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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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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
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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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Common Stock, par value $0.01 per share
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The Nasdaq Stock Market LLC
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(Title of each class)
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(Name of each exchange on which registered)
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Large accelerated filer
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¨
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Smaller reporting company
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¨
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Non-accelerated filer
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¨
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Emerging growth company
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¨
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Accelerated filer
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þ
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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•
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“NCM, Inc.,” “the Company,” “we,” “us” or “our” refer to National CineMedia, Inc., a Delaware corporation, and its consolidated subsidiary National CineMedia, LLC.
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•
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“NCM LLC” refers to National CineMedia, LLC, a Delaware limited liability company, which commenced operations on April 1, 2005, and is the current operating company for our business, which NCM, Inc. acquired an interest in, and became a member and the sole manager of, upon completion of our initial public offering, or “IPO,” which closed on February 13, 2007.
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•
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“ESAs” refers to the amended and restated exhibitor services agreements entered into by NCM LLC with each of NCM LLC’s founding members upon completion of the IPO, which were further amended and restated on December 26, 2013 in connection with the sale of the Fathom Events business.
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•
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“AMC” refers to AMC Entertainment Inc. and its subsidiaries, National Cinema Network, Inc., or “NCN,” which contributed assets used in the operations of NCM LLC and formed NCM LLC in March 2005, AMC ShowPlace Theatres, Inc., which joined NCM LLC in June 2010 in connection with AMC’s acquisition of Kerasotes ICON Theatres, AMC Starplex, LLC, which joined NCM LLC in December 2015 in connection with AMC’s acquisition of Starplex Cinemas and American Multi-Cinema, Inc., which is a party to an ESA with NCM LLC.
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•
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“Cinemark” refers to Cinemark Holdings, Inc. and its subsidiaries, Cinemark Media, Inc., which joined NCM LLC in July 2005, and Cinemark USA, Inc., which is a party to an ESA with NCM LLC.
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•
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“Regal” refers to Cineworld Group plc, Regal Entertainment Group and its subsidiaries, Regal CineMedia Corporation, or “RCM,” which contributed assets used in the operations of NCM LLC, Regal CineMedia Holdings, LLC, which formed NCM LLC in March 2005, and Regal Cinemas, Inc., which is a party to an ESA with NCM LLC.
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•
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“Founding members” refers to AMC, Cinemark and Regal.
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•
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“OIBDA” refers to operating income before depreciation and amortization expense.
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•
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“Adjusted OIBDA” excludes from OIBDA non-cash share based payment costs, merger-related administrative costs, CEO transition costs and early lease termination expense.
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•
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“Adjusted OIBDA margin” is calculated by dividing Adjusted OIBDA by total revenue.
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•
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“DCN” refers to NCM LLC’s Digital Content Network.
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•
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“TRA” refers to the tax receivable agreement entered into by NCM, Inc. and the founding members.
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•
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potential significant declines in theater attendance;
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•
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changes in theater patron behavior could result in declines in viewership of the
Noovie
pre-show;
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•
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our plans for developing additional revenue opportunities may not be implemented and may not be achieved;
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•
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competition within the overall advertising industry;
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•
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we may not maintain our technological advantage;
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•
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national, regional and local economic conditions;
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•
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the potential loss of any major content partner or advertising customer;
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•
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potential inability to retain or replace our senior management;
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•
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changes to relationships with NCM LLC’s founding members;
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•
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founding member and network affiliate government regulation could slow growth;
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•
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failure to effectively manage or continue our growth;
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•
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potential failures or disruptions in our technology systems;
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•
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possible infringement of our technology on intellectual property rights owned by others;
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•
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the content we distribute and user information we collect and maintain through our in-theater, online or mobile services may expose us to liability;
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•
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changes in regulations relating to the Internet or other areas of our online or mobile services;
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•
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our revenue and Adjusted OIBDA fluctuate from quarter to quarter and may be unpredictable, which could increase the volatility of our stock price;
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•
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an ineffective system of internal controls over financial reporting could adversely affect our ability to accurately report our financial results and market confidence in our reported financial information;
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•
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we are a holding company with no operations of our own, and we depend on distributions and payments under the NCM LLC operating and management services agreements from NCM LLC to meet our ongoing obligations and to pay cash dividends on our common stock;
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•
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risks and uncertainties relating to our significant indebtedness and investments, including the availability and adequacy of cash flows to meet our debt service requirements and any other indebtedness that we may incur in the future;
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•
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NCM LLC’s other members or their affiliates may have interests that differ from those of us or our public stockholders and they may be able to influence our affairs, compete with us or benefit from corporate opportunities that might otherwise be available to us;
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•
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future issuance of membership units or preferred stock could dilute the interest of our common stockholders;
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•
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determination that NCM, Inc. or any of NCM LLC’s founding members is an investment company;
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•
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determination that any amount of our tax benefits under the TRA should not have been available;
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•
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the effect on our stock price from the substantial number of our shares eligible for sale;
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•
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the interests of our largest stockholder and NCM LLC’s other members may be different from or conflict with those of our other stockholders; and
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•
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other factors described under “Risk Factors” or elsewhere in this Annual Report on Form 10-K.
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Item 1.
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Business
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•
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Segment four is the first section of
Noovie
and begins approximately 25 to 30 minutes prior to the advertised show time. Entertaining content is a core element of
Noovie
, and NCM programs an exclusive
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•
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Segment three typically begins approximately 21 minutes prior to the advertised show time and features primarily 15 or 30-second local, regional, or national spot advertisements by individual theaters, or across an entire Designated Market Area (“DMA”)® or geographic region, as well as a long-form entertainment content segment from one of our content partners.
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•
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Segment two begins approximately 16 minutes prior to the advertised show time and features primarily national, national spot and regional advertisements, which generally range between 15 to 90 seconds, as well as a long-form entertainment content segment from one of our content partners. This segment also includes a 50-second
Noovie ARcade
slot where audiences have the opportunity to play our featured interactive augmented reality (“AR”) game on the big screen using their mobile phones.
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•
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Segment one runs closest to the advertised show time at approximately 10 minutes prior to the advertised show time and features primarily national advertisements, which are generally 30 or 60 seconds, as well as a long-form entertainment content segment from one of our content partners. Segment one also includes an advertisement for the founding members’ beverage supplier and a public service announcement (“PSA”).
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•
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advertising on concession items such as beverage cups, popcorn bags and kids’ trays;
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•
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coupons and promotional materials, which are customizable by film and are distributed to ticket buyers at the box office or as they exit the theater;
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•
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tabling displays, product demonstrations and sampling;
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•
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touch-screen display units and kiosks; and
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•
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signage throughout the lobbies, including posters, banners, counter cards, danglers, floor mats, standees and window clings.
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Advertising Network
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|||||||
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Theaters
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Total Screens
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% of Total
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|||
Founding Members
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1,259
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16,768
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79.2
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%
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Network Affiliates
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471
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4,404
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20.8
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%
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Total
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1,730
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21,172
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100.0
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%
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•
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Our advertising network consisted of 21,172 screens (16,768 operated by the founding members) located in 1,730 theaters (1,259 operated by the founding members) in 47 states and the District of Columbia, including each of the top 25 and 50 DMAs®, and 187 DMAs® in total;
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•
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Approximately 73% of our screens (approximately 77% of our attendance) were located within the top 50 U.S. DMAs
®
and approximately 32% of our screens (approximately 37% of our attendance) were located within the top 10 U.S. DMAs
®
. Theaters within our network represented approximately 69%, 67%, and 67% of the total theater attendance in theaters that present advertising in the top 10, top 25 and top 50 U.S. DMAs
®
, respectively and 62% for all DMAs
®
, providing a very attractive platform for national advertisers who want exposure in larger markets or on a national basis;
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•
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Our total annual network theater attendance was approximately 705.1 million (approximately 580.8 million from the founding members), which increased 7.5% compared to 2017. Our network of modern theaters represented approximately 58% of the total U.S. theater attendance, with some of the most highly attended theaters in the industry, as measured by screens per location and attendance per screen;
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•
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The average screens per theater in our network was 12.2 screens, 1.7 times the U.S. theater industry average, and the aggregate annual attendance per screen of theaters included in our network during 2018 was 33,303, versus the U.S. theater industry average attendance per indoor screen of 29,985, using metrics reported by the National Association of Theatre Owners (“NATO”).
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Item 1A.
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Risk Factors
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•
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if NCM LLC’s network theater circuits cannot compete with other out-of-home entertainment due to an increase in the use of alternative film delivery methods (and the shortening of the “release window” between the release of major motion pictures to the alternative delivery methods), including network, syndicated cable and satellite television and DVDs, as well as video-on-demand, pay-per-view services, video streaming and downloads via the Internet;
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•
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theater circuits in NCM LLC’s network continue to renovate auditoriums in certain of their theaters to install new larger, more comfortable seating, which reduces the number of seats in a theater auditorium. This renovation has been viewed favorably by patrons and many theater circuits have noted an intent to continue such renovations;
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•
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changes in theater operating policies, including the number and length of trailers for upcoming films that are played prior to the start of the feature film, which if the length of trailers increases, it could result in the
Noovie
pre-show starting further out from the show time of the feature film;
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•
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any reduction in consumer confidence or disposable income in general that reduces the demand for motion pictures or adversely affects the motion picture production industry;
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•
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the success of first-run motion pictures, which depends upon the production and marketing efforts of the major studios and the attractiveness and value proposition of the movies to consumers compared to other forms of entertainment;
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•
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if the theaters in our network fail to maintain their theaters and provide amenities that consumers prefer;
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•
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if studios begin to reduce the number of feature films produced and their investments in those films or reduce the investments made to market those films;
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•
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if future theater attendance declines significantly over an extended time period, one or more of the founding members or network affiliates may face financial difficulties and could be forced to sell or close theaters or reduce the number of screens it builds or upgrades or increase ticket prices; and
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•
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NCM LLC’s network theater circuits also may not successfully compete for licenses to exhibit quality films and are not assured a consistent supply of motion pictures since they do not have long-term arrangements with major film distributors.
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•
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theater patrons are increasingly purchasing tickets ahead of time via on-line ticketing mediums and when available reserving a seat in the theater (offered in approximately 54.2% of our network as of December 27, 2018), which could affect how early patrons arrive to the theater and reduce the number of patrons that are in a theater seat to view the Noovie pre-show; and
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•
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changes in theater patron amenities, including, online ticketing, bars and entertainment within exhibitor lobbies causing increased dwell time of patrons.
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•
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increased competition for fewer advertising and entertainment programming dollars;
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•
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pricing pressure that may adversely affect revenue and gross margin;
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•
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declining attendance and thus a decline in the impressions available for our pre-show;
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•
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reduced credit availability and/or access to capital markets;
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•
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difficulty forecasting, budgeting and planning due to limited visibility into the spending plans of current or prospective customers; or
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•
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customer financial difficulty and increased risk of uncollectible accounts.
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•
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is not necessary to protect a legitimate business interest of the party seeking enforcement;
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•
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unreasonably restrains the party against whom enforcement is sought; or
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•
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is contrary to the public interest.
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•
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limiting NCM LLC’s ability to obtain financing in the future;
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•
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requiring much of NCM LLC’s cash flow to be dedicated to interest obligations and making it unavailable for other purposes, including payments to its members (including NCM, Inc.);
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•
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limiting NCM LLC’s liquidity and operational flexibility in changing economic, business and competitive conditions which could require NCM LLC to consider deferring planned capital expenditures, reducing discretionary spending, selling assets, restructuring existing debt or deferring acquisitions or other strategic opportunities; and
|
•
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making NCM LLC more vulnerable to an increase in interest rates, a downturn in operating performance or decline in general economic conditions.
|
•
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assign, transfer, sell or pledge all or a portion of the membership units of NCM LLC beneficially owned by NCM, Inc.;
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•
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acquire, dispose, lease or license assets with an aggregate value exceeding 20% of the fair market value of the business of NCM LLC operating as a going concern;
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•
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merge, reorganize, recapitalize, reclassify, consolidate, dissolve, liquidate or enter into a similar transaction;
|
•
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incur any funded indebtedness or repay, before due, any funded indebtedness with a fixed term in an aggregate amount in excess of $15.0 million per year;
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•
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issue, grant or sell shares of NCM, Inc. common stock, preferred stock or rights with respect to common or preferred stock, or NCM LLC membership units or rights with respect to membership units, except under specified circumstances;
|
•
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amend, modify, restate or repeal any provision of NCM, Inc.’s certificate of incorporation or bylaws or the NCM LLC operating agreement;
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•
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enter into, modify or terminate certain material contracts not in the ordinary course of business as defined under applicable securities laws;
|
•
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except as specifically set forth in the NCM LLC operating agreement, declare, set aside or pay any redemption of, or dividends with respect to membership interests;
|
•
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amend any material terms or provisions (as defined in the Nasdaq rules) of NCM, Inc.’s equity incentive plan or enter into any new equity incentive compensation plan;
|
•
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make any change in the current business purpose of NCM, Inc. to serve solely as the manager of NCM LLC or any change in the current business purpose of NCM LLC to provide the services as set forth in the ESAs; and
|
•
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approve any actions relating to NCM LLC that could reasonably be expected to have a material adverse tax effect on NCM LLC’s founding members.
|
•
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provide veto rights to the directors designated by Cinemark and Regal over certain actions specified in our certificate of incorporation;
|
•
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authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to increase the number of outstanding shares, making a takeover more difficult and expensive;
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•
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prohibit stockholder action by written consent; and
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•
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do not permit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates.
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Location
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Facility
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Size
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Centennial, CO
(1)
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Headquarters (including the NOC)
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63,123 sq. ft.
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Chicago, IL
(2)
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Advertising Sales Office
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3,350 sq. ft.
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New York, NY
(3)
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Advertising Sales Office
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21,892 sq. ft.
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Woodland Hills, CA
(4)
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Advertising Sales Office
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6,062 sq. ft.
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Minneapolis, MN
(5)
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Software Development Office
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5,989 sq. ft.
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Newport Beach, CA
(6)
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Regional Advertising Sales Office
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1,417 sq. ft.
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Royal Oak, MI
(7)
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Advertising Sales Office
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200 sq. ft.
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Playa Vista, CA
(8)
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Digital Development Office
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997 sq. ft.
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New York, NY
(9)
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Digital Development Office
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350 sq. ft.
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(1)
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This facility is leased through June 30, 2028.
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(2)
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This facility is leased through April 30, 2028.
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(3)
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This facility is leased through April 30, 2032.
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(4)
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This facility is leased through November 30, 2019.
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(5)
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This facility is leased through September 30, 2022.
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(6)
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This facility is leased through July 31, 2019.
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(7)
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This facility is leased through March 22, 2020.
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(8)
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This facility is leased through June 30, 2019.
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(9)
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This facility is leased through March 31, 2019.
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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Name
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Age
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Position
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Clifford E. Marks
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57
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Interim Chief Executive Officer and President
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Katherine L. Scherping
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59
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Chief Financial Officer
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Sarah Kinnick Hilty
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48
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Senior Vice President, General Counsel and Secretary
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Scott D. Felenstein
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50
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Executive Vice President and Chief Revenue Officer
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Item 5.
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Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
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Period
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(a)
Total Number
of Shares
Purchased
|
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(b)
Average Price
Paid Per Share
|
|
(c)
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs
|
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(d)
Maximum
Number (or
Approximate
Dollar Value)
of Shares that
may yet be
Purchased under
the Plans or
Programs
|
||||
September 28, 2018 through October 25. 2018
|
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—
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$
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—
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—
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N/A
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October 26, 2018 through November 29, 2018
|
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26,308
|
|
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$
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8.53
|
|
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—
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N/A
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November 30, 2018 through December 27, 2018
|
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—
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$
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—
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—
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N/A
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Item 6.
