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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on April 29, 2011

Registration No. 333-168105

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



AMENDMENT
NO. 5 TO

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



AMC ENTERTAINMENT HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  7832
(Primary Standard Industrial
Classification Code Number)
  26-0303916
(I.R.S. Employer
Identification Number)



c/o AMC Entertainment Inc.
920 Main Street
Kansas City, Missouri 64105-1977
(816) 221-4000
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)



Kevin M. Connor, Esq.
Senior Vice President, General Counsel & Secretary
AMC Entertainment Inc.
920 Main Street
Kansas City, Missouri 64105
(816) 221-4000
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies of Communications to:

Monica K. Thurmond, Esq.
O'Melveny & Myers LLP
7 Times Square
New York, New York 10036
(212) 326-2000

 

Matthew D. Bloch, Esq.
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000

         Approximate date of commencement of proposed sale to public: As soon as practicable after the effective date of this Registration Statement.

         If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box.    o

         If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

         If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box.    o



         The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.


Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED APRIL 29, 2011

                Shares

LOGO

AMC Entertainment Inc.

Common Stock



        This is an initial public offering of shares of common stock of AMC Entertainment Inc. (formerly AMC Entertainment Holdings, Inc.). We are selling an aggregate of                  shares in this offering.

        Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is expected to be between $        and $        per share. We have applied to list the common stock on a national securities exchange under the symbol "AMC".

        The underwriters have an option to purchase up to a maximum of                  additional shares of common stock from us.

        An affiliate of J.P. Morgan Securities LLC., one of the underwriters in this offering, is one of our principal stockholders: J.P. Morgan Partners, LLC, or JPMP. JPMP currently owns approximately    % of our common stock on a fully diluted basis and will own approximately    % of our common stock upon the completion of this offering (assuming the underwriters' option to purchase additional shares is not exercised). As a result of JPMP's current ownership interest in us, this offering is being conducted in accordance with the applicable provisions of the Financial Industry Regulatory Authority, or the FINRA, rules. These rules require, among other things, that the "qualified independent underwriter" (as such term is defined by the rules) participates in the preparation of the registration statement and prospectus and conducts due diligence. Goldman, Sachs & Co. is assuming the responsibilities of acting as the qualified independent underwriter in this offering.

        Investing in our common stock involves risks. See "Risk Factors" beginning on page 18.

 

 
  Price to Public
  Underwriting Discounts and Commissions
  Proceeds to Us
 

Per Share

           
 

Total

           

 

        Delivery of the shares of common stock will be made on or about                      , 2011.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

J.P. Morgan   Goldman, Sachs & Co.

Barclays Capital

 

Citi

 

Credit Suisse

 

Deutsche Bank Securities



The date of this prospectus is                      , 2011.



TABLE OF CONTENTS

 
  PAGE  

PROSPECTUS SUMMARY

    1  

RISK FACTORS

    18  

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

    31  

USE OF PROCEEDS

    32  

DIVIDEND POLICY

    33  

CAPITALIZATION

    34  

DILUTION

    35  

UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION

    37  

SELECTED HISTORICAL FINANCIAL AND OPERATING DATA

    52  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    55  

BUSINESS

    83  

MANAGEMENT

    98  

COMPENSATION DISCUSSION AND ANALYSIS

    106  

PRINCIPAL STOCKHOLDERS

    126  

DESCRIPTION OF CERTAIN INDEBTEDNESS

    130  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

    134  

DESCRIPTION OF CAPITAL STOCK

    138  

SHARES ELIGIBLE FOR FUTURE SALE

    143  

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

    145  

UNDERWRITING

    149  

CONFLICTS OF INTEREST

    153  

LEGAL MATTERS

    154  

EXPERTS

    154  

CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

    154  

WHERE YOU CAN FIND MORE INFORMATION

    155  

INDEX TO FINANCIAL STATEMENTS

    F-1  



        You should rely only on the information contained in or incorporated by reference in this document. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.




MARKET AND INDUSTRY INFORMATION

        Information regarding market share, market position and industry data pertaining to our business contained in this prospectus consists of our estimates based on data and reports compiled by industry professional organizations, including the Motion Picture Association of America, the National Association of Theatre Owners ("NATO"), Nielsen Media Research, Rentrak Corporation ("Rentrak"), industry analysts and our management's knowledge of our business and markets. Unless otherwise noted in this prospectus, all information provided by the Motion Picture Association of America is for the 2009 calendar year, all information provided by NATO is for the 2009 calendar year and all information provided by Rentrak is as of December 31, 2010.

        Although we believe that the sources are reliable, we have not independently verified market industry data provided by third parties or by industry or general publications. Similarly, while we believe our internal estimates with respect to our industry are reliable, our estimates have not been verified by any independent sources. While we are not aware of any misstatements regarding any industry data presented in this prospectus, our estimates involve risks and uncertainties and are subject to changes based on various factors, including those discussed under "Risk Factors" in this prospectus.

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PROSPECTUS SUMMARY

        The following summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, especially the risks of investing in our common stock discussed under "Risk Factors" and our consolidated financial statements and accompanying notes.

        AMC Entertainment Holdings, Inc. ("Parent"), an entity created on June 6, 2007, is the sole stockholder of AMC Entertainment Inc. ("AMCE"). Upon completion of this initial public offering, AMCE will be merged with and into Parent, with Parent continuing as the surviving entity (the "Merger"). Parent will change its name to AMC Entertainment Inc. As used in this prospectus, unless the context otherwise requires, references to "we," "us," "our," the "Company," "AMC" or "AMC Entertainment" refer to Parent and its subsidiaries after giving effect to the Merger.

        As used in this prospectus, the term "pro forma" refers to, in the case of pro forma financial information, such information after giving pro forma effect to (i) the Merger, (ii) the Kerasotes Acquisition (as described under "—Recent Developments"), (iii) the Redemptions (as described under "—Recent Developments") and (iv) this offering and related transactions (collectively, the "Transactions"). Except as stated otherwise herein, the share data set forth in this prospectus reflects the reclassification of Parent's capital stock as described below under "—The Reclassification."

        Parent has a 52-week or 53-week fiscal year ending on the Thursday closest to March 31. Fiscal years 2006, 2007, 2009 and 2010 contained 52 weeks. Fiscal year 2008 contained 53 weeks.


Who We Are

        We are one of the world's leading theatrical exhibition companies. As of December 30, 2010, we owned, operated or held interests in 361 movie theatres with a total of 5,203 screens, approximately 99% of which were located in the United States and Canada. Our theatres are primarily located in major metropolitan markets, which we believe offer us strategic, operational and financial advantages. We also have a modern, highly productive theatre circuit that leads the theatrical exhibition industry in key asset quality and performance metrics, such as screens per theatre and per theatre productivity measures. Our industry-leading performance is largely driven by the quality of our theatre sites, our operating practices, which focus on delivering the best customer experience through consumer-focused innovation, and, most recently, our implementation of premium sight and sound formats, which we believe will be key components of the future movie-going experience. As of December 30, 2010, we are the largest IMAX exhibitor in the world with a 45% market share in the United States and more than twice the screen count of the second largest U.S. IMAX exhibitor, and each of our local installations is protected by geographic exclusivity.

        Approximately 200 million consumers have attended our theatres each year for the past five years. We offer these consumers a fully immersive out-of-home entertainment experience by featuring a wide array of entertainment alternatives, including popular movies, throughout the day and at different price points. This broad range of entertainment alternatives appeals to a wide variety of consumers across different age, gender, and socioeconomic demographics. For example, in addition to traditional film programming, we offer more diversified programming that includes independent and foreign films, performing arts, music and sports. We also offer food and beverage alternatives beyond traditional concession items, including made-to-order meals, customized coffee, healthy snacks and dine-in theatre options, all designed to create further service and selection for our consumers. We believe there is potential for us to further increase our annual attendance as we gain market share from other in-home and out-of-home entertainment options.

        Our large annual attendance makes us an important partner to content providers who want access and distribution to consumers. AMC currently generates 16% more estimated unique visitors per year (33.3 million) than HBO's subscribers (28.6 million) and 67% more than Netflix's subscribers (20.0 million) according to the October 14, 2010 Hollywood Reporter, the December 31, 2010 Netflix Form 10-K and the Theatrical Market Statistics 2010 report from the Motion Picture Association of

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America. Further underscoring our importance to the content providers, AMC represents approximately 17% to 20%, on average, of each of the six largest grossing studios' U.S. box office revenues. Average annual film rental payments to each of these studios ranged from approximately $100 million to $160 million.

        For the 52 weeks ended December 30, 2010, the fiscal year ended April 1, 2010 and the 39 weeks ended December 30, 2010, we generated pro forma revenues of approximately $2.6 billion, $2.7 billion, and $1.9 billion, respectively, pro forma Adjusted EBITDA (as defined on page 13) of $329.7 million, $365.2 million and $253.1 million, respectively, and pro forma earnings from continuing operations of $66.3 million, $66.6 million and $8.8 million, respectively. We reported revenues of approximately $2.4 billion, Adjusted EBITDA of $327.9 million, earnings from continuing operations of $87.4 million and net earnings of $79.9 million in fiscal 2010. For fiscal 2009 and 2008, we reported revenues of approximately $2.3 billion and $2.3 billion, Adjusted EBITDA of $294.7 million and $347.6 million, losses from continuing operations of $158.8 million and $8.0 million, and net losses of $149.0 million and $6.2 million, respectively.

        We were founded in 1920 and since then have pioneered many of the theatrical exhibition industry's most important innovations, including the multiplex theatre format in the early 1960s and the North American megaplex theatre format in the mid-1990s. In addition, we have acquired some of the most respected companies in the theatrical exhibition industry, including Loews Cineplex Entertainment Corporation ("Loews"), General Cinema Corporation ("General Cinema") and, more recently, Kerasotes Showplace Theatres, LLC ("Kerasotes"), the acquisition of which is described under "—Recent Developments." Our historic growth has been driven by a combination of organic growth and acquisition strategies, in addition to strategic alliances and partnerships that highlight our ability to capture innovation and value beyond the traditional exhibition space. For example:

        Consistent with our history and culture of innovation, we believe we have pioneered a new way of thinking about theatrical exhibition: as a consumer entertainment provider. This vision, which introduces a strategic and marketing overlay to traditional theatrical exhibition, has been instrumental in driving and redirecting our future strategy.

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Our Competitive Strengths

        We believe our leadership in major metropolitan markets, superior asset quality and continuous focus on innovation and the guest experience have positioned us well to capitalize disproportionately on trends providing momentum to the theatrical exhibition industry as a whole, particularly the mass adoption of digital and 3D technologies. We believe we can gain additional share of wallet from the consumer by broadening our offerings to them and increasing our engagement with them. We can then enable marketers and partners, such as NCM, to engage with our guests deriving further financial value and benefit. We believe our management team is uniquely equipped to execute our strategy to realize these opportunities, making us a particularly effective competitor in our industry and positioning us well for future growth. Our competitive strengths include:

        Broad National Reach.    Thirty-nine percent (39%) of Americans (or approximately 120 million consumers) live within 10 miles of an AMC theatre. This proximity and convenience, along with the affordability and diversity of our film product, drive approximately 200 million consumers into our theatres each year, or approximately 33.3 million unique visitors annually. We believe our ability to serve a broad consumer base across numerous entertainment occasions, such as teenage socializing, romantic dates and group events, is a competitive advantage. Our consumer reach, operating scale, access to diverse content and marketing platforms are valuable to content providers and marketers who want to access this broad and diverse audience.

        Major Market Leader.    We maintain the leading market share within our markets. As of December 30, 2010, we operated in 24 of the top 25 Designated Market Areas as defined by Nielsen Media Research ("DMAs") and had the number one or two market share in each of the top 15 DMAs, including New York City, Los Angeles, Chicago, Philadelphia, San Francisco, Boston and Dallas. In addition, 75% of our screens were located in the top 25 DMAs and 89% were located in the top 50 DMAs. Our strong presence in the top DMAs makes our theatres more visible and therefore strategically more important to content providers who rely on these markets for a disproportionately large share of box office receipts. According to Rentrak, during the 52 weeks ended December 30, 2010, 59% of all U.S. box office receipts were derived from the top 25 DMAs and 75% were derived from the top 50 DMAs. In certain of our densely populated major metropolitan markets, we believe a scarcity of attractive retail real estate opportunities enhances the strategic value of our existing theatres. We also believe the complexity inherent in operating in these major metropolitan markets is a deterrent to other less sophisticated competitors, protecting our market share position.

        We believe that customers in our major metropolitan markets are generally more affluent and culturally diverse than those in smaller markets. Traditionally, our strong presence in these markets has created a greater opportunity to exhibit a broad array of programming and premium formats, which we believe drives higher levels of attendance at our theatres. This has allowed us to generate higher per screen and per theatre operating metrics. For example, our pro forma average ticket price in the United States was $8.80 for our 52 weeks ended December 30, 2010, as compared to $7.89 for the industry as a whole for the 12 months ended December 31, 2010.

        Modern, Highly Productive Theatre Circuit.    We believe the combination of our strong major market presence, focus on a superior guest experience and core operating strategies enables us to deliver industry-leading theatre level operating metrics. Our circuit averages 14 screens per theatre, which is more than twice the National Association of Theatre Owners average of 6.7 for calendar year 2010 and higher than any of our peers. For the 52 weeks ended December 30, 2010, on a pro forma basis, our theatre exhibition circuit generated attendance per average theatre of 568,000 (higher than any of our peers), revenues per average theatre of $7.0 million and operating cash flows before rent (defined as Adjusted EBITDA before rent and G&A-Other) per average theatre of $2.4 million. Over the past five fiscal years, we invested an average of $131.3 million per year to improve and expand our theatre circuit, contributing to the modern portfolio of theatres we operate today.

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        Leader in Deployment of Premium Formats.    We also believe our strong major market presence and our highly productive theatre circuit allow us to take greater advantage of incremental revenue-generating opportunities associated with the premium services that are beginning to define the future of the theatrical business, including digital delivery, 3D projection, large screen formats, such as IMAX and our proprietary ETX offering, and alternative programming. As the industry's digital conversion accelerates, we believe we have established a differentiated leadership position in premium formats. For example, we are the world's largest IMAX exhibitor with 107 screens as of December 30, 2010, all of which are 3D enabled, and we expect to increase our IMAX screen count to 127 by the end of fiscal year 2012. We are able to charge a premium price for the IMAX experience, which, in combination with higher attendance levels, produces average weekly box office per print that is 300% greater than standard 2D versions of the same movie. The availability of IMAX and 3D content has increased significantly from calendar year 2005 to 2010. During this period, available 3D content increased from 3 titles to 26 titles, while available IMAX content increased from 5 titles to 14 titles. Industry film grosses for available 3D products increased from $191.0 million to approximately $3.0 billion, while industry film grosses for available IMAX products increased from $864.0 million to approximately $3.0 billion over this period. This favorable trend continues in calendar year 2011 with 34 3D titles and 20 IMAX titles slated to open, including highly successful franchise installments such as Pirates of the Caribbean: On Stranger Tides, Kung Fu Panda: The Kaboom of D, Transformers: Dark of the Moon, Harry Potter and the Deathly Hallows, Part 2 and Mission Impossible-Ghost Protocal. The film release calendar for calendar year 2012 is beginning to solidify with 22 3D titles and 4 IMAX titles already announced, including sequels of high profile franchises such as Spiderman, Men in Black, James Bond, Bourne Legacy, Batman and a 3D version of Star Wars. We expect that additional 3D and IMAX titles will be announced as the beginning of 2012 approaches.

        Innovative Growth Initiatives in Food and Beverage.    We believe our theatre circuit is better positioned than our peer competitors' to generate additional revenue from broader and more diverse food and beverage offerings, in part due to our markets' larger, more diverse and more affluent customer base and our management's extensive experience in guest services, specifically within the food and beverage industry. Our annual food and beverage sales exceed the domestic food service sales generated from 18 of the top 75 ranked restaurants chains in the U.S., while representing only approximately 27% of our total revenue. To capitalize on this opportunity, we have currently introduced one or more proprietary food and beverage offerings in 145 theatres and we intend to deploy these offerings across our theatre circuit based on the needs and specific circumstances of each theatre. Our wide range of food and beverage offerings features expanded menus, enhanced concession formats and unique dine-in theatre options, which we believe appeals to a larger cross section of potential customers. For example, in fiscal 2009 we converted a small, six-screen theatre in Atlanta, Georgia to a dine-in theatre facility with full kitchen facilities, seat-side servers and a separate bar and lounge area. From fiscal 2008 to fiscal 2010, this theatre's attendance increased over 60%, revenues more than doubled, and operating cash flow and margins increased significantly. We plan to continue to invest in one or more enhanced food and beverage offerings across 125 to 150 theatres over the next three years.

        Our current food and beverage initiatives include:

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        Strong Cash Flow Generation.    We believe that our major market focus and highly productive theatre circuit have enabled us to generate significant and stable cash flow provided by operating activities. For the 52 weeks ended December 30, 2010, on a pro forma basis, our net cash provided by operating activities totaled $87.0 million. For the fiscal year ended April 1, 2010, on a pro forma basis, our net cash provided by operating activities totaled $245.7 million. This strong cash flow will enable us to continue our deployment of premium formats and services and to finance planned capital expenditures without relying on the capital markets for funding. In addition, in future years, we expect to continue to generate cash flow sufficient to allow us to grow our revenues, maintain our facilities, service our indebtedness and make dividend payments to our stockholders.

        Management Team Uniquely Positioned to Execute.    Our management team has a unique combination of industry experiences and skill-sets, equipping them to effectively execute our strategies. Our CEO's broad experience in a number of consumer packaged goods and entertainment-related businesses expands our growth perspectives beyond traditional theatrical exhibition and has increased our focus on providing more value to our guests. Recent additions, including a Chief Marketing Officer, Senior Vice President of Strategy and Strategic Partnerships and heads of Food and Beverage, Programming and Development/Real Estate, augment our deep bench of industry experience. The expanded breadth of our management team complements the established team that is focused on operational excellence, innovation and successful industry consolidation.


Our Strategy

        Our strategy is to leverage our modern theatre circuit and major market position to lead the industry in consumer-focused innovation and financial and operating metrics. The use of emerging premium formats and our focus on the guest experience give us a unique opportunity to leverage our theatre circuit and major market position across our platform. Our primary goal is to maintain our company's and the industry's social relevance and to offer consumers distinctive, affordable and compelling out-of-home entertainment alternatives that capture a greater share of their personal time and spend. We have a two-pronged strategy to accomplish this goal: first, drive consumer-related growth and second, focus on operational excellence.

        Drive Consumer-Related Growth    

        Capitalize on Premium Formats.    Technical innovation has allowed us to enhance the consumer experience through premium formats such as IMAX and 3D. Our customers are willing to pay a premium price for this differentiated entertainment experience. When combined with our major markets' customer base, operating a digital theatre circuit will enhance our capacity utilization and dynamic pricing capabilities, enabling us to achieve higher ticket prices for premium formats, and provide incremental revenue from the exhibition of alternative content such as live concerts, sporting events, Broadway shows, opera and other non-traditional programming. We have already seen success from the Metropolitan Opera, with respect to which, during fiscal 2010, we programmed 23 performances in 75 theatres and charged an average ticket price of $18. Within each of our major markets, we are able to charge a premium for these services relative to our smaller markets. We will continue to broaden our content offerings through the installation of additional IMAX, ETX and RealD systems and the presentation of attractive alternative content. For example:

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        Broaden and Enhance Food and Beverage Offerings.    To address consumer trends, we are expanding our menu of premium food and beverage products to include made-to-order meals, customized coffee, healthy snacks, alcohol and other gourmet products. We plan to invest across a spectrum of enhanced food and beverage formats, from simple, less capital-intensive concession design improvements to the development of new dine-in theatre options. We have successfully implemented our dine-in theatre offerings to rejuvenate theatres approaching the end of their useful lives as traditional movie theatres and, in some of our larger theatres to more efficiently leverage their additional capacity. The costs of these conversions in some cases are partially covered by investments from the theatre landlord. We plan to continue to invest in one or more enhanced food and beverage offerings across 125 to 150 theatres over the next three years.

        Maximize Guest Engagement and Loyalty.    In addition to differentiating the AMC Entertainment movie-going experience by deploying new sight and sound formats, as well as food and beverage offerings, we are also focused on creating differentiation through guest marketing. We are already the most recognized theatre exhibition brand, with almost 60% brand awareness in the United States. We are actively marketing our own "AMC experience" message to our customers, focusing on every aspect of a customer's engagement with AMC, from the moment a guest visits our website or purchases a ticket to the moment he leaves our theatre. We have also refocused our marketing to drive active engagement with our customers through a redesigned website, Facebook, Twitter and push email campaigns. As of March 8, 2011, we had approximately 567,000 "likes" on Facebook, and we engaged directly with our guests via close to 32 million emails in fiscal 2010. In addition, our frequent moviegoer loyalty program is scheduled to re-launch during 2011 with a new, more robust fee-based program. Our loyalty program currently has approximately 1.5 million active members.

        Focus on Operational Excellence    

        Disciplined Approach to Theatre Portfolio Management.    We evaluate the potential for new theatres and, where appropriate, replace underperforming theatres with newer, more modern theatres that offer amenities consistent with our portfolio. We also intend to selectively pursue acquisitions where the

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characteristics of the location, overall market and facilities further enhance the quality of our theatre portfolio. We presently have no current plans, proposals or understandings regarding any such acquisitions. Historically, we have demonstrated a successful track record of integrating acquisitions such as Loews, General Cinema and Kerasotes. For example, our January 2006 acquisition of Loews combined two leading theatrical exhibition companies, each with a long history of operating in the industry, thereby increasing the number of screens we operated by 47%.

        Continue to Achieve Operating Efficiencies.    We believe that the size of our theatre circuit, our major market concentration and the breadth of our operations will allow us to continue to achieve economies of scale and further improve operating margins. Our operating strategies are focused in the following areas:


Our Industry

        Movie-going is a compelling consumer out-of-home entertainment experience. Movie theatres currently garner a relatively small share of consumer entertainment time and spend, leaving significant room for expansion and growth in the U.S. In addition, our industry benefits from available capacity to satisfy additional consumer demand without capital investment.

