NCMI 10-K & 10-Q changes, risk factors and insider trading

Our business is affected by the level of attendance at the theaters in our advertising network that operate in a highly competitive industry and whose attendance is reliant on the presence of motion pictures that attract audiences. The value of our advertising business could be adversely affected by a decline in theater attendance or even the perception by media buyers that our network is no longer relevant to their marketing plan due to the decreases in attendance and geographic coverage. Factors that could reduce attendance at our network theaters include the following:

if political events, such as terrorist attacks, or health-related epidemics, such as flu outbreaks, and pandemics, such as the COVID-19 Pandemic, cause consumers to avoid movie theaters or other places where large crowds are in attendance (for example the outbreak of the novel corona virus or COVID-19 in 2020 (the "COVID-19 Pandemic");

The ESAs with the ESA Parties are critical to our business. The ESA with AMC (as amended by the 2025 ESA Amendment) has an initiala term of 3035 years and the ESA with Cinemark (as amended by the 2019 ESA Amendment) has a term of 34 years, each such term beginning February 13, 2007. EachThe Cinemark ESA provides NCM LLC with a five-year right of first refusal for the services that it provides to the ESA Parties,Cinemark, which begins one year prior to the end of the term of each respective ESA. The ESA Parties’ theaters represent approximately 52.4%52.9% of the screens and approximately 62.0%63.0% of the attendance in ourthe networkNCM Network as of DecemberJanuary 26,1, 2024.2026. If either ESA were terminated, not renewed at its expiration, rejected in a bankruptcy proceeding, or found to be unenforceable, it could have a material negative impact on our revenue, profitability and financial condition.

Beginning with the 2019 ESA Amendment with affiliates of Cinemark in 2019, NCM LLC ishas entitlednegotiated the right to display up to five minutesportions of The Noovie® Show after the scheduled showtime of a feature film and a Platinum Spot that is either 30 or 60 seconds of The Noovie Show in the trailer position directly prior to the “attached” trailers preceding the feature filmfilm, and in Cinemark and certain othertheaters networkan affiliates’ theaters. The Regal Advertising Agreement also provides for (i) up to ten minutes immediately after the advertised showtime of a feature film, extending the time available to NCM LLC by five minutes, and (ii) the Platinum Spot that may be exhibited on-screen prior to the last two trailers, which may be either 30 or 60 seconds in length. Subject to Regal’s approval, NCM LLC may display two 30 second spots in the Platinum Spot and a Gold Spot, aadditional 30 second spot displayed immediatelyin priorthe trailer, subject to approval from the fourththeater trailer preceding a feature film or digital programming event.owner.

We believe that Post-Showtime Inventory has resulted and will continue to result in an increase in our average CPM, revenues and Adjusted OIBDA, however we may not realize any or all such benefits.benefits and the benefits of the Post-Showtime Inventory may not exceed the additional costs NCM LLC is incurring to access the Post-Showtime Inventory. Potential difficulties and uncertainties that may impair the full realization of the anticipated benefits include, among others:

We have invested significant resources in pursuing potential opportunities for revenue growth, which we describe under “Business—Our Strategy.Strategy,” Weincluding hadthe 824.4acquisition million and 703.3 million uniqueof data records as of December 26, 2024 and December 28, 2023, respectively.records. These valuable data records consist of both our own NCM first-party data from our owned-and-operated digital products and a variety of key second- and third-party data addressable consumer records, including location-based data that allows us to track when our audiences go to the movie theater to see The Noovie Show and where they go in the days and weeks afterwards. Our ability to increase our unique data records requires us to invest in third-party relationships, to comply with evolving privacy and data security laws, rules and regulations and to develop innovative digital properties that will increase the number of users of our digital entertainment and advertising network and mobile apps. Our ability to collect and leverage movie audience data is under increasing competitive and regulatory pressure and may be negatively impacted by changes to advertising technology, platform operator policies and privacy laws and regulation and may not deliver the future benefits that we are expecting. It is important that we maintain a critical mass of audience data to make our digital offering more attractive to advertisers, including national brands who buy both our national and regional advertising inventory.

On January 24, 2025, NCM LLC as borrower, entered into a Loan and Security Agreement with U.S. Bank National Association, as lender. The agreement provides for a $45.0 million senior secured revolving credit facility (the “2025 Credit Facility”) that matures on January 24, 2028. As of January 1, 2026, the Company has $12.0 million outstanding. In connection with entering into the 2025 Credit Facility, NCM LLC repaid in full the $10.0 million balance outstanding as of December 26, 2024 and terminated all commitments under its 2023 Revolving Credit Facility. While the 2025 Credit Facility provides benefits to the Company relative to the Revolving Credit Facility 2023, the restrictionsterms in the 2025 Credit Facility may restrict NCM LLC from taking actions, distributing cash or entering into agreements to raise additional capital, and the availability of the 2025 Credit Facility may be insufficient for NCM LLC’s needs, particularly in the event of an economic downturn. The Company’s future capital resource and flexibility needs are difficult to predict at this time and will depend on (i) NCM LLC’s ability to comply with the terms and conditions of the 2025 Credit Facility, (ii) ability to general sufficient cash flow from operations and (iii) future strategic initiatives.

Advertising demand also impacts the price (CPM) we are able to charge our clients. Due to increased competition, combined with seasonal marketplace supply and demand characteristics, we have experienced volatility in our pricing (CPMs) over the years, with annual national CPM increases (decreases)variances ranging from (4.2%18.1%) to 23.6% from 2015 to 20242025 (excluding 2020).