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Selected Financial Data
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Results of Operations Data
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Years Ended
|
||||||||||||||||||
($ in millions, except per share data)
|
Dec. 27,
2018 |
|
Dec. 28,
2017 |
|
Dec. 29,
2016 |
|
Dec. 31,
2015 |
|
Jan. 1,
2015 |
||||||||||
Revenue
|
$
|
441.4
|
|
|
$
|
426.1
|
|
|
$
|
447.6
|
|
|
$
|
446.5
|
|
|
$
|
394.0
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
||||||||||
Advertising operating costs
|
37.4
|
|
|
32.4
|
|
|
30.0
|
|
|
30.8
|
|
|
26.4
|
|
|||||
Network costs
|
13.3
|
|
|
15.8
|
|
|
17.1
|
|
|
17.8
|
|
|
18.3
|
|
|||||
Theater access fees—founding members
|
81.7
|
|
|
76.5
|
|
|
75.1
|
|
|
72.5
|
|
|
70.6
|
|
|||||
Selling and marketing costs
|
66.5
|
|
|
72.0
|
|
|
72.8
|
|
|
72.3
|
|
|
57.6
|
|
|||||
Merger termination fee and related merger costs
|
—
|
|
|
—
|
|
|
—
|
|
|
34.3
|
|
|
7.5
|
|
|||||
Administrative and other costs
|
48.3
|
|
|
37.9
|
|
|
43.8
|
|
|
38.6
|
|
|
29.5
|
|
|||||
Depreciation and amortization
|
39.9
|
|
|
37.6
|
|
|
35.8
|
|
|
32.2
|
|
|
32.4
|
|
|||||
Total
|
287.1
|
|
|
272.2
|
|
|
274.6
|
|
|
298.5
|
|
|
242.3
|
|
|||||
OPERATING INCOME
|
154.3
|
|
|
153.9
|
|
|
173.0
|
|
|
148.0
|
|
|
151.7
|
|
|||||
NON-OPERATING EXPENSES (INCOME)
(9)
|
50.6
|
|
|
(140.9
|
)
|
|
64.1
|
|
|
47.9
|
|
|
42.7
|
|
|||||
INCOME BEFORE INCOME TAXES
(9)
|
103.7
|
|
|
294.8
|
|
|
108.9
|
|
|
100.1
|
|
|
109.0
|
|
|||||
Provision for income taxes
(9)
|
23.5
|
|
|
180.3
|
|
|
14.4
|
|
|
27.9
|
|
|
30.6
|
|
|||||
CONSOLIDATED NET INCOME
(9)
|
80.2
|
|
|
114.5
|
|
|
94.5
|
|
|
72.2
|
|
|
78.4
|
|
|||||
Less: Net income attributable to noncontrolling
interests
|
50.4
|
|
|
56.2
|
|
|
61.6
|
|
|
48.3
|
|
|
52.2
|
|
|||||
NET INCOME ATTRIBUTABLE TO NCM, Inc.
(9)
|
$
|
29.8
|
|
|
$
|
58.3
|
|
|
$
|
32.9
|
|
|
$
|
23.9
|
|
|
$
|
26.2
|
|
EARNINGS PER NCM, INC. COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
(9)
|
$
|
0.39
|
|
|
$
|
0.89
|
|
|
$
|
0.55
|
|
|
$
|
0.41
|
|
|
$
|
0.45
|
|
Diluted
(9)
|
$
|
0.37
|
|
|
$
|
0.48
|
|
|
$
|
0.54
|
|
|
$
|
0.35
|
|
|
$
|
0.39
|
|
|
As of
|
||||||||||||||||||
Balance Sheet Data (in millions)
|
Dec. 27,
2018 |
|
Dec. 28,
2017 |
|
Dec. 29,
2016 |
|
Dec. 31,
2015 |
|
Jan. 1,
2015 |
||||||||||
Cash, cash equivalents and marketable securities
(1)
|
$
|
75.6
|
|
|
$
|
59.5
|
|
|
$
|
68.7
|
|
|
$
|
85.4
|
|
|
$
|
80.6
|
|
Receivables, net
|
149.9
|
|
|
160.6
|
|
|
160.5
|
|
|
148.9
|
|
|
116.5
|
|
|||||
Property and equipment, net
|
33.6
|
|
|
30.7
|
|
|
29.6
|
|
|
25.1
|
|
|
22.4
|
|
|||||
Total assets
(2) (9)
|
1,141.8
|
|
|
1,173.1
|
|
|
1,215.5
|
|
|
1,238.2
|
|
|
1,159.0
|
|
|||||
Borrowings, gross
|
931.4
|
|
|
932.0
|
|
|
935.0
|
|
|
936.0
|
|
|
892.0
|
|
|||||
Payable to founding members under tax receivable
agreement
(9)
|
211.1
|
|
|
232.2
|
|
|
419.1
|
|
|
439.3
|
|
|
450.1
|
|
|||||
Equity/(deficit)
(9)
|
(89.2
|
)
|
|
(74.8
|
)
|
|
(232.2
|
)
|
|
(229.9
|
)
|
|
(269.6
|
)
|
|||||
Total liabilities and equity
(2) (9)
|
1,141.8
|
|
|
1,173.1
|
|
|
1,215.5
|
|
|
1,238.2
|
|
|
1,159.0
|
|
Other Financial and Operating Data
|
Years Ended
|
||||||||||||||||||
(in millions, except cash dividend declared per common share and screen data)
|
Dec. 27,
2018 |
|
Dec. 28,
2017 |
|
Dec. 29,
2016 |
|
Dec. 31,
2015 |
|
Jan. 1,
2015 |
||||||||||
OIBDA
(3)
|
$
|
194.2
|
|
|
$
|
191.5
|
|
|
$
|
208.8
|
|
|
$
|
180.2
|
|
|
$
|
184.1
|
|
Adjusted OIBDA
(3)
|
$
|
205.4
|
|
|
$
|
205.1
|
|
|
$
|
230.7
|
|
|
$
|
229.9
|
|
|
$
|
199.3
|
|
Adjusted OIBDA margin
(3)
|
46.5
|
%
|
|
48.1
|
%
|
|
51.5
|
%
|
|
51.5
|
%
|
|
50.6
|
%
|
|||||
Capital expenditures
|
$
|
15.4
|
|
|
$
|
12.3
|
|
|
$
|
13.3
|
|
|
$
|
13.0
|
|
|
$
|
8.8
|
|
Cash dividend declared per common share
|
$
|
0.68
|
|
|
$
|
0.88
|
|
|
$
|
0.88
|
|
|
$
|
0.88
|
|
|
$
|
1.38
|
|
Founding member screens at period end
(4) (8)
|
16,768
|
|
|
16,808
|
|
|
17,022
|
|
|
16,981
|
|
|
16,497
|
|
|||||
Total screens at period end
(5) (8)
|
21,172
|
|
|
20,850
|
|
|
20,548
|
|
|
20,361
|
|
|
20,109
|
|
|||||
DCN screens at period end
(6) (8)
|
20,741
|
|
|
20,419
|
|
|
20,080
|
|
|
19,760
|
|
|
19,251
|
|
|||||
Total attendance for period
(7) (8)
|
705.1
|
|
|
655.8
|
|
|
688.8
|
|
|
694.7
|
|
|
688.2
|
|
(1)
|
Includes short-term and long-term marketable securities.
|
(2)
|
During the first quarter of 2016, the Company adopted Accounting Standards Update 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs (“ASU 2015-03”) and Accounting Standards Update 2015-15, Interest – Imputation of Interest (“ASU 2015-15”), on a retrospective basis, which provide guidance for simplifying the presentation of debt issuance costs. In connection with the adoption of ASU 2015-03 and ASU 2015-15, the Company reclassified net deferred financing costs related to NCM LLC’s term loans, secured and unsecured notes in the Consolidated Balance Sheet as a direct deduction from the carrying amount of those borrowings, while net deferred financing costs related to the revolving credit facility remained an asset in the Consolidated Balance Sheet. The amounts presented above for total assets and total liabilities and equity reflect this reclassification as of
December 27, 2018
,
December 28, 2017
,
December 29, 2016
and
December 31, 2015
. Amounts presented as of
January 1, 2015
do not reflect the reclassification. If adjusted, the reclassification for ASU 2015-03 and ASU 2015-15 would reduce both total assets and total liabilities and equity shown above by $12.7 million as of
January 1, 2015
.
|
(3)
|
Operating Income Before Depreciation and Amortization (“OIBDA”), Adjusted OIBDA and Adjusted OIBDA margin are not financial measures calculated in accordance with GAAP in the United States. OIBDA represents operating income before depreciation and amortization expense. Adjusted OIBDA excludes from OIBDA non-cash share-based payment costs, the merger termination fee and related merger costs, Chief Executive Officer transition costs and early lease termination expense. Adjusted OIBDA margin is calculated by dividing Adjusted OIBDA by total revenue. Our management uses these non-GAAP financial measures to evaluate operating performance, to forecast future results and as a basis for compensation. The Company believes these are important supplemental measures of operating performance because they eliminate items that have less bearing on its operating performance and highlight trends in its core business that may not otherwise be apparent when relying solely on GAAP financial measures. The Company believes the presentation of these measures is relevant and useful for investors because it enables them to view performance in a manner similar to the method used by the Company’s management, helps improve their ability to understand the Company’s operating performance and makes it easier to compare the Company’s results with other companies that may have different depreciation and amortization policies, non-cash share based compensation programs, levels of mergers and acquisitions, CEO turnover, early
|
(4)
|
Represents the total number of screens within NCM LLC’s advertising network operated by NCM LLC’s founding members.
|
(5)
|
Represents the total screens within NCM LLC’s advertising network.
|
(6)
|
Represents the total number of screens that are connected to the DCN.
|
(7)
|
Represents the total attendance within NCM LLC’s advertising network.
|
(8)
|
Excludes screens and attendance associated with certain AMC Rave, AMC Carmike Cinemas, Inc. ("Carmike") and Cinemark Rave theaters for all periods presented. Refer to Note 5 to the audited Consolidated Financial Statements included elsewhere in this document.
|
(9)
|
The prior year balances have been adjusted to reflect the adoption of a change in accounting principle in the first quarter of 2018. Refer to Note 1 to the audited Consolidated Financial Statements for discussion of the nature and impact of the change on the results of operations data for years ended December 28, 2017 and December 29, 2016 and on the balance sheet data as of December 28, 2017. For the years ended December 31, 2015 and January 1, 2015, this adjustment changed the non-operating expenses and income before income taxes by $21.0 million and $35.0 million, respectively, increased the provision for income taxes by $8.4 million and $17.0 million, respectively, and increased consolidated net income and net income attributable to NCM, Inc. balances by $12.6 million and $18.0 million, respectively. The adjustment to net income attributable to NCM, Inc. resulted in a $0.22 and $0.16 increase in basic and diluted EPS, respectively, for the year ended December 31, 2015 and a $0.31 and $0.25 increase in basic and diluted EPS, respectively, for the year ended January 1, 2015. Additionally, total assets increased by $73.0 million, $78.2 million, and $84.3 million; payable to founding members under the TRA increased by $188.4 million, $205.5 million, and $218.4 million; Equity/(deficit) decreased by $115.5 million, $127.3 million, and $134.2 million; and total liabilities and equity increased by $73.0 million, $78.2 million, and $84.3 million for the years ended December 29, 2016, December 31, 2015 and January 1, 2015, respectively. The change in accounting principle does not impact the Company’s operating income, OIBDA, or Adjusted OIBDA.
|
|
Years Ended
|
||||||||||||||||||
|
Dec. 27,
2018 |
|
Dec. 28,
2017 |
|
Dec. 29,
2016 |
|
Dec. 31,
2015 |
|
Jan. 1,
2015 |
||||||||||
Operating income
|
$
|
154.3
|
|
|
$
|
153.9
|
|
|
$
|
173.0
|
|
|
$
|
148.0
|
|
|
$
|
151.7
|
|
Depreciation and amortization
|
39.9
|
|
|
37.6
|
|
|
35.8
|
|
|
32.2
|
|
|
32.4
|
|
|||||
OIBDA
|
194.2
|
|
|
191.5
|
|
|
208.8
|
|
|
180.2
|
|
|
184.1
|
|
|||||
Share-based compensation costs
(1)
|
7.8
|
|
|
11.2
|
|
|
18.3
|
|
|
14.8
|
|
|
7.7
|
|
|||||
Merger-related administrative costs
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
34.3
|
|
|
7.5
|
|
|||||
CEO transition costs
(3)
|
3.4
|
|
|
0.6
|
|
|
3.6
|
|
|
0.6
|
|
|
—
|
|
|||||
Early lease termination expense
(4)
|
—
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Adjusted OIBDA
|
$
|
205.4
|
|
|
$
|
205.1
|
|
|
$
|
230.7
|
|
|
$
|
229.9
|
|
|
$
|
199.3
|
|
Total revenue
|
$
|
441.4
|
|
|
$
|
426.1
|
|
|
$
|
447.6
|
|
|
$
|
446.5
|
|
|
$
|
394.0
|
|
Adjusted OIBDA margin
|
46.5
|
%
|
|
48.1
|
%
|
|
51.5
|
%
|
|
51.5
|
%
|
|
50.6
|
%
|
|
(1)
|
Share-based payments costs are included in network operations, selling and marketing and administrative expense in the accompanying audited Consolidated Financial Statements.
|
(2)
|
Merger termination fee and related merger costs primarily include the merger termination payment and legal, accounting, advisory and other professional fees associated with the terminated merger with Screenvision.
|
(3)
|
Chief Executive Officer transition costs represent severance, consulting and related other costs.
|
(4)
|
Early lease termination expense represents an expense recorded upon the early termination of the lease of our corporate headquarters because the early termination payment made by the Company was reimbursed by the landlord of the new building.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Years Ended
|
|
% Change
|
||||||||||||||
($ in millions)
|
Dec. 27,
2018 |
|
Dec. 28,
2017 |
|
Dec. 29,
2016 |
|
2017 to 2018
|
|
2016 to 2017
|
||||||||
Revenue
|
$
|
441.4
|
|
|
$
|
426.1
|
|
|
$
|
447.6
|
|
|
3.6
|
%
|
|
(4.8
|
)%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||
Advertising
|
181.3
|
|
|
178.0
|
|
|
173.9
|
|
|
1.9
|
%
|
|
2.4
|
%
|
|||
Network, administrative and unallocated costs
|
105.8
|
|
|
94.2
|
|
|
100.7
|
|
|
12.3
|
%
|
|
(6.5
|
)%
|
|||
Total operating expenses
|
287.1
|
|
|
272.2
|
|
|
274.6
|
|
|
5.5
|
%
|
|
(0.9
|
)%
|
|||
Operating income
|
154.3
|
|
|
153.9
|
|
|
173.0
|
|
|
0.3
|
%
|
|
(11.0
|
)%
|
|||
Non-operating expenses (income)
|
50.6
|
|
|
(140.9
|
)
|
|
64.1
|
|
|
NM
|
|
NM
|
|||||
Income tax expense
|
23.5
|
|
|
180.3
|
|
|
14.4
|
|
|
(87.0
|
)%
|
|
NM
|
||||
Net income attributable to noncontrolling interests
|
50.4
|
|
|
56.2
|
|
|
61.6
|
|
|
(10.3
|
)%
|
|
(8.8
|
)%
|
|||
Net income attributable to NCM, Inc.
|
$
|
29.8
|
|
|
$
|
58.3
|
|
|
$
|
32.9
|
|
|
(48.9
|
)%
|
|
77.2
|
%
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per NCM, Inc. basic share
|
$
|
0.39
|
|
|
$
|
0.89
|
|
|
$
|
0.55
|
|
|
(56.2
|
)%
|
|
61.8
|
%
|
Net income per NCM, Inc. diluted share
|
$
|
0.37
|
|
|
$
|
0.48
|
|
|
$
|
0.54
|
|
|
(22.9
|
)%
|
|
(11.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
||||||||
Adjusted OIBDA
|
$
|
205.4
|
|
|
$
|
205.1
|
|
|
$
|
230.7
|
|
|
0.1
|
%
|
|
(11.1
|
)%
|
Adjusted OIBDA margin
|
46.5
|
%
|
|
48.1
|
%
|
|
51.5
|
%
|
|
(1.6
|
)%
|
|
(3.4
|
)%
|
|||
Total theater attendance (in millions)
(1)
|
705.1
|
|
|
655.8
|
|
|
688.8
|
|
|
7.5
|
%
|
|
(4.8
|
)%
|
|
(1)
|
Represents the total attendance within NCM LLC’s advertising network, excluding screens and attendance associated with certain AMC Rave, AMC Carmike and Cinemark Rave theaters that are currently part of another cinema advertising network for all periods presented. Refer to Note 5 to the audited Consolidated Financial Statements included elsewhere in this document.