        As major studio releases have declined in recent years, we believe that companies like Open Road Films could fill an important gap that exists in the market today for consumers, movie producers and theatrical exhibitors by providing a broader availability of movies to consumers. Theatrical exhibitors are uniquely positioned to not only support, but also benefit from new distribution companies and content providers. We believe the theatrical exhibition industry is and will continue to be attractive for a number of key reasons, including:

        A Highly Popular and Affordable Out-of-Home Entertainment Experience.    Going to the movies has been one of the most popular and affordable out-of-home entertainment options for decades. The estimated average price of a movie ticket was $7.89 in calendar 2010, considerably less than other out-of-home entertainment alternatives such as concerts and sporting events. In calendar 2010, attendance at indoor movie theatres in the United States and Canada was 1.3 billion. This contrasts with the 111 million combined annual attendance generated by professional baseball, basketball and football over the same period.

        Adoption of Digital Technology.    The theatrical exhibition industry is well under way in its overall conversion from film-based to digital projection technology. This digital conversion will position the industry with lower distribution and exhibition expenses, efficient delivery of alternative content and niche programming, and premium experiences for consumers. Digital projection also results in a

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premium visual experience for patrons, and digital content gives the theatre operator greater flexibility in programming. The industry will benefit from the conversion to digital delivery, alternative content, 3D formats and dynamic pricing models. As theatre exhibitors have adopted digital technology, the theatre circuits have shown enhanced productivity, profitability and efficiency. Digital technology has increased attendance and average ticket prices. Digital technology also facilitates live and pre-recorded networked and single-site meetings and corporate events in movie theatres and will allow for the distribution of live and pre-recorded entertainment content and the sale of associated sponsorships.

        Long History of Steady Growth.    The theatrical exhibition industry has produced steady growth in revenues over the past several decades. In recent years, net new build activity has slowed, and screen count has rationalized and is expected to decline in the near term before stabilizing, thereby increasing revenue per screen for existing theatres. The combination of the popularity of movie-going, its steady long-term growth characteristics, industry consolidation that has resulted in more rational capital deployment and the industry's relative maturity makes theatrical exhibition a high cash flow generating business. Box office revenues in the United States and Canada have increased from $5.0 billion in 1989 to $10.5 billion in 2010, driven by increases in both ticket prices and attendance across multiple economic cycles. The industry has also demonstrated its resilience to economic downturns; during four of the last six recessions, attendance and box office revenues grew an average of 8.1% and 12.3%, respectively.

        Importance to Content Providers.    We believe that the theatrical success of a motion picture is often the key determinant in establishing the film's value in the other parts of its product life cycle, such as DVD, cable television, merchandising and other ancillary markets. For each $1 of theatrical box office receipts, an average of $1.33 of additional revenue is generated in the remainder of a film's product life cycle. As a result, we believe motion picture studios will continue to work cooperatively with theatrical exhibitors to ensure the continued importance of the theatrical window.


Recent Developments

Holdings Merger

        On March 31, 2011, Marquee Holdings Inc. ("Holdings"), a direct, wholly-owned subsidiary of Parent and a holding company, the sole assets of which consisted of the capital stock of AMCE, was merged with and into Parent, with Parent continuing as the surviving entity (the "Holdings Merger"). As a result of the merger, AMCE became a direct subsidiary of Parent.

Theatre and Other Closures

        During the fourth quarter of our fiscal year ending March 31, 2011, we evaluated excess capacity and vacant and under-utilized retail space throughout our theatre circuit. On March 28, 2011, management decided to permanently close 73 underperforming screens and auditoriums in six theatre locations in the United States and Canada while continuing to operate 89 screens at these locations. The permanently closed screens are physically segregated from the screens that will remain in operation and access to the closed space is restricted. Additionally, management decided to discontinue development of and cease use of (including for storage) certain vacant and under-utilized retail space at four other theatres in the United States and the United Kingdom. As a result of closing the screens and auditoriums and discontinuing the development and use of the other spaces, we anticipate recording a charge of $55 million to $60 million for theatre and other closure expense most of which is expected to be incurred during the fiscal year ending March 31, 2011. The charge to theatre and other closure expense reflects the discounted contractual amounts of the existing lease obligations for the remaining 7 to 13 year terms of the leases ($54 million to $58 million) as well as expected incremental cash outlays for related asset removal and shutdown costs ($1 million to $2 million). A significant portion of each of the affected properties will be closed and no longer used. The charges to theatre and other closure expense do not result in any new, increased or accelerated obligations for cash

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payments related to the underlying long-term operating lease agreements. We expect that the estimated future savings in rent expense and variable operating expenses as a result of our exit plan and from operating these ten theatres in a more efficient manner will exceed the estimated loss in attendance and revenues that we may experience related to the closed auditoriums.

NCM, Inc. Stock Sale

        All of our NCM membership units are redeemable for, at the option of NCM, cash or shares of common stock of NCM, Inc. on a share-for-share basis. On August 18, 2010, we sold 6,500,000 shares of common stock of NCM, Inc., in an underwritten public offering for $16.00 per share and reduced our related investment in NCM, Inc. by $36.7 million, the average carrying amount of the shares sold. Net proceeds received on this sale were $99.8 million, after deducting related underwriting fees and professional and consulting costs of $4.2 million, resulting in a gain on sale of $63.1 million. In addition, on September 8, 2010, we sold 155,193 shares of NCM, Inc. to the underwriters to cover over allotments for $16.00 per share and reduced our related investment in NCM, Inc. by $867,000, the average carrying amount of the shares owned. Net proceeds received on this sale were $2.4 million, after deducting related underwriting fees and professional and consulting costs of $99,000, resulting in a gain on sale of $1.5 million.

Kerasotes Acquisition

        On May 24, 2010, we completed the acquisition of 92 theatres and 928 screens from Kerasotes (the "Kerasotes Acquisition"). Kerasotes operated 95 theatres and 972 screens in mid-sized, suburban and metropolitan markets, primarily in the Midwest. More than three quarters of the Kerasotes theatres feature stadium seating and almost 90% have been built since 1994. The purchase price for the Kerasotes theatres paid in cash at closing was $276.8 million, net of cash acquired, and was subject to working capital and other purchase price adjustments. We paid working capital and other purchase price adjustments of $3.8 million during the second quarter of fiscal 2011, based on the final closing date working capital and deferred revenue amounts and have included this amount as part of the total estimated purchase price. The acquisition of Kerasotes significantly increased our size. For additional information about the Kerasotes acquisition, see the notes to our unaudited consolidated financial statements for the 39-week period ended December 30, 2010 included elsewhere in this prospectus.

Notes Offering, Cash Tender Offers and Redemptions

        On December 15, 2010, AMCE issued $600,000,000 aggregate principal amount of 9.75% Senior Subordinated Notes due 2020 (the "Notes due 2020") pursuant to an indenture, dated as of December 15, 2010 (the "Indenture"), among AMCE, the guarantors named therein and U.S. Bank National Association, as trustee (the "Notes Offering"). The Indenture provides that the Notes due 2020 are general unsecured senior subordinated obligations of AMCE and are fully and unconditionally guaranteed on a joint and several senior subordinated unsecured basis by all of AMCE's existing and future domestic restricted subsidiaries that guarantee AMCE's other indebtedness.

        Concurrently with the Notes Offering, AMCE launched a cash tender offer and consent solicitation for any and all of our currently outstanding 11% Senior Subordinated Notes due 2016 (the "Notes due 2016") at a purchase price of $1,031.00 plus a $30.00 consent fee for each $1,000.00 of principal amount of currently outstanding Notes due 2016 validly tendered and accepted by AMCE on or before the early tender date, and Holdings launched a tender offer for its 12% Senior Discount Notes due 2014 (the "Discount Notes due 2014") at a purchase price of $797.00 plus a $30.00 consent fee for each $1,000.00 face amount (or $792.09 accreted value) of currently outstanding Discount Notes due 2014 validly tendered and accepted by Holdings on or before the early tender date (the "Cash Tender Offers"). As of December 29, 2010, AMCE had purchased $95.1 million principal amount of its Notes due 2016 for a total consideration of $104.8 million, and Holdings had purchased $215.5 million principal amount at face value (or $170.7 million accreted value) of the Discount Notes due 2014 for a

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total consideration of $185.0 million. We recorded a loss on extinguishment for the Notes due 2016, the Discount Notes due 2014 and AMCE's senior secured credit facility amendment (as described below) of approximately $21.7 million.

        AMCE used a portion of the net proceeds from the issuance of the Notes due 2020 to pay the consideration for the Cash Tender Offer for the Notes due 2016 plus any accrued and unpaid interest and distributed the remainder of such proceeds to Holdings to be applied to the Cash Tender Offer for the Discount Notes due 2014. On January 3, 2011, Holdings redeemed $88.5 million principal amount at face value (or $70.1 million accreted value) of the Discount Notes due 2014 that remained outstanding after the closing of the Cash Tender Offer for the Discount Notes due 2014 at a price of $823.77 per $1,000.00 face amount (or $792.09 accreted value) of Discount Notes due 2014 for a total consideration of $76.1 million in accordance of the terms of the indenture governing the Discount Notes due 2014, as amended pursuant to the consent solicitation (the "Holdings Redemption"). We recorded an additional loss on extinguishment related to the Discount Notes due 2014 of approximately $4.1 million. On December 30, 2010, AMCE issued an irrevocable notice of redemption in respect of the $229.9 million principal amount of Notes due 2016 that remained outstanding after the closing of the Cash Tender Offers, and AMCE redeemed the remaining Notes due 2016 at a price of $1,055.00 per $1,000.00 principal amount of Notes due 2016 on February 1, 2011 for a total consideration of $255.2 million in accordance with the terms of the indenture governing the Notes due 2016 (the "AMCE Redemption," and together with the Holdings Redemption, the "Redemptions").

Senior Secured Credit Facility Amendment

        On December 15, 2010, AMCE amended its senior secured credit facility dated January 26, 2006. The amendments, among other things,: (i) replaced the existing revolving facility with a new five year revolving facility (with higher interest rates than the existing revolving facility); (ii) extended the maturity of term loans held by term lenders who consented to such extension; (iii) increased the interest rates payable to holders of extended term loans; and (iv) included certain other modifications to the senior secured credit facility in connection with the foregoing. For more information regarding the senior secured credit facility, as amended, see "Description of Certain Indebtedness—Senior Secured Credit Facility."

Launch of Open Road Films

        On March 7, 2011, AMCE and another major theatrical exhibition chain announced the launch of Open Road Films, a dynamic acquisition-based domestic theatrical distribution company that will concentrate on wide-release movies. Tim Ortenberg, who has more than 25 years of movie marketing, distribution and acquisition experience, will join as Chief Executive Officer of Open Road Films.

NCM 2010 Common Unit Adjustment

        On March 17, 2011, NCM, Inc., as sole manager of NCM, disclosed the changes in ownership interest in NCM LLC pursuant to the Common Unit Adjustment Agreement dated as of February 13, 2007 by and among NCM, Inc., NCM, Regal CineMedia Holdings, LLC, American Multi-Cinema, Inc., Cinemark Media, Inc., Regal Cinemas, Inc. and Cinemark USA, Inc. (the "2010 Common Unit Adjustment"). This agreement provides for a mechanism for adjusting membership units based on increases or decreases in attendance associated with theatre additions and dispositions. Prior to the 2010 Common Unit Adjustment, we held 18,803,420 units, or a 16.98% ownership interest, in NCM as of December 30, 2010. As a result of theatre dispositions in fiscal 2010 and 2011, we surrendered 1,479,638 ownership units, leaving us with 17,323,782 units, or a 15.69% ownership interest, in NCM as of December 30, 2010, as adjusted for the 2010 Common Unit Adjustment.

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The Reclassification

        Prior to consummating this offering, we intend to reclassify each share of the Parent's existing Class A common stock, Class N common stock and Class L common stock. Pursuant to the reclassification, each holder of shares of Class A common stock, Class N common stock and Class L common stock will receive               shares of common stock for one share of Class A common stock, Class L common stock or Class N common stock. The transactions described in this paragraph are referred to in this prospectus as the "Reclassification."

        Currently, investment vehicles affiliated with J.P. Morgan Partners, LLC (collectively, "JPMP"), Apollo Investment Fund V, L.P. and certain related investment funds (collectively, "Apollo"), JPMP's and Apollo's co-investors, funds associated with Bain Capital Partners, LLC ("Bain"), affiliates of The Carlyle Group (collectively, "Carlyle"), affiliates of Spectrum Equity Investors (collectively, "Spectrum"), and management hold 100% of our outstanding common stock. JPMP, Apollo, Bain, Carlyle and Spectrum are collectively referred to in this prospectus as the "Sponsors." After giving effect to the Reclassification and this offering, the Sponsors will hold               shares of our common stock, representing approximately       % of our outstanding common stock, and will have the power to control our affairs and policies including with respect to the election of directors (and, through the election of directors, the appointment of management), the entering into of mergers, sales of substantially all of our assets and other extraordinary transactions. The governance agreements will provide that, initially, the Sponsors will collectively have the right to designate eight directors (out of a total of 10 initial board members) and that each will vote for the others' nominees. The number of Sponsor-designated directors will be reduced as the Sponsors' ownership percentage reduces, such that the Sponsors will not have the ability to nominate a majority of the board of directors once their collective ownership (together with the share ownership held by the JPMP and Apollo co-investors) becomes less than 50.1%. However, because our board of directors will be divided into three staggered classes, the Sponsors may be able to influence or control our affairs and policies even after they cease to own 50.1% of our outstanding common stock during the period in which the Sponsors' nominees finish their terms as members of our board but in any event no longer than would be permitted under applicable law and national securities exchange listing requirements. See "Certain Relationships and Related Party Transactions—Governance Agreements." Pursuant to the Fee Agreement as described under the heading "Certain Relationships and Related Party Transactions—Fee Agreement," upon consummation of this offering, the Sponsors will receive an automatic fee equal to the net present value of the aggregate annual management fee that would have been payable to the Sponsors during the remainder of the term of the fee agreement and our obligation to pay annual management fees will terminate. We estimate that our aggregate payment to the Sponsors would have been $26.1 million had the offering occurred on December 30, 2010.


Risk Factors

        The "Risk Factors" section included in this prospectus contains a discussion of factors that you should carefully read and consider before deciding to invest in shares of our common stock.


Corporate Information

        We are a Delaware corporation. Our principal executive offices are located at 920 Main Street, Kansas City, Missouri 64105. The telephone number of our principal executive offices is (816) 221-4000. We maintain a website at www.amcentertainment.com, on which we will post our key corporate governance documents, including our board committee charters and our code of ethics. We do not incorporate the information on our website into this prospectus and you should not consider any information on, or that can be accessed through, our website as part of this prospectus.

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The Offering

Common stock offered

               shares

Common stock to be outstanding immediately after this offering

 

             shares

Option to purchase additional shares

 

We have granted to the underwriters a 30-day option to purchase up to            additional shares from us at the initial public offering price less underwriting discounts and commissions.

Common stock voting rights

 

Each share of our common stock will entitle its holder to one vote per share.

Dividend policy

 

We intend to pay cash dividends commencing from the closing date of this offering. We expect that our first dividend will be with respect to the    quarter of fiscal 2012. The declaration and payment of future dividends to holders of our common stock will be at the sole discretion of our board of directors and will depend upon many factors, including our financial condition, earnings, legal requirements, restrictions in our senior secured credit facility and the indentures governing our debt securities and other factors our board of directors deem relevant. See "Risk Factors—We may not generate sufficient cash flows or have sufficient restricted payment capacity under our senior secured credit facility or the indentures governing our debt securities to pay our intended dividends on the common stock," "Dividend Policy," "Management's Discussion and Analysis of Financial Condition and Results of Operations—Commitments and Contingencies," "Description of Certain Indebtedness" and "Description of Capital Stock."

Use of proceeds

 

We estimate that our net proceeds from this offering without exercise of the underwriters' option to purchase additional shares will be approximately $             million after deducting the estimated underwriting discounts and commissions and expenses, assuming the shares are offered at $            per share, which represents the midpoint of the range set forth on the front cover of this prospectus. We intend to use the net proceeds to us, together with cash on hand, to: first, repay $207.2 million principal amount of the loans outstanding under the Parent's term loan facility plus accrued and unpaid interest; second, to retire $300.0 million principal amount of our outstanding 8% senior subordinated notes due 2014 plus accrued and unpaid interest; and third, to pay a $26.1 million lump sum payment to the Sponsors pursuant to the Fee Agreement with our Sponsors. Affiliates of certain of the underwriters are holders of our outstanding 8% senior subordinated notes due 2014 and will receive a portion of our net proceeds from this offering. See "Use of Proceeds."

Proposed national securities exchange trading symbol

 

"AMC"

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        Unless otherwise stated herein, the information in this prospectus (other than our historical financial statements and historical financial data) assumes that:

        In the Reclassification, each holder of shares of Parent's Class A common stock, Class L common stock and Class N common stock will receive                      shares of common stock for one share of Class A common stock, Class L common stock or Class N common stock. The number of shares of common stock to be outstanding after completion of this offering is based on                     shares of our common stock to be sold in this offering and, except where we state otherwise, the common stock information we present in this prospectus excludes, as of                    , 2011:

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Summary Historical and Unaudited Pro Forma Financial and Operating Data

        The following summary historical financial and operating data sets forth our historical financial and operating data for the 39 weeks ended December 30, 2010 and December 31, 2009 and the fiscal years ended April 1, 2010, April 2, 2009 and April 3, 2008 and have been derived from the Company's consolidated financial statements and related notes for such periods included elsewhere in this prospectus. The historical financial data set forth below is qualified in its entirety by reference to the Company's consolidated financial statements and the notes thereto included elsewhere in this prospectus.

        The following summary unaudited pro forma financial and operating data sets forth our unaudited pro forma combined balance sheet as of December 30, 2010 and unaudited pro forma combined statement of operations for the 39 weeks ended December 30, 2010, the 52 weeks ended December 30, 2010 and the 52 weeks ended April 1, 2010. The pro forma financial data has been derived from the Company's historical consolidated financial information, including the notes thereto, and the Kerasotes historical financial information, including the notes thereto, included elsewhere in this prospectus, and has been prepared based on the Company's historical consolidated financial statements and the Kerasotes historical financial statements included elsewhere in this prospectus. The unaudited pro forma combined balance sheet gives pro forma effect to the Transactions as if they had occurred on December 30, 2010. The unaudited pro forma combined statement of operations data gives pro forma effect to the Transactions as if they had occurred on April 3, 2009. The summary unaudited pro forma financial and operating data is based on certain assumptions and adjustments and does not purport to present what the Company's actual results of operations would have been had the Transactions and events reflected by them in fact occurred on the dates specified, nor is it necessarily indicative of the results of operations that may be achieved in the future. The summary unaudited pro forma financial data should be read in conjunction with "Unaudited Pro Forma Condensed Financial Information," the historical consolidated financial statements, including the notes thereto, of the Company and of Kerasotes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Company's other financial data presented elsewhere in this prospectus.

        The summary historical financial and operating data presented below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations", our historical consolidated financial statements, including the notes thereto, and the Kerasotes historical financial statements, including the notes thereto, included in this prospectus.