Changes in regulations, government funding, trade policies and tariffs imposed by the U.S. and other governments could have an impact on our advertising clients. If our advertising clients’ operating costs increase due to the changes in policy, and they are unsuccessful in passing these increases along to consumers, then the advertisers will likely seek to reduce costs in other ways, including advertising. Additionally, changes in regulations, government funding, trade policies and tariffs could also have the impact of preventing our advertising clients from deploying new goods and services and reducing the related advertising dollars. The recentlytariffs announced tariffs by the U.S. government on product imports fromin certain2025 countries may result inhad an outsize impact on certain industries that are key advertising categories for us, including automotiveus and consumerthe goods.uncertainty caused by the tariffs impacted many of our advertisers. Our local team also sells advertising to government agencies that may be impacted if the level of government funding is reduced or eliminated. The uncertainty regarding the ultimate impact of any changes in regulations, government funding, trade policies or tariffs could also impact our advertisers as they continue to determine changes needed to their businesses.

The ESAs and certain of our network affiliate agreements include automatic annual cost or fee increases. The theater access fees under the ESAs are composed of a fixed payment per patron, increasing byon 8%a everyregular five years,basis and a fixed payment per digital screen connected to the DCN, increasing annually by 5%, and certain of our network affiliate agreements include annual increases in the minimum fee per patron payable. If NCM LLC further amends the ESAs or network affiliate agreements in response to market conditions or in connection with the bankruptcy of a counterparty, the costs could increase. If we are unable to grow our high margin advertising revenue at a rate at least equal to that of our contractual obligations, our margins and results would be negatively affected.

We also derive a significant portion of our revenue from our contracts with our content partners, courtesy PSAs and the ESA Parties’ agreements to purchase on-screen advertising for their beverage concessionaires. We are not direct parties to the agreements between the ESA Parties’ and their beverage concessionaires but expect that each ESA Party will have an agreement with a beverage concessionaire to provide advertising for the foreseeable future. The Company did not have any agencies through which it sourced advertising revenue that accounted for 10% or more of the Company's gross outstanding receivable balance as of January 1, 2026. The Company had one agency through which it sourced advertising revenue that accounted for more than 14.7% of the Company’s gross outstanding receivable balance as of December 26, 2024. The Company had no agencies through which it sourced advertising revenue that accounted for 10% or more than 10% of the Company's gross outstanding receivable balance as of December 28, 2023. During the year ended December 26, 2024, the Company haddid nonot have a customer that accounted for 10% or more of the Company's revenue. During the yearyears ended January 1, 2026 and December 28, 2023, the Company had one customer that accounted for 11.0% and 11.2%, respectively, of the Company's revenue. Because we derive a significant percentage of our total revenue from a relatively small number of large companies, the loss of one or more as a customer could decrease our revenue and adversely affect current and future operating results.

The ESAs and network affiliate agreements contain certain limited exceptions to our exclusive right to use the counterparties’ theaters for our advertising business. Certain counterparties have the right to enter into a limited number of strategic cross-marketing relationships with third-party, unaffiliated businesses for the purpose of generating increased attendance or revenue (other than revenue from the sale of advertising). NCM has limited rights or does not have the right to advertise in certain theater lobbies or agreed to allow the counterparty to sell certain types of inventory on their own behalf. Some of these strategic marketing relationships can include the use of on-screen, LEN and certain types of lobby promotions and can be provided at no cost, but only for the purpose of promoting the products or services of those businesses while at the same time promoting the theater circuit or the movie-going experience and some of these exceptions are broader. NCM has limited rights or does not have the right to advertise in certain theater lobbies or has agreed to allow the counterparty to sell certain types of inventory on their own behalf. The use of LEN or lobby promotions or other inventory by the theater counterparties for these advertisements and programs could result in the theater counterparties creating relationships with advertisers that could adversely affect our advertising revenue and profitability, as well as the potential we have to grow that advertising revenue in the future. In particular, the LEN and lobby promotions represented approximately 0.5%0.6% and 0.9%0.5% of our total advertising revenue for the year ended DecemberJanuary 26,1, 20242026 and December 28,26, 2023,2024, respectively.

TheSome ESAof Partiesour exhibitors also have the right to install a network of video monitors in the theater lobbies in excess of those required to be installed for the LEN,LEN andto this right has beenbe used to installdisplay atrailers, significantstudio numbercontent ofand video monitors inother theater lobbies.advertising. The presence of this additional lobby video network could reduce the effectiveness of our LEN, thereby reducing our current LEN advertising revenue and profitability and adversely affecting future revenue potential associated with that marketing platform. Other network affiliates also have the right to display advertising in the lobby or other areas of their theaters that could potentially conflict with our on-screen advertising.

Our success depends in part upon the retention of our experienced senior management with specialized industry, sales and technical knowledge or industry relationships. In MayNovember 2024,2025, the Company replaced itsCompany's President of Sales, Marketing and Partnerships.Partnerships departed the Company following the elimination of the position. If we are not able to find qualified internal or external replacements for critical members of our senior management team, the loss of these key employees could have a material negative impact on our ability to effectively pursue our business strategy and our relationships with advertisers, exhibitors, media and content partners. While the Company has been able to retain our senior management, there is no guarantee that the Company will continue to be able to recruit experienced replacements, or that the Company will not be required to institute additional retention or incentive programs in order to retain senior management. We do not have key-man life insurance covering any of our employees.