|
|
Number of screens
|
|||||||
|
Founding Members
|
|
Network Affiliates
|
|
Total
|
|||
Balance as of December 28, 2017
|
16,808
|
|
|
4,042
|
|
|
20,850
|
|
New affiliates
(1)
|
—
|
|
|
314
|
|
|
314
|
|
Openings, net of closures
|
(40
|
)
|
|
48
|
|
|
8
|
|
Balance as of December 27, 2018
|
16,768
|
|
|
4,404
|
|
|
21,172
|
|
|
(1)
|
Represents six new affiliates added to our network during 2018.
|
|
|
Reference in
|
Fiscal Year Ended
|
|
this Document
|
December 27, 2018
|
|
2018
|
December 28, 2017
|
|
2017
|
December 29, 2016
|
|
2016
|
|
Fiscal Year
|
|
$ Change
|
|
% Change
|
|||||||||
|
2018
|
|
2017
|
|
2017 to 2018
|
|
2017 to 2018
|
|||||||
National advertising revenue
|
$
|
312.0
|
|
|
$
|
296.3
|
|
|
$
|
15.7
|
|
|
5.3
|
%
|
Local and regional advertising revenue
|
98.0
|
|
|
99.9
|
|
|
(1.9
|
)
|
|
(1.9
|
)%
|
|||
Founding member advertising revenue from beverage
concessionaire agreements
|
31.4
|
|
|
29.9
|
|
|
1.5
|
|
|
5.0
|
%
|
|||
Total revenue
|
$
|
441.4
|
|
|
$
|
426.1
|
|
|
$
|
15.3
|
|
|
3.6
|
%
|
|
Fiscal Year
|
|
% Change
|
|||||||
|
2018
|
|
2017
|
|
2017 to 2018
|
|||||
National advertising revenue per attendee
|
$
|
0.442
|
|
|
$
|
0.452
|
|
|
(2.1
|
)%
|
Local and regional advertising revenue per attendee
|
$
|
0.139
|
|
|
$
|
0.152
|
|
|
(8.6
|
)%
|
Total advertising revenue (excluding founding member
beverage revenue) per attendee
|
$
|
0.581
|
|
|
$
|
0.604
|
|
|
(3.7
|
)%
|
Total advertising revenue per attendee
|
$
|
0.626
|
|
|
$
|
0.650
|
|
|
(3.7
|
)%
|
Total theater attendance (in millions)
(1)
|
705.1
|
|
|
655.8
|
|
|
7.5
|
%
|
|
(1)
|
Represents the total attendance within NCM LLC’s advertising network, excluding screens and attendance associated with certain AMC Rave, AMC Carmike and Cinemark Rave theaters for all periods presented. Refer to Note 5 to the audited Consolidated Financial Statements included elsewhere in this document.
|
|
Fiscal Year
|
|
$ Change
|
|
% Change
|
|||||||||
|
2018
|
|
2017
|
|
2017 to 2018
|
|
2017 to 2018
|
|||||||
Advertising operating costs
|
$
|
37.4
|
|
|
$
|
32.4
|
|
|
$
|
5.0
|
|
|
15.4
|
%
|
Network costs
|
13.3
|
|
|
15.8
|
|
|
(2.5
|
)
|
|
(15.8
|
)%
|
|||
Theater access fees—founding members
|
81.7
|
|
|
76.5
|
|
|
5.2
|
|
|
6.8
|
%
|
|||
Selling and marketing costs
|
66.5
|
|
|
72.0
|
|
|
(5.5
|
)
|
|
(7.6
|
)%
|
|||
Administrative and other costs
|
48.3
|
|
|
37.9
|
|
|
10.4
|
|
|
27.4
|
%
|
|||
Depreciation and amortization
|
39.9
|
|
|
37.6
|
|
|
2.3
|
|
|
6.1
|
%
|
|||
Total operating expenses
|
$
|
287.1
|
|
|
$
|
272.2
|
|
|
$
|
14.9
|
|
|
5.5
|
%
|
|
Fiscal Year
|
|
$ Change
|
|
% Change
|
|||||||||
|
2018
|
|
2017
|
|
2017 to 2018
|
|
2017 to 2018
|
|||||||
Interest on borrowings
|
$
|
55.4
|
|
|
$
|
52.8
|
|
|
$
|
2.6
|
|
|
4.9
|
%
|
Interest income
|
(1.5
|
)
|
|
(1.2
|
)
|
|
(0.3
|
)
|
|
25.0
|
%
|
|||
Loss on early retirement of debt, net
|
0.7
|
|
|
—
|
|
|
0.7
|
|
|
—
|
%
|
|||
(Gain) loss on re-measurement of the payable to
founding members under the tax receivable
agreement
|
(3.8
|
)
|
|
(192.2
|
)
|
|
188.4
|
|
|
NM
|
||||
Other non-operating (income)
|
(0.2
|
)
|
|
(0.3
|
)
|
|
0.1
|
|
|
(100.0
|
)%
|
|||
Total non-operating expense (income)
|
$
|
50.6
|
|
|
$
|
(140.9
|
)
|
|
$
|
191.5
|
|
|
135.9
|
%
|
|
|
Fiscal Year
|
|
$ Change
|
|
% Change
|
|||||||||
|
2017
|
|
2016
|
|
2016 to
2017
|
|
2016 to
2017
|
|||||||
National advertising revenue
|
$
|
296.3
|
|
|
$
|
311.9
|
|
|
$
|
(15.6
|
)
|
|
(5.0
|
)%
|
Local and regional advertising revenue
|
99.9
|
|
|
107.0
|
|
|
(7.1
|
)
|
|
(6.6
|
)%
|
|||
Founding member advertising revenue from beverage
concessionaire agreements
|
29.9
|
|
|
28.7
|
|
|
1.2
|
|
|
4.2
|
%
|
|||
Total revenue
|
$
|
426.1
|
|
|
$
|
447.6
|
|
|
$
|
(21.5
|
)
|
|
(4.8
|
)%
|
|
Fiscal Year
|
|
% Change
|
|||||||
|
2017
|
|
2016
|
|
2016 to
2017
|
|||||
National advertising revenue per attendee
|
$
|
0.452
|
|
|
$
|
0.453
|
|
|
(0.2
|
)%
|
Local and regional advertising revenue per attendee
|
$
|
0.152
|
|
|
$
|
0.155
|
|
|
(1.9
|
)%
|
Total advertising revenue (excluding founding member
beverage revenue) per attendee
|
$
|
0.604
|
|
|
$
|
0.608
|
|
|
(0.7
|
)%
|
Total advertising revenue per attendee
|
$
|
0.650
|
|
|
$
|
0.650
|
|
|
—
|
%
|
Total theater attendance (in millions)
(1)
|
655.8
|
|
|
688.8
|
|
|
(4.8
|
)%
|
|
(1)
|
Represents the total attendance within NCM LLC’s advertising network, excluding screens and attendance associated with certain AMC Rave and Cinemark Rave theaters for all periods presented. Refer to Note 5 to the audited Consolidated Financial Statements included elsewhere in this document.
|
|
Fiscal Year
|
|
$ Change
|
|
% Change
|
|||||||||
|
2017
|
|
2016
|
|
2016 to
2017
|
|
2016 to
2017
|
|||||||
Advertising operating costs
|
$
|
32.4
|
|
|
$
|
30.0
|
|
|
$
|
2.4
|
|
|
8.0
|
%
|
Network costs
|
15.8
|
|
|
17.1
|
|
|
(1.3
|
)
|
|
(7.6
|
)%
|
|||
Theater access fees—founding members
|
76.5
|
|
|
75.1
|
|
|
1.4
|
|
|
1.9
|
%
|
|||
Selling and marketing costs
|
72.0
|
|
|
72.8
|
|
|
(0.8
|
)
|
|
(1.1
|
)%
|
|||
Administrative and other costs
|
37.9
|
|
|
43.8
|
|
|
(5.9
|
)
|
|
(13.5
|
)%
|
|||
Depreciation and amortization
|
37.6
|
|
|
35.8
|
|
|
1.8
|
|
|
5.0
|
%
|
|||
Total operating expenses
|
$
|
272.2
|
|
|
$
|
274.6
|
|
|
$
|
(2.4
|
)
|
|
(0.9
|
)%
|
|
Fiscal Year
|
|
$ Change
|
|
% Change
|
|||||||||
|
2017
|
|
2016
|
|
2016 to
2017
|
|
2016 to
2017
|
|||||||
Interest on borrowings
|
$
|
52.8
|
|
|
$
|
54.0
|
|
|
$
|
(1.2
|
)
|
|
(2.2
|
)%
|
Interest income
|
(1.2
|
)
|
|
(1.5
|
)
|
|
0.3
|
|
|
(20.0
|
)%
|
|||
Loss on early retirement of debt
|
—
|
|
|
10.4
|
|
|
(10.4
|
)
|
|
100.0
|
%
|
|||
(Gain) loss on re-measurement of the payable
to founding members under the tax receivable
agreement
|
(192.2
|
)
|
|
1.2
|
|
|
(193.4
|
)
|
|
NM
|
|
|||
Other non-operating (income) expense
|
(0.3
|
)
|
|
—
|
|
|
(0.3
|
)
|
|
(100.0
|
)%
|
|||
Total non-operating (income) expenses
|
$
|
(140.9
|
)
|
|
$
|
64.1
|
|
|
$
|
(205.0
|
)
|
|
(319.8
|
)%
|
|
|
Years Ended
|
|
$ Change
|
||||||||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
|
2017 to
2018 |
|
2016 to
2017 |
||||||||||
Cash, cash equivalents and marketable
securities
(1)
|
$
|
75.6
|
|
|
$
|
59.5
|
|
|
$
|
68.7
|
|
|
$
|
16.1
|
|
|
$
|
(9.2
|
)
|
Revolver availability
(2)
|
143.2
|
|
|
158.2
|
|
|
158.8
|
|
|
(15.0
|
)
|
|
(0.6
|
)
|
|||||
Total liquidity
|
$
|
218.8
|
|
|
$
|
217.7
|
|
|
$
|
227.5
|
|
|
$
|
1.1
|
|
|
$
|
(9.8
|
)
|
|
(1)
|
Included in cash and cash equivalents as of
December 27, 2018
,
December 28, 2017
and
December 29, 2016
there was $7.2 million, $4.6 million and $10.7 million, respectively, of cash held by NCM LLC which is not available to satisfy NCM, Inc.'s dividend payments and other NCM, Inc. 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, $175.0 million and $135.0 million less $4.8 million, $4.8 million and $1.2 million, respectively, of outstanding letters of credit or $170.2 million, $170.2 million and $133.8 million, respectively, as of
December 27, 2018
, December 28, 2017 and December 29, 2016, respectively.
|
|
Years Ended
|
||||||||||
|
2018
|
|
2017
|
|
2016
|
||||||
Operating cash flow
|
$
|
150.3
|
|
|
$
|
138.9
|
|
|
$
|
133.5
|
|
Investing cash flow
|
(16.1
|
)
|
|
8.5
|
|
|
(4.3
|
)
|
|||
Financing cash flow
|
(123.0
|
)
|
|
(140.2
|
)
|
|
(137.9
|
)
|
|
Payments Due by Period (in millions)
|
||||||||||||||||||
|
Within
1 fiscal year |
|
1-3
fiscal years |
|
3-5
fiscal years |
|
Thereafter
|
|
Total
|
||||||||||
Borrowings
(1)
|
$
|
2.7
|
|
|
$
|
5.4
|
|
|
$
|
432.4
|
|
|
$
|
490.9
|
|
|
$
|
931.4
|
|
Cash interest on borrowings
(2)
|
53.9
|
|
|
106.5
|
|
|
66.3
|
|
|
59.1
|
|
|
285.8
|
|
|||||
Office leases
|
3.5
|
|
|
6.7
|
|
|
6.8
|
|
|
22.1
|
|
|
39.1
|
|
|||||
Payable to founding members under TRA
(3)
|
15.5
|
|
|
28.5
|
|
|
36.3
|
|
|
130.8
|
|
|
211.1
|
|
|||||
Total contractual cash obligations
|
$
|
75.6
|
|
|
$
|
147.1
|
|
|
$
|
541.8
|
|
|
$
|
702.9
|
|
|
$
|
1,467.4
|
|
|
(1)
|
We have a $175.0 million variable rate revolving credit facility of which $27.0 million was outstanding as of
December 27, 2018
and $4.8 million is restricted due to outstanding letters of credit. Debt service requirements under this agreement depend on the amounts borrowed and the level of the base interest rate, in addition to a commitment fee on the unused portion of the revolving credit facility. Refer to further discussion of the secured credit facility under “—Financial Condition and Liquidity-Financings” above.
|
(2)
|
The amounts of future cash interest payments in the table above are based on the amount outstanding on the Senior Secured Notes, Senior Unsecured Notes, term loans and revolving credit facility, as well as, estimated rates of interest over the term of the variable rate revolving credit facility and term loan. The Senior Secured Notes due in 2022 are at a fixed rate of 6.00%. The Senior Unsecured Notes due in 2026 are at a fixed rate of 5.750%. In addition, we have variable rate term loans and a revolving credit facility. Debt service requirements under this agreement depend on the amounts borrowed and the level of the base interest rate, in addition to a commitment fee on the unused portion of the revolving credit facility. Refer to further discussion of the secured credit facility under “—Financial Condition and Liquidity-Financings” above.
|
(3)
|
The TRA entered into at the completion of our IPO provides for the payment by us 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 we actually realize as a result of certain increases in our proportionate share of tax basis in NCM LLC’s tangible and intangible assets. The payments to NCM LLC’s founding members are based, in part, on actual annual income and as such, will vary based on our operating results. The value in the table represents the estimated amounts payable under the TRA as of
December 27, 2018
.
