Like something out of the movie serials of old that would end in a cliff hanger with the hero in jeopardy so you’d return to the theater next week to see what happens, AMC Entertainment Holdings Inc., which is the largest movie theater operator in the world, is raising doubts about its future.
The company is based in Leawood, Kansas, and has 996 theaters and 10,973 screens in 15 countries. In a filing today with the Securities and Exchange Commission, AMC said that it is unsure if it will be able to continue in business.
AMC has 630 theaters with a total of 8,048 screens in the U.S. including multiplexes in Port Chester, the Palisades Center in Nyack, in Middletown in Orange County and in Danbury, Connecticut.
“Substantial doubt exists about our ability to continue as a going concern for a reasonable period of time,” the company said after describing a number of factors related to COVID-19 that have dramatically impacted its operations.
“As a result of the pandemic, all of our theaters worldwide have temporarily suspended operations through late June, and we are generating no revenue from admissions, food and beverage sales, or other revenue, which represent substantially all of our revenue and cash flow from operations,” the company said.
“The ultimate duration of the pandemic and of responsive governmental regulations, including shelter-in-place orders and mandated business closures, is uncertain and we may need to extend such suspension with respect to some or all of our theaters.”
AMC said it cannot predict when or if its business will return to normal levels.
“If the coronavirus continues to spread in the parts of the world where we operate, we may elect on a voluntary basis to again halt operations (after their reopening) certain of our theaters, or governmental officials may order additional closures, impose further restrictions on travel or introduce social distancing measures such as limiting the number of people allowed in a theater at any given time,” AMC said.
The company reported net losses for the first quarter of 2020 to be between $2.117 billion and $2.417 billion. Its total revenues for the quarter were approximately $941.5 million compared with $1.2 billion for the three months ended March 31, 2019.
AMC noted that since the outbreak of the COVID-19 virus, movie studios have suspended production of movies and delayed the release dates of movies. Some movie studios have also reduced or eliminated the theatrical exclusive release window as theatres are not operating.
“We believe we have the cash resources to reopen our theaters and resume our operations this summer or later,” the company reported. “Our liquidity needs thereafter will depend, among other things, on the timing of a full resumption of operations, the timing of movie releases and our ability to generate revenues.”
The company said that it can’t make assurances that its assumptions used to estimate liquidity requirements will be correct because it never previously experienced a complete cessation of operations.
AMC’s theatrical exhibition revenues come primarily from box office admissions and food and beverage sales in the theaters. The company said that as of April 30, it had a cash balance of $718.3 million, including borrowings in March and had begun to ramp up cash spending with the intention of showing movies again this summer.
It said executive compensation has been reduced and it has suspended nonessential operating expenditures, including marketing, promotional, travel and entertainment expenses. Annual merit pay increases were canceled and nonhealth-care benefits eliminated or reduced.