In connection with filings made with the Bankruptcy Court and as cleansing materials after negotiations with NCM LLC’s creditors, the Company disclosed projected financial information regarding NCM LLC’s future prospects. Those projections were prepared solely for the purpose of negotiations and the bankruptcy proceedings and have not been, and will not be, updated on an ongoing basis and should not be relied upon by investors. At the time they were prepared, the projections reflected numerous assumptions concerning our anticipated future performance with respect to prevailing and anticipated market and economic conditions that were and remain beyond our control and that may not materialize. Projections are inherently subject to substantial and numerous uncertainties and to a wide variety of significant business, economic and competitive risks and the assumptions underlying the projections and/or valuation estimates may prove to be wrong in material respects. Actual results may vary significantly from those contemplated by the projections. As a result, investors should not rely on these projections.

As of the Effective Date, NCM Inc. was the only beneficial owner of NCM LLC’s membership units, but AMC and Cinemark continue to have rights to receive additional units pursuant to the terms of the Common Unit Adjustment Agreement. As of AugustJanuary 7,1, 2023,2026, Blantyre Capital Limited ("Blantyre Capital"), our largest stockholder, obtainedhas beneficial ownership of 26,664,34927,144,639 shares of our common stock. Their beneficial ownership remains unchanged,stock, representing 27.8%29.1% of the Company’s shares outstanding as of December 26, 2024.outstanding. Additionally, the Company entered into a Director Designation Agreement (the “Designation Agreement”) among the Company, the Consenting Creditor Designation Committee (the “Designation Committee”) and Blantyre Capital in accordance with the Plan. The Designation Agreement providesprovided for the designation of up to six directors, three of whom must be independent, by the Designation Committee and Blantyre Capital with up to two of the directors designated by Blantyre Capital. The number of directors designated will vary based on the ownership level of the Consenting Creditors under the Designation Agreement. In 2024,2025, four directors were appointed under the Designation Agreement. As a result, these stockholders could be in a position to influence or control to some degree the outcome of matters requiring stockholder approval, including the adoption of amendments to our certificate of incorporation and the approval of mergers and other significant corporate transactions. Their influence or control of our Company and NCM LLC may have the effect of delaying or promoting a change of control of our Company and may adversely affect the voting and other rights of other stockholders.

The original agreements between us and the ESA Parties were made in the context of an affiliated relationship and may contain different terms than comparable agreements with unaffiliated third parties.

The Common Unit Adjustment Agreement and the ESAsESA with Cinemark provide that NCM LLC will issue common membership units to account for changes in attendance associated with the theaters that theCinemark ESA Parties operateoperates and which are made part of our advertising network. Historically, each of the ESA PartiesCinemark has increasedgenerally thebeen attendance associated with the theaters it operates in most years. If this trend continues, NCM LLC may issueissued additional common membership units toeach the ESA Parties to reflect their increases in attendance associated with theaters.year. Each common membership unit may be redeemed in exchange for, at our option, shares of our common stock on a one-for-one basis or a cash payment equal to the market price of one share of our common stock. Other than the maximum number of authorized shares of common stock in our certificate of incorporation, there is no limit on the number of shares of our common stock that we may issue upon redemption of an ESA Party’sCinemark’s common membership units in NCM LLC. For further information, refer to Note 6 to the Consolidated Financial Statements included elsewhere in this document.

Our TRA with the ESA PartiesCinemark is expected to reduce the amount of overall cash flow that would otherwise be available to us and will increase our potential exposure to the financial condition of the ESA Parties.Cinemark.

Our initial public offering and related transactions have the effect of reducing the amounts NCM, Inc. would otherwise pay in the future to various tax authorities as a result of an increase in its proportionate share of tax basis in NCM LLC’s tangible and intangible assets. We have agreed in our TRA with the ESA PartiesCinemark to pay to the ESA PartiesCinemark 90% of the amount by which NCM, Inc.’s tax payments to various tax authorities are reduced as a result of the increase in tax basis associated with the ESA Parties’Cinemark’s share of certain tax assets. After paying these reduced amounts to tax authorities, if it is determined as a result of an income tax audit or examination that any amount of NCM, Inc.’s claimed tax benefits should not have been available, NCM, Inc. may be required to pay additional taxes and possibly penalties and interest to one or more tax authorities. If this were to occur and if one or more of the ESA PartiesCinemark was insolvent or bankrupt or otherwise unable to make payment under its indemnification obligation under the TRA, then NCM, Inc.’s financial condition could be negatively impacted.

We cannot predict the effect, if any, that market sales of shares of common stock by Blantyre Capital, Cinemark or any of our significant stockholders will have on the market price of our common stock from time to time. Sales of substantial amounts of shares of our common stock in the public market, or the perception that those sales will occur, could cause the market price of our common stock to decline or make future offerings of our equity securities more difficult. If we are unable to sell equity securities at times and prices that we deem appropriate, we may be unable to fund growth. Additionally, once equity awards held by our employees become vested and/or exercisable, as applicable, to the extent that they are not held by one of our affiliates, the shares acquired upon vesting or exercise are freely tradable.

National CineMedia is the largest cinema advertising platform in the US.U.S. With unparalleled reach and scale, NCM connects brands to sought-after young, diverse audiences through the power of movies and pop culture. A premium video, full-funnel marketing solution for advertisers, NCM enhances marketers’ ability to measure and drive results. We currently derive revenue principally from the sale of advertising to national, regional and local businesses in The Noovie® Show, our cinema advertising and entertainment show seen on movie screens across the U.S. within the NCM Network, and the Cinelife® Show within the Spotlight Cinema Network. We present multiple formats of The Noovie® Show and Cinelife® Show depending on the theater circuit in which it runs, with almost all theater circuits including Post-Showtime advertising inventory after the advertised showtime. The movie trailers presented by the theater circuits that run before the feature film are not part of our preshows.