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||
FY 2016
|
17.0
|
%
|
|
25.8
|
%
|
|
25.4
|
%
|
|
31.8
|
%
|
FY 2017
|
16.9
|
%
|
|
22.8
|
%
|
|
27.3
|
%
|
|
33.0
|
%
|
FY 2018
|
18.2
|
%
|
|
25.8
|
%
|
|
24.9
|
%
|
|
31.1
|
%
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 8.
|
Financial Statements and Supplementary Data
|
|
Page
|
National CineMedia, Inc. and Subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 27, 2018
|
|
December 28, 2017
|
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
41.4
|
|
|
$
|
30.2
|
|
Short-term marketable securities
|
24.0
|
|
|
13.1
|
|
||
Receivables, net of allowance of $6.0 and $6.0, respectively
|
149.9
|
|
|
160.6
|
|
||
Income tax receivable
|
0.3
|
|
|
0.2
|
|
||
Amounts due from founding members, net
|
5.8
|
|
|
—
|
|
||
Current portion of notes receivable - founding members (related parties of $4.2 and $4.2, respectively)
|
5.6
|
|
|
4.2
|
|
||
Prepaid expenses and other current assets
|
3.9
|
|
|
4.3
|
|
||
Total current assets
|
230.9
|
|
|
212.6
|
|
||
NON-CURRENT ASSETS:
|
|
|
|
||||
Property and equipment, net of accumulated depreciation of $62.5 and $70.4, respectively
|
33.6
|
|
|
30.7
|
|
||
Intangible assets, net of accumulated amortization of $172.7 and $145.4, respectively
|
684.5
|
|
|
717.2
|
|
||
Deferred tax assets, net of valuation allowance of $80.1 and $98.1, respectively
|
173.9
|
|
|
186.0
|
|
||
Long-term notes receivable, net of current portion - founding members
|
—
|
|
|
4.1
|
|
||
Other investments
|
3.0
|
|
|
3.5
|
|
||
Long-term marketable securities
|
10.2
|
|
|
16.2
|
|
||
Debt issuance costs, net
|
5.0
|
|
|
1.3
|
|
||
Other assets
|
0.7
|
|
|
1.5
|
|
||
Total non-current assets
|
910.9
|
|
|
960.5
|
|
||
TOTAL ASSETS
|
$
|
1,141.8
|
|
|
$
|
1,173.1
|
|
LIABILITIES AND EQUITY/(DEFICIT)
|
|
|
|
||||
CURRENT LIABILITIES:
|
|
|
|
||||
Amounts due to founding members, net
|
30.0
|
|
|
32.7
|
|
||
Payable to founding members under the TRA (related party payables of $11.2 and $19.6, respectively)
|
15.5
|
|
|
19.6
|
|
||
Accrued expenses
|
21.7
|
|
|
19.9
|
|
||
Accrued payroll and related expenses
|
15.3
|
|
|
11.1
|
|
||
Accounts payable
|
18.0
|
|
|
19.3
|
|
||
Deferred revenue
|
7.3
|
|
|
7.1
|
|
||
Short-term debt
|
2.7
|
|
|
—
|
|
||
Total current liabilities
|
110.5
|
|
|
109.7
|
|
||
NON-CURRENT LIABILITIES:
|
|
|
|
||||
Long-term debt, net of debt issuance costs of $7.8 and $8.7, respectively
|
920.9
|
|
|
923.3
|
|
||
Income tax payable
|
—
|
|
|
0.3
|
|
||
Payable to founding members under the TRA (related party payables of $141.1 and $212.6, respectively)
|
195.6
|
|
|
212.6
|
|
||
Other liabilities
|
4.0
|
|
|
2.0
|
|
||
Total non-current liabilities
|
1,120.5
|
|
|
1,138.2
|
|
||
Total liabilities
|
1,231.0
|
|
|
1,247.9
|
|
||
COMMITMENTS AND CONTINGENCIES (NOTE 13)
|
|
|
|
|
|
||
EQUITY/(DEFICIT):
|
|
|
|
||||
NCM, Inc. Stockholders’ Equity/(Deficit):
|
|
|
|
||||
Preferred stock, $0.01 par value; 10,000,000 shares authorized, none issued and outstanding, respectively
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value; 175,000,000 shares authorized, 76,976,398 and 76,242,222 issued and
outstanding, respectively
|
0.8
|
|
|
0.8
|
|
||
Additional paid in capital (deficit)
|
(215.2
|
)
|
|
(233.1
|
)
|
||
Retained earnings (distributions in excess of earnings)
|
(153.6
|
)
|
|
(130.2
|
)
|
||
Total NCM, Inc. stockholders’ equity/(deficit)
|
(368.0
|
)
|
|
(362.5
|
)
|
||
Noncontrolling interests
|
278.8
|
|
|
287.7
|
|
||
Total equity/(deficit)
|
(89.2
|
)
|
|
(74.8
|
)
|
||
TOTAL LIABILITIES AND EQUITY/DEFICIT
|
$
|
1,141.8
|
|
|
$
|
1,173.1
|
|
|
Years Ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
Revenue (including revenue from related parties of $28.4, $29.9
and $29.1, respectively)
|
$
|
441.4
|
|
|
$
|
426.1
|
|
|
$
|
447.6
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
||||||
Advertising operating costs
|
37.4
|
|
|
32.4
|
|
|
30.0
|
|
|||
Network costs
|
13.3
|
|
|
15.8
|
|
|
17.1
|
|
|||
Theater access fees—founding members (including fees to related parties of $69.0, $76.5 and $75.1, respectively)
|
81.7
|
|
|
76.5
|
|
|
75.1
|
|
|||
Selling and marketing costs
|
66.5
|
|
|
72.0
|
|
|
72.8
|
|
|||
Administrative and other costs
|
48.3
|
|
|
37.9
|
|
|
43.8
|
|
|||
Depreciation and amortization
|
39.9
|
|
|
37.6
|
|
|
35.8
|
|
|||
Total
|
287.1
|
|
|
272.2
|
|
|
274.6
|
|
|||
OPERATING INCOME
|
154.3
|
|
|
153.9
|
|
|
173.0
|
|
|||
NON-OPERATING EXPENSES:
|
|
|
|
|
|
||||||
Interest on borrowings
|
55.4
|
|
|
52.8
|
|
|
54.0
|
|
|||
Interest income
|
(1.5
|
)
|
|
(1.2
|
)
|
|
(1.5
|
)
|
|||
Loss on early retirement of debt, net
|
0.7
|
|
|
—
|
|
|
10.4
|
|
|||
(Gain) loss on re-measurement of the payable to founding
members under the TRA
|
(3.8
|
)
|
|
(192.2
|
)
|
|
1.2
|
|
|||
Other non-operating income
|
(0.2
|
)
|
|
(0.3
|
)
|
|
—
|
|
|||
Total
|
50.6
|
|
|
(140.9
|
)
|
|
64.1
|
|
|||
INCOME BEFORE INCOME TAXES
|
103.7
|
|
|
294.8
|
|
|
108.9
|
|
|||
Income tax expense
|
23.5
|
|
|
180.3
|
|
|
14.4
|
|
|||
CONSOLIDATED NET INCOME
|
80.2
|
|
|
114.5
|
|
|
94.5
|
|
|||
Less: Net income attributable to noncontrolling interests
|
50.4
|
|
|
56.2
|
|
|
61.6
|
|
|||
NET INCOME ATTRIBUTABLE TO NCM, INC.
|
29.8
|
|
|
58.3
|
|
|
32.9
|
|
|||
COMPREHENSIVE INCOME ATTRIBUTABLE TO NCM, INC.
|
$
|
29.8
|
|
|
$
|
58.3
|
|
|
$
|
32.9
|
|
|
|
|
|
|
|
||||||
NET INCOME PER NCM, INC. COMMON SHARE:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.39
|
|
|
$
|
0.89
|
|
|
$
|
0.55
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
0.48
|
|
|
$
|
0.54
|
|
|
|
|
|
|
|
||||||
WEIGHTED AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
||||||
Basic
|
76,859,087
|
|
|
65,226,817
|
|
|
59,788,026
|
|
|||
Diluted
|
157,403,910
|
|
|
151,067,270
|
|
|
60,605,570
|
|
|||
|
|
|
|
|
|
||||||
Dividends declared per common share
|
$
|
0.68
|
|
|
$
|
0.88
|
|
|
$
|
0.88
|
|
|
|
|
NCM, Inc.
|
|
|
|||||||||||||||||
|
|
|
Common Stock
|
|
Additional
Paid in Capital (Deficit) |
|
Retained
Earnings (Distribution in Excess of Earnings) |
|
Noncontrolling
Interest |
|||||||||||||
|
Consolidated
|
|
Shares
|
|
Amount
|
|
|
|
||||||||||||||
Balance—December 31, 2015
|
$
|
(229.9
|
)
|
|
59,239,154
|
|
|
$
|
0.6
|
|
|
$
|
(357.0
|
)
|
|
$
|
(108.8
|
)
|
|
$
|
235.3
|
|
Distributions to founding members
|
(75.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(75.1
|
)
|
|||||
NCM LLC equity issued for purchase of
intangible asset |
21.1
|
|
|
—
|
|
|
—
|
|
|
9.2
|
|
|
—
|
|
|
11.9
|
|
|||||
Income tax and other impacts of NCM LLC
ownership changes |
(2.3
|
)
|
|
—
|
|
|
—
|
|
|
(3.7
|
)
|
|
—
|
|
|
1.4
|
|
|||||
Comprehensive income, net of tax
|
94.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
32.9
|
|
|
61.6
|
|
|||||
Share-based compensation issued
|
(4.4
|
)
|
|
635,258
|
|
|
—
|
|
|
(4.4
|
)
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation expense/capitalized
|
18.8
|
|
|
—
|
|
|
—
|
|
|
12.4
|
|
|
—
|
|
|
6.4
|
|
|||||
Cash dividends declared $0.88 per share
|
(54.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(54.9
|
)
|
|
—
|
|
|||||
Balance—December 29, 2016
|
$
|
(232.2
|
)
|
|
59,874,412
|
|
|
$
|
0.6
|
|
|
$
|
(343.5
|
)
|
|
$
|
(130.8
|
)
|
|
$
|
241.5
|
|
Distributions to founding members
|
(85.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(85.0
|
)
|
|||||
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 |
(23.6
|
)
|
|
—
|
|
|
—
|
|
|
28.6
|
|
|
—
|
|
|
(52.2
|
)
|
|||||
Issuance of shares to founding members
|
84.9
|
|
|
15,600,000
|
|
|
0.2
|
|
|
84.7
|
|
|
—
|
|
|
—
|
|
|||||
NCM, Inc. investment in NCM LLC
|
(84.9
|
)
|
|
—
|
|
|
—
|
|
|
(84.9
|
)
|
|
—
|
|
|
—
|
|
|||||
Comprehensive income, net of tax
|
114.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
58.3
|
|
|
56.2
|
|
|||||
Share-based compensation issued
|
(4.1
|
)
|
|
767,810
|
|
|
—
|
|
|
(4.1
|
)
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation expense/capitalized
|
11.5
|
|
|
—
|
|
|
—
|
|
|
7.3
|
|
|
—
|
|
|
4.2
|
|
|||||
Cash dividends declared $0.88 per share
|
(57.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57.7
|
)
|
|
—
|
|
|||||
Balance—December 28, 2017
|
$
|
(74.8
|
)
|
|
76,242,222
|
|
|
$
|
0.8
|
|
|
$
|
(233.1
|
)
|
|
$
|
(130.2
|
)
|
|
$
|
287.7
|
|
Cumulative-effect adjustment for adoption of 2014-09
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|||||
Distributions to founding members
|
(72.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(72.3
|
)
|
|||||
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 |
9.5
|
|
|
—
|
|
|
—
|
|
|
7.0
|
|
|
—
|
|
|
2.5
|
|
|||||
Comprehensive income, net of tax
|
80.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29.8
|
|
|
50.4
|
|
|||||
Share-based compensation issued
|
(2.4
|
)
|
|
734,176
|
|
|
—
|
|
|
(2.4
|
)
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation expense/capitalized
|
7.9
|
|
|
—
|
|
|
—
|
|
|
5.6
|
|
|
—
|
|
|
2.3
|
|
|||||
Cash dividends declared $0.68 per share
|
(53.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(53.0
|
)
|
|
—
|
|
|||||
Balance—December 27, 2018
|
$
|
(89.2
|
)
|
|
76,976,398
|
|
|
$
|
0.8
|
|
|
$
|
(215.2
|
)
|
|
$
|
(153.6
|
)
|
|
$
|
278.8
|
|
|
Years Ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
Consolidated net income
|
$
|
80.2
|
|
|
$
|
114.5
|
|
|
$
|
94.5
|
|
Adjustments to reconcile consolidated net income to net cash
provided by operating activities:
|
|
|
|
|
|
||||||
Deferred income tax expense
|
23.3
|
|
|
181.9
|
|
|
16.7
|
|
|||
Depreciation and amortization
|
39.9
|
|
|
37.6
|
|
|
35.8
|
|
|||
Non-cash share-based compensation
|
7.8
|
|
|
11.2
|
|
|
18.3
|
|
|||
Impairment on investment
|
0.4
|
|
|
3.1
|
|
|
0.7
|
|
|||
Reversal of income tax reserve
|
(0.4
|
)
|
|
(1.7
|
)
|
|
(2.9
|
)
|
|||
Amortization of debt issuance costs
|
2.6
|
|
|
2.6
|
|
|
2.6
|
|
|||
Loss on early retirement of debt, net
|
0.7
|
|
|
—
|
|
|
10.4
|
|
|||
Non-cash (gain) loss on re-measurement of the payable to founding
members under the TRA
|
(3.8
|
)
|
|
(192.2
|
)
|
|
1.2
|
|
|||
Other
|
(0.5
|
)
|
|
(0.3
|
)
|
|
—
|
|
|||
Cash distributions from non-consolidated entities
|
0.2
|
|
|
0.3
|
|
|
0.2
|
|
|||
Proceeds from lessor on purchases of property, plant, and equipment
|
1.0
|
|
|
—
|
|
|
—
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Receivables, net
|
10.7
|
|
|
(0.1
|
)
|
|
(13.5
|
)
|
|||
Accounts payable and accrued expenses
|
4.8
|
|
|
1.7
|
|
|
(4.1
|
)
|
|||
Amounts due to founding members, net
|
(0.1
|
)
|
|
0.3
|
|
|
(0.1
|
)
|
|||
Payment to founding members under the TRA
|
(18.4
|
)
|
|
(18.8
|
)
|
|
(25.3
|
)
|
|||
Deferred revenue
|
0.2
|
|
|
(3.1
|
)
|
|
—
|
|
|||
Income taxes and other
|
1.7
|
|
|
1.9
|
|
|
(1.0
|
)
|
|||
Net cash provided by operating activities
|
150.3
|
|
|
138.9
|
|
|
133.5
|
|
|||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
Purchases of property and equipment
|
(14.2
|
)
|
|
(11.6
|
)
|
|
(12.9
|
)
|
|||
Acquisition of a business
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|||
Purchases of marketable securities
|
(36.8
|
)
|
|
(34.4
|
)
|
|
(54.7
|
)
|
|||
Proceeds from sale and maturities of marketable securities
|
32.2
|
|
|
50.9
|
|
|
62.8
|
|
|||
Proceeds from restricted cash
|
—
|
|
|
0.3
|
|
|
—
|
|
|||
Purchases of intangible assets from network affiliates
|
(0.1
|
)
|
|
(2.1
|
)
|
|
(2.3
|
)
|
|||
Proceeds from notes receivable - founding members (including payments from related parties of $1.4, $5.6 and $2.8, respectively)
|
2.8
|
|
|
5.6
|
|
|
2.8
|
|
|||
Net cash (used in) provided by investing activities
|
(16.1
|
)
|
|
8.5
|
|
|
(4.3
|
)
|
|||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
Payment of dividends
|
(54.4
|
)
|
|
(58.7
|
)
|
|
(54.6
|
)
|
|||
Proceeds from revolving credit facility
|
193.2
|
|
|
80.0
|
|
|
126.0
|
|
|||
Repayments of revolving credit facility
|
(178.2
|
)
|
|
(83.0
|
)
|
|
(177.0
|
)
|
|||
Proceeds from term loan facility
|
270.0
|
|
|
—
|
|
|
—
|
|
|||
Repayments of term loan facility
|
(270.7
|
)
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of Senior Notes due 2026
|
—
|
|
|
—
|
|
|
250.0
|
|
|||
Repayments of Senior Notes due 2026
|
(14.2
|
)
|
|
—
|
|
|
—
|
|
|||
Redemption of Senior Notes due 2021
|
—
|
|
|
—
|
|
|
(207.9
|
)
|
|||
Payment of debt issuance costs
|
(6.9
|
)
|
|
—
|
|
|
(4.8
|
)
|
|||
Founding member integration and other encumbered theater payments
(including payments from related parties of $17.2, $12.9 and $2.4, respectively)
|
22.7
|
|
|
12.9
|
|
|
2.4
|
|
|||
Distributions to founding members
|
(82.1
|
)
|
|
(87.3
|
)
|
|
(67.6
|
)
|
|||
Proceeds from stock option exercises
|
—
|
|
|
0.6
|
|
|
0.5
|
|
|||
Repurchase of stock for restricted stock tax withholding
|
(2.4
|
)
|
|
(4.7
|
)
|
|
(4.9
|
)
|
|||
Net cash used in financing activities
|
(123.0
|
)
|
|
(140.2
|
)
|
|
(137.9
|
)
|
|||
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
11.2
|
|
|
7.2
|
|
|
(8.7
|
)
|
|||
Cash, cash equivalents, and restricted cash at beginning of period
|
30.2
|
|
|
23.0
|
|
|
31.7
|
|
|||
Cash, cash equivalents, and restricted cash at end of period
|
$
|
41.4
|
|
|
$
|
30.2
|
|
|
$
|
23.0
|
|
|
Years Ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
Supplemental disclosure of non-cash financing and investing activity:
|
|
|
|
|
|
|
|
|
|||
Purchase of an intangible asset with NCM LLC equity
|
$
|
15.9
|
|
|
$
|
201.8
|
|
|
$
|
21.1
|
|
Accrued distributions to founding members
|
$
|
27.9
|
|
|
$
|
37.6
|
|
|
$
|
39.9
|
|
Accrued integration and other encumbered theater payments
from founding members (including accrued payments due from
related parties of $0.4, $0.0 and $0.0, respectively)
|
$
|
7.8
|
|
|
$
|
9.0
|
|
|
$
|
—
|
|
Purchase of subsidiary equity with NCM, Inc. equity
|
$
|
—
|
|
|
$
|
84.9
|
|
|
$
|
—
|
|
Accrued purchases of property and equipment
|
$
|
1.1
|
|
|
$
|
0.4
|
|
|
$
|
—
|
|
Increase in cost and equity method investments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2.0
|
|
(Decrease) increase in dividend equivalent accrual not requiring cash
in the period
|
$
|
(1.4
|
)
|
|
$
|
(1.0
|
)
|
|
$
|
0.3
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
54.1
|
|
|
$
|
49.9
|
|
|
$
|
52.5
|
|
Cash paid for income taxes, net of refunds
|
$
|
0.3
|
|
|
$
|
(1.7
|
)
|
|
$
|
0.5
|
|
1.
