37.0
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Administrative and other costs
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12.8
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10.5
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25.4
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19.8
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Depreciation and amortization
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10.0
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9.2
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19.5
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18.8
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Total
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73.5
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68.8
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142.7
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135.6
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OPERATING INCOME
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40.2
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28.3
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51.2
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33.4
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NON-OPERATING EXPENSES:
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Interest on borrowings
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14.1
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13.1
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27.9
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26.3
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Interest income
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(0.4
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)
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(0.4
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)
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(0.7
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)
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(0.8
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)
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||||
Gain on re-measurement of the payable to founding members under the tax
receivable agreement
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(7.7
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)
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(0.6
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)
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(7.8
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)
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(0.6
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)
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||||
Other non-operating expense (income)
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1.2
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—
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1.2
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(0.1
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)
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||||
Total
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7.2
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12.1
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20.6
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24.8
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||||
INCOME BEFORE INCOME TAXES
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33.0
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16.2
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30.6
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8.6
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|
||||
Income tax expense (benefit)
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16.0
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1.6
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17.0
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(0.2
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)
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||||
CONSOLIDATED NET INCOME
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17.0
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14.6
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13.6
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8.8
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||||
Less: Net income attributable to noncontrolling interests
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12.8
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9.4
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11.3
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4.9
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NET INCOME ATTRIBUTABLE TO NCM, INC.
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$
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4.2
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$
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5.2
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$
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2.3
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$
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3.9
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||||||||
NET INCOME PER NCM, INC. COMMON SHARE:
|
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Basic
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$
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0.05
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$
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0.09
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$
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0.03
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$
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0.06
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Diluted
|
$
|
0.05
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$
|
0.09
|
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$
|
0.03
|
|
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$
|
0.06
|
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WEIGHTED AVERAGE SHARES OUTSTANDING:
|
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|
||||||||
Basic
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76,912,086
|
|
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60,609,975
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76,776,250
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|
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60,459,531
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|
||||
Diluted
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77,125,610
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60,899,177
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76,981,056
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60,933,103
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||||
Dividends declared per common share
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$
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0.17
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$
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0.22
|
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$
|
0.34
|
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$
|
0.44
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Six Months Ended
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||||||
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June 28, 2018
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June 29, 2017
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||||
CASH FLOWS FROM OPERATING ACTIVITIES:
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|
||||
Consolidated net income
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$
|
13.6
|
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$
|
8.8
|
|
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
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||||
Deferred income tax expense
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16.5
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(0.5
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)
|
||
Depreciation and amortization
|
19.5
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18.8
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|
||
Non-cash share-based compensation
|
4.9
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|
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5.5
|
|
||
Impairment on investment
|
0.4
|
|
|
3.1
|
|
||
Amortization of debt issuance costs
|
1.3
|
|
|
1.3
|
|
||
Non-cash gain on re-measurement of the payable to founding members under the tax receivable agreement
|
(7.8
|
)
|
|
(0.6
|
)
|
||
Write-off of debt issuance costs
|
0.8
|
|
|
—
|
|
||
Other
|
0.1
|
|
|
(0.2
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Receivables, net
|
34.9
|
|
|
61.3
|
|
||
Accounts payable and accrued expenses
|
(5.4
|
)
|
|
(4.6
|
)
|
||
Amounts due to/from founding members, net
|
0.6
|
|
|
(0.8
|
)
|
||
Payment to the founding members under tax receivable agreement
|
(17.6
|
)
|
|
(17.3
|
)
|
||
Deferred revenue
|
3.1
|
|
|
(2.0
|
)
|
||
Income taxes and other
|
1.3
|
|
|
(4.2
|
)
|
||
Net cash provided by operating activities
|
66.2
|
|
|
68.6
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
||||
Purchases of property and equipment
|
(7.2
|
)
|
|
(5.8
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)
|
||
Purchases of marketable securities
|
(13.9
|
)
|
|
(21.7
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)
|
||
Proceeds from sale and maturities of marketable securities
|
12.0
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30.5
|
|
||
Purchases of intangible assets from network affiliates
|
—
|
|
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(0.3
|
)
|
||
Proceeds from notes receivable - founding members
|
—
|
|
|
1.4
|
|
||
Net cash (used in) provided by investing activities
|
(9.1
|
)
|
|
4.1
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
||||
Payment of dividends
|
(28.1
|
)
|
|
(28.7
|
)
|
||
Proceeds from revolving credit facility
|
106.2
|
|
|
50.0
|
|
||
Repayments of revolving credit facility
|
(88.0
|
)
|
|
(55.0
|
)
|
||
Proceeds from term loan facility
|
270.0
|
|
|
—
|
|
||
Repayment of term loan facility
|
(270.0
|
)
|
|
—
|
|
||
Payment of debt issuance costs
|
(6.3
|
)
|
|
—
|
|
||
Founding member integration and other encumbered theater payments
|
11.5
|
|
|
1.5
|
|
||
Distributions to founding members
|
(46.1
|
)
|
|
(44.9
|
)
|
||
Proceeds from stock option exercises
|
—
|
|
|
0.6
|
|
||
Repurchase of stock for restricted stock tax withholding
|
(2.1
|
)
|
|
(4.6
|
)
|
||
Net cash used in financing activities
|
(52.9
|
)
|
|
(81.1
|
)
|
||
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
|
4.2
|
|
|
(8.4
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)
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
30.2
|
|
|
23.0
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
34.4
|
|
|
$
|
14.6
|
|
|
Six Months Ended
|
||||||
|
June 28,
2018 |
|
June 29,
2017 |
||||
Supplemental disclosure of non-cash financing and investing activity:
|
|
|
|
||||
Purchase of an intangible asset with NCM LLC equity
|
$
|
15.9
|
|
|
$
|
201.8
|
|
Accrued distributions to founding members
|
$
|
16.9
|
|
|
$
|
15.2
|
|
Accrued integration and other encumbered theater payments due from founding members
|
$
|
5.3
|
|
|
$
|
—
|
|
Accrued debt issuance costs
|
$
|
0.5
|
|
|
$
|
—
|
|
Increase (decrease) in dividends not requiring cash in the period
|
$
|
0.5
|
|
|
$
|
(1.6
|
)
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Cash paid for interest
|
$
|
27.0
|
|
|
$
|
24.7
|
|
Cash paid for income taxes, net of refunds
|
$
|
0.1
|
|
|
$
|
0.5
|
|
|
|
|
NCM, Inc.