We also sell advertising on our LEN, a series of strategically-placed screens located in movie theater lobbies, as well as other forms of advertising, promotions and experiences in theater lobbies. In addition, we sell digital advertising through the NCMx™ suite of products and NCMthrough Boost,our toNoovie connectdigital properties. We also sell advertising across a variety of complementary out of home venues. In combination, our multimedia advertising connects brands with audiences across all screens, both in theaters and beyond, before, during and after their moviegoing experience. As of December 26, 2024, approximately 7.4 million moviegoers have downloaded our mobile apps. These downloads and the acquisition of second- and third-party data sets have resulted in unique data records of approximately 824.4 million as of December 26, 2024. We have long-term ESAs (approximately 14.115.6 weighted average years) with the ESA Parties and multi-year agreements with network affiliates, which expire at various dates between JulyMarch 7,31, 20252026 and July 13, 2033, with our largest affiliate agreement expiring on July 13, 2033. The weighted average remaining term of the ESAs and the network affiliate agreements is 11.311.8 years as of DecemberJanuary 26,1, 2024.2026. The ESAs and network affiliate agreements grant NCM LLC exclusive rights in their theaters to sell advertising, subject to limited exceptions. TheOur Noovieadvertising Showpreshows and our LEN programming are distributed predominantly via satellite through our proprietary DCN.DCN and Media Director.

Debt Agreement—On January 24, 2025, NCM LLC as borrower,LLC, entered into a Loan and Security Agreement with U.S. Bank National Association, as lender. The agreement provides for a $45.0 million senior secured revolving credit facility (the “2025 Credit Facility”) that matures on January 24, 2028. In connection with entering into the 2025 Credit Facility, NCM LLC repaid in full the $10.0 million balance outstanding as of December 26, 2024 and terminated all commitments under its 2023 Revolving Credit Facility, and in connection with this termination, paid a prepayment fee equal to 1% of the total commitment. The 2025 Credit Facility is expected to result in a meaningful reduction of the Company’s overall interest expense, extends the maturity date to 2028 and is a cash flow-based revolving loan compared to the asset-based revolving loan of the 2023 Revolving Credit Facility. As of MarchJanuary 6,1, 2025,2026, NCM LLC has notan madeoutstanding anybalance borrowingsof $12.0 million under the 2025 Credit Facility. Borrowings under the 2025 Credit Facility may be used for, among other things, working capital and other general corporate purposes of the Company and bear interest at a floating rate equal to term SOFR (subject to a floor of zero) plus an applicable margin of 2.00%, which is subject to increase by an additional 2.00% upon the occurrence of an event of default.

Share Repurchase Program—On March 18, 2024, the Board of Directors of the Company approved a stock repurchase program under which the Company is authorized to use assets of the Company to repurchase up to $100.0 million of shares of the Company’s Common Stock, exclusive of any fees, commissions or other expenses related to such repurchases, from time to time over a period of three years. Shares may be repurchased under the program through open market purchases, block trades, or accelerated or other structured share repurchase programs. During the year ended January 1, 2026 and December 26, 2024, 2,524,9914.1 million and 2.5 million shares were repurchased on the open marketmarket, or privately negotiated purchases.respectively. In accordance with Accounting Standards Codification (“ASC”) 505 —Equity, the Company elected to retire the shares. Upon the retirement of these shares were retired andshares, the excess over par value paidpaid, inclusive of direct costs, of $22.3 million and $13.4 million was recorded as a reduction to retained earnings duringfor the year ended January 1, 2026 and December 26, 2024.2024, respectively.

Reverse Stock Split—On August 3, 2023, the Company effected a one-for-ten (1:10) reverse stock split of its common stock, par value $0.01 per share. The reverse stock split, which was authorized by its Board of Directors, was approved by the Company’s stockholders on August 2, 2023. The reverse stock split reduced the number of outstanding shares of the Company’s common stock from 174,112,385 shares as of August 3, 2023, to 17,411,323 shares outstanding post-split. After the cancellation of Regal’s shares on August 7, 2023, there were 13,343,065 shares outstanding. The primary purpose of the reverse stock split was to comply with the Company’s obligations under the NCMI 9019 Settlement so that the Plan could become effective,Settlement, as well as, to increase the per share market price of the Company’s common stock in an effort to maintain compliance with applicable Nasdaq continued listing standards with respect to the closing price of the Company’s common stock.standards.

As of DecemberJanuary 26,1, 2024,2026, the Company has not completed all agreed upon payments to the General Unsecured Claim Pool, due to the existence of one pre-petition litigation matter that is ongoing in the Bankruptcy Court, the result of which could impact the payments to other unsecured creditors from the General Unsecured Claims PoolPool. andAs a result, the Company held a total of $3.0 million within the escrow accounts and accruals, presented within ‘Restricted cash’ and ‘Accounts Payable’ on the audited Consolidated Balance Sheets as of DecemberJanuary 26,1, 20242026 and December 28,26, 2023,2024, respectively.

(1) Represents the total attendance within the NCM LLC’s advertising network,Network, excluding screens and attendance associated with certain AMC Carmike theaters that are currentlywere part of another cinema advertising network for each ofduring the periods presented.presented, Referas well as, estimated attendance for the Spotlight Cinema Network for the period included within the Company's consolidated results (November 14, 2025 to NoteJanuary 61, to the audited Consolidated Financial Statements included elsewhere in this document.2026).

Local and regional advertising revenue. Local and regional advertising revenue decreased by $12.0$4.5 million, or 23.5%,11.5%, from $51.1 million in 2023 to $39.1 million in 2024.2024 to $34.6 million in 2025. The decrease in local and regional advertising revenue was primarily due to a decrease in contract activity and average size within education,the dining,pharmaceutical, entertainmenttravel, government and consumerautomotive packaged goods, duecategories in part2025, as compared to a2024. 11.0%These decreasedecreases in attendance as well as a decreased movie slate in 2024, caused by the writer and actor strikes in 2023. The decrease waswere partially offset by an increase in contract activity and size within automotive,the government,gaming, technology, beverages, retail and technologyapparel and healthcare categories in 2024,2025, as compared to 2023.2024.