|
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
Fiscal Year Ended
|
|
Reference in
this Document
|
December 27, 2018
|
|
2018
|
December 28, 2017
|
|
2017
|
December 29, 2016
|
|
2016
|
|
As of
|
||||||
|
December 27, 2018
|
|
December 28, 2017
|
||||
Trade accounts
|
$
|
154.0
|
|
|
$
|
166.4
|
|
Other
|
1.9
|
|
|
0.2
|
|
||
Less: Allowance for doubtful accounts
|
(6.0
|
)
|
|
(6.0
|
)
|
||
Total
|
$
|
149.9
|
|
|
$
|
160.6
|
|
Equipment
|
4-10 years
|
Computer hardware and software
|
3-5 years
|
Leasehold improvements
|
Lesser of lease term or asset life
|
|
Years Ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
Beginning balance
|
$
|
10.0
|
|
|
$
|
12.6
|
|
|
$
|
12.9
|
|
Debt issuance payments
|
6.4
|
|
|
—
|
|
|
4.8
|
|
|||
Amortization of debt issuance costs
|
(2.6
|
)
|
|
(2.6
|
)
|
|
(2.6
|
)
|
|||
Write-off of debt issuance costs
|
(1.0
|
)
|
|
—
|
|
|
(2.5
|
)
|
|||
Ending balance
|
$
|
12.8
|
|
|
$
|
10.0
|
|
|
$
|
12.6
|
|
|
Years Ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
Net income attributable to NCM, Inc.
|
$
|
29.8
|
|
|
$
|
58.3
|
|
|
$
|
32.9
|
|
NCM LLC equity issued for purchase of intangible asset
|
7.7
|
|
|
78.8
|
|
|
9.2
|
|
|||
Income tax and other impacts of NCM LLC ownership
changes
|
7.0
|
|
|
28.6
|
|
|
(3.7
|
)
|
|||
NCM, Inc. investment in NCM LLC
|
—
|
|
|
(84.9
|
)
|
|
—
|
|
|||
Issuance of shares to founding members
|
—
|
|
|
84.7
|
|
|
—
|
|
|||
Change from net income attributable to NCM, Inc.
and transfers from noncontrolling interests
|
$
|
44.5
|
|
|
$
|
165.5
|
|
|
$
|
38.4
|
|
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, 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
|
)
|
|
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 the TRA
|
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
|
|
|
Year Ended
|
||||||||||
|
December 28, 2017
|
||||||||||
|
As Reported
|
|
Change in Accounting Principle
|
|
As Adjusted
|
||||||
Accretion of interest on the discounted payable to founding members under the TRA
|
$
|
18.5
|
|
|
$
|
(18.5
|
)
|
|
$
|
—
|
|
Gain on re-measurement of the payable to founding members under the TRA
|
(103.6
|
)
|
|
(88.6
|
)
|
|
(192.2
|
)
|
|||
Total non-operating expenses
|
(33.8
|
)
|
|
(107.1
|
)
|
|
(140.9
|
)
|
|||
INCOME BEFORE INCOME TAXES
|
187.7
|
|
|
107.1
|
|
|
294.8
|
|
|||
Income tax expense
|
129.0
|
|
|
51.3
|
|
|
180.3
|
|
|||
CONSOLIDATED NET INCOME
|
58.7
|
|
|
55.8
|
|
|
114.5
|
|
|||
NET INCOME ATTRIBUTABLE TO NCM, INC.
|
2.5
|
|
|
55.8
|
|
|
58.3
|
|
|||
|
|
|
|
|
|
||||||
NET INCOME PER NCM, INC. COMMON SHARE:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.04
|
|
|
$
|
0.85
|
|
|
$
|
0.89
|
|
Diluted
|
$
|
0.02
|
|
|
$
|
0.46
|
|
|
$
|
0.48
|
|
|
Year Ended
|
||||||||||
|
December 29, 2016
|
||||||||||
|
As Reported
|
|
Change in Accounting Principle
|
|
As Adjusted
|
||||||
Accretion of interest on the discounted payable to founding members under the TRA
|
$
|
19.6
|
|
|
$
|
(19.6
|
)
|
|
$
|
—
|
|
Loss on re-measurement of the payable to founding members under the TRA
|
1.0
|
|
|
0.2
|
|
|
1.2
|
|
|||
Total non-operating expenses
|
83.5
|
|
|
(19.4
|
)
|
|
64.1
|
|
|||
INCOME BEFORE INCOME TAXES
|
89.5
|
|
|
19.4
|
|
|
108.9
|
|
|||
Income tax expense
|
7.5
|
|
|
6.9
|
|
|
14.4
|
|
|||
CONSOLIDATED NET INCOME
|
82.0
|
|
|
12.5
|
|
|
94.5
|
|
|||
NET INCOME ATTRIBUTABLE TO NCM, INC.
|
20.4
|
|
|
12.5
|
|
|
32.9
|
|
|||
|
|
|
|
|
|
||||||
NET INCOME PER NCM, INC. COMMON SHARE:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.34
|
|
|
$
|
0.21
|
|
|
$
|
0.55
|
|
Diluted
|
$
|
0.34
|
|
|
$
|
0.20
|
|
|
$
|
0.54
|
|
|
Year Ended
|
||||||||||
|
December 28, 2017
|
||||||||||
|
As Reported
|
|
Change in Accounting Principle
|
|
As Adjusted
|
||||||
Consolidated net income
|
$
|
58.7
|
|
|
$
|
55.8
|
|
|
$
|
114.5
|
|
Adjustments to reconcile consolidated net income to net cash
provided by operating activities:
|
|
|
|
|
|
||||||
Deferred income tax expense
|
130.6
|
|
|
51.3
|
|
|
181.9
|
|
|||
Accretion of interest on the discounted payable to founding
members under the TRA |
18.5
|
|
|
(18.5
|
)
|
|
—
|
|
|||
Non-cash gain on re-measurement of the payable to
founding members under the TRA |
(103.6
|
)
|
|
(88.6
|
)
|
|
(192.2
|
)
|
|||
Net cash provided by operating activities
|
138.9
|
|
|
—
|
|
|
138.9
|
|
|
Year Ended
|
||||||||||
|
December 29, 2016
|
||||||||||
|
As Reported
|
|
Change in Accounting Principle
|
|
As Adjusted
|
||||||
Consolidated net income
|
$
|
82.0
|
|
|
$
|
12.5
|
|
|
$
|
94.5
|
|
Adjustments to reconcile consolidated net income to net cash
provided by operating activities:
|
|
|
|
|
|
||||||
Deferred income tax expense
|
9.8
|
|
|
6.9
|
|
|
16.7
|
|
|||
Accretion of interest on the discounted payable to founding
members under the TRA |
19.6
|
|
|
(19.6
|
)
|
|
—
|
|
|||
Non-cash gain on re-measurement of the payable to
founding members under the TRA |
1.0
|
|
|
0.2
|
|
|
1.2
|
|
|||
Net cash provided by operating activities
|
133.5
|
|
|
—
|
|
|
133.5
|
|
2.
|
REVENUE FROM CONTRACTS WITH CUSTOMERS
|
|
Years ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
National advertising revenue
|
$
|
312.0
|
|
|
$
|
296.3
|
|
|
$
|
311.9
|
|
Local and regional advertising revenue
|
98.0
|
|
|
99.9
|
|
|
107.0
|
|
|||
Founding member advertising revenue from beverage concessionaire agreements
|
31.4
|
|
|
29.9
|
|
|
28.7
|
|
|||
Total revenue
|
$
|
441.4
|
|
|
$
|
426.1
|
|
|
$
|
447.6
|
|
|
Year ended
|
||
|
December 27, 2018
|
||
Balance at beginning of period
|
$
|
(7.1
|
)
|
Performance obligations satisfied
|
7.1
|
|
|
New contract liabilities
|
(7.3
|
)
|
|
Balance at end of period
|
$
|
(7.3
|
)
|
3.
|
EARNINGS PER SHARE
|
|
Years Ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
Net income attributable to NCM, Inc. (in millions)
|
$
|
29.8
|
|
|
$
|
58.3
|
|
|
$
|
32.9
|
|
Net income attributable to NCM, Inc. following
conversion of dilutive membership units (net of
estimated taxes of $22.2, $42.5, and $0.0)
|
$
|
58.0
|
|
|
$
|
72.0
|
|
|
$
|
32.9
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
76,859,087
|
|
|
65,226,817
|
|
|
59,788,026
|
|
|||
Add: Dilutive effect of stock options, restricted
stock, and exchangeable NCM LLC common
membership units
|
80,544,823
|
|
|
85,840,453
|
|
|
817,544
|
|
|||
Diluted
|
157,403,910
|
|
|
151,067,270
|
|
|
60,605,570
|
|
|||
Earnings per NCM, Inc. share:
|
|
|
|
|
|
||||||
Basic
|
$
|
0.39
|
|
|
$
|
0.89
|
|
|
$
|
0.55
|
|
Diluted
|
$
|
0.37
|
|
|
$
|
0.48
|
|
|
$
|
0.54
|
|
4.
|
PROPERTY AND EQUIPMENT
|
|
As of
|
||||||
|
December 27, 2018
|
|
December 28, 2017
|
||||
Equipment, computer hardware and software
|
$
|
90.8
|
|
|
$
|
92.9
|
|
Leasehold improvements
|
2.4
|
|
|
4.0
|
|
||
Less: Accumulated depreciation
|
(62.5
|
)
|
|
(70.4
|
)
|
||
Subtotal
|
30.7
|
|
|
26.5
|
|
||
Construction in progress
|
2.9
|
|
|
4.2
|
|
||
Total property and equipment
|
$
|
33.6
|
|
|
$
|
30.7
|
|
5.
|
INTANGIBLE ASSETS
|
|
As of
December 28,
2017
|
|
Additions (1)
|
|
Amortization
|
|
Integration
and other encumbered theater payments (3)
|
|
As of
December 27,
2018
|
||||||||||
Gross carrying amount
|
$
|
862.6
|
|
|
$
|
16.0
|
|
|
$
|
—
|
|
|
$
|
(21.4
|
)
|
|
$
|
857.2
|
|
Accumulated amortization
|
(145.4
|
)
|
|
—
|
|
|
(27.3
|
)
|
|
—
|
|
|
(172.7
|
)
|
|||||
Total intangible assets, net
|
$
|
717.2
|
|
|
$
|
16.0
|
|
|
$
|
(27.3
|
)
|
|
$
|
(21.4
|
)
|
|
$
|
684.5
|
|
|
As of
December 29, 2016
|
|
Additions (2)
|
|
Amortization
|
|
Integration and other encumbered theater payments (3)
|
|
As of
December 28, 2017
|
||||||||||
Gross carrying amount
|
$
|
679.4
|
|
|
$
|
204.1
|
|
|
$
|
—
|
|
|
$
|
(20.9
|
)
|
|
$
|
862.6
|
|
Accumulated amortization
|
(118.9
|
)
|
|
—
|
|
|
(26.5
|
)
|
|
—
|
|
|
(145.4
|
)
|
|||||
Total intangible assets, net
|
$
|
560.5
|
|
|
$
|
204.1
|
|
|
$
|
(26.5
|
)
|
|
$
|
(20.9
|
)
|
|
$
|
717.2
|
|
|
(1)
|
During the first quarter of 2018, NCM LLC issued
2,821,710
(
3,736,860
issued, net of
915,150
returned) common membership units to its founding members for the rights to exclusive access to the theater screens and attendees added, net of dispositions by the founding members to NCM LLC’s network during the 2017 fiscal year and NCM LLC recorded a net intangible asset of
$15.9
million during the first quarter of 2018 as a result of the Common Unit Adjustment.
|
(2)
|
During the first quarter of 2017, NCM LLC issued
2,351,029
common membership units to its founding members for the rights to exclusive access to net new theater screens and attendees added by the founding members to NCM LLC’s network during 2016. During the first quarter of 2017, the Company issued
18,425,423
NCM LLC common membership units to AMC in respect of the annual attendance at the acquired Carmike theaters in accordance with the Common Unit Adjustment Agreement. AMC’s acquisition of Carmike meets the criteria for a Common Unit Adjustment because it resulted in an extraordinary attendance increase of approximately
9.5%
. Further, the Final Judgment required AMC to transfer advertising rights to
17
theaters from NCM LLC to another advertising provider. AMC surrendered
4,657,673
NCM LLC common membership units in respect of such theaters. The
4,657,673
NCM LLC common membership units were comprised of (i)
2,850,453
NCM LLC common membership units pursuant to the adjustment for divested theaters in the Common Unit Adjustment Agreement and (ii) an additional
1,807,220
NCM LLC common membership units valued at
$25.0
million to compensate for NCM LLC’s lost operating income for these theaters during the
10
-year term of the Final Judgment. NCM LLC recorded a net intangible asset of
$201.8
million in the first quarter of 2017 as a result of these Common Unit Adjustments.
|
(3)
|
Carmike and Rave Cinemas had pre-existing advertising agreements for some of the theaters it owned prior to their acquisitions by AMC and Cinemark. As a result, AMC and Cinemark will make integration and other encumbered theater payments over the remaining term of those agreements. During the year ended
December 27, 2018
and
December 28, 2017
, NCM LLC recorded a reduction to net intangible assets of $
21.4
million and $
20.9
million, respectively, related to integration and other encumbered theater payments due from AMC and Cinemark. During the year ended
December 27, 2018
and
December 28, 2017
, AMC and Cinemark paid a total of $
22.7
million and $
12.9
million, respectively, related to integration and other encumbered theater payments.
|
Year
|
|
Amortization
|
||
2018
|
|
$
|
27.3
|
|
2019
|
|
27.1
|
|
|
2020
|
|
27.1
|
|
|
2021
|
|
26.8
|
|
|
2022
|
|
26.4
|
|
6.
|
ACCRUED EXPENSES
|
|
As of
|
||||||
|
December 27, 2018
|
|
December 28, 2017
|
||||
Make-good reserve
|
$
|
8.0
|
|
|
$
|
5.5
|
|
Accrued interest
|
10.3
|
|
|
11.6
|
|
||
Deferred rent
|
0.2
|
|
|
0.8
|
|
||
Other accrued expenses
|
3.2
|
|
|
2.0
|
|
||
Total accrued expenses
|
$
|
21.7
|
|
|
$
|
19.9
|
|
7.
|
INCOME TAXES
|
|
Years Ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
(0.3
|
)
|
|
$
|
(1.6
|
)
|
|
$
|
(2.5
|
)
|
State
|
0.5
|
|
|
—
|
|
|
0.2
|
|
|||
Total current income tax (benefit)/expense
|
$
|
0.2
|
|
|
$
|
(1.6
|
)
|
|
$
|
(2.3
|
)
|
Deferred:
|
|
|
|
|
|
||||||
Federal
|
$
|
13.2
|
|
|
$
|
142.1
|
|
|
$
|
15.0
|
|
State
|
10.1
|
|
|
39.8
|
|
|
1.7
|
|
|||
Total deferred income tax expense
|
$
|
23.3
|
|
|
$
|
181.9
|
|
|
$
|
16.7
|
|
Total income tax provision on Consolidated
Statements of Income
|
$
|
23.5
|
|
|
$
|
180.3
|
|
|
$
|
14.4
|
|
|
Years Ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
Provision calculated at federal statutory income
tax rate:
|
|
|
|
|
|
||||||
Income before income taxes
|
$
|
21.8
|
|
|
$
|
102.6
|
|
|
$
|
37.9
|
|
Less: Noncontrolling interests
|
(10.6
|
)
|
|
(19.7
|
)
|
|
(21.6
|
)
|
|||
Income attributable to NCM, Inc.