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
Additional
Paid in Capital (Deficit) |
|
Retained
Earnings (Distribution in Excess of Earnings) |
|
Noncontrolling Interest
|
|||||||||||
|
|
|
Common Stock
|
|
|
|
||||||||||||||||
|
Consolidated
|
|
Shares
|
|
Amount
|
|
|
|
||||||||||||||
Balance-December 29, 2016
|
$
|
(232.2
|
)
|
|
59,874,412
|
|
|
$
|
0.6
|
|
|
$
|
(343.6
|
)
|
|
$
|
(130.7
|
)
|
|
$
|
241.5
|
|
Distributions to founding members
|
(20.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20.2
|
)
|
|||||
NCM LLC equity issued for purchase of intangible asset
|
201.8
|
|
|
—
|
|
|
—
|
|
|
78.8
|
|
|
—
|
|
|
123.0
|
|
|||||
Income tax and other impacts of NCM LLC ownership changes
|
(34.1
|
)
|
|
—
|
|
|
—
|
|
|
(46.0
|
)
|
|
—
|
|
|
11.9
|
|
|||||
Comprehensive income, net of tax
|
8.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.9
|
|
|
4.9
|
|
|||||
Share-based compensation issued
|
(4.0
|
)
|
|
740,194
|
|
|
—
|
|
|
(4.0
|
)
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation expense/capitalized
|
5.7
|
|
|
—
|
|
|
—
|
|
|
3.3
|
|
|
—
|
|
|
2.4
|
|
|||||
Cash dividends declared $0.44 per share
|
(27.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27.1
|
)
|
|
—
|
|
|||||
Balance-June 29, 2017
|
$
|
(101.3
|
)
|
|
60,614,606
|
|
|
$
|
0.6
|
|
|
$
|
(311.5
|
)
|
|
$
|
(153.9
|
)
|
|
$
|
363.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance December 28, 2017
|
$
|
(74.8
|
)
|
|
76,242,222
|
|
|
$
|
0.8
|
|
|
(233.1
|
)
|
|
$
|
(130.2
|
)
|
|
$
|
287.7
|
|
|
Cumulative-effect adjustment for adoption of ASU 2014-09
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|||||
Distributions to founding members
|
(25.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25.4
|
)
|
|||||
NCM LLC equity issued for purchase of intangible asset
|
15.9
|
|
|
—
|
|
|
—
|
|
|
7.7
|
|
|
—
|
|
|
8.2
|
|
|||||
Income tax and other impacts of NCM LLC ownership changes
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
|
2.8
|
|
|||||
Comprehensive income, net of tax
|
13.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.3
|
|
|
11.3
|
|
|||||
Share-based compensation issued
|
(2.1
|
)
|
|
673,310
|
|
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation expense/capitalized
|
5.0
|
|
|
—
|
|
|
—
|
|
|
3.5
|
|
|
—
|
|
|
1.5
|
|
|||||
Cash dividends declared $0.34 per share
|
(26.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(26.8
|
)
|
|
—
|
|
|||||
Balance-June 28, 2018
|
$
|
(95.1
|
)
|
|
76,915,532
|
|
|
$
|
0.8
|
|
|
$
|
(227.1
|
)
|
|
$
|
(154.9
|
)
|
|
$
|
286.1
|
|
|
Six Months Ended
|
||||||
|
June 28,
2018 |
|
June 29,
2017 |
||||
Net income attributable to NCM, Inc.
|
$
|
2.3
|
|
|
$
|
3.9
|
|
NCM LLC equity issued for purchase of intangible asset
|
7.7
|
|
|
78.8
|
|
||
Income tax and other impacts of subsidiary ownership changes
|
(3.1
|
)
|
|
(46.0
|
)
|
||
Change from net loss attributable to NCM, Inc. and transfers from noncontrolling interests
|
$
|
6.9
|
|
|
$
|
36.7
|
|
Beginning retained earnings (distributions in excess of earnings), as of December 29, 2016 – as
previously reported
|
$
|
(248.3
|
)
|
Cumulative effect for change in accounting principle
|
$
|
117.6
|
|
Beginning retained earnings (distributions in excess of earnings), as of December 29, 2016 – as adjusted
|
$
|
(130.7
|
)
|
Beginning additional paid in capital (deficit), as of December 29, 2016 – as previously reported
|
$
|
(110.5
|
)
|
Cumulative effect for change in accounting principle
|
$
|
(233.1
|
)
|
Beginning additional paid in capital (deficit), as of December 29, 2016 – as adjusted
|
$
|
(343.6
|
)
|
|
As of December 28, 2017
|
||||||||||
|
As Reported
|
|
Change in Accounting Principle
|
|
As Adjusted
|
||||||
Long-term deferred tax assets, net of valuation allowance of $98.1
|
$
|
161.0
|
|
|
$
|
25.0
|
|
|
$
|
186.0
|
|
TOTAL ASSETS
|
1,148.1
|
|
|
25.0
|
|
|
1,173.1
|
|
|||
Long-term payable to founding members under tax receivable agreement
|
114.0
|
|
|
98.6
|
|
|
212.6
|
|
|||
Total liabilities
|
1,149.3
|
|
|
98.6
|
|
|
1,247.9
|
|
|||
Additional paid in capital (deficit)
|
13.8
|
|
|
(246.9
|
)
|
|
(233.1
|
)
|
|||
Retained earnings (distributions in excess of earnings)
|
(303.5
|
)
|
|
173.3
|
|
|
(130.2
|
)
|
|||
Total equity/(deficit)
|
(1.2
|
)
|
|
(73.6
|
)
|
|
(74.8
|
)
|
|||
TOTAL LIABILITIES AND EQUITY/DEFICIT
|
1,148.1
|
|
|
25.0
|
|
|
1,173.1
|
|
|
Three Months Ended
|
||||||||||||||||||
|
June 29, 2017
|
||||||||||||||||||
|
As Reported
|
|
Correction of an Error
|
|
As Corrected
|
|
Change in Accounting Principle
|
|
As Corrected and Adjusted
|
||||||||||
Accretion of interest on the discounted payable to founding
members under tax receivable agreement
|
$
|
2.9
|
|
|
$
|
1.4
|
|
|
$
|
4.3
|
|
|
$
|
(4.3
|
)
|
|
$
|
—
|
|
Gain on re-measurement of the payable to founding members
under the tax receivable agreement
|
$
|
—
|
|
|
$
|
(5.5
|
)
|
|
$
|
(5.5
|
)
|
|
$
|
4.9
|
|
|
$
|
(0.6
|
)
|
Total non-operating expenses
|
$
|
15.6
|
|
|
$
|
(4.1
|
)
|
|
$
|
11.5
|
|
|
$
|
0.6
|
|
|
$
|
12.1
|
|
INCOME BEFORE INCOME TAXES
|
$
|
12.7
|
|
|
$
|
4.1
|
|
|
$
|
16.8
|
|
|
$
|
(0.6
|
)
|
|
$
|
16.2
|
|
Income tax expense
|
$
|
1.8
|
|
|
$
|
1.1
|
|
|
$
|
2.9
|
|
|
$
|
(1.3
|
)
|
|
$
|
1.6
|
|
CONSOLIDATED NET INCOME
|
$
|
10.9
|
|
|
$
|
3.0
|
|
|
$
|
13.9
|
|
|
$
|
0.7
|
|
|
$
|
14.6
|
|
NET INCOME ATTRIBUTABLE TO NCM, INC.