ESA Party beverage revenue. ESA Party beverage revenue decreasedincreased by $4.9$0.4 million, or 26.3%,2.9%, from $18.6$13.7 million in 20232024 to $13.7$14.1 million forin 2024.2025. The decreaseincrease in ESA Party beverage revenue was primarily due to Regal's termination of its ESA in 2023 and the resulting discontinuation of its beverage revenue as well as a 6.2%3.7% decreaseincrease in ESA Party attendance in 2024,2025, as compared to 2023.2024.

AmortizationOperating expense.expenses. AmortizationTotal expenseoperating increasedexpenses $8.0decreased $3.2 million, or 26.8%,1.2%, from $29.8$260.3 million infor 2023,2024 to $37.8$257.1 million infor 2024.2025. The increasefollowing wastable primarily due toshows the fairchanges valuein adjustmentsoperating toexpense NCMfor LLC’s2025 intangibleand assets2024 upon(in reconsolidation with NCM, Inc. on August 7, 2023.millions):

Non-GAAP Financial Measures for NCM LLC

Adjusted OIBDA represents operating income before depreciation and amortization expense adjusted to also exclude non-cash share-based payment costs, impairment of long-lived assets, workforce reorganization costs, termination of the Regal ESA, system optimization costs, satellite transitions costs, Spotlight acquisition and transition related costs and advisor fees related to involvement in the Cineworld Proceeding and Chapter 11 Case. Our management uses this non-GAAP financial measure to evaluate operating performance, to forecast future results and as a basis for compensation. The Company believes this is an important supplemental measure of operating performance because it eliminates items that have less bearing on its operating performance and highlights trends in its core business that may not otherwise be apparent when relying solely on GAAP financial measures. The Company believes the presentation of this measure 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 payment costs, impairment of long-lived assets, workforce reorganization costs, termination of the Regal ESA, system optimization costs, satellite transition costs, acquisition related costs and advisor fees related to involvement in the Cineworld Proceeding and Chapter 11 Case, interest rates, debt levels or income tax rates.

Adjusted OIBDA margin is calculated by dividing Adjusted OIBDA by total revenue. Our management uses this non-GAAP financial measure to evaluate operating performance, to forecast future results and as a basis for compensation. The Company believes this is an important supplemental measure of operating performance because it eliminates 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 this measure 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 payment costs, impairment of long-lived assets, workforce reorganization costs, termination of the Regal ESA, system optimization costs, satellite transitions costs, acquisition related costs, advisor fees related to involvement in the Cineworld Proceeding and Chapter 11 Case, interest rates, debt levels or income tax rates.

A limitation of both of these measures, however, is that they exclude depreciation and amortization, which represent a proxy for the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in NCM LLC’s business. In addition, Adjusted OIBDA and Adjusted OIBDA margin have the limitation of not reflecting the effect of the Company’s depreciation and amortization expense, non-cash share-based payment costs, impairment of long-lived assets, workforce reorganization costs, termination of the Regal ESA, system optimization costs, satellite transitions costs, acquisition related costs and advisor fees related to involvement in the Cineworld Proceeding and Chapter 11 Case. Adjusted OIBDA should not be regarded as an alternative to operating income, net income or as indicators of operating performance, nor should it be considered in isolation of, or as substitutes for financial measures prepared in accordance with GAAP. The Company believes that operating income is the most directly comparable GAAP financial measure to Adjusted OIBDA, and operating margin is the most directly comparable GAAP financial measure to Adjusted OIBDA margin. Because not all companies use identical calculations, these non-GAAP presentations may not be comparable to other similarly titled measures of other companies, or calculations in NCM LLC’s Revolving2025 Credit Facility 2023.Facility.

The following table reconciles operating income to Adjusted OIBDA for NCM LLC for the periods presented (dollars in millions):

Share-based compensation costs are included in network'network operations,operating sellingcosts', 'selling and marketing costs' and administrative'administrative expenseand other costs' in the accompanyingCompany's audited Consolidated Financial Statements.

Workforce reorganization costs represent eliminated positions and redundancy costs associated with changes to the Company’s workforce primarily implemented during 2024,workforce, as well as related office relocations and redundancy costs associated with changes to the Company's sales force implemented during the first quarter of 2022.relocations.

The net impact of Regal’sRegal's termination of the ESA resulting from the disposal of the intangible asset partially offset by the surrender of Regal’sRegal's ownership in the Company and the forgiveness of the prepetition claims.

We also sell advertising on our lobby entertainment network (“LEN”), a series of strategically placed screens located in movie theater lobbies, as well as other forms of advertising and promotions in theater lobbies. In addition, we sell data and digital advertising through the NCMx™ suite of products and through our Noovie digital properties. We also sell advertising across a variety of complementary out of home venues. In combination, our multimedia advertising connects brands with audiences across all screens, both in theaters and beyond, before, during and after their moviegoing experience. We have long-term ESAs (approximately 15.415.1 weighted average years remaining) and multi-year agreements with our network affiliates, which expire at various dates between JuneAugust 1,31, 2026 and July 13, 2033, with our largest affiliate agreement expiring on July 13, 2033. The weighted average remaining term of the ESAs and the network affiliate agreements is 11.611.4 years as of AprilJuly 2, 2026. The ESAs and network affiliate agreements grant NCM LLC exclusive rights in their theaters to sell advertising, subject to limited exceptions. Our Noovie Show and LEN programming are distributed predominantly via satellite through our proprietary digital content network (“DCN”) and Media Director.