 
  Pro Forma   Historical  
 
   
   
   
  39 Weeks Ended   Years Ended(1)(2)  
 
  39 Weeks
Ended
Dec. 30,
2010
  52 Weeks
Ended
Dec. 30,
2010(3)
  52 Weeks
Ended
April 1,
2010(3)
  39 Weeks
Ended
Dec. 30,
2010
  39 Weeks
Ended
Dec. 31,
2009
  52 Weeks
Ended
April 1,
2010
  52 Weeks
Ended
April 2,
2009
  53 Weeks
Ended
April 3,
2008
 
 
  (in thousands, except per share and operating data)
 

Statement of Operations Data:

                                                 

Total revenues

  $ 1,925,453   $ 2,594,540   $ 2,683,755   $ 1,897,444   $ 1,813,546   $ 2,417,739   $ 2,265,487   $ 2,333,044  
                                   

Operating Costs and Expenses:

                                                 
 

Cost of operations

    1,292,078     1,747,747     1,785,080     1,264,853     1,199,317     1,612,260     1,486,457     1,502,578  
 

Rent

    360,374     480,413     479,590     356,121     331,107     440,664     448,803     439,389  
 

General and administrative:

                                                 
   

Merger, acquisition and transactions costs

    13,396     15,001     2,578     13,396     973     2,578     1,481     7,310  
   

Management fee

                3,750     3,750     5,000     5,000     5,000  
   

Other

    42,967     64,284     75,241     41,316     41,173     58,274     53,800     39,084  
 

Depreciation and amortization

    160,623     213,078     214,682     156,895     142,949     188,342     201,413     222,111  
 

Impairment of long-lived assets

        3,765     3,765             3,765     73,547     8,933  
                                   
   

Operating costs and expenses

    1,869,438     2,524,288     2,560,936     1,836,331     1,719,269     2,310,883     2,270,501     2,224,405  
                                   

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  Pro Forma   Historical  
 
   
   
   
  39 Weeks Ended   Years Ended(1)(2)  
 
  39 Weeks
Ended
Dec. 30,
2010
  52 Weeks
Ended
Dec. 30,
2010(3)
  52 Weeks
Ended
April 1,
2010
  39 Weeks
Ended
Dec. 30,
2010
  39 Weeks
Ended
Dec. 31,
2009
  52 Weeks
Ended
April 1,
2010
  52 Weeks
Ended
April 2,
2009
  53 Weeks
Ended
April 3,
2008
 
 
  (in thousands, except per share and operating data)
 

Operating income (loss)

  $ 56,015   $ 70,252   $ 122,819   $ 61,113   $ 94,277   $ 106,856   $ (5,014 ) $ 108,639  

Other (income) expense

    9,876     7,617     (2,559 )   9,876     (85,534 )   (87,793 )   (14,139 )   (12,932 )

Interest expense

    109,150     144,365     137,976     136,179     129,254     174,091     188,681     204,226  

Equity in (earnings) loss of non-consolidated entities(4)

    (17,057 )   (29,230 )   (30,300 )   (17,057 )   (18,127 )   (30,300 )   (24,823 )   (43,019 )

Gain on NCM, Inc. stock sale

    (64,648 )   (64,648 )       (64,648 )                

Investment income(5)

    (387 )   (711 )   (89 )   (387 )   (213 )   (287 )   (1,759 )   (24,013 )
                                   
 

Earnings (loss) from continuing operations before income taxes

    19,081     12,859     17,791     (2,850 )   68,897     51,145     (152,974 )   (15,623 )
 

Income tax provision

    10,325     (53,475 )   (48,800 )   2,125     32,100     (36,300 )   5,800     (7,580 )
                                   
 

Earnings (loss) from continuing operations

  $ 8,756   $ 66,334   $ 66,591   $ (4,975 ) $ 36,797   $ 87,445   $ (158,774 ) $ (8,043 )
                                   
 

Basic earnings (loss) from continuing operations per share

                    $ (3.89 ) $ 28.77   $ 68.38   $ (123.93 ) $ (6.27 )
 

Diluted earnings (loss) from continuing operations per share

                      (3.89 )   28.77     68.24     (123.93 )   (6.27 )

Average shares outstanding:

                                                 
 

Basic

                      1,278.85     1,278.82     1,278.82     1,281.20     1,282.65  
 

Diluted

                      1,278.85     1,278.91     1,281.42     1,281.20     1,282.65  

Balance Sheet Data (at period end):

                                                 

Cash and equivalents

  $ 250,501               $ 802,392         $ 611,593   $ 539,597   $ 111,820  

Corporate borrowings, including current portion

    1,806,125                 2,612,206           2,271,914     2,394,586     2,287,521  

Other long-term liabilities

    354,940                 354,940           309,591     308,702     350,250  

Capital and financing lease obligations, including current portion

    66,736                 66,736           57,286     60,709     69,983  

Stockholders' equity

    706,359                 437,121           439,542     378,484     506,731  
 

Total assets

    3,768,795                 4,327,262           3,774,912     3,774,894     3,899,128  

Other Data:

                                                 

Adjusted EBITDA(6)

  $ 253,099   $ 329,669   $ 365,162   $ 248,163   $ 258,759   $ 327,859   $ 294,705   $ 347,638  

NCM cash distributions received

    21,404     35,732     34,633     21,404     20,305     34,633     28,104     22,175  

Net cash provided by operating activities

    63,449     86,959     245,732     36,763     201,896     198,936     167,249     201,209  

Capital expenditures

    (84,374 )   (123,711 )   (99,109 )   (84,085 )   (59,482 )   (97,011 )   (121,456 )   (171,100 )

Proceeds from sale/leasebacks

            6,570             6,570          

Operating Data (at period end):

                                                 

Screen additions

    61     61     6     1,015     6     6     83     136  

Screen dispositions

    183     198     105     325     90     105     77     196  

Average screens—continuing operations(7)

    5,197     5,287     5,271     5,080     4,501     4,485     4,545     4,561  

Number of screens operated

    5,203     5,203     5,299     5,203     4,528     4,513     4,612     4,606  

Number of theatres operated

    361     361     378     361     299     297     307     309  

Screens per theatre

    14.4     14.4     14.0     14.4     15.1     15.2     15.0     14.9  

Attendance (in thousands)—continuing operations(7)

    155,479     209,583     225,222     152,895     152,147     200,285     196,184     207,603  

(1)
A cash dividend of $652.8 million was declared on common stock for fiscal 2008. There were no other cash dividends declared on common stock.

(2)
Fiscal 2008 includes 53 weeks. All other years have 52 weeks.

(3)
The pro forma statement of operations and other data for the 52 weeks ended December 30, 2010, which are unaudited, have been calculated by subtracting the pro forma data for the 39 weeks ended December 31, 2009 from the pro forma data for the 52 weeks ended April 1, 2010 and adding the data for the 39 weeks ended December 30, 2010. This presentation is not in accordance with U.S. GAAP. We believe that this presentation provides useful information to investors regarding our recent financial performance, and we view this presentation of the four most recently completed fiscal quarters as a key measurement period for investors to assess our historical results. In addition, our management uses trailing four quarter financial information to evaluate our financial performance for ongoing planning purposes, including a continuous assessment of our financial performance in comparison to budgets and internal projections. We also use trailing four quarter financial data to test compliance with covenants under our senior secured credit facility. This presentation has limits as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. See "Unaudited Pro Forma Condensed Financial Information" for further discussion of the calculation of unaudited pro forma financial data for the 52 weeks ended December 30, 2010.

(4)
During fiscal 2010, fiscal 2009 and fiscal 2008, equity in earnings including cash distributions from NCM were $34.4 million, $27.7 million and $22.2 million, respectively. During fiscal 2008, equity in (earnings) losses of non-consolidated entities includes a gain of $18.8 million from the sale of Hoyts General Cinema South America.

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(5)
Includes gain of $16.0 million for the 53 weeks ended April 3, 2008 from the sale of our investment in Fandango, Inc. ("Fandango").

(6)
We present Adjusted EBITDA as a supplemental measure of our performance. We define Adjusted EBITDA as earnings (loss) from continuing operations plus (i) income tax provisions (benefit), (ii) interest expense and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance. These further adjustments are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Set forth below is a reconciliation of Adjusted EBITDA to earnings (loss) from continuing operations, our most comparable GAAP measure:

 
  Pro Forma   Historical  
 
   
   
   
  39 weeks Ended   Years Ended(1)(2)  
 
  39 Weeks
Ended
Dec. 30,
2010
  52 Weeks
Ended
Dec. 30,
2010
  52 Weeks
Ended
April 1,
2010
  39 Weeks
Ended
Dec. 30,
2010
  39 Weeks
Ended
Dec. 31,
2009
  52 Weeks
Ended
April 1,
2010
  52 Weeks
Ended
April 2,
2009
  53 Weeks
Ended
April 3,
2008
 
 
  (in thousands, except per share and operating data)
 

Earnings (loss) from continuing operations

  $ 8,756   $ 66,334   $ 66,591   $ (4,975 ) $ 36,797   $ 87,445   $ (158,774 ) $ (8,043 )

Plus:

                                                 
 

Income tax provision (benefit)

    10,325     (53,475 )   (48,800 )   2,125     32,100     (36,300 )   5,800     (7,580 )
 

Interest expense

    109,150     144,365     137,976     136,179     129,254     174,091     188,681     204,226  
 

Depreciation and amortization

    160,623     213,078     214,682     156,895     142,949     188,342     201,413     222,111  
 

Impairment of long-lived assets

        3,765     3,765             3,765     73,547     8,933  
 

Certain operating expenses(a)

    10,150     12,263     6,099     94     3,986     6,099     1,517     (16,248 )
 

Equity in earnings of non-consolidated entities

    (17,057 )   (29,230 )   (30,300 )   (17,057 )   (18,127 )   (30,300 )   (24,823 )   (43,019 )
 

Gain on NCM, Inc. stock sale

    (64,648 )   (64,648 )       (64,648 )                
 

Investment income

    (387 )   (711 )   (89 )   (387 )   (213 )   (287 )   (1,759 )   (24,013 )
 

Other (income) expense(b)

    21,771     21,771     11,276     21,771     (73,958 )   (73,958 )       (1,246 )
 

General and administrative expense:

                                                 
   

Merger, acquisition and transaction costs

    13,396     15,001     2,578     13,396     973     2,578     1,481     7,310  
   

Management fee

                3,750     3,750     5,000     5,000     5,000  
   

Stock-based compensation expense

    1,020     1,156     1,384     1,020     1,248     1,384     2,622     207  
                                   

Adjusted EBITDA(c)(d)

  $ 253,099   $ 329,669   $ 365,162   $ 248,163   $ 258,759   $ 327,859   $ 294,705   $ 347,638  
                                   

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Adjusted EBITDA and Pro Forma Adjusted EBITDA are non-GAAP financial measures commonly used in our industry and should not be construed as an alternative to net earnings (loss) as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (as determined in accordance with GAAP). Adjusted EBITDA and Pro Forma Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. We have included Adjusted EBITDA and Pro Forma Adjusted EBITDA because we believe they provide management and investors with additional information to measure our performance and liquidity, estimate our value and evaluate our ability to service debt. In addition, we use Adjusted EBITDA for incentive compensation purposes.


Adjusted EBITDA and Pro Forma Adjusted EBITDA have important limitations as analytical tools, and you should not consider them in isolation, or as substitutes for analysis of our results as reported under U.S. GAAP. For example, Adjusted EBITDA:

does not reflect our capital expenditures, future requirements for capital expenditures or contractual commitments;

does not reflect changes in, or cash requirements for, our working capital needs;

does not reflect the significant interest expenses, or the cash requirements necessary to service interest or principal payments, on our debt;

excludes tax payments that represent a reduction in cash available to us;

does not reflect any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future; and

does not reflect management fees that may be paid to our sponsors.

(7)
Includes consolidated theatres only.

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RISK FACTORS

        Before you decide to purchase shares of our common stock, you should understand the high degree of risk involved. You should consider carefully the following risks and other information in this prospectus, including our pro forma and historical financial statements and related notes. If any of the following risks actually occur, our business, financial condition and operating results could be adversely affected. As a result, the trading price of our common stock could decline, perhaps significantly.


Risks Related to Our Industry

We have no control over distributors of the films and our business may be adversely affected if our access to motion pictures is limited or delayed.

        We rely on distributors of motion pictures, over whom we have no control, for the films that we exhibit. Major motion picture distributors are required by law to offer and license film to exhibitors, including us, on a film-by-film and theatre-by-theatre basis. Consequently, we cannot assure ourselves of a supply of motion pictures by entering into long-term arrangements with major distributors, but must compete for our licenses on a film-by-film and theatre-by-theatre basis. Our business depends on maintaining good relations with these distributors, as this affects our ability to negotiate commercially favorable licensing terms for first-run films or to obtain licenses at all. Our business may be adversely affected if our access to motion pictures is limited or delayed because of deterioration in our relationships with one or more distributors or for some other reason. To the extent that we are unable to license a popular film for exhibition in our theatres, our operating results may be adversely affected.

We depend on motion picture production and performance.

        Our ability to operate successfully depends upon the availability, diversity and appeal of motion pictures, our ability to license motion pictures and the performance of such motion pictures in our markets. We license first-run motion pictures, the success of which has increasingly depended on the marketing efforts of the major motion picture studios. Poor performance of, or any disruption in the production of these motion pictures (including by reason of a strike or lack of adequate financing), or a reduction in the marketing efforts of the major motion picture studios, could hurt our business and results of operations. Conversely, the successful performance of these motion pictures, particularly the sustained success of any one motion picture, or an increase in effective marketing efforts of the major motion picture studios, may generate positive results for our business and operations in a specific fiscal quarter or year that may not necessarily be indicative of, or comparable to, future results of operations. In addition, a change in the type and breadth of movies offered by motion picture studios may adversely affect the demographic base of moviegoers.

We are subject, at times, to intense competition.

        Our theatres are subject to varying degrees of competition in the geographic areas in which we operate. Competitors may be national circuits, regional circuits or smaller independent exhibitors. Competition among theatre exhibition companies is often intense with respect to the following factors:

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        The theatrical exhibition industry also faces competition from other forms of out-of-home entertainment, such as concerts, amusement parks and sporting events and from other distribution channels for filmed entertainment, such as cable television, pay per view and home video systems and from other forms of in-home entertainment.

Industry-wide screen growth has affected and may continue to affect the performance of some of our theatres.

        In recent years, theatrical exhibition companies have emphasized the development of large megaplexes, some of which have as many as 30 screens in a single theatre. The industry-wide strategy of aggressively building megaplexes generated significant competition and rendered many older, multiplex theatres obsolete more rapidly than expected. Many of these theatres are under long-term lease commitments that make closing them financially burdensome, and some companies have elected to continue operating them notwithstanding their lack of profitability. In other instances, because theatres are typically limited use design facilities, or for other reasons, landlords have been willing to make rent concessions to keep them open. In recent years, many older theatres that had closed are being reopened by small theatre operators and in some instances by sole proprietors that are able to negotiate significant rent and other concessions from landlords. As a result, there has been growth in the number of screens in the U.S. and Canadian exhibition industry from 2005 to 2008. This has affected and may continue to affect the performance of some of our theatres. The number of screens in the U.S. and Canadian exhibition industry slightly declined from 2008 to 2009.

An increase in the use of alternative film delivery methods or other forms of entertainment may drive down our attendance and limit our ticket prices.

        We compete with other film delivery methods, including network, syndicated cable and satellite television, DVDs and video cassettes, as well as video-on-demand, pay-per-view services and downloads via the Internet. We also compete for the public's leisure time and disposable income with other forms of entertainment, including sporting events, amusement parks, live music concerts, live theatre and restaurants. An increase in the popularity of these alternative film delivery methods and other forms of entertainment could reduce attendance at our theatres, limit the prices we can charge for admission and materially adversely affect our business and results of operations.

Our results of operations may be impacted by shrinking video release windows.

        Over the last decade, the average video release window, which represents the time that elapses from the date of a film's theatrical release to the date a film is available on DVD, an important downstream market, has decreased from approximately six months to approximately three to four months. If patrons choose to wait for a DVD release rather than attend a theatre for viewing the film, it may adversely impact our business and results of operations, financial condition and cash flows. Film studios are currently considering a premium video on demand product which could also cause the release window to shrink further. We cannot assure you that this release window, which is determined by the film studios, will not shrink further or be eliminated altogether, which could have an adverse impact on our business and results of operations.

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Development of digital technology may increase our capital expenses.

        The industry is in the process of converting film-based media to digital-based media. We, along with some of our competitors, have commenced a roll-out of digital equipment for exhibiting feature films and plan to continue the roll-out through our joint venture DCIP. However, significant obstacles exist that impact such a roll-out plan, including the cost of digital projectors, and the supply of projectors by manufacturers. During fiscal 2010, DCIP completed its formation and $660 million funding to facilitate the financing and deployment of digital technology in our theatres. We cannot assure you that DCIP will be able to obtain sufficient additional financing to be able to purchase and lease to us the number of digital projectors ultimately needed for our roll-out or that the manufacturers will be able to supply the volume of projectors needed for our roll-out. As a result, our roll-out of digital equipment could be delayed or not completed at all.

General political, social and economic conditions can reduce our attendance.

        Our success depends on general political, social and economic conditions and the willingness of consumers to spend money at movie theatres. If going to motion pictures becomes less popular or consumers spend less on concessions, which accounted for 27% of our revenues in fiscal 2010, our operations could be adversely affected. In addition, our operations could be adversely affected if consumers' discretionary income falls as a result of an economic downturn. Political events, such as terrorist attacks, could cause people to avoid our theatres or other public places where large crowds are in attendance.


Risks Related to Our Business

Our substantial debt could adversely affect our operations and prevent us from satisfying those debt obligations.

        We have a significant amount of debt. As of December 30, 2010, on a pro forma basis, we had $1.9 billion of outstanding indebtedness, and our subsidiaries had approximately $4.6 billion of undiscounted rental payments under operating leases (with initial base terms of between 15 and 20 years).

        The amount of our indebtedness and lease and other financial obligations could have important consequences to you. For example, it could:

        If we fail to make any required payment under our senior secured credit facility or to comply with any of the financial and operating covenants contained therein, we would be in default. Lenders under our senior secured credit facility could then vote to accelerate the maturity of the indebtedness under the senior secured credit facility and foreclose upon the stock and personal property of our subsidiaries that is pledged to secure the senior secured credit facility. Other creditors might then accelerate other

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indebtedness. If the lenders under the senior secured credit facility accelerate the maturity of the indebtedness thereunder, we might not have sufficient assets to satisfy our obligations under the senior secured credit facility or our other indebtedness. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

        Our indebtedness under our senior secured credit facility bears interest at rates that fluctuate with changes in certain prevailing interest rates (although, subject to certain conditions, such rates may be fixed for certain periods). If interest rates increase, we may be unable to meet our debt service obligations under our senior secured credit facility and other indebtedness.

The agreements governing our indebtedness contain covenants that may limit our ability to take advantage of certain business opportunities advantageous to us.

        The agreements governing our indebtedness contain various covenants that limit our ability to, among other things:

        These restrictions could limit our ability to obtain future financing, make acquisitions or needed capital expenditures, withstand economic downturns in our business or the economy in general, conduct operations or otherwise take advantage of business opportunities that may arise.

        Although the indentures for our notes contain a fixed charge coverage test that limits our ability to incur indebtedness, this limitation is subject to a number of significant exceptions and qualifications. Moreover, the indentures do not impose any limitation on our incurrence of capital or finance lease obligations or liabilities that are not considered "Indebtedness" under the indentures (such as operating leases), nor do they impose any limitation on the amount of liabilities incurred by subsidiaries, if any, that might be designated as "unrestricted subsidiaries," which are subsidiaries that we designate, that are not subject to the restrictive covenants contained in the indentures governing our notes. Furthermore, there are no restrictions in the indentures on our ability to invest in other entities (including unaffiliated entities) and no restrictions on the ability of our subsidiaries to enter into agreements restricting their ability to pay dividends or otherwise transfer funds to us. Also, although the indentures limit our ability to make restricted payments, these restrictions are subject to significant exceptions and qualifications.

We may not generate sufficient cash flow from our theatre acquisitions to service our indebtedness.

        In any acquisition, we expect to benefit from cost savings through, for example, the reduction of overhead and theatre level costs, and from revenue enhancements resulting from the acquisition. However, there can be no assurance that we will be able to generate sufficient cash flow from these acquisitions to service any indebtedness incurred to finance such acquisitions or realize any other anticipated benefits. Nor can there be any assurance that our profitability will be improved by any one or more acquisitions. Any acquisition may involve operating risks, such as:

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If our cash flows prove inadequate to service our debt and provide for our other obligations, we may be required to refinance all or a portion of our existing debt or future debt at terms unfavorable to us.

        Our ability to make payments on and refinance our debt and other financial obligations and to fund our capital expenditures and acquisitions will depend on our ability to generate substantial operating cash flow. This will depend on our future performance, which will be subject to prevailing economic conditions and to financial, business and other factors beyond our control. The maximum amount we would be permitted to distribute in compliance with our senior secured credit facility and the indentures governing our debt securities, on a pro forma basis, was approximately $219.2 million as of December 30, 2010.

        In addition, our notes require us to repay or refinance those notes when they come due. If our cash flows were to prove inadequate to meet our debt service, rental and other obligations in the future, we may be required to refinance all or a portion of our existing or future debt, on or before maturity, to sell assets or to obtain additional financing. We cannot assure you that we will be able to refinance any of our indebtedness, including our senior secured credit facility, sell any such assets or obtain additional financing on commercially reasonable terms or at all.

        The terms of the agreements governing our indebtedness restrict, but do not prohibit us from incurring additional indebtedness. If we are in compliance with the financial covenants set forth in the senior secured credit facility and our other outstanding debt instruments, we may be able to incur substantial additional indebtedness. If we incur additional indebtedness, the related risks that we face may intensify.

We face significant competition for new theatre sites, and we may not be able to build or acquire theatres on terms favorable to us.

        We anticipate significant competition from other exhibition companies and financial buyers when trying to acquire theatres, and there can be no assurance that we will be able to acquire such theatres at reasonable prices or on favorable terms. Moreover, some of these possible buyers may be stronger financially than we are. In addition, given our size and market share, as well as our recent experiences with the Antitrust Division of the United States Department of Justice in connection with the acquisition of Kerasotes and prior acquisitions, we may be required to dispose of theatres in connection with future acquisitions that we make. As a result of the foregoing, we may not succeed in acquiring theatres or may have to pay more than we would prefer to make an acquisition.

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Acquiring or expanding existing circuits and theatres may require additional financing, and we cannot be certain that we will be able to obtain new financing on favorable terms, or at all.

        On a pro forma basis, our net capital expenditures aggregated approximately $99.1 million for fiscal 2010. We estimate that our planned capital expenditures will be between $140.0 million and $150.0 million in fiscal 2011 and will continue at this level or higher over the next three years. Actual capital expenditures in fiscal 2011 may differ materially from our estimates. We may have to seek additional financing or issue additional securities to fully implement our growth strategy. We cannot be certain that we will be able to obtain new financing on favorable terms, or at all. In addition, covenants under our existing indebtedness limit our ability to incur additional indebtedness, and the performance of any additional theatres may not be sufficient to service the related indebtedness that we are permitted to incur.

We may be reviewed by antitrust authorities in connection with acquisition opportunities that would increase our number of theatres in markets where we have a leading market share.

        Given our size and market share, pursuit of acquisition opportunities that would increase the number of our theatres in markets where we have a leading market share would likely result in significant review by the Antitrust Division of the United States Department of Justice, and we may be required to dispose of theatres in order to complete such acquisition opportunities. For example, in connection with the acquisition of Kerasotes, we were required to dispose of 11 theatres located in various markets across the United States, including Chicago, Denver and Indianapolis. As a result, we may not be able to succeed in acquiring other exhibition companies or we may have to dispose of a significant number of theatres in key markets in order to complete such acquisitions.

We must comply with the ADA, which could entail significant cost.

        Our theatres must comply with Title III of the Americans with Disabilities Act of 1990, or ADA. Compliance with the ADA requires that public accommodations "reasonably accommodate" individuals with disabilities and that new construction or alterations made to "commercial facilities" conform to accessibility guidelines unless "structurally impracticable" for new construction or technically infeasible for alterations. Non-compliance with the ADA could result in the imposition of injunctive relief, fines, and an award of damages to private litigants or additional capital expenditures to remedy such noncompliance.