|
$
|
1.5
|
|
|
$
|
3.0
|
|
|
$
|
4.5
|
|
|
$
|
0.7
|
|
|
$
|
5.2
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
NET INCOME PER NCM, INC. COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
0.02
|
|
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
0.02
|
|
|
$
|
0.09
|
|
Diluted
|
$
|
0.02
|
|
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
0.02
|
|
|
$
|
0.09
|
|
|
Six Months Ended
|
||||||||||||||||||
|
June 29, 2017
|
||||||||||||||||||
|
As Reported
|
|
Correction of an Error
|
|
As Corrected
|
|
Change in Accounting Principle
|
|
As Corrected and Adjusted
|
||||||||||
Consolidated net income
|
$
|
1.4
|
|
|
$
|
0.7
|
|
|
$
|
2.1
|
|
|
$
|
6.7
|
|
|
$
|
8.8
|
|
Adjustments to reconcile consolidated net income to net cash
provided by operating activities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Deferred income tax expense
|
$
|
—
|
|
|
$
|
2.1
|
|
|
$
|
2.1
|
|
|
$
|
(2.6
|
)
|
|
$
|
(0.5
|
)
|
Accretion of interest on the discounted payable to founding
members under tax receivable agreement
|
$
|
6.3
|
|
|
$
|
2.7
|
|
|
$
|
9.0
|
|
|
$
|
(9.0
|
)
|
|
$
|
—
|
|
Non-cash gain on re-measurement of the payable to
founding members under tax receivable agreement
|
$
|
—
|
|
|
$
|
(5.5
|
)
|
|
$
|
(5.5
|
)
|
|
$
|
4.9
|
|
|
$
|
(0.6
|
)
|
Net cash provided by operating activities
|
$
|
68.6
|
|
|
$
|
—
|
|
|
$
|
68.6
|
|
|
$
|
—
|
|
|
$
|
68.6
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2018 |
|
June 29,
2017 |
|
June 28,
2018 |
|
June 29,
2017 |
||||||||
National advertising revenue
|
$
|
78.8
|
|
|
$
|
66.0
|
|
|
$
|
133.6
|
|
|
$
|
110.4
|
|
Local and regional advertising revenue
|
26.3
|
|
|
23.5
|
|
|
43.7
|
|
|
42.6
|
|
||||
Founding member advertising revenue from beverage concessionaire agreements
|
8.6
|
|
|
7.6
|
|
|
16.6
|
|
|
16.0
|
|
||||
Total revenue
|
$
|
113.7
|
|
|
$
|
97.1
|
|
|
$
|
193.9
|
|
|
$
|
169.0
|
|
|
Six Months Ended
|
||
|
June 28,
2018 |
||
Balance at beginning of period
|
$
|
(7.1
|
)
|
Performance obligations satisfied
|
7.1
|
|
|
New contract liabilities
|
(10.2
|
)
|
|
Balance at end of period
|
$
|
(10.2
|
)
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2018 |
|
June 29,
2017 |
|
June 28,
2018 |
|
June 29,
2017 |
||||||||
Net income attributable to NCM, Inc. (in millions)
|
$
|
4.2
|
|
|
$
|
5.2
|
|
|
$
|
2.3
|
|
|
$
|
3.9
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Basic
|
76,912,086
|
|
|
60,609,975
|
|
|
76,776,250
|
|
|
60,459,531
|
|
||||
Add: Dilutive effect of stock options and restricted stock
|
213,524
|
|
|
289,202
|
|
|
204,806
|
|
|
473,572
|
|
||||
Diluted
|
77,125,610
|
|
|
60,899,177
|
|
|
76,981,056
|
|
|
60,933,103
|
|
||||
Income per NCM, Inc. share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.05
|
|
|
$
|
0.09
|
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
Diluted
|
$
|
0.05
|
|
|
$
|
0.09
|
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
•
|
ESAs.
Under the ESAs, NCM LLC is the exclusive provider within the United States of advertising services in the founding members’ theaters (subject to pre-existing contractual obligations and other limited exceptions for the benefit of the founding members). The advertising services include the use of the digital content network (“DCN”) equipment required to deliver the on-screen advertising and other content included in the
Noovie
pre-show, use of the LEN and rights to sell and display certain lobby promotions. Further,
30
to
60 seconds
of advertising included in the
Noovie
pre-show is sold to NCM LLC’s founding members to satisfy the founding members’ on-screen advertising commitments under their beverage concessionaire agreements. In consideration for access to the founding members’ theaters, theater patrons, the network equipment required to display on-screen and LEN video advertising and the use of theaters for lobby promotions, the founding members receive a monthly theater access fee.
|
•
|
Common Unit Adjustment Agreement.
The Common Unit Adjustment Agreement provides a mechanism for increasing or decreasing the membership units held by the founding members based on the acquisition or construction of new theaters or sale or closure of theaters that are operated by each founding member and included in NCM LLC’s network.
|
•
|
Tax Receivable Agreement.
The tax receivable agreement provides for the effective payment by NCM, Inc. to the founding members of
90%
of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that is actually realized as a result of certain increases in NCM, Inc.’s proportionate share of tax basis in NCM LLC’s tangible and intangible assets resulting from the IPO and related transactions.
|
•
|
Software License Agreement.
At the date of the Company’s IPO, NCM LLC was granted a perpetual, royalty-free license from NCM LLC’s founding members to use certain proprietary software that existed at the time for the delivery of digital advertising and other content through the DCN to screens in the U.S. NCM LLC has made improvements to this software since the IPO date and NCM LLC owns those improvements, except for improvements that were developed jointly by NCM LLC and NCM LLC’s founding members, if any.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
Included in the Condensed Consolidated Statements of Income:
|
June 28,
2018 |
|
June 29,
2017 |
|
June 28,
2018 |
|
June 29,
2017 |
||||||||
Revenue:
|
|
|
|
|
|
|
|
||||||||
Beverage concessionaire revenue (included in advertising revenue)
(1)
|
$
|
8.6
|
|
|
$
|
7.6
|
|
|
$
|
16.6
|
|
|
$
|
16.0
|
|
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Theater access fee
(2)
|
21.5
|
|
|
18.7
|
|
|
42.1
|
|
|
39.3
|
|
||||
Purchase of movie tickets and concession products and rental of theater space (included in selling and marketing costs)
(3)
|
0.3
|
|
|
0.3
|
|
|
0.7
|
|
|
0.8
|
|
||||
Purchase of movie tickets and concession products and rental of theater space (included in advertising operating costs)
(3)
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||
Non-operating expenses:
|
|
|
|
|
|
|
|
||||||||
Interest income from notes receivable (included in interest
income)
(4)
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
0.3
|
|
(1)
|
For the
three and six
months ended
June 28, 2018
and
June 29, 2017
, two of the founding members purchased
60 seconds
of on-screen advertising time and one founding member purchased
30 seconds
(with all three founding members having a right to purchase up to
90 seconds
) from NCM LLC to satisfy their obligations under their beverage concessionaire agreements at a
30
seconds equivalent CPM rate specified by the ESA.