Management focuses on several measurements that we believe provide us with the necessary ratios and key performance indicators to manage our business, determine how we are performing versus our internal goals and targets, and against the performance of our competitors and other benchmarks in the marketplace in which we operate. We focus on many operating metrics including revenue, Adjusted OIBDA and Adjusted OIBDA margin, as some of our primary measurement metrics. In addition, we monitor our monthly advertising performance measurements, including advertising inventory utilization, advertising pricing (“CPM”), local advertising rate per theater per week, advertising revenue per attendee, as well as significant operating expenses and related trends. We also monitor free cash flow, cash balances, the fixed charge coverage ratio and revolving credit facility availability to ensure financial debt covenant compliance and that there is adequate cash availability to fund our working capital needs, debt obligations and any future dividends declared by our Board of Directors.Directors Our operating results may be affected by a variety of internal and external factors and trends described more fully in the section entitled “Risk Factors” in our Annual Report on Form 10-K, filed with the SEC on February 26, 2026, for our fiscal year ended January 1, 2026 and in the Quarterly Report on Form 10-Q filed with the SEC on May 12, 2026 for the quarter ended April 2, 2026.

On March 31, 2026, the Company introduced a transformation initiative to increase operational efficiencies and allow for the ultimate automation of certain functions (“2026 Transformation Initiative”). The Company eliminated the positions of 9.3%approximately 10.0% of its workforce and is in the process of transitioningtransitioned the positions of an additional portion of its workforce to an outsourced service provider. The 2026 Transformation Initiative is expected to be completed in the third quarter of 2026. For the quarterthree and six months ended AprilJuly 2, 2026, the Company recognized severance expense and other incremental personnel costs of $1.0$1.7 million and $2.7 million, respectively, related to the eliminated positions and will recognize additional severance and transition costs in the second and third quarter of 2026 related to transitioning employees to the transitioningoutsourced employees.service provider. In conjunction with this initiative, the Company reviewed all vendor relationships and is in the process of terminating its relationship with certain vendors resulting in an accrual of estimated termination fees of $2.6$0.5 million asand of$3.1 Aprilmillion for the three and six months ended July 2, 2026.2026, respectively. The Company also engaged the services of a third-party consultantconsultants to assist with the 2026 Transformation Initiative and recorded a charge of $1.1$0.5 million and $1.6 million in the quarterthree and six months ended AprilJuly 2, 20262026, respectively, related to these services.

On November 14, 2025, NCM LLC entered into a Membership Interest Purchase Agreement (“MIPA”) with Spotlight Cinema Networks (“Spotlight”), a niche cinema advertising company, whereby the Company acquired 100.0% of Spotlight. The acquisition of Spotlight added high-scale luxury screens and exhibitors that offer unique and engaging customer experiences to the Company’s platform, unlocking new advertising and preshow entertainment inventory. Spotlight’s exhibitor partners, including Cinépolis Luxury Cinema, Landmark Theatres, Flix Brewhouse and LOOK Dine-In Cinemas, complement NCM’s national theater network and extend NCM’s reach among culturally engaged premium audiences. The addition of Spotlight’s footprint increasesincreased NCM’s national market share by more than 6.0% and expandsexpanded its theater presence by approximately 30.0% in the critical New York and Los Angeles markets. Spotlight was consolidated within the Company's financial statements as of November 15, 2025. Refer to Note 4—Business Combinations for more information regarding the acquisition and consolidation of Spotlight.

On January 24, 2025, NCM LLC, as borrower, entered into a Loan and Security Agreement with U.S. Bank National Association, as lender (the “2025 Credit Facility”). The agreement provides for a $45.0 million senior secured revolving credit facility that matures on January 24, 2028. In connection with entering into the 2025 Credit Facility, NCM LLC repaid in full the $10.0 million balance outstanding and terminated all commitments under its Revolving Credit Facility 2023, and in connection with this termination, paid a prepayment fee equal to 1% of the total commitment. The 2025 Credit Facility hasis reducedexpected to result in a meaningful reduction of the Company'sCompany’s overall interest expense, extends the maturity date to 2028 and is a cash flow-based revolving loan compared to the asset-based revolving loan of the Revolving Credit Facility 2023. As of AprilJuly 2, 2026, NCM LLC has an outstanding balance of $12.0 million under the 2025 Credit Facility. Borrowings under the 2025 Credit Facility may be used for, among other things, working capital and other general corporate purposes of the Company and bear interest at a floating rate equal to term SOFR (subject to a floor of zero) plus an applicable margin of 2.00%, which is subject to increase by an additional 2.00% upon the occurrence of an event of default.

On March 18, 2024, the Board of Directors of the Company approved a stock repurchase program under which the Company is authorized to use assets of the Company to repurchase up to $100.0 million of shares of the Company’s Common Stock, exclusive of any fees, commissions or other expenses related to such repurchases, from time to time over a period of three years. Shares may be repurchased under the program through open market purchases, block trades, or accelerated or other structured share repurchase programs. There were 0.20.1 million, 1.8 million, 0.3 million and 1.53.3 million shares repurchased on the open market during the three and six months ended AprilJuly 2, 2026 and MarchJune 27,26, 2025, respectively. In accordance with Accounting Standards Codification (“ASC”) 505 —Equity, these shares were retired and any excess over par value paid was recorded as a reduction to retained earnings of $0.2 million, $9.9 million, $0.8 million and $9.0$18.8 million for the three and six months ended AprilJuly 2, 2026 and MarchJune 27,26, 2025, respectively. As of AprilJuly 2, 2026, 6.86.9 million shares have been repurchased on the open market since the program's inception.