        On January 29, 1999, the Civil Rights Division of the Department of Justice, or the Department, filed suit alleging that our stadium-style theatres violated the ADA and related regulations. On December 5, 2003, the trial court entered a consent order and final judgment on non-line-of-sight issues under which AMCE agreed to remedy certain violations at its stadium-style theatres and at certain theatres it may open in the future. Currently we estimate that remaining betterments are required at approximately 45 stadium-style theatres. We estimate that the unpaid costs of these betterments will be approximately $16.7 million. The estimate is based on actual costs incurred on remediation work completed to date. As to line-of-sight matters, the trial court approved a settlement on November 29, 2010, requiring us to make settlements over a five-year term at an estimated cost of $5.0 million. The actual costs of the betterments may vary based on the results of surveys of the remaining theatres. See "Business—Legal Proceedings."

We are party to significant litigation.

        We are subject to a number of legal proceedings and claims that arise in the ordinary course of our business. We cannot be assured that we will succeed in defending any claims, that judgments will not be entered against us with respect to any litigation or that reserves we may set aside will be adequate to cover any such judgments. If any of these actions or proceedings against us is successful,

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we may be subject to significant damages awards. For a description of our legal proceedings, see "Business—Legal Proceedings."

We may be subject to liability under environmental laws and regulations.

        We own and operate facilities throughout the United States and manage or own facilities in several foreign countries and are subject to the environmental laws and regulations of those jurisdictions, particularly laws governing the cleanup of hazardous materials and the management of properties. We might in the future be required to participate in the cleanup of a property that we own or lease, or at which we have been alleged to have disposed of hazardous materials from one of our facilities. In certain circumstances, we might be solely responsible for any such liability under environmental laws, and such claims could be material.

We may not be able to generate additional ancillary revenues.

        We intend to continue to pursue ancillary revenue opportunities such as advertising, promotions and alternative uses of our theatres during non-peak hours. Our ability to achieve our business objectives may depend in part on our success in increasing these revenue streams. Some of our U.S. and Canadian competitors have stated that they intend to make significant capital investments in digital advertising delivery, and the success of this delivery system could make it more difficult for us to compete for advertising revenue. In addition, in March 2005 we contributed our cinema screen advertising business to NCM. As such, although we retain board seats and an ownership interest in NCM, we do not control this business, and therefore do not control our revenues attributable to cinema screen advertising. We cannot assure you that we will be able to effectively generate additional ancillary revenue and our inability to do so could have an adverse effect on our business and results of operations.

Although AMCE already files certain periodic reports with the Securities and Exchange Commission, becoming a public company will increase our expenses and administrative burden, in particular to bring our company into compliance with certain provisions of the Sarbanes Oxley Act of 2002 to which we are not currently subject.

        As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. In addition, our administrative staff will be required to perform additional tasks. For example, in anticipation of becoming a public company, we will need to create or revise the roles and duties of our board committees, adopt additional internal controls and disclosure controls and procedures, retain a transfer agent and adopt an insider trading policy in compliance with our obligations under the securities laws.

        In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002 and related regulations implemented by the Securities and Exchange Commission and the applicable national securities exchange, are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. We are currently evaluating and monitoring developments with respect to new and proposed rules and cannot predict or estimate the amount of the additional costs we may incur or the timing of such costs. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management's time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards

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differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed. We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee, and qualified executive officers.

We depend on key personnel for our current and future performance.

        Our current and future performance depends to a significant degree upon the retention of our senior management team and other key personnel. The loss or unavailability to us of any member of our senior management team or a key employee could have a material adverse effect on our business, financial condition and results of operations. We cannot assure you that we would be able to locate or employ qualified replacements for senior management or key employees on acceptable terms.

We have had significant financial losses in recent years.

        Prior to fiscal 2007, AMCE had reported net losses in each of the prior nine fiscal years totaling approximately $510.1 million. For fiscal 2007, we reported net earnings of $116.9 million. For fiscal 2008 and 2009, we reported net losses of $6.2 million and $149.0 million, respectively. We reported net earnings of $79.9 million in fiscal 2010. If we experience losses in the future, we may be unable to meet our payment obligations while attempting to expand our theatre circuit and withstand competitive pressures or adverse economic conditions.

Our investment in and revenues from NCM may be negatively impacted by the competitive environment in which NCM operates.

        We have maintained an investment in NCM. NCM's in-theatre advertising operations compete with other cinema advertising companies and other advertising mediums including, most notably, television, newspaper, radio and the Internet. There can be no guarantee that in-theatre advertising will continue to attract major advertisers or that NCM's in-theatre advertising format will be favorably received by the theatre-going public. If NCM is unable to generate expected sales of advertising, it may not maintain the level of profitability we hope to achieve, its results of operations and cash flows may be adversely affected and our investment in and revenues and dividends from NCM may be adversely impacted.

We may suffer future impairment losses and lease termination charges.

        The opening of large megaplexes by us and certain of our competitors has drawn audiences away from some of our older, multiplex theatres. In addition, demographic changes and competitive pressures have caused some of our theatres to become unprofitable. As a result, we may have to close certain theatres or recognize impairment losses related to the decrease in value of particular theatres. We review long-lived assets, including intangibles, for impairment as part of our annual budgeting process and whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. We recognized non-cash impairment losses in 1996 and in each fiscal year thereafter except for 2005. AMCE's impairment losses from continuing operations over this period aggregated to $285.0 million. Beginning fiscal 1999 through December 30, 2010, we also incurred theatre and other closure expenses, including theatre lease termination charges aggregating approximately $61.4 million. Deterioration in the performance of our theatres could require us to recognize additional impairment losses and close additional theatres, which could have an adverse effect on the results of our operations.

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Risks Related to This Offering

Future sales of our common stock could cause the market price for our common stock to decline.

        Upon consummation of this offering, there will be                     shares of our common stock outstanding. All shares of common stock sold in this offering will be freely transferable without restriction or further registration under the Securities Act of 1933, as amended (the "Securities Act"). Of the remaining shares of common stock outstanding,                will be restricted securities within the meaning of Rule 144 under the Securities Act, but will be eligible for resale subject to applicable volume, manner of sale, holding period and other limitations of Rule 144. We cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock prevailing 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. After giving effect to the Reclassification, the Sponsors will hold                     shares of our common stock, all of which constitute "restricted securities" under the Securities Act. Provided the holders comply with the applicable volume limits and other conditions prescribed in Rule 144 under the Securities Act, all of these restricted securities are currently freely tradable. The Securities and Exchange Commission (the "SEC") adopted revisions to Rule 144 that, among other things, shorten the holding period applicable to restricted securities under certain circumstances from one year to six months.

        Additionally, as of the consummation of this offering, approximately                     shares of our common stock will be issuable upon exercise of stock options that vest and are exercisable at various dates through May 28, 2019, with an exercise price of $            . Of such options,                     will be immediately exercisable. As soon as practicable after the completion of this offering, we intend to file a registration statement on Form S-8 under the Securities Act covering shares of our common stock reserved for issuance under our equity incentive plan. Accordingly, shares of our common stock registered under such registration statement will be available for sale in the open market upon exercise by the holders, subject to vesting restrictions, Rule 144 limitations applicable to our affiliates and the contractual lock-up provisions described below.

        We and certain of our stockholders, directors and officers have agreed to a "lock-up," pursuant to which neither we nor they will sell any shares without the prior consent of             for 180 days after the date of this prospectus, subject to certain exceptions and extension under certain circumstances. Following the expiration of the applicable lock-up period, all these shares of our common stock will be eligible for future sale, subject to the applicable volume, manner of sale, holding period and other limitations of Rule 144. In addition, the Sponsors have certain demand and "piggy-back" registration rights with respect to the common stock that they will retain following this offering. See "Shares Eligible for Future Sale" for a discussion of the shares of common stock that may be sold into the public market in the future, including common stock held by the Sponsors.

Our stock price may be volatile and may decline substantially from the initial offering price.

        Immediately prior to this offering, there has been no public market for our common stock, and an active trading market for our common stock may not develop or continue upon completion of the offering. The initial public offering price will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of the price at which our common stock will trade after the offering.

        The stock market in general has experienced extreme price and volume fluctuations in recent years. These broad market fluctuations may adversely affect the market price of our common stock,

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regardless of our actual operating performance. You may be unable to resell your shares at or above the public offering price because of a number of factors, including:

We may not generate sufficient cash flows or have sufficient restricted payment capacity under our senior secured credit facility or the indentures governing our debt securities to pay our intended dividends on the common stock.

        Following this offering, and subject to legally available funds, we intend to pay quarterly cash dividends, commencing from the closing date of this offering. We expect that our first dividend will be with respect to the    quarter of fiscal 2012. We are a holding company and will have no direct operations. We will only be able to pay dividends from our available cash on hand and funds received from our subsidiaries. Our subsidiaries' ability to make distributions to us will depend on their ability to generate substantial operating cash flow. Our ability to pay dividends to our stockholders will be subject to the terms of our senior secured credit facility and the indentures governing the outstanding notes. Our operating cash flow and ability to comply with restricted payments covenants in our debt instruments will depend on our future performance, which will be subject to prevailing economic conditions and to financial, business and other factors beyond our control. In addition, dividend payments are not mandatory or guaranteed, and our board of directors may never declare a dividend, decrease the level of dividends or entirely discontinue the payment of dividends. Your decision whether to purchase shares of our common stock should allow for the possibility that no dividends will be paid. You may not receive any dividends as a result of the following additional factors, among others:

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        The maximum amount we would be permitted to distribute in compliance with our senior secured credit facility and the indentures governing our debt securities on a pro forma basis was approximately $219.2 million as of December 30, 2010. As a result of the foregoing limitations on our ability to make distributions, we cannot assure you that we will be able to make all of our intended quarterly dividend payments.

We are controlled by the Sponsors, whose interests may not be aligned with our public stockholders.

        Even after giving effect to this offering, the Sponsors will beneficially own approximately        % of our common stock and will have the power to control our affairs and policies including with respect to the election of directors (and through the election of directors the appointment of management), the entering into of mergers, sales of substantially all of our assets and other extraordinary transactions. We intend to avail ourselves of the "controlled company" exception under the applicable national securities exchange rules, which eliminates the requirement that we have a majority of independent directors on our board of directors and that we have compensation and nominating committees composed entirely of independent directors, but retains the requirement that we have an audit committee composed entirely of independent members. The governance agreements will provide that, initially, the Sponsors will collectively have the right to designate eight directors and that each will vote for the others' nominees. Additionally, our governance documents provide that directors shall be elected by a plurality of votes and do not provide for cumulative voting rights. The right to designate directors will reduce as the Sponsors' ownership percentage reduces, such that the Sponsors will not have the ability to nominate a majority of the board of directors once their collective ownership (together with the share ownership held by the JPMP and Apollo co-investors) becomes less than 50.1%. However, because our board of directors will be divided into three staggered classes, the Sponsors may be able to influence or control our affairs and policies even after they cease to own 50.1% of our outstanding common stock during the period in which the Sponsors' nominees finish their terms as members of our board but in any event no longer than would be permitted under applicable law and national securities exchange listing requirements. The directors elected by the Sponsors will have the authority, subject to the terms of our debt, to issue additional stock, implement stock repurchase programs, declare dividends, pay advisory fees and make other decisions, and they may have an interest in our doing so.

        The interests of the Sponsors could conflict with our public stockholders' interests in material respects. For example, the Sponsors could cause us to make acquisitions that increase the amount of our indebtedness or sell revenue-generating assets. Furthermore, the Sponsors are in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. The Sponsors may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. In addition, our governance documents do not contain any provisions applicable to deadlocks among the members of our board, and as a result we may be precluded from taking advantage of opportunities due to disagreements among the Sponsors and their respective board designees. So long as the Sponsors continue to own a significant amount of the outstanding shares of our common stock, they will continue to be able to strongly influence or effectively control our decisions. See "Certain Relationships and Related Party Transactions—Governance Agreements."

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Our amended and restated certificate of incorporation and our amended and restated bylaws, as amended, contain anti-takeover protections, which may discourage or prevent a takeover of our company, even if an acquisition would be beneficial to our stockholders.

        Provisions contained in our amended and restated certificate of incorporation and amended and restated bylaws, as amended, as well as provisions of the Delaware General Corporation Law, could delay or make it more difficult to remove incumbent directors or for a third party to acquire us, even if a takeover would benefit our stockholders. These provisions include:

        Our issuance of shares of preferred stock could delay or prevent a change of control of our company. Our board of directors has the authority to cause us to issue, without any further vote or action by the stockholders, up to                     shares of preferred stock, par value $0.01 per share, in one or more series, to designate the number of shares constituting any series, and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, voting rights, rights and terms of redemption, redemption price or prices and liquidation preferences of such series. The issuance of shares of preferred stock may have the effect of delaying, deferring or preventing a change in control of our company without further action by the stockholders, even where stockholders are offered a premium for their shares.

        Our incorporation under Delaware law, the ability of our board of directors to create and issue a new series of preferred stock or a stockholder rights plan and certain other provisions of our amended and restated certificate of incorporation and amended and restated bylaws could impede a merger, takeover or other business combination involving Parent or the replacement of our management or discourage a potential investor from making a tender offer for our common stock, which, under certain circumstances, could reduce the market value of our common stock. See "Description of Capital Stock."

Our issuance of preferred stock could dilute the voting power of the common stockholders.

        The issuance of shares of preferred stock with voting rights may adversely affect the voting power of the holders of our other classes of voting stock either by diluting the voting power of our other classes of voting stock if they vote together as a single class, or by giving the holders of any such preferred stock the right to block an action on which they have a separate class vote even if the action were approved by the holders of our other classes of voting stock.

Our issuance of preferred stock could adversely affect the market value of our common stock.

        The issuance of shares of preferred stock with dividend or conversion rights, liquidation preferences or other economic terms favorable to the holders of preferred stock could adversely affect

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the market price for our common stock by making an investment in the common stock less attractive. For example, investors in the common stock may not wish to purchase common stock at a price above the conversion price of a series of convertible preferred stock because the holders of the preferred stock would effectively be entitled to purchase common stock at the lower conversion price causing economic dilution to the holders of common stock.

J.P. Morgan Securities LLC may have a conflict of interest with respect to this offering.

        Prior to the completion of this offering, JPMP, an affiliate of J.P. Morgan Securities LLC ("J.P. Morgan"), owned more than 10% of our outstanding common stock and therefore J.P. Morgan is presumed to have a "conflict of interest" with us under FINRA Rule 2720. Accordingly, J.P. Morgan's interest may go beyond receiving customary underwriting discounts and commissions. In particular, there may be a conflict of interest between J.P. Morgan's own interests as underwriter (including in negotiating the initial public offering price) and the interests of its affiliate JPMP (as a principal stockholder). Because of the conflict of interest under FINRA Rule 2720, this offering is being conducted in accordance with the applicable provisions of that rule. FINRA Rule 2720 requires that the "qualified independent underwriter" (as such term is defined by FINRA Rule 2720) participates in the preparation of the registration statement and prospectus and conducts due diligence. Accordingly, Goldman, Sachs & Co. ("Goldman Sachs") is assuming the responsibilities of acting as the qualified independent underwriter in this offering. Although the qualified independent underwriter has participated in the preparation of the registration statement and prospectus and conducted due diligence, we cannot assure you that this will adequately address any potential conflicts of interest related to J.P. Morgan and JPMP. We have agreed to indemnify Goldman Sachs for acting as qualified independent underwriter against certain liabilities, including liabilities under the Securities Act of 1933, or the Securities Act, and to contribute to payments that Goldman Sachs may be required to make for these liabilities.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        In addition to historical information, this prospectus contains forward-looking statements. The words "forecast," "estimate," "project," "intend," "expect," "should," "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors, including those discussed in "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the following:

        This list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative but not exhaustive. In addition, new risks and uncertainties may arise from time to time. Accordingly, all forward-looking statements should be evaluated with an understanding of their inherent uncertainty.

        Except as required by law, we assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

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USE OF PROCEEDS

        We estimate that our net proceeds from this offering without exercise of the underwriters' option to purchase additional shares will be approximately $             million after deducting the estimated underwriting discounts and commissions and expenses, assuming the shares are offered at $            per share, which represents the midpoint of the range set forth on the front cover of this prospectus. If the underwriters exercise their option to purchase additional shares in full, the net proceeds to us will be approximately $             million.

        We intend to use these net proceeds, together with cash on hand, to: first, repay $207.2 million principal amount of the loans outstanding under the Parent's term loan facility plus accrued and unpaid interest; second, to retire $300.0 million principal amount of our outstanding 8% senior subordinated notes due 2014; and third, to pay a $26.1 million lump sum payment to the Sponsors pursuant to the Fee Agreement with our Sponsors. Affiliates of certain of the underwriters are holders of our outstanding 8% senior subordinated notes due 2014 and will receive a portion of our net proceeds from this offering. See "Risk Factors—Risks Related to this Offering."

        Borrowings under the Parent's term loan facility mature on June 13, 2012. The interest rate on such borrowings was 5.30% per annum as of December 30, 2010. Our outstanding 8% senior subordinated notes mature on March 1, 2014.

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DIVIDEND POLICY

        Following this offering and subject to legally available funds, we intend to pay a quarterly cash dividend at an annual rate initially equal to $            per share (or a quarterly rate initially equal to $            per share) of common stock, commencing from the closing date of this offering. We expect that our first dividend will be with respect to the    quarter of 2012. Based on the approximately                     million shares of common stock to be outstanding after the offering, this dividend policy implies a quarterly cash requirement of approximately $             million. We cannot assure you that any dividends will be paid in the anticipated amounts and frequency set forth in this prospectus, if at all.

        We are a holding company and have no direct operations. We will only be able to pay dividends from our available cash on hand and funds received from our subsidiaries. Their ability to make any payments to us will depend upon many factors, including its operating results, cash flows and the terms of our senior secured credit facility and the indentures governing our subsidiaries' debt securities. In addition, our ability to pay dividends to our stockholders will be subject to the terms of our indebtedness. Although we have sustained net losses in prior periods and cannot assure you that we will be able to pay dividends on a quarterly basis or at all, we believe that a number of recent positive developments in our business have improved our ability to pay dividends in compliance with applicable state corporate law once this offering has been completed. These include: the completion of the Kerasotes Acquisition, which increased the scale and cash flow of our company and generated, and we expect will continue to generate, synergies and cost savings; the continued positive impact of our implementation of premium formats and enhanced food and beverage offerings; the Redemptions; the use of proceeds from this offering, together with cash on hand, to retire $207.2 million principal amount of the Parent's term loan facility and $300.0 million principal amount of our outstanding 8% senior subordinated notes due 2014, which we estimate will reduce our annual cash interest expense by approximately $24.0 million for the fiscal year ended March 31, 2011; and the discontinuation of $5.0 million per year management fees paid to our Sponsors as a result of this offering. Further, we expect to continue to benefit from substantial net operating loss carry-forwards from prior periods that will be available to offset taxes that we may owe. Also, because the Delaware General Corporation Law, or the DGCL, permits corporations to pay dividends either out of surplus (generally, the excess of a corporation's net assets (total assets minus total liabilities) over its stated capital, in each case as defined and calculated in the manner prescribed by the DGCL) or net profits, we may be able to pay dividends even if we report net losses in future periods. We do not intend to borrow funds to pay the projected quarterly dividend described above.

        The maximum amount we would be permitted to distribute in compliance with our senior secured credit facility and the indentures governing our debt securities, on a pro forma basis, was approximately $219.2 million as of December 30, 2010.

        The declaration and payment of any future dividends will be at the sole discretion of our board of directors after taking into account various factors, including legal requirements, our subsidiaries' ability to make payments to us, our financial condition, operating results, cash flow from operating activities, available cash and current and anticipated cash needs.

        On June 15, 2007, we paid a cash dividend of $652.8 million to our stockholders on the outstanding shares of our common stock.

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CAPITALIZATION

        The following table sets forth our cash and cash equivalents and capitalization as of December 30, 2010 (i) on an actual basis, and (ii) on a pro forma basis giving effect to the Redemptions, the Mergers, this offering and the use of proceeds therefrom. The information in this table should be read in conjunction with "Unaudited Pro Forma Condensed Financial Information," "Business," the unaudited consolidated financial statements and the historical financial statements of the Company and the respective accompanying notes thereto appearing elsewhere in this prospectus.

 
  As of December 30, 2010  
 
  Actual   Pro Forma  
 
  (in thousands)
 

Cash and cash equivalents(1)

  $ 802,392   $ 250,501  
           

Short term debt (current maturities of long-term debt and capital and financing lease obligations)

  $ 310,163   $ 10,150  

Long-term debt:

             
 

Parent term loan facility

    206,711      
 

9.75% senior subordinated notes due 2020

    600,000     600,000  
 

8% senior subordinated notes due 2014

    299,357      
 

8.75% senior fixed rate notes due 2019

    587,000     587,000  
 

Senior secured credit facility:

             
   

Revolving loan facility(2)

         
   

Term loan due 2013

    141,028     141,028  
   

Term loan due 2016

    471,597     471,597  
 

Capital and financing lease obligations

    63,086     63,086  
           
 

Total debt

  $ 2,678,942   $ 1,872,861  
           

Stockholders' equity

             
 

Common Stock voting ($.01 par value                 shares authorized;                 shares issued and outstanding as of December 30, 2010 after giving pro forma effect to the Reclassification)

  $   $ 14  
 

Class A-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00 shares issued and outstanding as of December 30, 2010)

    4      
 

Class A-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00 shares issued and outstanding as of December 30, 2010)

    4      
 

Class N Common Stock nonvoting ($.01 par value, 375,000 shares authorized; 2,021.02 shares issued and outstanding as of December 30, 2010)

         
 

Class L-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61 shares issued and outstanding as of December 30, 2010)

    3      
 

Class L-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61 shares issued and outstanding as of December 30, 2010)

    3      
 

Additional paid-in capital

    670,857     967,230  
 

Treasury stock, 4,314 shares at cost

    (2,596 )   (2,596 )
 

Accumulated other comprehensive loss

    (2,216 )   (2,216 )
 

Accumulated deficit

    (228,938 )   (256,073 )
           
 

Total stockholders' equity

    437,121     706,359  
           
 

Total capitalization

  $ 3,116,063   $ 2,579,220  
           

(1)
A $1.00 increase (decrease) in the assumed initial public offering price of $        per share would increase (decrease) our cash and cash equivalents by $        , assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us.