|
(2)
|
Comprised of payments per theater attendee and payments per digital screen with respect to the founding member theaters included in the Company’s network, including payments for access to higher quality digital cinema equipment.
|
(3)
|
Used primarily for marketing to NCM LLC’s advertising clients.
|
|
As of
|
||||||
Included in the Condensed Consolidated Balance Sheets:
|
June 28,
2018 |
|
December 28,
2017 |
||||
Purchase of movie tickets and concession products (included in prepaid expenses)
|
$
|
0.2
|
|
|
$
|
—
|
|
Current portion of notes receivable - founding members
(1)
|
4.2
|
|
|
4.2
|
|
||
Long-term portion of notes receivable - founding members
(1)
|
4.1
|
|
|
4.1
|
|
||
Interest receivable on notes receivable (included in other current assets)
(1)
|
0.2
|
|
|
—
|
|
||
Common unit adjustments, net of amortization and integration payments (included in intangible assets)
(2)
|
683.3
|
|
|
687.1
|
|
||
Current payable to founding members under tax receivable agreement
(3)(4)
|
14.5
|
|
|
19.6
|
|
||
Long-term payable to founding members under tax receivable agreement
(3)(4)
|
193.9
|
|
|
212.6
|
|
(1)
|
Refer to the discussion of notes receivable from the founding members above.
|
(2)
|
Refer to Note 4—
Intangible Assets
for further information on common unit adjustments and integration payments.
|
(3)
|
The Company paid the founding members $
17.6
million in payments pursuant to the TRA during the second quarter of 2018 which was for the 2017 tax year. The Company paid the founding members
$18.8 million
in 2017 which was for the 2016 tax year.
|
(4)
|
These balances have been recast following the adoption of the change in accounting principle discussed within Note 1—
The Company
.
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 28,
2018 |
|
June 29,
2017 |
|
June 28,
2018 |
|
June 29,
2017 |
||||||||
AMC
|
$
|
—
|
|
|
$
|
6.2
|
|
|
$
|
2.2
|
|
|
$
|
8.2
|
|
Cinemark
|
8.3
|
|
|
4.5
|
|
|
11.3
|
|
|
6.0
|
|
||||
Regal
|
8.6
|
|
|
4.5
|
|
|
11.8
|
|
|
6.0
|
|
||||
Total founding members
|
16.9
|
|
|
15.2
|
|
|
25.3
|
|
|
20.2
|
|
||||
NCM, Inc.
|
16.2
|
|
|
9.9
|
|
|
24.3
|
|
|
13.1
|
|
||||
Total
|
$
|
33.1
|
|
|
$
|
25.1
|
|
|
$
|
49.6
|
|
|
$
|
33.3
|
|
|
AMC
|
|
Cinemark
|
|
Regal
|
|
Total
|
||||||||
Theater access fees, net of beverage revenues and other encumbered theater payments
|
$
|
1.7
|
|
|
$
|
1.1
|
|
|
$
|
1.7
|
|
|
$
|
4.5
|
|
Distributions payable to founding members
|
—
|
|
|
8.3
|
|
|
8.6
|
|
|
16.9
|
|
||||
Integration payments due from founding members
|
(4.8
|
)
|
|
(0.3
|
)
|
|
—
|
|
|
(5.1
|
)
|
||||
Cost and other reimbursement
|
—
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
||||
Total amounts due (from) to founding members, net
|
$
|
(3.1
|
)
|
|
$
|
9.2
|
|
|
$
|
10.3
|
|
|
$
|
16.4
|
|
|
AMC
|
|
Cinemark
|
|
Regal
|
|
Total
|
||||||||
Theater access fees, net of beverage revenues and other encumbered theater payments
|
$
|
1.5
|
|
|
$
|
1.0
|
|
|
$
|
1.5
|
|
|
$
|
4.0
|
|
Distributions payable to founding members
|
10.8
|
|
|
13.5
|
|
|
13.3
|
|
|
37.6
|
|
||||
Integration payments due from founding members
|
(8.5
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
(8.9
|
)
|
||||
Total amounts due to founding members, net
|
$
|
3.8
|
|
|
$
|
14.1
|
|
|
$
|
14.8
|
|
|
$
|
32.7
|
|
|
|
Outstanding Balance as of
|
|
|
|
|
|||||||
Borrowings
|
|
June 28,
2018 |
|
December 28,
2017 |
|
Maturity
Date
|
|
Interest
Rate
|
|||||
Senior secured notes due 2022
|
|
$
|
400.0
|
|
|
$
|
400.0
|
|
|
April 15, 2022
|
|
6.000
|
%
|
Revolving credit facility
|
|
30.2
|
|
|
12.0
|
|
|
June 20, 2023
(1)
|
|
(2
|
)
|
||
Term loans
|
|
270.0
|
|
|
270.0
|
|
|
June 20, 2025
(1)
|
|
(2
|
)
|
||
Senior unsecured notes due 2026
|
|
250.0
|
|
|
250.0
|
|
|
August 15, 2026
|
|
5.750
|
%
|
||
Total borrowings
|
|
950.2
|
|
|
932.0
|
|
|
|
|
|
|||
Less: debt issuance costs related to term loans and senior notes
|
|
(8.7
|
)
|
|
(8.7
|
)
|
|
|
|
|
|||
Total borrowings, net
|
|
941.5
|
|
|
923.3
|
|
|
|
|
|
|||
Less: current portion of debt
|
|
(2.0
|
)
|
|
—
|
|
|
|
|
|
|||
Carrying value of long-term debt
|
|
$
|
939.5
|
|
|
$
|
923.3
|
|
|
|
|
|
(1)
|
The maturity dates for the revolving credit facility and term loan are contingent upon the refinancing of the senior secured notes due in 2022 on or prior to October 30, 2021. If the Senior Secured Notes are not refinanced on or prior to October 30, 2021, then the revolving credit facility and term loan will instead mature on December 30, 2021. The maturity dates for the revolving credit facility and term loan as of December 28, 2017 are described below.
|
(2)
|
The interest rates on the revolving credit facility and term loans are described below.
|
|
As of
|
||||||
|
June 28,
2018 |
|
December 28,
2017 |
||||
Investment in AC JV, LLC
(1)
|
$
|
1.1
|
|
|
$
|
1.0
|
|
Other investments
(2)
|
2.1
|
|
|
2.5
|
|
||
Total
|
$
|
3.2
|
|
|
$
|
3.5
|
|
(1)
|
Refer to Note 5—
Related Party Transactions
. This investment is accounted for utilizing the equity method.