Represents the total attendance within NCM LLC’sLLC's advertising network, including Spotlight,Spotlight subsequent to November 15, 2025.

Represents the total screens within NCM LLC's advertising network, including Spotlight,Spotlight subsequent to November 15, 2025.

Advisor and legal fees incurred in connection with the acquisition of Spotlight in the fourth quarter of 2025, as well as temporary transition costs incurred during the integration of Spotlight into the Company's processes during the first quarterand second quarters of 2026.

The results of operations data for the three months ended AprilJuly 2, 2026 (firstsecond quarter of 2026) and MarchJune 27,26, 2025 (firstsecond quarter of 2025) were derived from the unaudited Condensed Consolidated Financial Statements and accounting records of NCM, Inc. and should be read in conjunction with the accompanying notes.

FirstSecond Quarter of 2026 and FirstSecond Quarter of 2025.

Revenue. Total revenue decreasedincreased $0.9$6.6 million, or 2.6%,12.7%, from $34.9$51.8 million for the firstsecond quarter of 2025 to $34.0$58.4 million for the firstsecond quarter of 2026. The following is a summary of revenue by category (in millions):

The following table shows data on theater attendance and revenue per attendee for the firstsecond quarter of 2026 and 2025:

________________________________________________________ (1) Represents the total attendance within ourNCM LLC’s advertising network, including the attendance within Spotlight's networkSpotlight subsequent to the acquisition on November 15, 2025.

National advertising revenue. National advertising revenue increased by $0.1$3.7 million, or 0.4%,9.0%, from $27.4$41.2 million for the firstsecond quarter of 2025 to $27.5$44.9 million for the firstsecond quarter of 2026. The increase in national advertising revenue was primarily due to a 21.2% increase in national advertising utilization and a 15.0%19.3% increase in network attendance and an 11.2% increase in CPMs, partially offset by a 7.2% decrease in national advertising utilization, as well as decreased revenue associated with the Courtesy segment of The Noovie® Show in the firstsecond quarter of 2026, as compared to the firstsecond quarter of 2025. In order to increase utilization and better monetize attendance, the Company strategically decreased national advertising CPMs by 21.6% in the first quarter of 2026, as compared to the first quarter of 2025.

Local and regional advertising revenue. Local and regional advertising revenue decreasedincreased by $0.5$3.1 million, or 10.2%,48.4%, from $4.9$6.4 million for the firstsecond quarter of 2025 to $4.4$9.5 million for the firstsecond quarter of 2026. The decreaseincrease in local and regional advertising revenue was primarily due to reducedthe contractsale of a higher percentage of premium inventory at higher CPMs, as well as an increase in activity and size within the government, educationretail and healthcareapparel, gaming and entertainment categories for the firstsecond quarter of 2026, as compared to the firstsecond quarter of 2025. These decreasesincreases were partially offset by ana increasedecrease in contract activity and size within the wirelessgovernment and travel categoriescategory in the firstsecond quarter of 2026, as compared to the firstsecond quarter of 2025.

ESA Party beverage revenue. ESA Party beverage revenue decreased by $0.5$0.2 million, or 19.2%,4.8%, from $2.6$4.2 million for the firstsecond quarter of 2025 to $2.1$4.0 million for the firstsecond quarter of 2026. The decrease in ESA Party beverage revenue was primarily due to a decrease in the length of the on-screen advertising purchased by an ESA party in accordance with its underlying beverage concessionaire agreement in the firstsecond quarter of 2026, as compared to the firstsecond quarter of 2025. This decrease was offset by a 4.4%12.6% increase in ESA Party attendance in the firstsecond quarter of 2026, as compared to the firstsecond quarter of 2025, as well as contractual rate increases.2025.

Non-operatingOperating expense.expenses. Total non-operatingoperating expenseexpenses decreasedincreased $5.1$7.4 million, or 75.0%,11.6%, from $6.8$63.8 million for the firstsecond quarter of 2025 to $1.7$71.2 million for the firstsecond quarter of 2026. The following table shows the changes in non-operatingoperating expense for the firstsecond quarter of 2026 and the firstsecond quarter of 2025 (in millions):

The decreaseincrease in non-operating expenseincome was primarily due to a $3.6$1.5 million decreaseincrease in lossgain on the remeasurementre-measurement of the payable under the TRAtax receivable agreement largely due to the addition of one new forecasted year in 2026 to replace the completed prior year within the calculation and the subsequent decrease in the forecast during 2025,the second quarter of 2026, as compared to the original forecast, as well theas inclusiona of$0.3 million increase in other non-operating income related to the AMCCompany's Terminationequity Agreementmethod within the calculation in 2026 and a $1.8 million decrease in loss on debt extinguishmentinvestments in the firstsecond quarter of 2026, compared to the firstsecond quarter of 2025. These decreases were partially offset by a $0.4 million decrease in interest income in the first quarter of 2026, compared to the first quarter of 2025.

Beverage revenue—Under the ESAs, up to 90 seconds of The Noovie® Show program can be sold to the ESA Parties to satisfy their on-screen advertising commitments under their beverage concessionaire agreements. In 2025, Cinemark purchased 60 seconds of on-screen advertising time and AMC purchased 30 seconds to satisfy their obligations under their beverage concessionaire agreements. In 2026, one ESA party began purchasing less on-screen advertising time for nine months of the year in accordance with its beverage concessionaire agreement. This change in the ESA party's obligation, in conjunction with changes in the fee structure of the other ESA party's beverage agreement that are expected to be implemented later in 2026,obligation will result in lower beverage revenue in 2026, as compared to 2025. The price for the time sold will increase at a fixed rate of 2.0% each year.