|
11.2
|
|
|
82.9
|
|
|
16.3
|
|
|||
Current year change to enacted federal and
state rate
(1)
|
6.5
|
|
|
92.2
|
|
|
(2.2
|
)
|
|||
State and local income taxes, net of federal
benefit
|
2.6
|
|
|
8.7
|
|
|
2.0
|
|
|||
NCM LLC income taxes
|
0.4
|
|
|
0.2
|
|
|
0.1
|
|
|||
Share-based compensation
|
1.1
|
|
|
0.8
|
|
|
(0.1
|
)
|
|||
Uncertain tax positions
(2)
|
(0.4
|
)
|
|
(1.7
|
)
|
|
(2.9
|
)
|
|||
Change in the valuation allowance
|
0.5
|
|
|
(4.2
|
)
|
|
—
|
|
|||
NCM LLC membership unit issuance to
NCM, Inc.
|
0.2
|
|
|
0.5
|
|
|
0.9
|
|
|||
Executive compensation
|
1.4
|
|
|
0.4
|
|
|
0.3
|
|
|||
Other
|
—
|
|
|
0.5
|
|
|
—
|
|
|||
Total income tax provision
|
$
|
23.5
|
|
|
$
|
180.3
|
|
|
$
|
14.4
|
|
|
(1)
|
Refer to the discussion of the impact of the Tax Act within the ‘Tax Reform’ section below.
|
(2)
|
During the year ended December 31, 2015, the Company established a reserve for material, known tax exposures of
$4.9 million
, including accrued interest and penalties. The reserve relates to tax exposures from prior periods (2010 through 2014). During the years ended
December 27, 2018
,
December 28, 2017
, and
December 29, 2016
the Company reversed approximately
$0.4 million
of its reserve (
$0.3 million
of unrecognized tax benefits and
$0.1 million
of accrued interest and penalties),
$1.7 million
of its reserve (
$1.3 million
of income tax benefits and
$0.4 million
of accrued interest and penalties) and
$2.9 million
(
$2.3 million
of income tax benefits and
$0.6 million
of accrued interest and penalties), respectively, because the statute of limitations expired. Further information is provided below.
|
|
Years Ended
|
||||||
|
December 27, 2018
|
|
December 28, 2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Investment in consolidated subsidiary NCM
LLC
(1)
|
$
|
233.5
|
|
|
$
|
266.0
|
|
Share-based compensation
|
3.0
|
|
|
3.7
|
|
||
Net operating losses
|
15.8
|
|
|
12.7
|
|
||
Accrued bonus
|
0.5
|
|
|
0.4
|
|
||
Other
|
1.2
|
|
|
1.3
|
|
||
Total gross deferred tax assets
|
$
|
254.0
|
|
|
$
|
284.1
|
|
Valuation allowance
(1)
|
(80.1
|
)
|
|
(98.1
|
)
|
||
Total deferred tax assets, net of valuation allowance
|
$
|
173.9
|
|
|
$
|
186.0
|
|
|
(1)
|
The Company recognized a deferred tax asset in the amount of $
233.5
million and $
266.0
million as of 2018 and 2017, respectively, associated with the basis difference in our investment in NCM LLC. However, a portion of the total basis difference will only reverse upon a sale of the Company’s interest in NCM LLC, which the Company expects would result in a capital loss for which no offsetting capital gain is expected. Therefore, as of
December 27, 2018
and
December 28, 2017
the Company has a valuation allowance in the amount of $
80.1
million and $
98.1
million, respectively, against the deferred tax asset to which this portion relates. The change in the valuation allowance from
|
|
Years Ended
|
||||||
|
December 27, 2018
|
|
December 28, 2017
|
||||
Balance at beginning of period
|
$
|
0.3
|
|
|
$
|
1.6
|
|
Reductions based on the lapse of applicable statute of limitations
|
(0.3
|
)
|
|
(1.3
|
)
|
||
Balance at end of period
|
$
|
—
|
|
|
$
|
0.3
|
|
8.
|
EQUITY
|
9.
|
RELATED PARTY TRANSACTIONS
|
•
|
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 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 the 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
|
•
|
Tax Receivable Agreement.
The TRA 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 the 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 the founding members, if any.
|
|
Years Ended
|
||||||||||
Included in the Consolidated Statements of Income:
(1)
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
Revenue:
|
|
|
|
|
|
||||||
Beverage concessionaire revenue (included in
advertising revenue)
(2)
|
$
|
28.4
|
|
|
$
|
29.9
|
|
|
$
|
28.7
|
|
Advertising inventory revenue (included in advertising
revenue)
(3)
|
—
|
|
|
—
|
|
|
0.4
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Theater access fee
(4)
|
69.0
|
|
|
76.5
|
|
|
75.1
|
|
|||
Purchase of movie tickets and concession products and
rental of theater space (included in selling and
marketing costs)
(5)
|
1.1
|
|
|
2.1
|
|
|
1.6
|
|
|||
Purchase of movie tickets and concession products and
rental of theater space (included in advertising
operating costs)
|
0.1
|
|
|
0.1
|
|
|
—
|
|
|||
Purchase of movie tickets and concession products and
rental of theater space (included in other
administrative and other costs)
|
—
|
|
|
—
|
|
|
0.1
|
|
|||
Non-operating expenses:
|
|
|
|
|
|
||||||
Interest income from notes receivable (included in
interest income)
(6)
|
0.3
|
|
|
0.6
|
|
|
0.8
|
|
|
(1)
|
AMC is no longer considered a related party as of July 5, 2018, as described further above. As such, the figures within the table above only include related party activity with AMC for the first six months of 2018.
|
(2)
|
For the full years ended
December 27, 2018
,
December 28, 2017
and
December 29, 2016
, 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
second equivalent CPM rate specified by the ESA.
|
(3)
|
The value of such purchases is calculated by reference to NCM LLC’s advertising rate card.
|
(4)
|
Comprised of payments per theater attendee, payments per digital screen with respect to the founding member theaters included in the Company’s network and payments for access to higher quality digital cinema equipment.
|
(5)
|
Used primarily for marketing to NCM LLC’s advertising clients.
|
(6)
|
Refer to the discussion of the Fathom Events sale under AC JV, LLC transactions below.
|
|
As of
|
||||||
Included in the Consolidated Balance Sheets:
|
December 27, 2018
|
|
December 28, 2017
|
||||
Current portion of note receivable
(1) (2)
|
$
|
4.2
|
|
|
$
|
4.2
|
|
Long-term portion of note receivable
(2)
|
—
|
|
|
4.1
|
|
||
Interest receivable on notes receivable (included in other current assets)
(2)
|
0.1
|
|
|
—
|
|
||
Common unit adjustments, net of amortization and integration payments (included in
intangible assets)
(3)
|
657.6
|
|
|
687.1
|
|
||
Current payable to founding members under the TRA
(1) (4) (5)
|
11.2
|
|
|
19.6
|
|
||
Long-term payable to founding members under the TRA
(1) (4) (5)
|
141.1
|
|
|
212.6
|
|
|
(1)
|
AMC is no longer considered a related party as of July 5, 2018, as described further above. As such, the figures within the table above only include related party activity with AMC for the first six months of 2018.
|
(2)
|
Refer to the discussion of the Fathom Events sale under AC JV, LLC transactions below.
|
(3)
|
Refer to Note 5—
Intangible Assets
for further information on common unit adjustments and integration payments.
|
(4)
|
The Company paid the founding members
$18.4 million
in payments pursuant to the TRA during 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.
|
(5)
|
These balances have been recast following the adoption of the change in accounting principle discussed within Note 1—
Basis of Presentation and Summary of Significant Accounting Policies
.
|
|
Years Ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
AMC
|
$
|
2.2
|
|
|
$
|
27.1
|
|
|
$
|
23.6
|
|
Cinemark
|
34.3
|
|
|
29.1
|
|
|
25.4
|
|
|||
Regal
|
35.8
|
|
|
28.8
|
|
|
26.1
|
|
|||
Total founding members
|
72.3
|
|
|
85.0
|
|
|
75.1
|
|
|||
NCM, Inc.
|
69.1
|
|
|
75.9
|
|
|
57.5
|
|
|||
Total
|
$
|
141.4
|
|
|
$
|
160.9
|
|
|
$
|
132.6
|
|
|
Cinemark
|
|
Regal
|
|
Total
|
||||||
Theater access fees, net of beverage revenues
and other encumbered theater payments
|
$
|
1.0
|
|
|
$
|
1.5
|
|
|
$
|
2.5
|
|
Distributions payable to founding members
|
13.7
|
|
|
14.2
|
|
|
27.9
|
|
|||
Integration payments due from founding members
|
(0.4
|
)
|
|
—
|
|
|
(0.4
|
)
|
|||
Total amounts due (from) to founding members, net
|
$
|
14.3
|
|
|
$
|
15.7
|
|
|
$
|
30.0
|
|
|
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
|
|
10.
|
BORROWINGS
|
|
|
Outstanding Balance as of
|
|
|
|
|
||||||
Borrowings ($ in millions)
|
|
December 27, 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
|
|
27.0
|
|
|
12.0
|
|
|
June 20, 2023
|
|
(1)
|
||
Term loans
|
|
269.4
|
|
|
270.0
|
|
|
June 20, 2025
|
|
(1)
|
||
Senior unsecured notes due 2026
|
|
235.0
|
|
|
250.0
|
|
|
August 15, 2026
|
|
5.750%
|
||
Total borrowings
|
|
931.4
|
|
|
932.0
|
|
|
|
|
|
||
Less: Debt issuance costs related to term loans and senior notes
|
|
(7.8
|
)
|
|
(8.7
|
)
|
|
|
|
|
||
Total borrowings, net
|
|
923.6
|
|
|
923.3
|
|
|
|
|
|
||
Less: current portion of debt
|
|
(2.7
|
)
|
|
—
|
|
|
|
|
|
||
Carrying value of long-term debt
|
|
$
|
920.9
|
|
|
$
|
923.3
|
|
|
|
|
|
(1)
|
The interest rates on the revolving credit facility and term loan are described below.
|
Year
|
|
Amount
|
||
2019
|
|
$
|
2.7
|
|
2020
|
|
2.7
|
|
|
2021
|
|
2.7
|
|
|
2022
|
|
402.7
|
|
|
2023
|
|
29.7
|
|
|
Thereafter
|
|
490.9
|
|
|
Total
|
|
$
|
931.4
|
|
11.
|
SHARE-BASED COMPENSATION
|
|
Years Ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
Share-based compensation costs included in network
costs
|
$
|
0.6
|
|
|
$
|
1.0
|
|
|
$
|
1.1
|
|
Share-based compensation costs included in selling
and marketing costs
|
2.5
|
|
|
4.1
|
|
|
6.0
|
|
|||
Share-based compensation costs included in
administrative and other costs
(1)
|
4.7
|
|
|
6.1
|
|
|
11.2
|
|
|||
Total share-based compensation costs
|
$
|
7.8
|
|
|
$
|
11.2
|
|
|
$
|
18.3
|
|
|
(1)
|
Includes
$0.0 million
,
$0.0 million
, and
$2.3 million
of expense associated with the modification of certain former executive equity awards during the years ended
December 27, 2018
,
December 28, 2017
, and
December 29, 2016
, respectively, as described further below.
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life (in years)
|
|
Aggregate
Intrinsic
Value
(in millions)
|
|||||
Outstanding as of December 28, 2017
|
2,165,181
|
|
|
$
|
16.47
|
|
|
—
|
|
$
|
—
|
|
Forfeited
|
(123,953
|
)
|
|
$
|
16.94
|
|
|
|
|
|
||
Expired
|
(90,478
|
)
|
|
$
|
16.14
|
|
|
|
|
|
||
Outstanding as of December 27, 2018
|
1,950,750
|
|
|
$
|
16.45
|
|
|
2.0
|
|
$
|
—
|
|
Exercisable as of December 27, 2018
|
1,950,750
|
|
|
$
|
16.45
|
|
|
2.0
|
|
$
|
—
|
|
Vested and expected to vest as of December 27, 2018
|
1,950,750
|
|
|
$
|
16.45
|
|
|
2.0
|
|
$
|
—
|
|
|
Number of
Restricted
Shares and
Restricted
Stock Units
|
|
Weighted
Average
Grant-Date
Fair Value
|
|||
Non-vested balance as of December 28, 2017
|
2,308,962
|
|
|
$
|
14.70
|
|
Granted
|
1,019,173
|
|
|
$
|
6.65
|
|
Vested
(1)
|
(1,067,615
|
)
|
|
$
|
14.55
|
|
Forfeited
|
(434,537
|
)
|
|
$
|
10.24
|
|
Non-vested balance as of December 27, 2018
|
1,825,983
|
|
|
$
|
11.31
|
|
|
(1)
|
Includes
333,439
vested shares that were withheld to cover tax obligations and were subsequently canceled.
|
12.
|
EMPLOYEE BENEFIT PLANS
|
13.
|
COMMITMENTS AND CONTINGENCIES
|
Year
|
|
Minimum Lease Payments
|
||
2019
|
|
$
|
3.5
|
|
2020
|
|
3.3
|
|
|
2021
|
|
3.4
|
|
|
2022
|
|
3.4
|
|
|
2023
|
|
3.4
|
|
|
Thereafter
|
|
22.1
|
|
|
Total
|
|
$
|
39.1
|
|
14.
|
FAIR VALUE MEASUREMENTS
|
|
As of
|
||||||
|
December 27, 2018
|
|
December 28, 2017
|
||||
Investment in AC JV, LLC
(1)
|
$
|
0.9
|
|
|
$
|
1.0
|
|
Other investments
(2)
|
2.1
|
|
|
2.5
|
|
||
Total
|
$
|
3.0
|
|
|
$
|
3.5
|
|
|
(1)
|
Refer to Note 9—
Related Party Transactions
.
|
(2)
|
The Company received equity securities in privately held companies as consideration for a portion of advertising contracts. The equity securities were accounted for under the cost method and represent an ownership of less than
20%
. The Company does not exert significant influence on these companies’ operating or financial activities.
|
|
As of December 27, 2018
|
|
As of December 28, 2017
|
||||||||||||
|
Carrying Value
|
|
Fair Value
(1)
|
|
Carrying Value
|
|
Fair Value
(1)
|
||||||||
Term loans
|
$
|
269.4
|
|
|
$
|
261.2
|
|
|
$
|
270.0
|
|
|
$
|
270.8
|
|
Senior Notes due 2022
|
400.0
|
|
|
401.8
|
|
|
400.0
|
|
|
407.3
|
|
||||
Senior Notes due 2026
|
235.0
|
|
|
211.0
|
|
|
250.0
|
|
|
235.0
|
|
|
(1)
|
The Company has estimated the fair value on an average of at least two non-binding broker quotes and the Company’s analysis. 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.
|
|
|
|
Fair Value Measurements at
Reporting Date Using
|
||||||||||||
|
Fair Value As of
December 27, 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)
|
$
|
18.2
|
|
|
$
|
11.2
|
|
|
$
|
7.0
|
|
|
$
|
—
|
|
Short-term marketable securities
(2)
|
24.0
|
|
|
—
|
|
|
24.0
|
|
|
—
|
|
||||
Long-term marketable securities
(2)
|
10.2
|
|
|
—
|
|
|
10.2
|
|
|
—
|
|
||||
Total assets
|
$
|
52.4
|
|
|
$
|
11.2
|
|
|
$
|
41.2
|
|
|
$
|
—
|
|
|
|
|
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 and municipal bonds are 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 inputs are recorded at a lower level in the fair value hierarchy. The value of commercial paper and certificates of deposit is derived from pricing models using inputs based upon market information, including contractual terms, market prices and yield curves. The inputs to the valuation pricing models are observable in the market, and as such are generally classified as Level 2 in the fair value hierarchy. For the years ended
December 27, 2018
and
December 28, 2017
, there was an inconsequential amount of net realized gains (losses) recognized in interest income and an inconsequential amount of net unrealized holding gains (losses) included in other comprehensive income. Original cost of short term marketable securities is based on
the specific identification method. As of
December 27, 2018
and
December 28, 2017
, there was
$0.2 million
and
$0.2 million
, respectively, of gross unrealized losses related to individual securities of
$11.8 million
and
$8.2 million
, respectively, that had been in a continuous loss position for 12 months or longer. The Company has not recorded an impairment because it has the intention and ability to hold these securities to maturity.