|
(2)
|
The Company received equity securities in privately held companies as consideration for a portion of advertising contracts. The equity securities are accounted for at adjusted cost in accordance with the practicability exception under ASU 2016-1 and represent an ownership of less than
20%
. The Company does not exert significant influence on these companies’ operating or financial activities.
|
|
As of June 28,
2018 |
|
As of December 28,
2017 |
||||||||||||
|
Carrying Value
|
|
Fair Value (1)
|
|
Carrying Value
|
|
Fair Value
(1)
|
||||||||
Term loan
|
$
|
270.0
|
|
|
$
|
270.7
|
|
|
$
|
270.0
|
|
|
$
|
270.8
|
|
Notes due 2022
|
400.0
|
|
|
407.3
|
|
|
400.0
|
|
|
407.3
|
|
||||
Notes due 2026
|
250.0
|
|
|
230.2
|
|
|
250.0
|
|
|
235.0
|
|
(1)
|
If the Company were to measure the borrowings in the above table at fair value on the balance sheet they would be classified as Level 2 based upon the inputs utilized.
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
Fair Value as of June 28,
2018 |
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
||||||||
ASSETS:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
(1)
|
$
|
20.7
|
|
|
$
|
10.2
|
|
|
$
|
10.5
|
|
|
$
|
—
|
|
Short-term marketable securities
(2)
|
18.0
|
|
|
—
|
|
|
18.0
|
|
|
—
|
|
||||
Long-term marketable securities
(2)
|
13.2
|
|
|
—
|
|
|
13.2
|
|
|
—
|
|
||||
Total assets
|
$
|
51.9
|
|
|
$
|
10.2
|
|
|
$
|
41.7
|
|
|
$
|
—
|
|
|
|
|
Fair Value Measurements at Reporting Date Using
|
||||||||||||
|
Fair Value as of December 28,
2017 |
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
||||||||
ASSETS:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
(1)
|
$
|
12.2
|
|
|
$
|
8.2
|
|
|
$
|
4.0
|
|
|
$
|
—
|
|
Short-term marketable securities
(2)
|
13.1
|
|
|
—
|
|
|
13.1
|
|
|
—
|
|
||||
Long-term marketable securities
(2)
|
16.2
|
|
|
—
|
|
|
16.2
|
|
|
—
|
|
||||
Total assets
|
$
|
41.5
|
|
|
$
|
8.2
|
|
|
$
|
33.3
|
|
|
$
|
—
|
|
(1)
|
Cash Equivalents
—The Company’s cash equivalents are carried at estimated fair value. Cash equivalents consist of money market accounts which the Company has classified as Level 1 given the active market for these accounts and commercial paper with original maturities of three months or less, which are classified as Level 2 and are valued as described below.
|
(2)
|
Short-Term and Long-Term Marketable Securities
—The carrying amount and fair value of the marketable securities are equivalent since the Company accounts for these instruments at fair value. The Company’s government agency bonds, commercial paper and certificates of deposit are valued using third party broker quotes. The value of the Company’s government agency bonds is derived from quoted market information. The inputs in the valuation are classified as Level 1 if there is an active market for these securities; however, if an active market does not exist, the
|
|
As of June 28, 2018
|
||||||||
|
Amortized Cost
Basis (in millions) |
|
Aggregate Fair
Value (in millions) |
|
Maturities (1)
(in years) |
||||
MARKETABLE SECURITIES:
|
|
|
|
|
|
||||
Short-term municipal bonds
|
$
|
0.5
|
|
|
$
|
0.5
|
|
|
0.6
|
Short-term U.S. government agency bonds
|
3.6
|
|
|
3.6
|
|
|
0.5
|
||
Short-term commercial paper:
|
|
|
|
|
|
||||
Financial
|
2.0
|
|
|
2.0
|
|
|
0.3
|
||
Industrial
|
7.9
|
|
|
8.0
|
|
|
0.1
|
||
Utility
|
2.0
|
|
|
2.0
|
|
|
0.1
|
||
Short-term certificates of deposit
|
1.9
|
|
|
1.9
|
|
|
0.5
|
||
Total short-term marketable securities
|
$
|
17.9
|
|
|
$
|
18.0
|
|
|
|
|
|
|
|
|
|
||||
Long-term municipal bonds
|
1.3
|
|
|
1.3
|
|
|
2.0
|
||
Long-term U.S. government agency bonds
|
9.0
|
|
|
8.8
|
|
|
2.2
|
||
Long-term certificates of deposit
|
3.1
|
|
|
3.1
|
|
|
1.5
|
||
Total long-term marketable securities
|
$
|
13.4
|
|
|
$
|
13.2
|
|
|
|
Total marketable securities
|
$
|
31.3
|
|
|
$
|
31.2
|
|
|
|
|
As of December 28, 2017
|
||||||||
|
Amortized Cost
Basis (in millions) |
|
Aggregate Fair
Value (in millions) |
|
Maturities (1)
(in years) |
||||
MARKETABLE SECURITIES:
|
|
|
|
|
|
||||
Short-term U.S. government agency bonds
|
2.3
|
|
|
2.2
|
|
|
0.9
|
||
Short-term certificates of deposit
|
0.9
|
|
|
0.9
|
|
|
0.8
|
||
Short-term commercial paper:
|
|
|
|
|
|
||||
Financial
|
6.0
|
|
|
6.0
|
|
|
0.3
|
||
Industrial
|
4.0
|
|
|
4.0
|
|
|
0.3
|
||
Total short-term marketable securities
|
13.2
|
|
|
13.1
|
|
|
|
||
|
|
|
|
|
|
||||
Long-term municipal bonds
|
1.9
|
|
|
1.9
|
|
|
2.1
|
||
Long-term U.S. government agency bonds
|
10.4
|
|
|
10.2
|
|
|
2.5
|
||
Long-term certificates of deposit
|
4.1
|
|
|
4.1
|
|
|
1.8
|
||
Total long-term marketable securities
|
16.4
|
|
|
16.2
|
|
|
|
||
Total marketable securities
|
$
|
29.6
|
|
|
$
|
29.3
|
|
|
|
(1)
|
Maturities
—Securities available for sale include obligations with various contractual maturity dates some of which are greater than one year. The Company considers the securities to be liquid and convertible to cash within
30
days.