Theater exhibition fees—In consideration for the Company’s access to the ESA Parties’ and network affiliate theaters for on-screen and LEN advertising and lobby promotions, the ESA Parties and network affiliates receive access fees based either upon number of attendees, a revenue share or a combination, including a minimum revenue guarantee per attendee. Many of these agreements contain annual increases to the respective fee structures or guaranteed minimums, either per patron, per theater and/or per digital screen. In May 2026, the Company implemented changes in the fee structure of an ESA party's beverage agreement which will result in increased theater exhibition fees in 2026, as compared to 2025. The payments under the ESA Parties' agreements and network affiliate agreements are recorded within ‘Theater exhibition fees’ in the unaudited Condensed Consolidated StatementStatements of Operations.

On January 24, 2025, NCM LLC, as borrower, entered into the 2025 Credit Facility with U.S. Bank National Association, as lender. The agreement provides for a $45.0 million senior secured revolving credit facility that matures on January 24, 2028. In connection with entering into the 2025 Credit Facility, NCM LLC repaid in full the $10.0 million balance outstanding, as of December 26, 2024, and terminated all commitments under its Revolving Credit Facility 2023 (as defined below), and in connection with this termination, paid a prepayment fee equal to 1% of the total commitment. As of AprilJuly 2, 2026, NCM LLC hashad an outstanding balance of $12.0 million under the 2025 Credit Facility. Borrowings under the 2025 Credit Facility may be used for, among other things, working capital and other general corporate purposes of the Company and bear interest at a floating rate equal to term SOFR (subject to a floor of zero) plus an applicable margin of 2.00%, which is subject to increase by an additional 2.00% upon the occurrence of an event of default.

Included in cash, cash equivalents and marketable securities as of AprilJuly 2, 2026, January 1, 2026 and MarchJune 27,26, 2025, was $39.1$36.7 million, $23.8 million and $26.9$18.2 million, respectively, of cash held by NCM LLC that is not available to satisfy dividends declared by NCM, Inc., income tax, TRA payments and other obligations.

The 2025 Credit Facility portion of NCM LLC’s total borrowings that 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 2025 Credit Facility is $45.0 million as of AprilJuly 2, 2026, January 1, 2026 and MarchJune 27,26, 2025. As of AprilJuly 2, 2026, January 1, 2026 and MarchJune 27,26, 2025, the amount available under the 2025 Credit Facility in the table above is net of letters of credit of $0.6 million, $0.6 million and 0.6 million.

As of AprilJuly 2, 2026, the weighted average remaining maturity of our debt facility was 1.81.6 years. As of AprilJuly 2, 2026, NCM LLC has an outstanding balance of $12.0 million under the 2025 Credit Facility. All of our borrowings bear interest at variable rates and our net income and earnings per share could fluctuate with market interest rate fluctuations that could increase or decrease the interest paid on our borrowings.

Operating Activities. The $12.1$15.5 million increase in cash provided by operating activities for the threesix months ended AprilJuly 2, 2026, as compared to the threesix months ended MarchJune 27,26, 2025, was due to (1) a $21.0$12.2 million increase in the change in deferred revenue, (2) ana $11.0$6.6 million decrease in payments of accounts payable and accrued expenses andexpenses, (3) a $0.4$6.1 million increase in accounts receivable collections, (4) a $0.5 million increase in the change in prepaid expenses.expenses and (5) a $0.3 million decrease in payments to the ESA Parties under the tax receivable agreement. These increases in cash provided by operating activities were partially offset by (1) a $12.1$7.8 million decrease in accounts receivable collections, (2) a $6.3 million decreaseincrease in net loss adjusted for non-cash items, (32) a $1.6$1.8 million increase in the change in ESA amounts due to/from, net and (43) a $0.3$0.6 million decrease in ESA integration and other encumbered theater payments received for the threesix months ended AprilJuly 2, 2026, as compared to the threesix months ended MarchJune 27,26, 2025.

Investing Activities. The $0.6$1.3 million decrease in cash used in investing activities for the threesix months ended AprilJuly 2, 2026, as compared to the threesix months ended MarchJune 27,26, 2025, was primarily due to a $0.4$1.4 million decrease in purchases of property and equipment and a $0.2$0.3 million increase in proceeds received from an equity method investment for the threesix months ended AprilJuly 2, 2026, as compared to the threesix months ended MarchJune 27,26, 2025. These decreases were partially offset by a $0.4 million increase in purchases of intangible assets for the six months ended July 2, 2026, as compared to the six months ended June 26, 2025.

Financing Activities. The $16.4$29.5 million decrease in cash used in financing activities for the threesix months ended AprilJuly 2, 2026, as compared to the threesix months ended MarchJune 27,26, 2025, was primarily due to a $10.0 million decrease in repayments due to the repayment of the Revolving Credit Facility 2023 in the first quarter of 2025, a $7.8$17.5 million decrease in payments made to repurchase shares of NCM, Inc.'s common stockstock, anda $10.0 million decrease in repayments under the Revolving Credit Facility 2023 due to the repayment of the outstanding balance in the first quarter of 2025, a $1.5 million decrease in payments of debt issuance costs associated with the termination of the Revolving Credit Facility 2023 and commencement of the Credit Facility 2025 in the first quarter of 2025.2025 Theseand decreasesa $0.5 million decrease in cashrepurchase usedof stock for financingrestricted activitiesstock weretax partially offset by a $2.8 million increase in payment of dividendswithholding for the threesix months ended AprilJuly 2, 2026, as compared to the threesix months ended MarchJune 27,26, 2025.