|
|
As of December 27, 2018
|
||||||||
|
Amortized
Cost Basis
(in millions)
|
|
Aggregate
Fair Value
(in millions)
|
|
Maturities
(1)
(in years)
|
||||
MARKETABLE SECURITIES:
|
|
|
|
|
|
|
|
||
Short-term U.S. government agency bonds
|
$
|
3.9
|
|
|
$
|
3.9
|
|
|
0.5
|
Short-term U.S. government treasury bonds
|
0.3
|
|
|
0.3
|
|
|
0.5
|
||
Short-term certificates of deposit
|
3.6
|
|
|
3.6
|
|
|
0.6
|
||
Short-term municipal bonds
|
0.5
|
|
|
0.5
|
|
|
0.1
|
||
Short-term commercial paper:
|
|
|
|
|
|
||||
Financial
|
3.8
|
|
|
3.8
|
|
|
0.1
|
||
Industrial
|
12.0
|
|
|
11.9
|
|
|
0.1
|
||
Total short-term marketable securities
|
24.1
|
|
|
24.0
|
|
|
|
||
Long-term municipal bonds
|
1.2
|
|
|
1.3
|
|
|
1.5
|
||
Long-term U.S. government agency bonds
|
6.9
|
|
|
6.8
|
|
|
2.1
|
||
Long-term certificates of deposit
|
2.4
|
|
|
2.1
|
|
|
2.9
|
||
Total long-term marketable securities
|
10.5
|
|
|
10.2
|
|
|
|
||
Total marketable securities
|
$
|
34.6
|
|
|
$
|
34.2
|
|
|
|
|
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 commercial paper
|
0.9
|
|
|
0.9
|
|
|
0.8
|
||
Short-term certificates of deposit:
|
|
|
|
|
|
||||
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.
|
15.
|
VALUATION AND QUALIFYING ACCOUNTS
|
|
Years Ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
6.0
|
|
|
$
|
6.3
|
|
|
$
|
5.6
|
|
Provision for bad debt
|
1.6
|
|
|
1.1
|
|
|
2.1
|
|
|||
Write-offs, net
|
(1.6
|
)
|
|
(1.4
|
)
|
|
(1.4
|
)
|
|||
Balance at end of period
|
$
|
6.0
|
|
|
$
|
6.0
|
|
|
$
|
6.3
|
|
|
Years Ended
|
||||||||||
|
December 27, 2018
|
|
December 28, 2017
|
|
December 29, 2016
|
||||||
VALUATION ALLOWANCE ON DEFERRED TAX ASSETS:
|
|
|
|
|
|
||||||
Balance at beginning of period
|
$
|
98.1
|
|
|
$
|
110.3
|
|
|
$
|
110.4
|
|
Valuation allowance reversed
(1)
|
(18.0
|
)
|
|
(12.2
|
)
|
|
(0.1
|
)
|
|||
Balance at end of period
|
$
|
80.1
|
|
|
$
|
98.1
|
|
|
$
|
110.3
|
|
|
(1)
|
The changes within the valuation allowance during the years ended December 27, 2018 and December 28, 2017 relate to movement within the underlying residual portion of the Investment in NCM LLC deferred tax asset due primarily to timing differences between the recognition of available cash distributions for book and tax purposes.
|
16.
|
QUARTERLY FINANCIAL DATA (UNAUDITED)
|
2018
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Revenue
|
|
$
|
80.2
|
|
|
$
|
113.7
|
|
|
$
|
110.1
|
|
|
$
|
137.4
|
|
Operating expenses
|
|
69.2
|
|
|
73.5
|
|
|
67.8
|
|
|
76.6
|
|
||||
Operating income
|
|
11.0
|
|
|
40.2
|
|
|
42.3
|
|
|
60.8
|
|
||||
Consolidated net (loss) income
(1)
|
|
(3.5
|
)
|
|
17.0
|
|
|
25.7
|
|
|
41.0
|
|
||||
(Loss) Net income attributable to NCM, Inc.
(1)
|
|
(1.9
|
)
|
|
4.2
|
|
|
11.2
|
|
|
16.3
|
|
||||
(Loss) Earnings per NCM, Inc. share, basic
(1) (2)
|
|
(0.03
|
)
|
|
0.05
|
|
|
0.15
|
|
|
0.21
|
|
||||
(Loss) Earnings per NCM, Inc. share, diluted
(1) (2)
|
|
(0.03
|
)
|
|
0.05
|
|
|
0.14
|
|
|
0.21
|
|
2017
|
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Revenue
|
|
$
|
71.9
|
|
|
$
|
97.1
|
|
|
$
|
116.4
|
|
|
$
|
140.7
|
|
Operating expenses
|
|
66.8
|
|
|
68.8
|
|
|
66.1
|
|
|
70.5
|
|
||||
Operating income
|
|
5.1
|
|
|
28.3
|
|
|
50.3
|
|
|
70.2
|
|
||||
Consolidated net (loss) income
(1)
|
|
(5.8
|
)
|
|
14.6
|
|
|
36.2
|
|
|
69.5
|
|
||||
(Loss) Net income attributable to NCM, Inc.
(1)
|
|
(1.3
|
)
|
|
5.2
|
|
|
13.7
|
|
|
40.7
|
|
||||
(Loss) Earnings per NCM, Inc. share, basic
(1) (2)
|
|
(0.02
|
)
|
|
0.09
|
|
|
0.21
|
|
|
0.54
|
|
||||
(Loss) Earnings per NCM, Inc. share, diluted
(1) (2)
|
|
(0.02
|
)
|
|
0.09
|
|
|
0.21
|
|
|
0.30
|
|
|
(1)
|
These balances have been adjusted to reflect the adoption of a change in accounting principle in the first quarter of 2018 as discussed within Note 1 -
Basis of Presentation and Summary of Significant Accounting Policies.
|
(2)
|
Earnings per share in each quarter is computed using the weighted-average number of common shares outstanding during that quarter while earnings per share for the full year is computed using the weighted average number of common shares outstanding during the year.
|
17.
|
SUBSEQUENT EVENT
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
|
Item 9A.
|
Controls and Procedures
|
Item 9B.
|
Other Information
|
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Item 11.
|
Executive Compensation
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
Item 14.
|
Principal Accounting Fees and Services
|
Item 15.
|
Exhibits, Financial Statement Schedules
|
|
|
|
Incorporation by Reference
|
|||
Exhibit
|
Ref.
|
Description
|
Form
|
SEC File No.
|
Exhibit
|
Filing
Date
|
3.1
|
|
8-K
|
001-33296
|
3.1
|
7/6/2018
|
|
|
|
|
|
|
|
|
3.2
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
8-K
|
001-33296
|
4.1
|
4/30/2012
|
|
|
|
|
|
|
|
|
4.2
|
|
8-K
|
001-33296
|
4.1
|
4/30/2012
|
|
|
|
|
|
|
|
|
4.3
|
|
8-K
|
001-33296
|
4.1
|
8/19/2016
|
|
|
|
|
|
|
|
|
4.4
|
|
8-K
|
001-33296
|
4.1
|
8/19/2016
|
|
|
|
|
|
|
|
|
10.1
|
|
8-K
|
001-33296
|
10.1
|
2/16/2007
|
|
|
|
|
|
|
|
|
10.1.1
|
|
10-Q
|
001-33296
|
10.1.1
|
8/7/2009
|
|
|
|
|
|
|
|
|
10.1.2
|
|
8-K
|
001-33296
|
10.1
|
8/10/2010
|
|
|
|
|
|
|
|
|
10.1.3
|
|
8-K
|
001-33296
|
10.1.3
|
9/9/2013
|
|
|
|
|
|
|
|
|
10.1.4
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
10-K
|
001-33296
|
10.2.4
|
2/21/2014
|
|
|
|
Incorporation by Reference
|
|||
Exhibit
|
Ref.
|
Description
|
Form
|
SEC File No.
|
Exhibit
|
Filing
Date
|
|
|
|
|
|
|
|
10.3
|
|
10-K
|
001-33296
|
10.3.4
|
2/21/2014
|
|
|
|
|
|
|
|
|
10.3.1
|
|
8-K
|
001-33296
|
10.3
|
3/15/2017
|
|
|
|
|
|
|
|
|
10.4
|
|
10-K
|
001-33296
|
10.4.4
|
2/21/2014
|
|
|
|
|
|
|
|
|
10.4.1
|
|
8-K
|
001-33296
|
10.2
|
3/15/2017
|
|
|
|
|
|
|
|
|
10.5
|
|
8-K
|
001-33296
|
10.6
|
2/16/2007
|
|
|
|
|
|
|
|
|
10.5.1
|
|
8-K
|
001-33296
|
10.1
|
3/15/2017
|
|
|
|
|
|
|
|
|
10.6
|
|
8-K
|
001-33296
|
10.7
|
2/16/2007
|
|
|
|
|
|
|
|
|
10.6.1
|
|
8-K
|
001-33296
|
10.1
|
5/5/2008
|
|
|
|
|
|
|
|
|
10.7
|
|
8-K
|
001-33296
|
10.8
|
2/16/2007
|
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference
|
|||
Exhibit
|
Ref.
|
Description
|
Form
|
SEC File No.
|
Exhibit
|
Filing
Date
|
10.8
|
|
8-K
|
001-33296
|
10.9
|
2/16/2007
|
|
|
|
|
|
|
|
|
10.9
|
|
8-K
|
001-33296
|
10.10
|
2/16/2007
|
|
|
|
|
|
|
|
|
10.10
|
|
8-K
|
001-33296
|
10.11
|
2/16/2007
|
|
|
|
|
|
|
|
|
10.11
|
|
8-K
|
001-33296
|
10.12
|
2/16/2007
|
|
|
|
|
|
|
|
|
10.12
|
|
|
8-K
|
001-33296
|
10.1
|
6/25/2018
|
|
|
|
|
|
|
|
10.13
|
|
|
8-K
|
001-33296
|
10.1
|
6/1/2018
|
|
|
|
|
|
|
|
10.14
|
|
8-K
|
001-33296
|
10.1
|
1/5/2016
|
|
|
|
|
|
|
|
|
10.15
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
10-Q
|
001-33296
|
10.1
|
5/12/2015
|
|
|
|
|
|
|
|
|
10.17
|
|
8-K
|
001-33296
|
10.1
|
8/11/2016
|
|
|
|
|
|
|
|
|
10.18
|
|
8-K
|
001-33296
|
10.1
|
12/21/2018
|
|
|
|
|
|
|
|
|
10.19
|
|
8-K
|
001-33296
|
10.18
|
2/16/2007
|
|
|
|
|
|
|
|
|
10.19.1
|
|
10-K
|
001-33296
|
10/18/2001
|
3/6/2009
|
|
|
|
|
|
|
|
|
10.19.2
|
|
8-K
|
001-33296
|
10.1
|
11/7/2017
|
|
|
|
Incorporation by Reference
|
|||
Exhibit
|
Ref.
|
Description
|
Form
|
SEC File No.
|
Exhibit
|
Filing
Date
|
|
|
|
|
|
|
|
10.20
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
10.22
|
|
8-K
|
001-33296
|
10.1
|
2/13/2007
|
|
|
|
|
|
|
|
|
10.23
|
|
|
10-Q
|
001-33296
|
10.3
|
8/7/2018
|
|
|
|
|
|
|
|
10.24
|
|
8-K
|
001-33296
|
10.2
|
5/2/2013
|
|
|
|
|
|
|
|
|
10.25
|
|
S-8
|
001-33296
|
4.1
|
4/29/2016
|
|
|
|
|
|
|
|
|
10.26
|
|
S-8
|
001-33296
|
4.4
|
2/13/2007
|
|
|
|
|
|
|
|
|
10.27
|
|
S-8
|
001-33296
|
4.6
|
2/13/2007
|
|
|
|
|
|
|
|
|
10.27.1
|
|
10-K
|
001-33296
|
10.22.1
|
3/6/2009
|
|
|
|
|
|
|
|
|
10.27.2
|
|
10-K
|
001-33296
|
10.22.2
|
3/9/2010
|
|
|
|
|
|
|
|
|
10.27.3
|
|
10-K
|
001-33296
|
10.22.3
|
2/25/2011
|
|
|
|
|
|
|
|
|
10.27.4
|
|
10-K
|
001-33296
|
10.22.4
|
2/24/2012
|
|
|
|
|
|
|
|
|
10.28.1
|
|
10-K
|
001-33296
|
10.23.7
|
2/26/2016
|
|
|
|
|
|
|
|
|
10.28.2
|
|
10-K
|
001-33296
|
10.23.8
|
2/26/2016
|
|
|
|
|
|
|
|
|
10.28.3
|
|
S-8
|
001-33296
|
4.2
|
4/29/2016
|
|
|
|
|
|
|
|
|
10.28.4
|
|
S-8
|
001-33296
|
4.3
|
4/29/2016
|
|
|
|
|
|
|
|
|
10.28.5
|
|
10-K
|
001-33296
|
10.26.9
|
2/24/2017
|
|
|
|
|
|
|
|
|
10.28.6
|
|
10-K
|
001-33296
|
10.26.10
|
2/24/2017
|
|
|
|
|
|
|
|
|
10.28.7
|
(1)
|
10-K
|
333-176056
|
10.24.9
|
3/14/2018
|
|
|
|
|
|
|
|
|
10.28.8
|
(1)
|
10-K
|
333-176056
|
10.24.10
|
3/14/2018
|
|
|
|
|
|
|
|
|
10.28.9
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28.10
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
10.29
|
|
10-K
|
001-33296
|
10.34
|
3/6/2009
|
|
|
|
|
|
|
|
|
|
|
|
Incorporation by Reference
|
|||
Exhibit
|
Ref.
|
Description
|
Form
|
SEC File No.
|
Exhibit
|
Filing
Date
|
10.29.1
|
|
S-8
|
001-33296
|
4.4
|
4/29/2016
|
|
|
|
|
|
|
|
|
10.29.2
|
|
10-K
|
001-33296
|
10.27.2
|
2/24/2017
|
|
|
|
|
|
|
|
|
21.1
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
24.1
|
*
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
+
|
Management contract.
|
(1)
|
Incorporated by reference to the exhibit listed from NCM LLC’s Annual Report on Form 10-K.
|
Item 16.
|
Form 10-K Summary
|
|
|
|
NATIONAL CINEMEDIA, INC.
|
|
|
|
(Registrant)
|
|
|
|
|
Date:
|
February 21, 2019
|
|
/s/ Clifford E. Marks
|
|
|
|
Clifford E. Marks
|
|
|
|
Interim Chief Executive Officer and President
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
Date:
|
February 21, 2019
|
|
/s/ Katherine L. Scherping
|
|
|
|
Katherine L. Scherping
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
Section
|
|
|
|
Page
|
|
|
|
||||
ARTICLE I Offices
|
|
1
|
|||
Section 1.01
|
|
Business Offices
|
|
1
|
|
Section 1.02
|
|
Registered Office
|
|
1
|
|
|
|
||||
ARTICLE II Stockholders
|
|
1
|
|||
Section 2.01
|
|
Annual Meeting
|
|
1
|
|
Section 2.02
|
|
Special Meetings
|
|
1
|
|
Section 2.03
|
|
Place of Meeting
|
|
1
|
|
Section 2.04
|
|
Notice of Meetings
|
|
1
|
|
Section 2.05
|
|
Fixing Date for Determination of Stockholders of Record.