|
|
|
|
|
|
|
|
% Change
|
||||||||||||||
|
Q2 2018
|
|
Q2 2017
|
|
YTD 2018
|
|
YTD 2017
|
|
Q2 2018 to Q2 2017
|
|
YTD 2018 to YTD 2017
|
||||||||||
Revenue
|
$
|
113.7
|
|
|
$
|
97.1
|
|
|
$
|
193.9
|
|
|
$
|
169.0
|
|
|
17.1
|
%
|
|
14.7
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Advertising
|
46.6
|
|
|
44.3
|
|
|
89.2
|
|
|
87.5
|
|
|
5.2
|
%
|
|
1.9
|
%
|
||||
Network, administrative and unallocated costs
|
26.9
|
|
|
24.5
|
|
|
53.5
|
|
|
48.1
|
|
|
9.8
|
%
|
|
11.2
|
%
|
||||
Total operating expenses
|
73.5
|
|
|
68.8
|
|
|
142.7
|
|
|
135.6
|
|
|
6.8
|
%
|
|
5.2
|
%
|
||||
Operating income
|
40.2
|
|
|
28.3
|
|
|
51.2
|
|
|
33.4
|
|
|
42.0
|
%
|
|
53.3
|
%
|
||||
Non-operating expenses
|
7.2
|
|
|
12.1
|
|
|
20.6
|
|
|
24.8
|
|
|
(40.5
|
)%
|
|
(16.9
|
)%
|
||||
Income tax expense (benefit)
|
16.0
|
|
|
1.6
|
|
|
17.0
|
|
|
(0.2
|
)
|
|
NM
|
|
|
NM
|
|
||||
Net income attributable to noncontrolling interests
|
12.8
|
|
|
9.4
|
|
|
11.3
|
|
|
4.9
|
|
|
36.2
|
%
|
|
130.6
|
%
|
||||
Net income attributable to NCM, Inc.
|
$
|
4.2
|
|
|
$
|
5.2
|
|
|
$
|
2.3
|
|
|
$
|
3.9
|
|
|
(19.2
|
)%
|
|
(41.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income per NCM, Inc. basic share
|
$
|
0.05
|
|
|
$
|
0.09
|
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
(44.4
|
)%
|
|
50.0
|
%
|
Net income per NCM, Inc. diluted share
|
$
|
0.05
|
|
|
$
|
0.09
|
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
(44.4
|
)%
|
|
50.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OIBDA
|
$
|
50.2
|
|
|
$
|
37.5
|
|
|
$
|
70.7
|
|
|
$
|
52.2
|
|
|
33.9
|
%
|
|
35.4
|
%
|
Adjusted OIBDA
|
$
|
52.3
|
|
|
$
|
42.3
|
|
|
$
|
75.6
|
|
|
$
|
59.9
|
|
|
23.6
|
%
|
|
26.2
|
%
|
Adjusted OIBDA margin
|
46.0
|
%
|
|
43.6
|
%
|
|
39.0
|
%
|
|
35.4
|
%
|
|
2.4
|
%
|
|
3.6
|
%
|
||||
Total theater attendance (in millions)
(1)
|
194.1
|
|
|
160.0
|
|
|
371.1
|
|
|
341.5
|
|
|
21.3
|
%
|
|
8.7
|
%
|
(1)
|
Represents the total attendance within our advertising network, excluding screens and attendance associated with certain AMC Carmike, AMC Rave and Cinemark Rave theaters that are currently part of another cinema advertising network for all periods presented.
|
|
Q2 2018
|
|
Q2 2017
|
|
YTD 2018
|
|
YTD 2017
|
||||||||
Operating income
|
$
|
40.2
|
|
|
$
|
28.3
|
|
|
$
|
51.2
|
|
|
$
|
33.4
|
|
Depreciation and amortization
|
10.0
|
|
|
9.2
|
|
|
19.5
|
|
|
18.8
|
|
||||
OIBDA
|
$
|
50.2
|
|
|
$
|
37.5
|
|
|
$
|
70.7
|
|
|
$
|
52.2
|
|
Share-based compensation costs
(1)
|
2.1
|
|
|
2.8
|
|
|
4.9
|
|
|
5.5
|
|
||||
CEO transition costs
(2)
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.4
|
|
||||
Early lease termination expense
(3)
|
—
|
|
|
1.8
|
|
|
—
|
|
|
1.8
|
|
||||
Adjusted OIBDA
|
$
|
52.3
|
|
|
$
|
42.3
|
|
|
$
|
75.6
|
|
|
$
|
59.9
|
|
Total revenue
|
$
|
113.7
|
|
|
$
|
97.1
|
|
|
$
|
193.9
|
|
|
$
|
169.0
|
|
Adjusted OIBDA margin
|
46.0
|
%
|
|
43.6
|
%
|
|
39.0
|
%
|
|
35.4
|
%
|
(1)
|
Share-based compensation costs are included in network operations, selling and marketing and administrative expense in the accompanying unaudited Condensed Consolidated Financial Statements.
|
(2)
|
Chief Executive Officer transition costs represent consulting, relocation and other costs.
|
(3)
|
Early lease termination expense represents an expense recorded upon the early termination of the lease of our previous corporate headquarters because the early termination payment made by the Company was reimbursed by the landlord of the new building.
|
|
|
|
$ Change
|
|
% Change
|
|||||||||
|
Q2 2018
|
|
Q2 2017
|
|
Q2 2018 to Q2 2017
|
|
Q2 2018 to Q2 2017
|
|||||||
National advertising revenue
|
$
|
78.8
|
|
|
$
|
66.0
|
|
|
$
|
12.8
|
|
|
19.4
|
%
|
Local and regional advertising revenue
|
26.3
|
|
|
23.5
|
|
|
2.8
|
|
|
11.9
|
%
|
|||
Founding member advertising revenue from
beverage concessionaire agreements
|
8.6
|
|
|
7.6
|
|
|
1.0
|
|
|
13.2
|
%
|
|||
Total revenue
|
$
|
113.7
|
|
|
$
|
97.1
|
|
|
$
|
16.6
|
|
|
17.1
|
%
|
|
|
|
% Change
|
|||||||
|
Q2 2018
|
|
Q2 2017
|
|
Q2 2018 to Q2 2017
|
|||||
National advertising revenue per attendee
|
$
|
0.406
|
|
|
$
|
0.413
|
|
|
(1.6
|
)%
|
Local and regional advertising revenue per attendee
|
$
|
0.135
|
|
|
$
|
0.147
|
|
|
(7.7
|
)%
|
Total advertising revenue (excluding founding
member beverage revenue) per attendee
|
$
|
0.541
|
|
|
$
|
0.559
|
|
|
(3.2
|
)%
|
Total advertising revenue per attendee
|
$
|
0.586
|
|
|
$
|
0.607
|
|
|
(3.5
|
)%
|
Total theater attendance (in millions)
(1)
|
194.1
|
|
|
160.0
|
|
|
21.3
|
%
|
(1)
|
Represents the total attendance within our advertising network, excluding screens and attendance associated with certain AMC Carmike, AMC Rave and Cinemark Rave theaters that are currently part of another cinema advertising network for all periods presented.