(2)
The aggregate revolving loan commitment under our senior secured credit facility is $192.5 million.

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DILUTION

        Dilution is the amount by which the offering price paid by the purchasers of the common stock to be sold in the offering exceeds the net tangible book value per share of common stock after the offering. Net tangible book value per share is determined at any date by subtracting our total liabilities from the total book value of our tangible assets and dividing the difference by the number of shares of common stock deemed to be outstanding at that date.

        Our net tangible book value as of                        , 2011 was $         million, or $        per share. After giving effect to the receipt and our intended use of approximately $         million of estimated net proceeds from our sale of         shares of common stock in the offering at an assumed offering price of $             per share (the midpoint of the range set forth on the cover page of this prospectus), our as adjusted net tangible book value as of                        , 2011 would have been approximately $         million, or $        per share. This represents an immediate increase in pro forma net tangible book value of $        per share to existing stockholders and an immediate dilution of $        per share to new investors purchasing shares of common stock in the offering. The following table illustrates this substantial and immediate per share dilution to new investors:

 
  Per Share  

Assumed initial public offering price per share

  $    
 

Net tangible book value before the offering

       
 

Increase per share attributable to investors in the offering

       
       

Pro forma net tangible book value after the offering

       
       

Dilution per share to new investors

  $    
       

        A $1.00 increase (decrease) in the assumed initial public offering price of $        per share would increase (decrease) our pro forma net tangible book value by $        , the as adjusted net tangible book value per share after this offering by $        per share and the dilution per share to new investors in this offering by $        , assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated expenses payable by us.

        The following table summarizes on an as adjusted basis as of                        , 2011, giving effect to:

 
   
   
  Total
Consideration
   
 
 
  Shares Purchased    
 
 
  Average
Price Per
Share
 
 
  Number   Percent   Amount   Percent  

Existing stockholders

            % $         % $    

Investors in the offering

            %           %      
                       
 

Total

          100 % $       100 % $    
                       

        A $1.00 increase (decrease) in the assumed initial public offering price of $            per share (the midpoint of the range set forth on the cover page of this prospectus) would increase (decrease) total

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consideration paid by existing stockholders, total consideration paid by new investors and the average price per share by $            , $            and $            , respectively, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and without deducting underwriting discounts and commissions and estimated expenses payable by us.

        The tables and calculations above assume no exercise of:

        To the extent any of these options are exercised, there will be further dilution to new investors.

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UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION

        We derived the following unaudited pro forma condensed financial information by applying pro forma adjustments attributable to the Kerasotes Acquisition, this offering, the Mergers and the Redemptions to our historical consolidated financial statements and the Kerasotes financial statements included in this prospectus.

        These adjustments include:

        The unaudited pro forma balance sheet gives pro forma effect to the Transactions as if they had occurred on December 30, 2010. The unaudited pro forma condensed statement of operations data for the 39 weeks ended December 30, 2010, the 52 weeks ended April 1, 2010 and the 52 weeks ended December 30, 2010 gives effect to the Transactions as if they had occurred on April 3, 2009. We describe the assumptions underlying the pro forma adjustments in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed financial information.

        We estimate that our net proceeds from this offering without exercise of the option to purchase additional shares will be approximately $       million after deducting the estimated underwriting discounts and commissions and expenses, assuming the shares are offered at $      per share, which represents the midpoint of the range set forth on the front cover of this prospectus. If the underwriters exercise their option to purchase additional shares in full, the net proceeds to us will be approximately $       million. We intend to use these net proceeds, together with cash on hand, to: first, repay all $207.2 million principal amount of the loans outstanding under the Parent's term loan facility plus accrued and unpaid interest; second, to retire all $300.0 million principal amount of our outstanding 8% senior subordinated notes due 2014 plus accrued and unpaid interest; and third, to pay a $26.1 million lump sum payment to the Sponsors pursuant to the Fee Agreement with our Sponsors.

        The pro forma statement of operations and other data for the 52 weeks ended December 30, 2010, which are unaudited, have been calculated by subtracting the pro forma data for the 39 weeks ended December 30, 2010 from the pro forma data for the 52 weeks ended April 1, 2010 and adding the data for the 39 weeks ended December 30, 2010. This presentation is not in accordance with U.S. GAAP. We believe that this presentation provides useful information to investors regarding our recent financial performance, and we view this presentation of the four most recently completed fiscal quarters as a key measurement period for investors to assess our historical results. In addition, our management uses trailing four quarter financial information to evaluate our financial performance for ongoing planning purposes, including a continuous assessment of our financial performance in comparison to budgets and internal projections. We also use trailing four quarter financial data to test compliance with covenants under our senior secured credit facility. This presentation has limits as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

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        The unaudited pro forma condensed financial information is for illustrative and informational purposes only and should not be considered indicative of the results that would have been achieved had the transactions been consummated on the dates or for the periods indicated and do not purport to represent consolidated balance sheet data or statement of operations data or other financial data as of any future date or any future period.

        The unaudited pro forma condensed financial information should be read in conjunction with the information contained in "Selected Historical Financial and Operating Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," our consolidated financial statements and accompanying notes appearing elsewhere in this prospectus and the Kerasotes financial statements.

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AMC ENTERTAINMENT HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA BALANCE SHEET
AS OF DECEMBER 30, 2010
(dollars in thousands)

 
  As of December 30, 2010  
 
  Parent
Historical
as of
December 30, 2010
  Offering
Transactions
Pro Forma
Adjustments
  Redemptions
Pro Forma
Adjustments
  Parent
Pro Forma
 

Assets

                         
 

Cash and equivalents

  $ 802,392   $ 350,000  (4) $ (329,065 )(9) $ 250,501  

          (572,826 )(4)            
 

Current assets

    150,848         (5,243 )(9)   145,605  
 

Property, net

    985,893             985,893  
 

Intangible assets, net

    154,552             154,552  
 

Goodwill

    1,943,925             1,943,925  
 

Other long-term assets

    289,652     (1,333 )(4a)       288,319  
                   
   

Total assets

  $ 4,327,262   $ (224,159 ) $ (334,308 ) $ 3,768,795  
                   

Liabilities and Stockholders' Equity

                         
 

Current liabilities

  $ 495,816   $ (8,022 )(4) $ (13,602 )(9) $ 474,192  
 

Current Maturities:

                         
   

12% Senior Discount Notes due 2014

    70,111         (70,111 )(9)    
   

11% Senior Subordinated Notes due 2016

    229,902         (229,902 )(9)    
   

Senior Secured Term Loan and Capital and Financing Lease Obligations

    10,150             10,150  
 

Corporate borrowings:

                         
   

Parent Term Loan Facility

    206,711     (206,711 )(4)        
   

8% Senior Subordinated Notes due 2014

    299,357     (299,357 )(4)        
   

9.75% Senior Subordinated Notes due 2020

    600,000             600,000  
   

8.75% Senior Notes due 2019

    587,000             587,000  
   

Senior Secured Term Loan Facility due 2013

    141,028             141,028  
   

Senior Secured Term Loan Facility due 2016

    471,597             471,597  
 

Capital and financing lease obligations

    63,086             63,086  
 

Other long-term liabilities

    715,383             715,383  
                   

Total liabilities

    3,890,141     (514,090 )   (313,615 )   3,062,436  

Stockholders' equity:

                         
 

Common Stock

    14             14  
 

Additional paid-in capital

    670,857     296,373   (4)       967,230  
 

Treasury stock

    (2,596 )           (2,596 )
 

Accumulated other comprehensive loss

    (2,216 )           (2,216 )
 

Accumulated deficit

    (228,938 )   (6,442 )(4a)   (20,693 )(9a)   (256,073 )
                   

Total stockholders' equity

    437,121     289,931     (20,693 )   706,359  
                   

Total liabilities and stockholders' equity

  $ 4,327,262   $ (224,159 ) $ (334,308 ) $ 3,768,795  
                   

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.

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AMC ENTERTAINMENT HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
THIRTY-NINE WEEKS ENDED DECEMBER 30, 2010
(dollars in thousands, except per share data)

 
  Thirty-nine Weeks Ended December 30, 2010  
 
  Parent
39 Weeks Ended
December 30, 2010
Historical
  Kerasotes
April 1, 2010
to May 24,
2010
Historical
  Kerasotes
Acquisition
Pro Forma
Adjustments
  Parent Pro Forma
Kerasotes
Acquisition
  Offering
Transactions
Pro Forma
Adjustments
  Parent
Pro Forma
 

Revenues

  $ 1,897,444   $ 40,696   $ (12,687 )(1) $ 1,925,453   $   $ 1,925,453  

                                   

Cost of operations

    1,264,853     25,802     (8,633 )(1)   1,292,078         1,292,078  

                10,056   (2)                  

Rent

    356,121     6,405     (2,854 )   360,374         360,374  

                702   (2)              

General and administrative:

                                     
 

M&A Costs

    13,396             13,396         13,396  
 

Management fee

    3,750             3,750     (3,750 )(7)    
 

Other

    41,316     1,651         42,967         42,967  

Depreciation and amortization

    156,895     2,702     (561 )(1)   160,623           160,623  

                1,587   (2)              
                           
 

Operating costs and expenses

    1,836,331     36,560     297     1,873,188     (3,750 )   1,869,438  
 

Operating income (loss)

   
61,113
   
4,136
   
(12,984

)
 
52,265
   
3,750
   
56,015
 

Other expense

   
9,876
   
   
   
9,876
   
   
9,876
 

Interest expense

    136,179     395     (179 )(2)   136,395     (27,245 )(5)   109,150  

Equity in earnings of non-consolidated entities

    (17,057 )           (17,057 )       (17,057 )

Gain on NCM, Inc. stock sale

    (64,648 )           (64,648 )       (64,648 )

Investment income

    (387 )   (99 )   99   (2)   (387 )       (387 )
                           

Total other expense (income)

    63,963     296     (80 )   64,179     (27,245 )   36,934  
                           

Earnings (loss) from continuing operations before income taxes

    (2,850 )   3,840     (12,904 )   (11,914 )   30,995     19,081  

Income tax provision (benefit)

    2,125         (3,400 )(3)   (1,275 )   11,600   (8)   10,325  
                           

Earnings (loss) from continuing operations

  $ (4,975 ) $ 3,840   $ (9,504 ) $ (10,639 ) $ 19,395   $ 8,756  
                           

Basic earnings (loss) per share from continuing operations

  $ (3.89 )                         $    
                                   

Average shares outstanding-Basic

  $ 1,278.85                                

Diluted earnings per share from continuing operations

  $ (3.89 )                         $    
                                   

Average shares outstanding-Diluted

    1,278.85                                

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

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AMC ENTERTAINMENT HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FIFTY-TWO WEEKS ENDED APRIL 1, 2010
(dollars in thousands, except for per share data)

 
  Fifty-two weeks ended April 1, 2010  
 
  Parent
52 Weeks
Ended
April 1,
2010
Historical
  Kerasotes
Year
Ended
Dec. 31,
2009
Historical
  Kerasotes
Three
Months
Ended
Mar. 31,
2010
Historical
  Kerasotes
Three
Months
Ended
Mar. 31,
2009
Historical
  Kerasotes
Twelve
Months
Ended
Mar. 31,
2010
Historical
  Kerasotes
Acquisition
Pro Forma
Adjustments
  Parent
Pro Forma
Kerasotes
Acquisition
  Offering
Transactions
Pro Forma
Adjustments
  Parent
Pro Forma
 

Revenues

  $ 2,417,739   $ 325,964   $ 79,723   $ 76,283   $ 329,404   $ (62,611 )(1) $ 2,683,755   $   $ 2,683,755  

                                  (777 )(2)                  

Cost of operations

    1,612,260     210,990     53,942     50,428     214,504     (41,684 )(1)   1,785,080         1,785,080  

Rent

    440,664     45,212     11,640     11,336     45,516     (11,365 )(1)   479,590         479,590  

                                  4,775   (2)              

General and administrative:

                                                       
 

M&A costs

    2,578                         2,578         2,578  
 

Management fee

    5,000                         5,000     (5,000 )(7)    
 

Other

    58,274     17,011     3,973     4,017     16,967         75,241         75,241  

Depreciation and amortization

    188,342     21,894     4,628     5,252     21,270     (1,540 )(1)   214,682         214,682  

                                  6,610   (2)                  

Impairment of long-lived assets

    3,765                         3,765         3,765  
                                       
 

Operating costs and expenses

    2,310,883     295,107     74,183     71,033     298,257     (43,204 )   2,565,936     (5,000 )   2,560,936  
                                       
 

Operating income (loss)

    106,856     30,857     5,540     5,250     31,147     (20,184 )   117,819     5,000     122,819  

Other income

    (87,793 )                       (87,793 )   85,234   (6)   (2,559 )

Interest expense

    174,091     4,150     744     1,042     3,852     (3,852 )(2)   174,091     (36,115 )(5)   137,976  

Equity in earnings of non-consolidated entities

    (30,300 )                       (30,300 )       (30,300 )

Investment (income) expense

    (287 )   3,291     569     715     3,145     (2,947 )(2)   (89 )       (89 )
                                       

Total other expense (income)

    55,711     7,441     1,313     1,757     6,997     (6,799 )   55,909     49,119     105,028  
                                       

Earnings (loss) from continuing operations before income taxes

    51,145     23,416     4,227     3,493     24,150     (13,385 )   61,910     (44,119 )   17,791  

Income tax provision (benefit)

    (36,300 )                   4,000   (3)   (32,300 )   (16,500 )(8)   (48,800 )
                                       

Earnings from continuing operations

  $ 87,445   $ 23,416   $ 4,227   $ 3,493   $ 24,150   $ (17,385 ) $ 94,210   $ (27,619 ) $ 66,591  
                                       

Basic earnings per share from continuing operations

  $ 68.38                                             $    
                                                     

Weighted average shares outstanding—Basic

    1,278.82                                                  

Diluted earnings per share from continuing operations

  $ 68.24                                             $    
                                                     

Weighted average shares outstanding—Diluted

    1,281.42                                                  

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.

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AMC ENTERTAINMENT HOLDINGS, INC.

UNAUDITED CONDENSED CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
FIFTY-TWO WEEKS ENDED DECEMBER 30, 2010
(dollars in thousands, except per share data)

 
  Fifty-two Weeks Ended December 30, 2010  
 
  Parent
52 Weeks Ended
April l,
2010
Historical
  Parent
39 Weeks Ended
Dec. 30,
2010
Historical
  Parent
39 Weeks Ended
Dec. 31,
2009
Historical
  Parent
52 Weeks Ended
Dec. 30,
2010
Historical
  Kerasotes
January 1, 2010
to May 24,
2010
Historical
  Kerasotes
Acquisition
Pro Forma
Adjustments
  Parent
Pro Forma
Kerasotes
Acquisition
  Offering
Transactions
Pro Forma
Adjustments
  Parent
Pro Forma
 

Revenues

  $ 2,417,739   $ 1,897,444   $ 1,813,546   $ 2,501,637   $ 120,419   $ (27,516 )(1)   2,594,540   $   $ 2,594,540  

                                                     

Cost of operations

    1,612,260     1,264,853     1,199,317     1,677,796     79,744     (19,849 )(1)   1,747,747         1,747,747  

                                  10,056   (2)                  

Rent

    440,664     356,121     331,107     465,678     18,045     (5,299 )(1)   480,413         480,413  

                                  1,989   (2)                

General and administrative:

                                                       
 

M&A Costs

    2,578     13,396     973     15,001             15,001         15,001  
 

Management fee

    5,000     3,750     3,750     5,000             5,000     (5,000 )(7)    
 

Other

    58,274     41,316     41,173     58,417     5,867         64,284         64,284  

Depreciation and amortization

    188,342     156,895     142,949     202,288     7,330     (801 )(1)   213,078         213,078  

                                  4,261   (2)              

Impairment of long-lived assets

    3,765             3,765               3,765         3,765  
                                       

Costs and expenses

    2,310,883     1,836,331     1,719,269     2,427,945     110,986     (9,643 )   2,529,288     (5,000 )   2,524,288  
                                       

Operating income (loss)

    106,856     61,113     94,277     73,692     9,433     (17,873 )   65,252     5,000     70,252  

Other expense

    (87,793 )   9,876     (85,534 )   7,617             7,617         7,617  

Interest expense

    174,091     136,179     129,254     181,016     1,139     (1,57l )(2)   180,584     (36,219 )(5)   144,365  

Equity in earnings of non-consolidated entities

    (30,300 )   (17,057 )   (18,127 )   (29,230 )           (29,230 )       (29,230 )

Gain on NCM, Inc. stock sale

          (64,648 )       (64,648 )           (64,648 )       (64,648 )

Investment income

    (287 )   (387 )   (213 )   (461 )   470     (720 )(2)   (711 )       (711 )
                                       

Total other expense

    55,711     63,963     25,380     94,294     1,609     (2,291 )   93,612     (36,219 )   57,393  
                                       

Earnings (loss) from continuing operations before income taxes

    51,145     (2,850 )   68,897     (20,602 )   7,824     (15,582 )   (28,360 )   41,219     12,859  

Income tax provision (benefit)

    (36,300 )   2,125     32,100     (66,275 )       (2,700 )(3)   (68,975 )   15,500   (8)   (53,475 )
                                       

Earnings from continuing operations

  $ 87,445   $ (4,975 ) $ 36,797   $ 45,673   $ 7,824   $ (12,882 ) $ 40,615   $ 25,719   $ 66,334  
                                       

Basic earnings per share of common stock

                    $ 35.71                           $    
                                                     

Average shares outstanding—

                                                       

Basic

                      1,278.84                                

Diluted earnings per share of common stock

                    $ 35.39                           $    
                                                     

Average shares outstanding—

                                                       

Diluted

                      1,290.52                                

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

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AMC ENTERTAINMENT HOLDINGS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS

Kerasotes Acquisition

        On May 24, 2010, we completed the acquisition of substantially all of the assets (92 theatres and 928 screens) of Kerasotes. Kerasotes operated 95 theatres and 972 screens in mid-sized, suburban and metropolitan markets, primarily in the Midwest. More than three quarters of the Kerasotes theatres feature stadium seating and almost 90% have been built since 1994. We acquired Kerasotes based on their highly complementary geographic presence in certain key markets. Additionally, we expect to realize synergies and cost savings related to the Kerasotes acquisition as a result of moving to our operating practices, decreasing costs for newspaper advertising and concessions and general and administrative expense savings, particularly with respect to the consolidation of corporate related functions and elimination of redundancies. The purchase price for the Kerasotes theatres paid in cash at closing was $276.8 million, net of cash acquired, and is subject to working capital and other purchase price adjustments. We paid working capital and other purchase price adjustments of $3.8 million during the second quarter of fiscal 2011, based on the final closing date working capital and deferred revenue amounts and have included this amount as part of the total estimated purchase price.

        The acquisition of Kerasotes is being treated as a purchase in accordance with Accounting Standards Topic 805, Business Combinations. The following is a summary of the allocation of the purchase price to the estimated fair values of assets and liabilities acquired in the transaction. The allocation of purchase price is based on management's judgment after evaluating several factors, including bid prices from potential buyers and a preliminary valuation assessment which falls under Level 3 of the valuation hierarchy. The allocation of purchase price is preliminary, expected to be finalized during fiscal 2011 and subject to changes as an appraisal of both tangible and intangible assets and liabilities is finalized and additional information becomes available, however, we do not expect material changes:

(In thousands)
  Total  

Cash

  $ 809  

Receivables, net(1)

    3,832  

Other current assets

    12,905  

Property, net

    205,104  

Intangible assets, net(2)

    17,387  

Goodwill(3)

    109,839  

Other long-term assets

    5,920  

Accounts payable

    (13,538 )

Accrued expenses and other liabilities

    (12,439 )

Deferred revenues and income

    (1,806 )

Capital and financing lease obligations

    (12,583 )

Other long-term liabilities(4)

    (34,015 )
       

Total estimated purchase price

  $ 281,415  
       

(1)
Receivables consist of trade receivables recorded at fair value. We did not acquire any other class of receivables as a result of the acquisition of Kerasotes.

(2)
Intangible assets consist of certain Kerasotes' trade names, a non-compete agreement, and favorable leases. See Note 4 to our unaudited consolidated financial statements for the 39-week period ended December 30, 2010 included elsewhere in this prospectus for further information.

(3)
Goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations. Amounts recorded for goodwill are not subject to amortization and are expected to be deductible for tax purposes.

(4)
Other long-term liabilities consist of certain theatre and ground leases that have been identified as unfavorable.

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        During the 39 weeks ended December 30, 2010, we incurred acquisition-related costs of approximately $12.1 million included in general and administrative expense: merger, acquisition and transaction costs in our consolidated statements of operations. We have expensed acquisition-related transaction costs as incurred pursuant to ASC 805-10.

        In connection with the acquisition of Kerasotes, we divested seven Kerasotes theatres with 85 screens as required by the Antitrust Division of the United States Department of Justice. Proceeds from the divested theatres exceeded the carrying amount of such theatres by $10.7 million, which was recorded as a reduction to goodwill.

        We were also required by the Antitrust Division of the United States Department of Justice to divest of four legacy AMC theatres with 57 screens. We recorded a gain on disposition of assets of $10.1 million for one divested legacy theatre with 14 screens during the 39 weeks ended December 30, 2010, which reduced operating expenses by approximately $10.1 million. Additionally, we acquired two theatres with 26 screens that were received in exchange for three of the legacy AMC theatres with 43 screens.

        A reconciliation of the $275.0 million purchase price as set forth in the acquisition agreement to the total estimated purchase price is as follows:

Base Purchase Price   $ 275,000,000  
Swap Termination Costs     1,798,000  
Closing Date Working Capital Amount     4,617,000  
       
Total estimated purchase price   $ 281,415,000  
       

Methods and Significant Assumptions Used in Valuation

Leases

        To evaluate whether the individual standard operating leases being acquired were either favorable or unfavorable, a representative sample of leases from both Kerasotes' and AMC's theatre portfolio was analyzed to develop an estimate of current market terms. Rent, as a percentage of revenue, was considered an appropriate metric to estimate a market term.