|
|
2
|
|
Section 2.06
|
|
Voting List
|
|
2
|
|
Section 2.07
|
|
Proxies
|
|
3
|
|
Section 2.08
|
|
Quorum and Manner of Acting
|
|
3
|
|
Section 2.09
|
|
Nominations for the Election of Directors
|
|
3
|
|
Section 2.10
|
|
Other Stockholder Proposals
|
|
4
|
|
Section 2.11
|
|
Stockholder Action by Written Consent Without a Meeting
|
|
5
|
|
Section 2.12
|
|
Conduct of Business
|
|
5
|
|
Section 2.13
|
|
Inspector of Elections
|
|
6
|
|
|
|
||||
ARTICLE III Board of Directors
|
|
7
|
|||
Section 3.01
|
|
General Powers
|
|
7
|
|
Section 3.02
|
|
Number, Tenure and Qualifications
|
|
7
|
|
Section 3.03
|
|
Resignation
|
|
7
|
|
Section 3.04
|
|
Regular Meetings
|
|
7
|
|
Section 3.05
|
|
Special Meetings
|
|
7
|
|
Section 3.06
|
|
Meetings by Telephone
|
|
7
|
|
Section 3.07
|
|
Notice of Meetings
|
|
7
|
|
Section 3.08
|
|
Quorum and Manner of Acting
|
|
8
|
|
Section 3.09
|
|
Action Without a Meeting
|
|
8
|
|
Section 3.10
|
|
Executive and Other Committees
|
|
8
|
|
Section 3.11
|
|
Compensation
|
|
9
|
|
Section 3.12
|
|
Removal of Directors; Vacancies
|
|
9
|
|
|
|
||||
ARTICLE IV Officers
|
|
9
|
|||
Section 4.01
|
|
Number and Qualifications
|
|
9
|
|
Section 4.02
|
|
Election and Term of Office
|
|
9
|
|
Section 4.03
|
|
Compensation
|
|
9
|
|
Section 4.04
|
|
Resignation
|
|
9
|
|
Section 4.05
|
|
Removal
|
|
9
|
Section 4.06
|
|
Vacancies
|
|
10
|
|
Section 4.07
|
|
Authority and Duties
|
|
10
|
|
Section 4.08
|
|
Surety Bonds
|
|
11
|
|
|
|
||||
ARTICLE V Stock
|
|
11
|
|||
Section 5.01
|
|
Issuance of Shares
|
|
11
|
|
Section 5.02
|
|
Transfer of Shares
|
|
11
|
|
Section 5.03
|
|
Registered Holders
|
|
12
|
|
Section 5.04
|
|
Transfer Agents, Registrars and Paying Agents
|
|
12
|
|
Section 5.05
|
|
Lost, Stolen or Destroyed Certificates
|
|
12
|
|
|
|
||||
ARTICLE VI Indemnification
|
|
12
|
|||
Section 6.01
|
|
Right to Indemnification
|
|
12
|
|
Section 6.02
|
|
Insurance
|
|
12
|
|
|
|
||||
ARTICLE VII Miscellaneous
|
|
13
|
|||
Section 7.01
|
|
Notice by Electronic Transmission
|
|
13
|
|
Section 7.02
|
|
Waivers of Notice
|
|
14
|
|
Section 7.03
|
|
Presumption of Assent
|
|
14
|
|
Section 7.04
|
|
Voting of Securities by the Corporation
|
|
14
|
|
Section 7.05
|
|
Authorized Signatories
|
|
14
|
|
Section 7.06
|
|
Seal
|
|
14
|
|
Section 7.07
|
|
Fiscal Year
|
|
14
|
|
Section 7.08
|
|
Amendments
|
|
14
|
(a)
|
as to each person whom the stockholder proposes to nominate as a director:
|
(i)
|
all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to and in accordance with Regulation 14A under the Securities Exchange Act of 1934, as amended (the “
Exchange Act
”), and
|
(ii)
|
such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected; and
|
(b)
|
as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination is made:
|
(i)
|
the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner,
|
(ii)
|
the class and number of shares of capital stock of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner,
|
(iii)
|
a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose nomination, and
|
(iv)
|
a representation regarding whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect the nominee and/or (B) otherwise to solicit proxies from stockholders in support of such nomination.
|
(a)
|
as to any business that the stockholder proposes to bring before the meeting:
|
(i)
|
a brief description of the business desired to be brought before the meeting,
|
(ii)
|
the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend these Bylaws, the language of the proposed amendment), and
|
(iii)
|
the reasons for conducting such business at the meeting; and
|
(b)
|
as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the proposal is made:
|
(i)
|
the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner,
|
(ii)
|
the class and number of shares of capital stock of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner,
|
(iii)
|
any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made as to each matter such stockholder proposes to bring before such meeting,
|
(iv)
|
a representation that the stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business, and
|
(v)
|
a representation regarding whether the stockholder or the beneficial owner, if any, intends or is part of a group which intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to approve or adopt the proposal and/or (B) otherwise to solicit proxies from stockholders in support of such proposal.
|
(a)
|
Any such consent shall be deemed revoked if:
|
(i)
|
the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent; and
|
(ii)
|
such inability becomes known to the secretary or an assistant secretary of the Corporation or to the transfer agent of the Corporation, or other person responsible for the giving of notice.
|
(b)
|
Any notice given pursuant to this Section 7.01 shall be deemed given:
|
(i)
|
if by facsimile telecommunication, when directed to a number at which the stockholder of the Corporation has consented to receive notice;
|
(ii)
|
if by electronic mail, when directed to an electronic mail address at which the stockholder of the Corporation has consented to receive notice;
|
(iii)
|
if by a posting on an electronic network together with separate notice to the stockholder of the Corporation of such specific posting, upon the later of such posting and the giving of such separate notice; and
|
(iv)
|
if by any other form of electronic transmission, when directed to the stockholder of the Corporation.
|
(c)
|
An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.
|
(d)
|
Notice by a form of electronic transmission shall not apply to Sections 164, 296, 311, 312 or 324 of the DGCL.
|
|
EXECUTIVE
|
|
|
|
|
By:
|
/s/ Andrew J. England
|
|
|
Andrew J. England
|
|
|
|
|
|
|
|
Date:
|
November 15, 2018
|
|
|
|
|
|
NATIONAL CINEMEDIA, INC.
|
|
|
By:
|
/s/ Clifford E. Marks
|
Name:
|
Clifford E. Marks
|
Title:
|
Interim Chief Executive Officer and President
|
|
|
Date:
|
November 14, 2018
|
|
|
($000s)
|
|
|
|
|
Shares to Vest
|
||||
|
|
|
|
|
Upon Termination
|
||||
Grant Detail
|
|
Number of Shares
|
Vesting Date
|
Proration Ratio
(2)
|
# of Shares Vesting
|
Current Value of Shares
(3)
|
Accrued Dividends
|
Total Value
|
|
Grant Date
|
Granted
|
Unvested
(1)
|
|||||||
2016 (Initial TBRS)
(4)
|
1/1/2016
|
48,109
|
16,037
|
1/1/2019
|
1.00
|
16,037
|
$138
|
$36
|
$174
|
2016 (Annual TBRS of 24,983 Total Shares)
|
1/20/2016
|
|
|
|
|
|
|
|
|
1st tranche (vests 1 year from grant date)
|
|
8,327
|
0
|
1/20/2017
|
0
|
0
|
0
|
0
|
0
|
2nd tranche (vests 2 years from grant date)
|
|
8,328
|
0
|
1/20/2018
|
0
|
0
|
0
|
0
|
0
|
3rd tranche (vests 3 years from grant date)
|
|
8,328
|
8,328
|
1/20/2019
|
0.93
|
7,728
|
$67
|
$18
|
$84
|
2016
(Annual PBRS)
(5)
|
1/20/2016
|
74,950
|
74,950
|
2/25/2019
(6)
|
0.90
|
67,336
|
$580
|
$153
|
$733
|
2017 (Annual TBRS of 25,338 Total Shares)
|
1/19/2017
|
|
|
|
|
|
|
|
|
1st tranche (vests 1 year from grant date)
|
|
8,446
|
0
|
1/19/2018
|
0
|
0
|
0
|
0
|
0
|
2nd tranche (vests 2 years from grant date)
|
|
8,446
|
8,446
|
1/19/2019
|
0.89
|
7,544
|
$65
|
$10
|
$75
|
3rd tranche (vests 3 years from grant date)
|
|
8,446
|
8,446
|
1/19/2020
|
0.60
|
5,029
|
$43
|
$7
|
$50
|
2017
(Annual PBRS)
(5)
|
1/19/2017
|
76,013
|
76,013
|
2/24/2020
(6)
|
0.58
|
43,820
|
$377
|
$61
|
$438
|
2018 (Annual TBRS of 56,818 Total Shares)
|
1/24/2018
|
|
|
|
|
|
|
|
|
1st tranche (vests 1 year from grant date)
|
|
18,939
|
18,939
|
1/24/2019
|
0.77
|
14,632
|
$126
|
$7
|
$133
|
2nd tranche (vests 2 years from grant date)
|
|
18,939
|
18,939
|
1/24/2020
|
0.39
|
7,316
|
$63
|
$4
|
$67
|
3rd tranche (vests 3 years from grant date)
|
|
18,940
|
18,940
|
1/24/2021
|
0.26
|
4,873
|
$42
|
$2
|
$44
|
2018 (Annual PBRS)
(5)
|
1/24/2018
|
170,455
|
170,455
|
3/1/2021
(6)
|
0.25
|
42,463
|
$366
|
$22
|
$387
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
476,666
|
419,493
|
|
|
216,778
|
$1,866
|
$321
|
$2,187
|
Note:
|
TBRS = Time-Based Restricted Stock, PBRS = Perf-Based Restricted Stock
|
|
|
|
NATIONAL CINEMEDIA, INC.
NATIONAL CINEMEDIA, LLC
|
||
|
|
|
By:
|
|
/s/ Andrew J. England
|
Name:
|
|
Andrew J. England
|
Title:
|
|
Chief Executive Officer
|
|
||
SCOTT FELENSTEIN
|
||
|
|
|
By:
|
|
/s/ Scott D. Felenstein
|
Name:
|
|
Scott Felenstein
|
Title:
|
|
EVP, Chief Revenue Officer
|
|
|
NATIONAL CINEMEDIA, INC.
|
|
|
|
By:
|
/s/ Andrew J. England
|
Name:
|
Andrew J. England
|
Title:
|
Chief Executive Officer
|
|
|
SARAH HILTY
|
|
|
|
By:
|
/s/ Sarah Kinnick Hilty
|
Name:
|
Sarah Kinnick Hilty
|
Title:
|
SVP, General Counsel
|
1.
|
Section 6.2 of the LLC Agreement shall be amended and restated as follows:
|
2.
|
The introductory clause to Section 10.3 of the LLC Agreement shall be deleted and replaced with the following:
|
3.
|
No Other Changes
. Except as expressly modified hereby, all terms, conditions and provisions of the LLC Agreement shall continue in full force and effect. This Amendment shall be deemed to be and construed as part of the LLC Agreement, and the LLC Agreement shall be deemed to be and be construed as part of this Amendment; provided, however, that in the event of any inconsistency or
|
4.
|
Counterparts
. This Amendment may be executed in one or more counterparts and by different parties on separate counterparts, each of which will be deemed an original, but all of which will constitute one and the same instrument. The parties agree that this Amendment shall be legally binding upon the electronic transmission, including by facsimile or email, by each party of a signed signature page hereof to the other party.
|
|
CINEMARK MEDIA, INC.
|
|
|
|
|
By:
|
/s/ Michael Cavalier
|
|
Name:
|
Michael Cavalier
|
|
|
|
|
Title:
|
Executive Vice President - General Counsel
|
|
|
|
|
|
CINEMARK USA, INC.
|
|
|
|
|
By:
|
/s/ Michael Cavalier
|
|
Name:
|
Michael Cavalier
|
|
|
|
|
Title:
|
Executive Vice President - General Counsel
|
|
|
|
|
|
REGAL CINEMEDIA HOLDINGS, LLC
|
|
|
|
|
By:
|
/s/ Vincent Fusco
|
|
Name:
|
Vincent Fusco
|
|
|
|
|
Title:
|
Senior Vice President
|
|
|
|
|
|
REGAL CINEMAS, INC.
|
|
|
|
|
By:
|
/s/ Vincent Fusco
|
|
Name:
|
Vincent Fusco
|
|
|
|
|
Title:
|
Senior Vice President
|
|
|
|
|
|
NATIONAL CINEMEDIA, INC.
|
|
|
|
|
By:
|
/s/Clifford E. Marks
|
|
Name:
|
Clifford E. Marks
|
|
|
|
|
Title:
|
Interim Chief Executive Officer and President
|
|
|
|
|
Free Cash Flow - % of Free Cash Flow Target
|
Vesting % of Free Cash Flow Restricted Stock
|
<85%
|
None
|
85%
|
25%
|
92%
|
60%
|
93%
|
68%
|
94%
|
72.5%
|
95%
|
77.5%
|
96%
|
85%
|
97%
|
92%
|
98%
|
98%
|
99%
|
99%
|
100%
|
100%
|
Free Cash Flow - % of Free Cash Flow Target
|
Vesting % of Free Cash Flow Restricted Stock
|
100%
|
100%
|
104%
|
112%
|
105%
|
125%
|
110%
|
150%
|
>110%
|
150%
|
By:
|
/s/ Sarah Kinnick Hilty
|
|
Sarah Kinnick Hilty
|
|
Senior Vice President, General Counsel and Secretary
|
|
|
Date:
|
February 21, 2019
|
|
|
|
|
|
|
|
|
|
|
|
Service Vesting Date
|
|
Percentage of
Shares that Vest
|
|
|
Number of
Shares that Vest
|
|
||
|
|
|
33.3
|
%
|
|
|
|
|
|
|
|
33.3
|
%
|
|
|
|
|
|
|
|
33.4
|
%
|
|
|
|
By:
|
/s/ Sarah Kinnick Hilty
|
|
Sarah Kinnick Hilty
|
|
Senior Vice President, General Counsel and Secretary
|
|
|
Date:
|
February 21, 2019
|
|
|
/s/ Clifford E. Marks
|
|
Date:
|
February 21, 2019
|
Clifford E. Marks, Interim Chief Executive Officer and President
|
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/ Katherine L. Scherping
|
|
Date:
|
February 21, 2019
|
Katherine L. Scherping, Chief Financial Officer
|
|
|
|
(Principal Financial and Accounting Officer)
|
|
|
|
|
|
|
|
/s/ Thomas F. Lesinski
|
|
Date:
|
February 13, 2019
|
Thomas F. Lesinski, Chairman
|
|
|
|
|
|
|
|
/s/ Andrew P. Glaze
|
|
Date:
|
February 13, 2019
|
Andrew P. Glaze, Director
|
|
|
|
|
|
|
|
/s/ Lawrence A. Goodman
|
|
Date:
|
February 14, 2019
|
Lawrence A. Goodman, Director
|
|
|
|
|
|
|
|
/s/ David R. Haas
|
|
Date:
|
February 13, 2019
|
David R. Haas, Director
|
|
|
|
|
|
|
|
/s/ Kurt C. Hall
|
|
Date:
|
February 18, 2019
|
Kurt C. Hall, Director
|
|
|
|
|
|
|
|
/s/ Lee Roy Mitchell
|
|
Date:
|
February 13, 2019
|
Lee Roy Mitchell, Director
|
|
|
|
|
|
|
|
/s/ Mark Segall
|
|
Date:
|
February 13, 2019
|
Mark Segall, Director
|
|
|
|
|
|
|
|
/s/ Renana Teperberg
|
|
Date:
|
February 14, 2019
|
Renana Teperberg, Director
|
|
|
|
Date:
|
February 21, 2019
|
/s/ Clifford E. Marks
|
|
|
Clifford E. Marks
Interim Chief Executive Officer and President (Principal Executive Officer) |
Date:
|
February 21, 2019
|
/s/ Katherine L. Scherping
|
|
|
Katherine L. Scherping
Chief Financial Officer
(Principal Financial and Accounting Officer)
|
Date:
|
February 21, 2019
|
/s/ Clifford E. Marks
|
|
|
Clifford E. Marks
Interim Chief Executive Officer and President
(Principal Executive Officer)
|
Date:
|
February 21, 2019
|
/s/ Katherine L. Scherping
|
|
|
Katherine L. Scherping
Chief Financial Officer
(Principal Financial and Accounting Officer)
|