|
|
|
|
$ Change
|
|
% Change
|
|||||||||
|
Q2 2018
|
|
Q2 2017
|
|
Q2 2018 to Q2 2017
|
|
Q2 2018 to Q2 2017
|
|||||||
Advertising operating costs
|
$
|
9.2
|
|
|
$
|
7.5
|
|
|
$
|
1.7
|
|
|
22.7
|
%
|
Network costs
|
3.3
|
|
|
4.0
|
|
|
(0.7
|
)
|
|
(17.5
|
)%
|
|||
Theater access fees—founding members
|
21.5
|
|
|
18.7
|
|
|
2.8
|
|
|
15.0
|
%
|
|||
Selling and marketing costs
|
16.7
|
|
|
18.9
|
|
|
(2.2
|
)
|
|
(11.6
|
)%
|
|||
Administrative and other costs
|
12.8
|
|
|
10.5
|
|
|
2.3
|
|
|
21.9
|
%
|
|||
Depreciation and amortization
|
10.0
|
|
|
9.2
|
|
|
0.8
|
|
|
8.7
|
%
|
|||
Total operating expenses
|
$
|
73.5
|
|
|
$
|
68.8
|
|
|
$
|
4.7
|
|
|
6.8
|
%
|
|
|
|
$ Change
|
|
% Change
|
|||||||||
|
Q2 2018
|
|
Q2 2017
|
|
Q2 2018 to Q2 2017
|
|
Q2 2018 to Q2 2017
|
|||||||
Interest on borrowings
|
$
|
14.1
|
|
|
$
|
13.1
|
|
|
$
|
1.0
|
|
|
7.6
|
%
|
Interest income
|
(0.4
|
)
|
|
(0.4
|
)
|
|
—
|
|
|
—
|
%
|
|||
Gain on re-measurement of the
payable to founding members under the
tax receivable agreement
|
(7.7
|
)
|
|
(0.6
|
)
|
|
(7.1
|
)
|
|
NM
|
|
|||
Other non-operating loss
|
1.2
|
|
|
—
|
|
|
1.2
|
|
|
(100.0
|
)%
|
|||
Total non-operating expenses
|
$
|
7.2
|
|
|
$
|
12.1
|
|
|
$
|
(4.9
|
)
|
|
(40.5
|
)%
|
|
Six Months Ended
|
|
$ Change
|
|
% Change
|
|||||||||
|
June 28, 2018
|
|
June 29, 2017
|
|
YTD 2018 to YTD 2017
|
|
YTD 2018 to YTD 2017
|
|||||||
National advertising revenue
|
$
|
133.6
|
|
|
$
|
110.4
|
|
|
$
|
23.2
|
|
|
21.0
|
%
|
Local and regional advertising revenue
|
43.7
|
|
|
42.6
|
|
|
1.1
|
|
|
2.6
|
%
|
|||
Founding member advertising revenue from
beverage concessionaire agreements
|
16.6
|
|
|
16.0
|
|
|
0.6
|
|
|
3.8
|
%
|
|||
Total revenue
|
$
|
193.9
|
|
|
$
|
169.0
|
|
|
$
|
24.9
|
|
|
14.7
|
%
|
|
Six Months Ended
|
|
% Change
|
|||||||
|
June 28, 2018
|
|
June 29, 2017
|
|
YTD 2018 to YTD 2017
|
|||||
National advertising revenue per attendee
|
$
|
0.360
|
|
|
$
|
0.323
|
|
|
11.4
|
%
|
Local and regional advertising revenue per attendee
|
$
|
0.118
|
|
|
$
|
0.125
|
|
|
(5.6
|
)%
|
Total advertising revenue (excluding founding
member beverage revenue) per attendee
|
$
|
0.478
|
|
|
$
|
0.448
|
|
|
6.6
|
%
|
Total advertising revenue per attendee
|
$
|
0.523
|
|
|
$
|
0.495
|
|
|
5.6
|
%
|
Total theater attendance (in millions)
(1)
|
371.1
|
|
|
341.5
|
|
|
8.7
|
%
|
(1)
|
Represents the total attendance within our advertising network, excluding screens and attendance associated with certain AMC Carmike, AMC Rave and Cinemark Rave theaters that are currently part of another cinema advertising network for all periods presented.
|
|
Six Months Ended
|
|
$ Change
|
|
% Change
|
|||||||||
|
June 28, 2018
|
|
June 29, 2017
|
|
YTD 2018 to YTD 2017
|
|
YTD 2018 to YTD 2017
|
|||||||
Advertising operating costs
|
$
|
16.2
|
|
|
$
|
12.5
|
|
|
$
|
3.7
|
|
|
29.6
|
%
|
Network costs
|
6.8
|
|
|
8.2
|
|
|
(1.4
|
)
|
|
(17.1
|
)%
|
|||
Theater access fees—founding members
|
42.1
|
|
|
39.3
|
|
|
2.8
|
|
|
7.1
|
%
|
|||
Selling and marketing costs
|
32.7
|
|
|
37.0
|
|
|
(4.3
|
)
|
|
(11.6
|
)%
|
|||
Administrative and other costs
|
25.4
|
|
|
19.8
|
|
|
5.6
|
|
|
28.3
|
%
|
|||
Depreciation and amortization
|
19.5
|
|
|
18.8
|
|
|
0.7
|
|
|
3.7
|
%
|
|||
Total operating expenses
|
$
|
142.7
|
|
|
$
|
135.6
|
|
|
$
|
7.1
|
|
|
5.2
|
%
|
|
Six Months Ended
|
|
$ Change
|
|
% Change
|
|||||||||
|
June 28, 2018
|
|
June 29, 2017
|
|
YTD 2018 to YTD 2017
|
|
YTD 2018 to YTD 2017
|
|||||||
Interest on borrowings
|
$
|
27.9
|
|
|
$
|
26.3
|
|
|
$
|
1.6
|
|
|
6.1
|
%
|
Interest income
|
(0.7
|
)
|
|
(0.8
|
)
|
|
0.1
|
|
|
(12.5
|
)%
|
|||
Gain on re-measurement of the
payable to founding members under the
tax receivable agreement
|
(7.8
|
)
|
|
(0.6
|
)
|
|
(7.2
|
)
|
|
NM
|
|
|||
Other non-operating loss (income)
|
1.2
|
|
|
(0.1
|
)
|
|
1.3
|
|
|
NM
|
|
|||
Total non-operating expenses
|
$
|
20.6
|
|
|
$
|
24.8
|
|
|
$
|
(4.2
|
)
|
|
(16.9
|
)%
|
|
Number of screens
|
|||||||
|
Founding Members
|
|
Network Affiliates
|
|
Total
|
|||
Balance as of December 29, 2017
|
16,808
|
|
|
4,042
|
|
|
20,850
|
|
New affiliates
(1)
|
—
|
|
|
331
|
|
|
331
|
|
Closures, net of openings
|
(17
|
)
|
|
(46
|
)
|
|
(63
|
)
|
Balance as of June 28, 2018
|
16,791
|
|
|
4,327
|
|
|
21,118
|
|
(1)
|
Represents three new affiliates added to our network during the first
six
months of 2018.