        Theatres considered at-market were the theatres in which rent-to-revenue ratio was within a calculated a range equal to one standard deviation around the average. As a secondary test, a comparison of all of the theatres' positive average annual operating cash flow ("OCF") margin was done. Similar to the rent to revenue analysis, a one standard deviation range from the average OCF margin was developed to represent reasonable profitability. Certain theatres within this at-market rent range were deemed favorable or unfavorable depending on the strength of their OCF margin.

        To calculate the value of the favorable and unfavorable leases, the expected rent to be paid annually was compared to a normalized rent level based on the average rent-to-revenue ratio discussed above. The rent differential was calculated over the remaining term of the individual leases for the identified theatres. The difference in rent was then discounted at a rate of return based on rates for similar real property.

Trade Name

        The Royalty Savings or Relief-from-Royalty Method, an income approach (Level 3 fair value measurement), was used to estimate the Fair Value of the ShowPlace and Star trade names. The Royalty Savings Method, estimates the value of a trade name by capitalizing the royalties saved because we own the trade name. The relief from royalty analysis is comprised of two primary steps including: i) the

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determination of the appropriate royalty rate, and ii) the subsequent application of the relief from royalty method.

        The seller has retained the "Kerasotes" name but most of the theatres were branded as either ShowPlace or Star. Therefore we valued the ShowPlace and Star trade names. We plan to preserve the use all of the ShowPlace and Star Theatres' trade names on a total of 46 theatres.

        The royalty savings was calculated by multiplying the royalty rate by the annual revenues for all of the theatres with the ShowPlace or Star names. The royalty rate was established based on various quantitative and qualitative factors. The present value of the after-tax royalty savings was determined using a rate for intangible assets.

Non-Compete Agreement

        As part of the Kerasotes transaction, certain management members of the remaining Kerasotes company ("Potential Competitors") entered into five year non-competition agreements, which prevent them from competing against the sold Kerasotes theatres and all other AMC theatres over the duration of the agreement. The Differential Cash Flow Method, an income approach (Level 3 fair value measurement), was used to value the Non-Competition Agreements.

        Key assumptions used in the Differential Cash Flow Method included assumptions regarding theatre cash flows with and without the non-compete agreements in place, probabilities regarding competitors reentering the market, and a discount rate used to present value cash flows, appropriate for intangible assets.

        Our preliminary allocation of purchase price as of May 24, 2010 consisted primarily of:

(a)
Receivables and Current assets acquired from Kerasotes, which excluded $26.7 million of assets in the Kerasotes unaudited condensed statement of assets and liabilities as of March 31, 2010 included elsewhere in this prospectus as such assets were not acquired;

(b)
Property, net which reflects the estimated fair value of furniture, fixtures and equipment, leasehold improvements and real estate;

(c)
Intangible assets, net comprised principally of six theatres with favorable leases of $5.6 million, the ShowPlace and Star trade names of $5.1 million and noncompete agreements with Kerasotes management of $6.4 million;

(d)
Other long-term assets is comprised of Land and Buildings at certain inactive theatre locations;

(e)
Accounts payable and accrued expenses and other liabilities primarily comprised of utility accruals, trade payables, accrued payroll and payroll taxes, and accrued property taxes. We did not assign any fair value to $0.3 million of "Current portion of developer reimbursements," $0.7 million of "Current portion of long-term debt to Parent" or $7.3 million of "Current portion of deferred gain" that are listed on the Kerasotes March 31, 2010 unaudited condensed statement of assets and liabilities included elsewhere in this Prospectus as the "Current portion of developer reimbursements" represented deferred rent which is reduced to $0 fair value in purchase accounting, the "Long-term debt to Parent" was not a liability that was assumed in the acquisition and the deferred gain related to Kerasotes sale lease back transactions is reduced to $0 in purchase accounting;

(f)
Deferred revenues for advance ticket sales, gift card sales and other scrip. As part of its fair value estimation for deferred revenue amounts, we reduced the historical amounts recorded by Kerasotes as of May 24, 2010 by $2.6 million to reflect the expected non-presentment rate based on our accounting policy for these sales. We determined that a $2.6 million reduction to deferred revenues was appropriate based upon our review and evaluation of Kerasotes' actual historical experience

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(g)
Capital and financing lease obligations were recorded for one location accounted for by Kerasotes as a sale leaseback transaction following the financing method. Deferred rent for two theatre locations totaling $4.1 million included in the Kerasotes March 31, 2010 unaudited condensed statement of assets and liabilities included elsewhere in this prospectus within the line item called "Developer reimbursements" were assigned a fair value of $0 as deferred rent is reduced to $0 fair value in purchase accounting; and

(h)
Other long-term liabilities, comprised of the estimated fair value of 14 theatres with unfavorable leases acquired from Kerasotes of $34.0 million. We did not assign any fair value to $19.9 million of "Long-term debt to Parent," $111.2 million of "Deferred gain from sale-leaseback transactions" or $7.4 million of "Deferred rent and other long-term liabilities" included in the Kerasotes March 31, 2010 unaudited condensed statement of assets and liabilities included elsewhere in this Prospectus as the "Long-term debt to Parent" was not a liability that was assumed in the acquisition and the "Deferred gain" related to Kerasotes sale lease back transactions and deferred rent is reduced to $0 in purchase accounting.

Earnings (Loss) per Share from Continuing Operations

        Basic earnings (loss) per share from continuing operations is computed by dividing net earnings (loss) from continuing operations by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share from continuing operations includes the effects of outstanding stock options, if dilutive. The following table sets forth the computation of basic and diluted earnings (loss) from continuing operations per common share:

(in thousands, except per share data)   39 weeks
Ended
December 30,
2010
  52 weeks
Ended
April 1, 2010
  52 weeks
Ended
December 30,
2010
 

Numerator:

                   

Earnings (loss) from continuing operations

  $ (4,975 ) $ 87,445   $ 45,673  

Denominator:

                   

Shares for basic earnings (loss) per common share

    1,278.85     1,278.82     1,278.84  

Stock options

        2.60     11.68  
               

Shares for diluted earnings (loss) per common share

    1,278.85     1,281.42     1,290.52  
               

Basic Earnings (loss) from continuing operations per common share

  $ (3.89 ) $ 68.38   $ 35.71  
               

Diluted earnings (loss) from continuing operations per common share

  $ (3.89 )   68.24   $ 35.39  
               

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        Options to purchase 35,691.2 shares of common stock at a weighted average exercise price of $448 per share and 6,553 shares of nonvested restricted stock were outstanding during the 39 weeks ended December 30, 2010, but were not included in the computation of diluted earnings per share since the options were anti-dilutive. Options to purchase 10,830.7 shares of common stock at a weighted average exercise price of $491 per share were outstanding during the year ended April 1, 2010, but were not included in the computations of diluted earnings per share since the shares were anti-dilutive.

        Options to purchase 6,265.0 shares of common stock at a weighted average exercise price of $752 per share and 6,553 shares of nonvested restricted stock were outstanding during the 52 weeks ended December 30, 2010, but were not included in the computations of diluted earnings per share the shares were anti-dilutive.

Pro Forma Earnings (Loss) per Share from Continuing Operations

        Basic earnings (loss) per share from continuing operations is computed by dividing net earnings (loss) from continuing operations by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share from continuing operations includes the effects of outstanding stock options, if dilutive. The following table sets forth the computation of basic and diluted earnings (loss) from continuing operations per common share:

(in thousands, except per share data)   39 weeks
Ended
December 30,
2010
  52 weeks
Ended
April 1, 2010
  52 weeks
Ended
December 30,
2010
 

Numerator:

                   

Earnings (loss) from continuing operations

  $ 8,825   $ 67,291   $ 66,568  

Denominator:

                   

Shares for basic earnings (loss) per common share

                   

Stock options

                   
               

Shares for diluted earnings (loss) per common share

                   
               

Basic Earnings (loss) from continuing operations per common share

  $     $     $    
               

Diluted earnings (loss) from continuing operations per common share

  $     $     $    
               

        Options to purchase                         shares of common stock at a weighted average exercise price of $      per share were outstanding during the 39 weeks ended December 30, 2010, but were not included in the computation of diluted earnings per share since the options were anti-dilutive. Options to purchase                         shares of common stock at a weighted average exercise price of $      per share were outstanding during the year ended April 1, 2010, but were not included in the computations of diluted earnings per share since they were anti-dilutive.

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Kerasotes Acquisition Pro Forma Adjustments

(1)
Reflects the exclusion of revenues and expenses and disposition of assets and liabilities for theatres expected to be disposed of in connection with the approval of the Kerasotes Acquisition by the U.S. Department of Justice:

   
  39 Weeks Ended
December 30, 2010
  52 Weeks Ended
April 1, 2010
  52 Weeks Ended
December 30, 2010
 
   
  (thousands of dollars)
  (thousands of dollars)
  (thousands of dollars)
 
 

Revenues

  $ 12,687   $ 62,611   $ 27,516  
 

Cost of operations

    8,633     41,684     19,849  
 

Rent

    2,854     11,365     5,299  
 

Depreciation & amortization

    561     1,540     801  
(2)
Pro forma adjustments are made to the unaudited pro forma condensed consolidated financial statement of operations for purchase accounting to reflect the following:

   
  39 weeks
ended
December 30,
2010
  52 weeks
ended
April 1, 2010
  52 weeks
ended
December 30,
2010
  Estimated
Useful Life
  Balance Sheet
Classification
   
  (thousands of
dollars)

  (thousands of
dollars)

  (thousands of
dollars)

   
   
 

Revenues:

                           
 

Remove Kerasotes historical gift certificate breakage

  $   $ (777 ) $          
 

Cost of operations:

                           
 

Remove gain on sale of divested theatres

    10,056         10,056          
 

Depreciation and Amortization:

                           
 

Remove Kerasotes historical amount

  $ (2,702 ) $ (21,270 ) $ (7,330 )        
 

Buildings and improvements, furniture, fixtures and equipment and leasehold improvements

    3,800     24,700     10,291     7   Property, net
 

Favorable leases

    292     1,900     767     3.6   Intangibles, net
 

Non-compete agreements

    197     1,280     533     5   Intangibles, net
 

Tradename

                Indefinite   Intangibles, net
                         
 

  $ 1,587   $ 6,610   $ 4,261          
                         

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  39 weeks
ended
December 30, 2010
  52 weeks
ended
April 1, 2010
  52 weeks
ended
December 30, 2010
  Estimated
Useful Life
  Balance Sheet
Classification
   
  (thousands of
dollars)

  (thousands of
dollars)

  (thousands of
dollars)

   
   
 

Rent:

                           
 

Kerasotes amortization of deferred gain on sale-leaseback transactions

  $ 1,086   $ 7,275   $ 3,031          
 

Unfavorable leases

    (384 )   (2,500 )   (1,042 )   15   Other long-term liabilities
                         
 

  $ 702   $ 4,775   $ 1,989          
                         

   
  39 weeks
ended
December 30, 2010
  52 weeks
ended
April 1, 2010
  52 weeks
ended
December 30, 2010
   
   
   
  (thousands of
dollars)

  (thousands of
dollars)

  (thousands of
dollars)

   
   
 

Interest Expense:

                           
 

Interest expense to Kerasotes Showplace Theatres, LLC and other

  $ (179 ) $ (3,852 ) $ (1,571 )        
                         
 

  $ (179 ) $ (3,852 ) $ (1,571 )        
                         

   
  39 weeks
ended
December 30, 2010
  52 weeks
ended
April 1, 2010
  52 weeks
ended
December 30, 2010
   
   
   
  (thousands of
dollars)

  (thousands of
dollars)

  (thousands of
dollars)

   
   
 

Investment Income:

                           
 

Kerasotes expense related to interest rate swap and other

  $ 99   $ (2,947 ) $ (720 )        
                         
 

  $ 99   $ (2,947 ) $ (720 )        
                         
(3)
Represents the expected income tax impact of the Kerasotes Acquisition in U.S. tax jurisdictions at the expected state and federal rate of approximately 37.5%.

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Table of Contents

Offering Transactions Pro Forma Adjustments

(4)
Reflects the estimated cash sources and uses of funds in connection with the offering Transactions as summarized below.

 
Sources of Funds
  Amount   Uses of Funds   Amount  
   
  (thousands of dollars)
   
  (thousands of dollars)
 
 

Proceeds from the
sale of common stock

  $ 350,000  

Repayment of principal Parent term loan facility

  $ 161,047  
 

Company cash

    222,826  

Repayment of PIK interest Parent term loan facility

    46,130  
 

       

Repayment of principal 8% senior subordinated notes due 2014

    300,000  
 

       

Premium on repayment of 8% senior subordinated notes due 2014

    4,000  
 

       

Repayment of accrued interest on 8% senior subordinated notes due 2014

    8,022  
 

       

Lump sum payment under management fee agreement

    26,127  
 

       

Underwriting fees for sale of common stock

    21,000  
 

       

Professional and consulting fees for sale of common stock

    6,500  
                 
 

  $ 572,826       $ 572,826  
                 
(4a)
Pro forma adjustments have been made to stockholders' equity for those income statement items that are not expected to have a continuing impact in connection with the offering Transactions, as follows:

Write off of discount on Parent term loan facility

  $ 466  

Write off of deferred charges on Parent term loan facility

    1,333  

Write off of discount on 8% senior subordinated notes due 2014

    643  

Premium paid on 8% senior subordinated notes due 2014

    4,000  
       

  $ 6,442  
       
(5)
Represents the elimination of all interest expense and amortization of discount and deferred charges recorded historically related to the debt obligations to be extinguished with the proceeds from this offering as follows:

   
  39 weeks ended
December 30, 2010
  52 weeks ended
April 1, 2010
  52 weeks ended
December 30, 2010
 
   
  (thousands of dollars)
  (thousands of dollars)
  (thousands of dollars)
 
 

Parent term loan facility due 2012 PIK interest(1)

  $ 8,206   $ 10,572   $ 10,815  
 

Parent term loan facility due 2012 discount amortization

    240     360     320  
 

Parent term loan facility due 2012 deferred charge amortization

    734     1,087     979  
 

8% senior subordinated notes due 2014 interest

    17,935     23,935     23,934  
 

8% senior subordinated notes due 2014 deferred charge amortization

    130     161     171  
                 
 

  $ 27,245   $ 36,115   $ 36,219  
                 

50


Table of Contents

(6)
Represents the elimination of the $85.2 million gain on extinguishment on the Parent term loan facility during the 52 weeks ended April 1, 2010 as the Parent's term loan facility will be extinguished with the proceeds from this offering. Because all interest expense related to the Parent term loan facility is eliminated in (5) above as if the Transactions had occurred on April 3, 2009, we have treated the recorded gain on the partial extinguishment of the Parent term loan in a similar manner.

(7)
Reflects the termination of the management fee agreement. The management fee will be terminated in connection with the Transactions as discussed elsewhere in this prospectus.

(8)
Represents the expected income tax impact of the offering Transactions, in U.S. tax jurisdictions at our expected state and federal tax rate of 37.5%.

Redemptions Pro Forma Adjustments

(9)
On January 3, 2011 and February 15, 2011, we redeemed all our remaining 12% senior discount notes due 2014 and 11% senior subordinated notes due 2016 with proceeds from the Notes Offering. We have not included these redemptions on the pro forma statements of operations, as we do not believe such redemptions would have a material impact on the pro forma statement of operations. We have included these redemptions in the pro forma balance sheets, as we believe such redemptions have a material impact on our capital structure, and such redemptions have been completed as of the date of this filing.


Reflects the cash sources and uses of funds in connection with the Redemptions as summarized below.

 
Sources of Funds
  Amount   Uses of Funds   Amount  
   
  (thousands of dollars)
   
  (thousands of dollars)
 
 

Company cash

  $ 329,065  

Repayment of principal 11% senior subordinated notes due 2016

  $ 229,902  
 

       

Premium on repayment of 11% senior subordinated notes due 2016

    12,645  
 

       

Repayment of accrued interest 11% senior subordinated notes due 2016

    10,446  
 

       

Repayment of principal 12% senior discount notes due 2014

    70,111  
 

       

Premium on repayment of 12% senior discount notes due 2014

    2,805  
 

       

Repayment of accrued interest on 12% senior discount notes due 2014

    3,156  
                 
 

  $ 329,065       $ 329,065  
                 
(9a)
Pro forma adjustment has been made to stockholders' equity for the loss on sale of redemptions in (9) above. This adjustment is not expected to have a continuing impact:

Premium paid on 11% senior subordinated notes due 2016

  $ 12,645  

Write off of deferred charges on 11% senior subordinated notes due 2016

    4,029  

Premium paid on 12% senior discount notes due 2014

    2,805  

Write off of deferred charges on 12% senior discount notes due 2014

    1,214  
       

  $ 20,693  
       

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Table of Contents


SELECTED HISTORICAL FINANCIAL AND OPERATING DATA

        The following table sets forth certain of our selected historical financial and operating data. Our selected financial data for the fiscal years ended April 1, 2010, April 2, 2009, April 3, 2008, March 29, 2007 and March 30, 2006 and the 39 weeks ended December 30, 2010 and December 31, 2009 have been derived from the consolidated financial statements for such periods either included elsewhere in this prospectus or not included herein.

        The selected financial data presented herein should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," consolidated financial statements, including the notes thereto, and our other historical financial information, including the notes thereto, included elsewhere in this prospectus.

 
  Thirty-nine Weeks Ended   Years Ended(1)(2)  
 
  39 Weeks
Ended
December 30,
2010
  39 Weeks
Ended
December 31,
2009
  52 Weeks
Ended
April 1,
2010
  52 Weeks
Ended
April 2,
2009
  53 Weeks
Ended
April 3,
2008
  52 Weeks
Ended
March 29,
2007
  52 Weeks
Ended
March 30,
2006(3)
 
 
  (in thousands, except per share and operating data)
 

Statement of Operations Data:

                                           

Revenues:

                                           
 

Admissions

  $ 1,334,527   $ 1,281,145   $ 1,711,853   $ 1,580,328   $ 1,615,606   $ 1,576,924   $ 1,125,243  
 

Concessions

    515,709     487,908     646,716     626,251     648,330     631,924     448,086  
 

Other theatre

    47,208     44,493     59,170     58,908     69,108     94,374     90,631  
                               
   

Total revenues

    1,897,444     1,813,546     2,417,739     2,265,487     2,333,044     2,303,222     1,663,960  
                               

Operating Costs and Expenses:

                                           
 

Film exhibition costs

    704,646     696,704     928,632     842,656     860,241     838,386     604,393  
 

Concession costs

    64,061     53,448     72,854     67,779     69,597     66,614     48,845  
 

Operating expense

    496,146     449,165     610,774     576,022     572,740     564,206     436,028  
 

Rent

    356,121     331,107     440,664     448,803     439,389     428,044     326,627  
 

General and administrative:

                                           
   

Merger, acquisition and transactions costs

    13,396     973     2,578     1,481     7,310     12,447     12,523  
   

Management fee

    3,750     3,750     5,000     5,000     5,000     5,000     2,000  
   

Other

    41,316     41,173     58,274     53,800     39,084     45,860     38,296  
 

Restructuring charge

                            3,980  
 

Depreciation and amortization

    156,895     142,949     188,342     201,413     222,111     228,437     158,098  
 

Impairment of long-lived assets

            3,765     73,547     8,933     10,686     11,974  
                               
   

Operating costs and expenses

    1,836,331     1,719,269     2,310,883     2,270,501     2,224,405     2,199,680     1,642,764  
                               
 

Operating income (loss)

    61,113     94,277     106,856     (5,014 )   108,639     103,542     21,196  

Other (income) loss

    9,876     (85,534 )   (87,793 )   (14,139 )   (12,932 )   (10,267 )   (9,818 )

Interest expense:

                                           
 

Corporate borrowings

    131,575     125,015     168,439     182,691     197,721     214,539     136,932  
 

Capital and financing lease obligations

    4,604     4,239     5,652     5,990     6,505     4,669     3,937  

Equity in (earnings) losses of non-consolidated entities(4)

    (17,057 )   (18,127 )   (30,300 )   (24,823 )   (43,019 )   (233,704 )   7,807  

Gain on NCM, Inc. stock sale

    (64,648 )                        

Investment income(5)

    (387 )   (213 )   (287 )   (1,759 )   (24,013 )   (17,594 )   (3,333 )
                               

Earnings (loss) from continuing operations before income taxes

    (2,850 )   68,897     51,145     (152,974 )   (15,623 )   145,899     (114,329 )

Income tax provision

    2,125     32,100     (36,300 )   5,800     (7,580 )   28,246     70,660  
                               

Earnings (loss) from continuing operations

    (4,975 )   36,797     87,445     (158,774 )   (8,043 )   117,653     (184,989 )

Earnings (loss) from discontinued operations, net of income tax provision(6)

    574     1,036     (7,534 )   9,728     1,802     (746 )   (31,234 )
                               
 

Net earnings (loss)

  $ (4,401 ) $ 37,833   $ 79,911   $ (149,046 ) $ (6,241 ) $ 116,907   $ (216,223 )
                               

                                           

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Table of Contents

 
  Thirty-nine Weeks Ended   Years Ended(1)(2)  
 
  39 Weeks
Ended
December 30,
2010
  39 Weeks
Ended
December 31,
2009
  52 Weeks
Ended
April 1,
2010
  52 Weeks
Ended
April 2,
2009
  53 Weeks
Ended
April 3,
2008
  52 Weeks
Ended
March 29,
2007
  52 Weeks
Ended
March 30,
2006(3)
 
 
  (in thousands, except per share and operating data)
 

Basic earnings (loss) per share of common stock:

                                           
 

Earnings (loss) from continuing operations

  $ (3.89 ) $ 28.77   $ 68.38   $ (123.93 ) $ (6.27 ) $ 91.76   $ (215.57 )
 

Earnings (loss) from discontinued operations

    0.45     0.81     (5.89 )   7.60     1.40     (0.59 )   (36.40 )
                               
 

Net earnings (loss) per share

  $ (3.44 ) $ 29.58   $ 62.49   $ (116.33 ) $ (4.87 ) $ 91.17   $ (251.97 )
                               
 

Average shares outstanding:

                                           
 

Basic

    1,278.85     1,278.82     1,278.82     1,281.20     1,282.65     1,282.25     858.12  

Diluted earnings (loss) per share of common stock:

                                           
 

Earnings (loss) from continuing operations

  $ (3.89 ) $ 28.77   $ 68.24   $ (123.93 ) $ (6.27 ) $ 91.69   $ (215.57 )
 

Earnings (loss) from discontinued operations

    0.45     0.81     (5.88 )   7.60     1.40     (0.58 )   (36.40 )
                               
 

Net earnings (loss) per share

  $ (3.44 ) $ 29.58   $ 62.36   $ (116.33 ) $ (4.87 ) $ 91.11   $ (251.97 )
                               

Average shares outstanding:

                                           
 

Diluted

    1,278.85     1,278.91     1,281.42     1,281.20     1,282.65     1,283.20     858.12  

Balance Sheet Data (at period end):

                                           

Cash and equivalents

  $ 802,392         $ 611,593   $ 539,597   $ 111,820   $ 319,533   $ 232,366  

Corporate borrowings, including current portion

    2,612,206           2,271,914     2,394,586     2,287,521     1,864,670     2,455,686  

Other long-term liabilities

    354,940           309,591     308,702     350,250     373,943     395,458  

Capital and financing lease obligations, including current portion

    66,736           57,286     60,709     69,983     53,125     68,130  

Stockholders' equity

    437,121           439,542     378,484     506,731     1,167,053     1,042,642  

Total assets

    4,327,262           3,774,912     3,774,894     3,899,128     4,118,149     4,407,351  

Other Data:

                                           

Net cash provided by operating activities(7)

  $ 36,763   $ 201,896   $ 198,936   $ 167,249   $ 201,209   $ 417,870   $ 25,694  

Capital expenditures

    (84,085 )   (59,482 )   (97,011 )   (121,456 )   (171,100 )   (142,969 )   (123,838 )

Proceeds from sale/leasebacks

            6,570                 35,010  

Operating Data (at period end):

                                           

Screen additions

    55     6     6     83     136     107     106  

Screen acquisitions

    960                     32     1,363  

Screen dispositions

    325     90     105     77     196     243     60  

Average screens—continuing operations(8)

    5,080     4,501     4,485     4,545     4,561     4,627     3,583  

Number of screens operated

    5,203     4,528     4,513     4,612     4,606     4,666     4,770  

Number of theatres operated

    361     299     297     307     309     318     335  

Screens per theatre

    14.4     15.1     15.2     15.0     14.9     14.7     14.2  

Attendance (in thousands)—continuing operations(8)

    152,895     152,147     200,285     196,184     207,603     213,041     161,867  

(1)
A cash dividend of $652.8 million was declared on common stock for fiscal 2008. There were no other cash dividends declared on common stock.

(2)
Fiscal 2008 includes 53 weeks. All other years have 52 weeks.

(3)
We acquired Loews Cineplex Entertainment Corporation on January 26, 2006, which significantly increased our size. In the Loews Acquisition we acquired 112 theatres with 1,308 screens throughout the United States that we consolidate.

(4)
During fiscal 2010, fiscal 2009 and fiscal 2008, equity in earnings including cash distributions from NCM were $34.4 million, $27.7 million and $22.2 million, respectively. During fiscal 2008, equity in (earnings) losses of

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Table of Contents

(5)
Includes gain of $16.0 million for the 53 weeks ended April 3, 2008 from the sale of our investment in Fandango, Inc. Includes interest income on temporary cash investments of $17.3 million for the 52 weeks ended March 29, 2007.

(6)
All fiscal years presented include earnings and losses from discontinued operations related to 44 theatres in Mexico that were sold during fiscal 2009. Both fiscal 2007 and 2006 includes losses from discontinued operations related to five theatres in Japan that were sold during fiscal 2006 and five theatres in Iberia that were sold during fiscal 2007.

(7)
Cash flows provided by operating activities for the 52 weeks ended March 30, 2006 do not include $142.5 million of cash acquired in the Loews Mergers which is included in cash flows from investing activities.

(8)
Includes consolidated theatres only.

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Table of Contents


MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion and analysis concerns our historical financial condition and results of operations for the periods indicated. This discussion contains forward-looking statements. Please see "Forward-Looking Statements" for a discussion of the risks, uncertainties and assumptions relating to these statements.

Overview

        We are one of the world's leading theatrical exhibition companies. As of December 30, 2010, we owned, operated or had interests in 361 theatres and 5,203 screens with 99%, or 5,148, of our screens in the U.S. and Canada, and 1%, or 55 of our screens in China (Hong Kong), France and the United Kingdom.

        During the 39 weeks ended December 30, 2010, we acquired 92 theatres with 928 screens from Kerasotes in the U.S. In connection with the acquisition of Kerasotes, we divested of 11 theatres with 142 screens as required by the Antitrust Division of the United States Department of Justice and acquired two theatres with 26 screens that were received in exchange for three of the divested theatres above with 43 screens. We also permanently closed 21 theatres with 142 screens in the U.S. and temporarily closed and reopened four theatres with 41 screens in the U.S. as part of a remodeling project to allow for dine-in theatres at these locations. We opened one new managed theatre with 14 screens in the U.S. and acquired one theatre with 6 screens in the U.S. in the ordinary course of business.

        Our Theatrical Exhibition revenues are generated primarily from box office admissions and theatre concession sales. The balance of our revenues are generated from ancillary sources, including on-screen advertising, rental of theatre auditoriums, fees and other revenues generated from the sale of gift cards and packaged tickets, on-line ticket fees and arcade games located in theatre lobbies.

        Box office admissions are our largest source of revenue. We predominantly license "first-run" motion pictures from distributors owned by major film production companies and from independent distributors. We license films on a film-by-film and theatre-by-theatre basis. Film exhibition costs are accrued based on the applicable admissions revenues and estimates of the final settlement pursuant to our film licenses. Licenses that we enter into typically state that rental fees are based on either aggregate terms established prior to the opening of the picture or on a mutually agreed settlement upon the conclusion of the picture run. Under an aggregate terms formula, we pay the distributor a specified percentage of box office receipts or pay based on a scale of percentages tied to different amounts of box office gross. The settlement process allows for negotiation based upon how a film actually performs.

        Concessions sales are our second largest source of revenue after box office admissions. Concessions items include popcorn, soft drinks, candy, hot dogs and other products. We negotiate prices for our concessions products and supplies directly with concessions vendors on a national or regional basis to obtain high volume discounts or bulk rates and marketing incentives.

        Our revenues are dependent upon the timing and popularity of motion picture releases by distributors. The most marketable motion pictures are usually released during the summer and the year-end holiday seasons. Therefore, our business is highly seasonal, with higher attendance and revenues generally occurring during the summer months and holiday seasons. Our results of operations will vary significantly from quarter to quarter.

        During fiscal 2010, based on revenues, films licensed from our six largest distributors accounted for approximately 84% of our U.S. and Canada admissions revenues. Our revenues attributable to individual distributors may vary significantly from year to year depending upon the commercial success of each distributor's motion pictures in any given year.

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        During the period from 1990 to 2009, the annual number of first-run motion pictures released by distributors in the United States ranged from a low of 370 in 1995 to a high of 633 in 2008, according to the Motion Picture Association of America 2009 MPAA Theatrical Market Statistics. The number of digital 3D films released increased to a high of 20 in 2009 from a low of 0 during this same time period.

        We continually upgrade the quality of our theatre circuit by adding new screens through new builds (including expansions) and acquisitions and by disposing of older screens through closures and sales. We are an industry leader in the development and operation of megaplex theatres, typically defined as a theatre having 14 or more screens and offering amenities to enhance the movie-going experience, such as stadium seating providing unobstructed viewing, digital sound and enhanced seat design. We have increased our 3D screens by 446 to 810 screens and our IMAX screens by 29 to 107 screens since December 31, 2009; and as of December 30, 2010, approximately 15.6% of our screens were 3D screens and approximately 2.1% of our screens were IMAX screens.

Significant Events

        On March 31, 2011, Marquee Holdings Inc. ("Holdings"), a direct, wholly-owned subsidiary of Parent and a holding company, the sole assets of which consisted of the capital stock of AMCE, was merged with and into Parent, with Parent continuing as the surviving entity. As a result of the merger, AMCE became a direct subsidiary of Parent.

        During the fourth quarter of our fiscal year ending March 31, 2011, we evaluated excess capacity and vacant and under-utilized retail space throughout our theatre circuit. On March 28, 2011, management decided to permanently close 73 underperforming screens and auditoriums in six theatre locations in the United States and Canada while continuing to operate 89 screens at these locations. The permanently closed screens are physically segregated from the screens that will remain in operation and access to the closed space is restricted. Additionally, management decided to discontinue development of and cease use of (including for storage) certain vacant and under-utilized retail space at four other theatres in the United States and the United Kingdom. As a result of closing the screens and auditoriums and discontinuing the development and use of the other spaces, we anticipate recording a charge of $55 million to $60 million for theatre and other closure expense most of which is expected to be incurred during the fiscal year ending March 31, 2011. The charge to theatre and other closure expense reflects the discounted contractual amounts of the existing lease obligations for the remaining 7 to 13 year terms of the leases ($54 million to $58 million) as well as expected incremental cash outlays for related asset removal and shutdown costs ($1 million to $2 million). A significant portion of each of the affected properties will be closed and no longer used. The charges to theatre and other closure expense do not result in any new, increased or accelerated obligations for cash payments related to the underlying long-term operating lease agreements. We expect that the estimated future savings in rent expense and variable operating expenses as a result of our exit plan and from operating these ten theatres in a more efficient manner will exceed the estimated loss in attendance and revenues that we may experience related to the closed auditoriums.

        During the thirty-nine weeks ended December 30, 2010, we permanently closed 21 theatres with 142 screens in the U.S., and recorded $5,381,000 for theatre and other closure expense, which is included with operating expense in the accompanying consolidated operating statements. Of the theatre closures, eight theatres with 33 screens are owned properties that will be marketed for sale; leases were allowed to expire at seven theatres with 67 screens; a management agreement expired at a single screen theatre; and five theatres with 41 screens were closed with remaining lease terms in excess of one month. Reserves for leases that have not been terminated are recorded at the present value of the future contractual commitments for the base rents, taxes and maintenance.

        On December 15, 2010, AMCE completed the offering of $600.0 million aggregate principal amount of the Notes due 2020. Concurrently with the Notes Offering, AMCE launched a cash tender offer and consent solicitation for any and all of our then outstanding $325.0 million aggregate principal

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amount Notes due 2016 at a purchase price of $1,031 plus a $30 consent fee for each $1,000 of principal amount of currently outstanding Notes due 2016 validly tendered and accepted by AMCE on or before the early tender date (the "Cash Tender Offer"). AMCE used the net proceeds from the issuance of the Notes due 2020 to pay the consideration for the Cash Tender Offer plus accrued and unpaid interest on $95.1 million principal amount of the Notes due 2016 validly tendered. We recorded a loss on extinguishment related to the Cash Tender Offer of $7.6 million in other expense during the thirty-nine weeks ended December 30, 2010, which included previously capitalized deferred financing fees of $1.7 million, a tender offer and consent fee paid to the holders of $5.8 million and other expenses of $149,000.

        Concurrently with the Notes Offering and Cash Tender Offer, Holdings launched a tender offer for its Discount Notes due 2014 at a purchase price of $797.00 plus a $30.00 consent fee for each $1,000.00 face amount (or $792.09 accreted value) of currently outstanding Discount Notes due 2014 validly tendered and accepted by Holdings on or before the early tender date (together with the Cash Tender Offer, the "Cash Tender Offers"). As of December 30, 2010, Holdings had purchased $215.5 million principal amount at face value (or $170.7 million accreted value) of the Discount Notes due 2014 for a total consideration of $185.0 million. We recorded a loss on extinguishment for the Discount Notes due 2014 of approximately $10.7 million.

        We used a portion of the net proceeds from the issuance of the Notes due 2020 to pay the consideration for the Cash Tender Offer for the Notes due 2016 plus any accrued and unpaid interest and distributed the remainder of such proceeds to be applied to the Cash Tender Offer for the Discount Notes due 2014. On January 3, 2011, Holdings redeemed $88.5 million principal amount at face value (or $70.1 million accreted value) of the Discount Notes due 2014 that remained outstanding after the closing of the Cash Tender Offer for the Discount Notes due 2014 at a price of $823.77 per $1,000.00 face amount (or $792.09 accreted value) of Discount Notes due 2014 for a total consideration of $76.1 million in accordance of the terms of the indenture governing the Discount Notes due 2014, as amended pursuant to the consent solicitation. We recorded an additional loss on extinguishment in the fourth quarter related to the Discount Notes due 2014 of approximately $4.1 million. On December 30, 2010, AMCE issued an irrevocable notice of redemption in respect of the $229.9 million principal amount of Notes due 2016 that remained outstanding after the closing of the Cash Tender Offers, and AMCE redeemed the remaining Notes due 2016 at a price of $1,055.00 per $1,000.00 principal amount of Notes due 2016 on February 1, 2011 for a total consideration of $255.2 million in accordance with the terms of the indenture governing the Notes due 2016.

        On December 15, 2010, AMCE entered into a third amendment to our senior secured credit facility dated as of January 26, 2006 to, among other things: (i) extend the maturity of the term loans held by accepting lenders of $476.6 million aggregate principal amount of term loans from January 26, 2013 to December 15, 2016 and to increase the interest rate with respect to such term loans, (ii) replace our existing revolving credit facility with a new five-year revolving credit facility (with higher interest rates and a longer maturity than the existing revolving credit facility), and (iii) amend certain of our existing covenants therein. We recorded a loss on the modification of our senior secured credit facility of $3.4 million in other expense during the thirty-nine weeks ended December 30, 2010, which included third party modification fees of $2.9 million, previously capitalized deferred financing fees related to the revolving credit facility of $367,000, and other expenses of $161,000.

        All of our NCM membership units are redeemable for, at the option of NCM, cash or shares of common stock of National CineMedia, Inc. ("NCM, Inc.") on a share-for-share basis. On August 18, 2010, we redeemed 6.5 million of our NCM LLC membership units for a like number of shares of NCM Inc. common stock, which we sold in the NCM Sale for $16.00 per share, reducing our investment in NCM by $36.7 million, the average carrying amount of the shares sold. We received approximately $99.8 million in proceeds after deducting related fees and expenses payable by us, resulting in a gain on sale of $63.1 million. On September 8, 2010, AMC ShowPlace and American Multi-Cinema, Inc. redeemed an additional 10,209 and 144,984 NCM membership units, respectively,

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and sold them to the underwriters to cover over-allotments at $16.00 per share, further reducing our investment in NCM by $867,000, the average carrying amount of the shares sold. We received approximately $2.4 million of net proceeds from this sale, resulting in a gain on sale of $1.5 million. The net proceeds will be used for general corporate purposes, including repaying indebtedness and to pursue accretive acquisitions as they become available.

        On May 24, 2010, we completed the acquisition of 92 theatres and 928 screens from Kerasotes. Kerasotes operated 95 theatres and 972 screens in mid-sized, suburban and metropolitan markets, primarily in the Midwest. More than three quarters of the Kerasotes theatres feature stadium seating and almost 90 percent have been built since 1994. The purchase price for the Kerasotes theatres paid in cash at closing was $276.8 million, net of cash acquired and was subject to working capital and other purchase price adjustments as described in the Unit Purchase Agreement. We paid working capital and other purchase price adjustments of $3.8 million during the second quarter of fiscal 2011, based on the final closing date working capital and deferred revenue amounts and have included this amount as part of the total estimated purchase price. The acquisition of Kerasotes significantly increased our size. For additional information about the Kerasotes acquisition, see the notes to our consolidated financial statements for the 39 week period ended December 30, 2010, included elsewhere in this prospectus.

        On March 10, 2010, Digital Cinema Implementation Partners, LLC ("DCIP") completed its financing transactions for the deployment of digital projection systems to nearly 14,000 movie theatre screens across North America, including screens operated or managed by the Company, Regal Entertainment Group ("Regal") and Cinemark Holdings, Inc ("Cinemark"). At closing, we contributed 342 projection systems that we owned to DCIP, which we recorded at estimated fair value as part of an additional investment in DCIP of $21.8 million. We also made cash investments in DCIP of $840,000 at closing and DCIP made a distribution of excess cash to us after the closing date and prior to year-end of $1.3 million. We recorded a loss on contribution of the 342 projection systems of $563,000, based on the difference between estimated fair value and our carrying value on the date of contribution. On March 26, 2010, we acquired 117 digital projectors from third party lessors for $6.8 million and sold them together with seven digital projectors that we owned to DCIP for $6.6 million. We recorded a loss on the sale of these 124 systems to DCIP of $697,000. As of April 1, 2010, we operated 568 digital projection systems leased from DCIP pursuant to operating leases and anticipate that we will have deployed 4,000 of these systems in our existing theatres over the next three to four years.

        The additional digital projection systems will allow us to add additional 3D screens to our circuit where we are generally able to charge a higher admission price than 2D. The digital projection systems leased from DCIP and its affiliates will replace most of our existing 35 millimeter projection systems in our U.S. theatres. We are examining the estimated depreciable lives for our existing 35 millimeter projection systems, with a net book value of $14.2 million, and expect to adjust the depreciable lives in order to accelerate the depreciation of these existing 35 millimeter projection systems, so that such systems are fully depreciated at the end of the digital projection system deployment timeframe. We currently estimate that the increase to depreciation and amortization expense as a result of the acceleration will be $2.7 million, $0.3 million and $1.0 million in fiscal years 2011, 2012 and 2013, respectively. Upon full deployment of the digital projection systems, we expect the cash rent expense of such equipment to approximate $4.5 million, annually, and the deferred rent expense to approximate $5.5 million, annually, which will be recognized in our consolidated statements of operations as "Operating expense".

        On June 9, 2009, we completed the offering of $600 million aggregate principal amount of our 8.75% Senior Notes due 2019 (the "Notes due 2019"). Concurrently with the notes offering, we launched a cash tender offer and consent solicitation for any and all of our then outstanding $250 million aggregate principal amount of 85/8% Senior Notes due 2012 (the "Fixed Notes due 2012") at a purchase price of $1,000 plus a $30 consent fee for each $1,000 of principal amount of currently outstanding Fixed Notes due 2012 validly tendered and accepted by us on or before the early tender date (the "Cash Tender Offer"). We used the net proceeds from the issuance of the Notes due 2019 to

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pay the consideration for the Cash Tender Offer plus accrued and unpaid interest on $238.1 million principal amount of the Fixed Notes due 2012. We recorded a loss on extinguishment related to the Cash Tender Offer of $10.8 million in other expense during the 52 weeks ended April 1, 2010, which included previously capitalized deferred financing fees of $3.3 million consent fee paid to holders of $7.1 million and other expenses of $372,000. On August 15, 2009, we redeemed the remaining $11.9 million of Fixed Notes due 2012 at a price of $1,021.56 per $1,000 principal in accordance with the terms of the indenture. We recorded a loss of $450,000 in Other expense related to the extinguishment of the remaining Fixed Notes due 2012 during the 52 weeks ended April 1, 2010, which included previously capitalized deferred financing fees of $157,000, a consent fee paid to the holders of $257,000 and other expenses of $36,000.

        We acquired Grupo Cinemex, S.A. de C.V. ("Cinemex") in January 2006 as part of a larger acquisition of Loews Cineplex Entertainment Corporation. We do not operate any other theatres in Mexico and have divested of the majority of our other investments in international theatres in Japan, Hong Kong, Spain, Portugal, Argentina, Brazil, Chile, and Uruguay over the past several years as part of our overall business strategy.

        On December 29, 2008, we sold all of our interests in Cinemex, which then operated 44 theatres with 493 screens primarily in the Mexico City Metropolitan Area, to Entretenimiento GM de Mexico S.A. de C.V. ("Entretenimiento"). The purchase price received at the date of the sale and in accordance with the Stock Purchase Agreement was $248.1 million. During the year ended April 1, 2010, we received payments of $4.3 million for purchase price adjustments in respect of tax payments and refunds, and a working capital calculation and post closing adjustments. Additionally, we estimate that as of April 1, 2010, we are contractually entitled to receive an additional $8.8 million in purchase price adjustments in respect of tax payments and refunds. While we believe we are entitled to these amounts from Cinemex, the collection thereof will require litigation, which was initiated by us on April 30, 2010. Resolution could take place over a prolonged period. As a result of the litigation, we have established an allowance for doubtful accounts related to this receivable in the amount of $7.5 million as of April 1, 2010 and further directly charged off $1.4 million of certain amounts as uncollectible with an offsetting charge of $8.9 million recorded to loss on disposal included as a component of discontinued operations in fiscal 2010.

        The operations and cash flows of the Cinemex theatres have been eliminated from our ongoing operations as a result of the disposal transaction. We do not have any significant continuing involvement in the operations of the Cinemex theatres. The results of operations of the Cinemex theatres have been classified as discontinued operations for all periods presented.

        In May 2007, we disposed of our investment in Fandango, accounted for using the cost method, for total proceeds of $20.4 million, of which $18 million was received in May and September 2007 and $2.4 million was received in November 2008, and have recorded a gain on the sale, included in investment income, of approximately $16 million during fiscal 2008 and $2.4 million during fiscal 2009. In July 2007, we disposed of our investment in Hoyts General Cinemas South America ("HGCSA"), an entity that operated 17 theatres in South America, for total proceeds of approximately $28.7 million and recorded a gain on the sale, included in equity earnings of non-consolidated entities, of approximately $18.8 million.