|
|
As of
|
|
$ Change
|
|
$ Change
|
||||||||
|
June 28, 2018
|
|
December 28, 2017
|
|
June 29, 2017
|
|
Q2 2018 to YE 2017
|
|
Q2 2018 to Q2 2017
|
||||
Cash, cash equivalents and marketable securities
(1)
|
$
|
65.6
|
|
|
59.5
|
|
51.6
|
|
6.1
|
|
|
14.0
|
|
NCM LLC revolver availability
(2)
|
140.0
|
|
|
158.2
|
|
160.2
|
|
(18.2
|
)
|
|
(20.2
|
)
|
|
Total liquidity
|
205.6
|
|
|
217.7
|
|
211.8
|
|
(12.1
|
)
|
|
(6.2
|
)
|
(1)
|
Included in cash, cash equivalents and marketable securities as of
June 28, 2018
,
December 28, 2017
and
June 29, 2017
, was $8.3 million, $4.6 million and $4.9 million, respectively, of cash and marketable securities held by NCM LLC that is not available to satisfy NCM, Inc.’s dividend, income tax, tax receivable payments to NCM LLC’s founding members and other obligations.
|
(2)
|
The revolving credit facility portion of NCM LLC’s total borrowings is available, subject to certain conditions, for general corporate purposes of NCM LLC in the ordinary course of business and for other transactions permitted under the senior secured credit facility, and a portion is available for letters of credit. NCM LLC’s total capacity under the revolving credit facility was $175.0 million as of
June 28, 2018
,
December 28, 2017
and
June 29, 2017
. As of
June 28, 2018
,
December 28, 2017
and
June 29, 2017
, the amount available under the NCM LLC revolving credit facility in the table above, was net of amount outstanding under the revolving credit facility of $30.2 million, $12.0 million and $10.0 million, respectively, and net letters of credit of $4.8 million in each respective period.
|
|
Six Months Ended
|
||||
|
June 28, 2018
|
|
June 29, 2017
|
||
Operating cash flow
|
66.2
|
|
|
68.6
|
|
Investing cash flow
|
(9.1
|
)
|
|
4.1
|
|
Financing cash flow
|
(52.9
|
)
|
|
(81.1
|
)
|
•
|
Operating Activities.
The $2.4 million decrease in cash provided by operating activities for the six months ended
June 28, 2018
compared to the six months ended
June 29, 2017
was due primarily to a decrease in the change in accounts receivable of $26.4 million related to timing of collections and higher revenue in the first six months of 2018, compared to the first six months of 2017. This decrease was partially offset by 1) an increase of $9.8 million in deferred income tax expense net of the increase in the non-cash gain on the re-measurement of the payable to founding members under the TRA driven by changes in the federal and state tax rates, 2) an increase of $5.5 million in the change in income taxes and other primarily related to an increase in the deferred rent balance following the relocation of our corporate headquarters, 3) an increase of $5.1 million in the change in deferred revenue, and 4) an increase of $4.8 million in consolidated net income, as described further above.
|
•
|
Investing Activities.
The $13.2 million decrease in cash provided by investing activities for the six months ended
June 28, 2018
, compared to the six months ended
June 29, 2017
was due primarily to higher purchases of marketable securities, net of proceeds, of $10.7 million, a $1.4 million increase in purchases of property plant and equipment related to the relocation of our corporate headquarters and investments in our digital product offerings and a $1.4 million decrease in the proceeds from the notes receivable from the founding members in the first six months of 2018, compared to the first six months of 2017.
|
•
|
Financing Activities.
The $28.2 million decrease in cash used in financing activities during the six months ended
June 28, 2018
, compared to the six months ended
June 29, 2017
was due primarily to a $23.2 million increase in proceeds from borrowings, net of repayments under our senior secured credit facility and a $10.0 million increase in founding member integration and other encumbered theater payments, partially offset by an increase of $6.3 million in the payment of debt issuance costs related to the new senior secured credit facility, as described within Note 6 –
Borrowings
to the unaudited Condensed Consolidated Financial Statements in Item 1 of this Form 10-Q.
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||
FY 2015
|
17.2
|
%
|
|
27.2
|
%
|
|
25.0
|
%
|
|
30.6
|
%
|
FY 2016
|
17.0
|
%
|
|
25.8
|
%
|
|
25.4
|
%
|
|
31.8
|
%
|
FY 2017
|
16.9
|
%
|
|
22.8
|
%
|
|
27.3
|
%
|
|
33.0
|
%
|
Period
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased under the Plans or Programs
|
||||
March 30, 2018 through April 26, 2018
|
6,717
|
|
|
$
|
5.71
|
|
|
—
|
|
|
N/A
|
April 27, 2018 through May 24, 2018
|
1,263
|
|
|
$
|
6.61
|
|
|
—
|
|
|
N/A
|
May 25, 2018 through June 28, 2018
|
—
|
|
|
N/A
|
|
|
—
|
|
|
N/A
|
Exhibit
|
Reference
|
Description
|
|
|
|
3.1
|
(1)
|
|
3.2
|
(2)
|
|
10.1
|
(3)
|
|
10.2
|
(4)
|
|
10.3
|
*
|
|
31.1
|
*
|
|
31.2
|
*
|
|
32.1
|
**
|
|
32.2
|
**
|
|
101.INS
|
*
|
XBRL Instance Document
|
101.SCH
|
*
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
*
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
*
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB
|
*
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE
|
*
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
(1)
|
Incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K (File No. 001-33296) filed on July 6, 2018.
|
(2)
|
Incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K (File No. 001-33296) filed on July 6, 2018.
|
(3)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-33296) filed on June 1, 2018.
|
(4)
|
Incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K (File No. 001-33296) filed on June 25, 2018.
|
|
|
|
NATIONAL CINEMEDIA, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
Date:
|
August 6, 2018
|
|
/s/ Andrew J. England
|
|
|
|
Andrew J. England
|
|
|
|
Chief Executive Officer and Director
|
|
|
|
(Principal Executive Officer)
|
Date:
|
August 6, 2018
|
|
/s/ Katherine L. Scherping
|
|
|
|
Katherine L. Scherping
|
|
|
|
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Date: August 6, 2018
|
|
/s/ Andrew J. England
|
|
|
Andrew J. England
|
|
|
Chief Executive Officer and Director
|
|
|
(Principal Executive Officer)
|
Date: August 6, 2018
|
|
/s/ Katherine L. Scherping
|
|
|
Katherine L. Scherping
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|
Date: August 6, 2018
|
|
/s/ Andrew J. England
|
|
|
Andrew J. England
|
|
|
Chief Executive Officer and Director
|
|
|
(Principal Executive Officer)
|
Date: August 6, 2018
|
|
/s/ Katherine L. Scherping
|
|
|
Katherine L. Scherping
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial and Accounting Officer)
|