Stock-Based Compensation

        We account for stock-based employee compensation arrangements using the fair value method. The fair value of each stock option was estimated on the grant date using the Black-Scholes option pricing model using the following assumptions: common stock value on the grant date, risk-free interest rate, expected term, expected volatility, and dividend yield. We have elected to use the simplified method for estimating the expected term of "plain vanilla" share option grants as we do not have enough historical experience to provide a reasonable estimate. Compensation cost is calculated on the date of the grant and then amortized over the vesting period.

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        We granted 38,876.7 options on December 23, 2004, 600 options on January 26, 2006, 15,980.5 options on March 6, 2009 and 4,786 options on May 28, 2009 to employees to acquire our common stock. The fair value of these options on their respective grant dates was $22.4 million, $138,000, $2.1 million, and $0.65 million, respectively. All of these options currently outstanding are equity classified.

        On July 8, 2010, we granted 6,377 options and 6,693 shares of restricted stock. The fair value of these options and restricted shares on their respective grant dates was $1.9 million and $5.0 million, respectively. All of these options currently outstanding are equity classified.

        The common stock value used to estimate the fair value of each option on the December 23, 2004 grant date was based upon a contemporaneous third party arms-length transaction on December 23, 2004 in which we sold 769,350 shares of our common stock for $1,000 per share to unrelated parties. The common stock value used to estimate the fair value of each option on the March 6, 2009 grant date was based upon a contemporaneous valuation reflecting market conditions as of January 1, 2009, a purchase of 2,542 shares by Parent for $323.95 per share from our former Chief Executive Officer pursuant to his Separation and General Release Agreement dated February 23, 2009 and a sale of 385.862 shares by Parent to our current Chief Executive Officer pursuant to his Employment Agreement dated February 23, 2009 for $323.95 per share.

        On June 11, 2007, Marquee Merger Sub Inc., a wholly-owned subsidiary of AMC Entertainment Holdings, Inc., merged with and into Holdings, with Holdings continuing as the surviving corporation (the "holdco merger"). In connection with this, Parent adopted an amended and restated 2004 stock option plan (formerly known as the 2004 Stock Option Plan of Marquee Holdings Inc.). The option exercise price per share of $1,000 was adjusted to $491 pursuant to the antidilution provisions of the 2004 Stock Option Plan to give effect to the payment of a one time non-recurring dividend paid by Parent on June 15, 2007 of $652.8 million to the holders of its 1,282,750 shares of common stock. The Company determined that there was no incremental value transferred as a result of the modification and as a result, no additional compensation cost to recognize.

        The common stock value of $339.59 per share used to estimate the fair value of each option on the May 28, 2009 grant date was based upon a valuation prepared by management on behalf of the Compensation Committee of the Board of Directors. Management chose not to obtain a contemporaneous valuation performed by an unrelated valuation specialist as management believed that the valuation obtained at January 1, 2009 and the subsequent stock sales and purchases were recent and could easily be updated and rolled forward without engaging a third party and incurring additional costs. Additionally, management considered that the number of options granted generated a relatively low amount of annual expense over 5 years ($130,100) and that any differences in other estimates of fair value would not be expected to materially impact the related annual expense. The common stock value was estimated based on current estimates of annual operating cash flows multiplied by the current average peer group multiple for similar publicly traded competitors of 6.7x less net indebtedness, plus the current fair value of our investment in NCM. Management compared the estimated stock value of $339.59 per share with the $323.95 value per share discussed above related to the March 6, 2009 option grant and noted the overall increase in value was primarily due the following:

March 6, 2009 grant value per share

  $ 323.95  
       

Decline in net indebtedness

    20.15  

Increase in value of investment in NCM

    37.10  

Increase due to peer group multiple

    47.89  

Decrease in annual operating cash flows

    (89.50 )
       

May 28, 2009 grant value per share

  $ 339.59  
       

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        The common stock value of $752 per share used to estimate the fair value of each option and restricted share on July 8, 2010 was based upon a contemporaneous valuation reflecting market conditions. The estimated grant date fair value for 5,354 shares of restricted stock (time vesting) and 1,339 shares of restricted stock (performance vesting, where the performance targets were established at the grant date following ASC 718-10-55-95) was based on $752 per shares and was $4.0 million and $1.0 million, respectively. The estimated grant date fair value of the options granted on 5,354 shares was $293.72 per share, or $1.6 million, and was determined using the Black-Scholes option-pricing model. The option exercise price was $752 per share, and the estimated fair value of the shares was $752, resulting in $0 intrinsic value for the option grants. As of December 30, 2010, total unrecognized stock based compensation expense related to the restricted stock awards and options under both the 2010 Equity Incentive Plan and the 2004 Stock Option Plan was $6.7 million.

Critical Accounting Estimates

        Our consolidated financial statements are prepared in accordance with GAAP. In connection with the preparation of our financial statements, we are required to make assumptions and estimates about future events, and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates, and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, we review the accounting policies, assumptions, estimates, and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

        Our significant accounting policies are discussed in note 1 to our audited consolidated financial statements included elsewhere in this prospectus. A listing of some of the more critical accounting estimates that we believe merit additional discussion and aid in better understanding and evaluating our reported financial results are as follows.

        Impairment charges.    We evaluate goodwill and other indefinite lived intangible assets for impairment annually, or more frequently as specific events or circumstances dictate. Impairment for other long lived assets (including finite lived intangibles) is done whenever events or changes in circumstances indicate that these assets may not be fully recoverable. We have invested material amounts of capital in goodwill and other intangible assets in addition to other long lived assets. We operate in a very competitive business environment and our revenues are highly dependent on movie content supplied by film producers. In addition, it is not uncommon for us to closely monitor certain locations where operating performance may not meet our expectations. Because of these and other reasons over the past three years we have recorded material impairment charges primarily related to long lived assets. For the last three years, impairment charges were $3.8 million in fiscal 2010, $73.5 million in fiscal 2009 and $8.9 million in fiscal year 2008. There are a number of estimates and significant judgments that are made by management in performing these impairment evaluations. Such judgments and estimates include estimates of future revenues, cash flows, capital expenditures, and the cost of capital, among others. Management believes we have used reasonable and appropriate business judgments. These estimates determine whether an impairment has been incurred and also quantify the amount of any related impairment charge. Given the nature of our business and our recent history, future impairments are possible and they may be material based upon business conditions that are constantly changing.

        Our recorded goodwill was $1,944 million, 1,845 million and $1,845 million as of December 30, 2010, April 1, 2010 and April 2, 2009, respectively. We evaluate goodwill and our trademark for impairment annually during our fourth fiscal quarter and any time an event occurs or circumstances change that would more likely than not reduce the fair value for a reporting unit below its carrying amount. Our goodwill is recorded in our Theatrical Exhibition operating segment, which is also the

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reporting unit for purposes of evaluating recorded goodwill for impairment. If the carrying value of the reporting unit exceeds its fair value we are required to reallocate the fair value of the reporting unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. We determine fair value by using an enterprise valuation methodology determined by applying multiples to cash flow estimates less net indebtedness, which we believe is an appropriate method to determine fair value. There is considerable management judgment with respect to cash flow estimates and appropriate multiples and discount rates to be used in determining fair value, and, accordingly, actual results could vary significantly from such estimates which fall under Level 3 within the fair value measurement hierarchy.

        We performed our annual goodwill impairment analysis during the fourth quarter of fiscal 2010. The estimated fair value of our Theatrical Exhibition reporting unit exceeded its carrying value by approximately $500 million, which we believe is substantial. While the fair value of our Theatrical Exhibition operations exceeds the carrying value at the present time, small changes in certain assumptions can have a significant impact on fair value. Facts and circumstances could change, including further deterioration of general economic conditions, the number of motion pictures released by the studios, and the popularity of films supplied by our distributors. These and/or other factors could result in changes to the assumptions underlying the calculation of fair value which could result in future impairment of our remaining goodwill.

        We evaluated our enterprise value as of April 1, 2010 and April 2, 2009 based on a contemporaneous valuation reflecting market conditions. Two valuation approaches were utilized; the income approach and the market approach. The income approach provides an estimate of enterprise value by measuring estimated annual cash flows over a discrete projection period and applying a present value rate to the cash flows. The present value of the cash flows is then added to the present value equivalent of the residual value of the business to arrive at an estimated fair value of the business. The residual value represents the present value of the projected cash flows beyond the discrete projection period. The discount rate is determined using a rate of return deemed appropriate for the risk of achieving the projected cash flows. The market approach used publicly traded peer companies and reported transactions in the industry. Due to conditions and the relatively few sale transactions, the market approach was used to provide additional support for the value achieved in the income approach.

        Key rates used in the income approach for fiscal 2010 and 2009 follow:

Description
  Fiscal 2010   Fiscal 2009  

Discount rate

    9.0 %   10.0 %

Market risk premium

    5.5 %   6.0 %

Hypothetical capital structure: Debt/Equity

    40%/60 %   40%/60 %

        The discount rate is an estimate of the weighted average cost of debt and equity capital. The required return on common equity was estimated by adding the risk-free required rate of return, the market risk premium (which is adjusted for the Company's estimated market volatility, or beta), and small stock premium. The discount rate used for fiscal 2010 was 9.0% and the discount rate used for fiscal 2009 was 10.0%. The lower discount rate was due to a number of factors, such as a decrease in corporate bond yields, decrease in betas, and decrease in market risk premiums, given current market conditions.

        The aggregate annual cash flows were determined based on management projections on a theatre-by-theatre basis further adjusted by non-theatre cash flows. The projections considered various factors including theatre lease terms, a reduction in attendance, and a reduction in capital investments in new theatres, given current market conditions and the resulting difficulty with obtaining contracts for new-builds. Cash flow estimates included in the analysis reflect our best estimate of the impact of the roll-out of digital projectors throughout our theatre circuit. Because we entered into a definitive agreement to acquire Kerasotes on December 9, 2009 and consummated the acquisition on May 24,

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2010, the valuation study includes our projected cash flows for Kerasotes. Based on the seasonal nature of our business, fluctuations in attendance from period to period are expected and we do not believe that the results would significantly decrease our projections for the full fiscal year 2011, or impact our conclusions regarding goodwill impairment. The anticipated acceleration of depreciation of the 35mm equipment described above under "—Significant Events" does not have an impact on our estimation of fair value as depreciation does not impact our projected available cash flow. The expected increases in rent expense upon full deployment of the digital projection systems also described under "—Significant Events" were included in the cash flow projections used to estimate our fair value as a part of our fiscal 2010 annual goodwill impairment analysis, and had the impact of reducing the projected cash flows. Because Cinemex was sold in December 2008, cash flows for the fiscal 2009 study did not include results from Cinemex. Cash flows were projected through fiscal 2017 and assumed revenues would increase approximately 3.25% annually primarily due to projected increases in ticket and concession pricing. Costs and expenses, as a percentage of revenue are projected to decrease from 85.5% to 85.1% through fiscal 2017. The residual value is a function of the estimated cash flow for fiscal 2018 divided by a capitalization rate (discount rate less long-term growth rate of 2%) then discounted back to represent the present value of the cash flows beyond the discrete projection period. You should note that we utilized the foregoing assumptions about future revenues and costs and expenses for the limited purpose of performing our annual goodwill impairment analysis. These assumptions should not be viewed as "projections" or as representations by us as to expected future performance or results of operations, and you should not rely on them in deciding whether to invest in our common stock. See "Special Note Regarding Forward-Looking Statements."

        As the expectations of the average investor are not directly observable, the market risk premium must be inferred. One approach is to use the long-run historical arithmetic average premiums that investors have historically earned over and above the returns on long-term Treasury bonds. The premium obtained using the historical approach is sensitive to the time period over which one calculates the average. Depending on the time period chosen, the historical approach yields an average premium in a range of 5.0% to 8.0%.

        There was no goodwill impairment as of December 30, 2010, April 1, 2010 or April 2, 2009.

        Film exhibition costs.    We have agreements with film companies who provide the content we make available to our customers. We are required to routinely make estimates and judgments about box office receipts for certain films and for films provided by specific film distributors in closing our books each period. These estimates are subject to adjustments based upon final settlements and determinations of final amounts due to our content providers that are typically based on a films box office receipts and how well it performs. In certain instances this evaluation is done on a film by film basis or in the aggregate by film production suppliers. We rely upon our industry experience and professional judgment in determining amounts to fairly record these obligations at any given point in time. The accrual made for film costs have historically been material and we expect they will continue to be so into the future. During fiscal years 2010, 2009 and 2008 our film exhibition costs totaled $928.6 million, $842.7 million and $860.2 million, respectively.

        Income and operating taxes.    Income and operating taxes are inherently difficult to estimate and record. This is due to the complex nature of the tax code which we use to file our tax returns and also because our returns are routinely subject to examination by government tax authorities, including federal, state and local officials. Most of these examinations take place a few years after we have filed our tax returns. Our tax audits in many instances raise questions regarding our tax filing positions, the timing and amount of deductions claimed and the allocation of income among various tax jurisdictions. Our federal and state tax operating loss carried forward of approximately $457.9 million and $891.4 million, respectively at April 1, 2010, require us to estimate the amount of carry forward losses that we can reasonably be expected to realize using feasible and prudent tax planning strategies that are available to us. Future changes in conditions and in the tax code may change these strategies and thus change the amount of carry forward losses that we expect to realize and the amount of valuation

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allowances we have recorded. Accordingly future reported results could be materially impacted by changes in tax matters, positions, rules and estimates and these changes could be material.

        Gift card and packaged ticket revenues.    As noted in our significant accounting policies for revenue we defer 100% of these items and recognize these amounts as they are redeemed by customers or when we estimate the likelihood of future redemption is remote based upon applicable laws and regulations. A vast majority of gift cards are used or partially used. However a portion of the gift cards and packaged ticket sales we sell to our customers are not redeemed and not used in whole or in part. Non-redeemed or partially redeemed cards or packaged tickets are known as "breakage" in our industry. We are required to estimate breakage and do so based upon our historical redemption patterns. Our history indicates that if a card or packaged ticket is not used for 18 months or longer, its likelihood of being used past this 18 month period is remote. When it is determined that a future redemption is remote we record income for unused cards and tickets. We changed our estimate on when packaged tickets would be considered remote in terms of future redemption in fiscal 2008 and changed our estimate of redemption rates for packaged tickets in 2009. Prior to 2008 dates we had estimated that unused packaged tickets would not become remote in terms of future use until 24 months after they were issued. The change we made to shorten this period from 24 to 18 months and align redemption patterns for packaged tickets with our gift card program represented our best judgment based on continued development of specific historical redemption patterns in our gift cards at AMC. We believe this 18 month period continues to be appropriate and do not anticipate any changes to this policy given our historical experience. We monitor redemptions and if we were to determine changes in our redemption statistics had taken place we would be required to change the current 18 month time period to a period that was determined to be more appropriate. This could cause us to either accelerate or lengthen the amount of time a gift card or packaged ticket is outstanding prior to being remote in terms of any future redemption.

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Operating Results

        The following table sets forth our revenues, costs and expenses attributable to our operations. Reference is made to note 15 to the audited consolidated financial statements included elsewhere in this prospectus for additional information therein.

        Both fiscal years 2010 and 2009 include 52 weeks and fiscal year 2008 includes 53 weeks.

(In thousands)
  39 Weeks
Ended
Dec. 30, 2010
  39 Weeks
Ended
Dec. 31, 2009
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
  53 Weeks
Ended
April 3, 2008
 

Revenues

                               

Theatrical exhibition

                               
 

Admissions

  $ 1,334,527   $ 1,281,145   $ 1,711,853   $ 1,580,328   $ 1,615,606  
 

Concessions

    515,709     487,908     646,716     626,251     648,330  
 

Other theatre

    47,208     44,493     59,170     58,908     69,108  
                       
 

Total revenues

  $ 1,897,444   $ 1,813,546   $ 2,417,739   $ 2,265,487   $ 2,333,044  
                       

Operating Costs and Expenses

                               

Theatrical exhibition

                               
 

Film exhibition costs

  $ 704,646   $ 696,704   $ 928,632   $ 842,656   $ 860,241  
 

Concession costs

    64,061     53,448     72,854     67,779     69,597  
 

Operating expense

    496,146     449,165     610,774     576,022     572,740  
 

Rent

    356,121     331,107     440,664     448,803     439,389  

General and administrative expense:

                               
 

Merger, acquisition and transaction costs

    13,396     973     2,578     1,481     7,310  
 

Management fee

    3,750     3,750     5,000     5,000     5,000  
 

Other

    41,316     41,173     58,274     53,800     39,084  

Depreciation and amortization

    156,895     142,949     188,342     201,413     222,111  

Impairment of long-lived assets

            3,765     73,547     8,933  
                       
 

Operating costs and expenses

  $ 1,836,331   $ 1,719,269   $ 2,310,883   $ 2,270,501   $ 2,224,405  
                       

Operating Data (at period end—unaudited)

                               
 

Screen additions

    55     6     6     83     136  
 

Screen acquisitions

    960                  
 

Screen dispositions

    325     90     105     77     196  
 

Average screens—continuing operations(1)

    5,080     4,501     4,485     4,545     4,561  
 

Number of screens operated

    5,203     4,528     4,513     4,612     4,606  
 

Number of theatres operated

    361     299     297     307     309  
 

Screens per theatre

    14.4     15.1     15.2     15.0     14.9  
 

Attendance (in thousands)—continuing operations(1)

    152,895     152,147     200,285     196,184     207,603  

(1)
Includes consolidated theatres only.

        We present Adjusted EBITDA as a supplemental measure of our performance. We define Adjusted EBITDA as earnings (loss) from continuing operations plus (i) income tax provisions (benefit), (ii) interest expense and (iii) depreciation and amortization, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our ongoing operating performance. These further adjustments are itemized below. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

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Reconciliation of Adjusted EBITDA
(unaudited)

(In thousands)
  39 Weeks
Ended
Dec. 30, 2010
  39 Weeks
Ended
Dec. 31, 2009
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
  53 Weeks
Ended
April 3, 2008
 

Earnings (loss) from continuing operations

  $ (4,975 ) $ 36,797   $ 87,445   $ (158,774 ) $ (8,043 )

Plus:

                               
 

Income tax provision (benefit)

    2,125     32,100     (36,300 )   5,800     (7,580 )
 

Interest expense

    136,179     129,254     174,091     188,681     204,226  
 

Depreciation and amortization

    156,895     142,949     188,342     201,413     222,111  
 

Impairment of long-lived assets

            3,765     73,547     8,933  
 

Certain operating expenses(1)

    94     3,986     6,099     1,517     (16,248 )
 

Equity in earnings of non-consolidated entities

    (17,057 )   (18,127 )   (30,300 )   (24,823 )   (43,019 )
 

Gain on NCM, Inc. stock sale

    (64,648 )                
 

Investment income

    (387 )   (213 )   (287 )   (1,759 )   (24,013 )
 

Other (income) expense(2)

    21,771     (73,958 )   (73,958 )       (1,246 )
 

General and administrative expense:

                               
   

Merger, acquisition and transaction costs

    13,396     973     2,578     1,481     7,310  
   

Management fee

    3,750     3,750     5,000     5,000     5,000  
   

Stock-based compensation expense

    1,020     1,248     1,384     2,622     207  
                       

Adjusted EBITDA(3)(4)

  $ 248,163   $ 258,759   $ 327,859   $ 294,705   $ 347,638  
                       

(1)
Amounts represent preopening expense, theatre and other closure expense (income) and disposition of assets and other gains included in operating expenses.

(2)
Other expense for the 39 weeks ended December 30, 2010 is comprised of the loss on extinguishment of indebtedness related to the redemption of the 11% senior notes due 2016 of $7.6 million, loss on extinguishment related to the redemption of the 12% senior discount notes due 2014 of $10.7 million and expense related to the modification of the senior secured credit facility of $3.4 million. Other expense for fiscal 2010 is comprised of the gain on extinguishment of indebtedness of $85.2 million related to the Parent's term facility loan and loss on extinguishment of indebtedness related to the redemption of our 85/8% senior notes due 2012 of $11.3 million. Other income for fiscal 2008 is comprised of recoveries for property loss related to Hurricane Katrina.

(3)
Does not reflect reduction in costs we anticipate that we will achieve relating to modifications made to our RealD and IMAX agreements in fiscal 2011. Had the modifications to the RealD and IMAX agreements been in place at December 31, 2009, we would have further reduced our operating costs by $6.5 million. Also does not reflect the anticipated synergies and cost savings related to the Kerasotes Acquisition that we expect to derive from increased ticket and concession revenues at the former Kerasotes locations as a result of moving to our operating practices, decreased costs for newspaper advertising and concessions for those locations, and general and administrative expense savings, particularly with respect to the consolidation of corporate overhead functions and elimination of redundancies. Based on the cost savings initiatives we have implemented since the Kerasotes Acquisition, which include reductions in salaries, reductions in newspaper advertising costs, savings achieved in respect of concession costs and theatre operating

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(4)
The acquisition of Kerasotes contributed approximately $26.6 million in Adjusted EBITDA during the thirty-nine weeks ended December 30, 2010.

        Adjusted EBITDA is a non-GAAP financial measure commonly used in our industry and should not be construed as an alternative to net earnings (loss) as an indicator of operating performance or as an alternative to cash flow provided by operating activities as a measure of liquidity (as determined in accordance with GAAP). Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. We have included Adjusted EBITDA because we believe it provides management and investors with additional information to measure our performance and liquidity, estimate our value and evaluate our ability to service debt. In addition, we use Adjusted EBITDA for incentive compensation purposes.

        Adjusted EBITDA has important limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. For example, Adjusted EBITDA:

For the 39 Weeks Ended December 30, 2010 and December 31, 2009

        Revenues.    Total revenues increased 4.6%, or $83.9 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009. This increase included approximately $168.3 million of additional revenues resulting from the acquisition of Kerasotes. Admissions revenues increased 4.2%, or $53.4 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009, due to a 3.7% increase in average ticket prices and a 0.5% increase in attendance. The increase in attendance and increase in admissions revenues includes the increased attendance and admissions revenues of approximately $111.0 million from Kerasotes. The increase in average ticket price was primarily due to an increase in attendance from 3D film product for which we are able to charge more per ticket than for a standard 2D film. Admissions revenues at comparable theatres (theatres opened on or before the first quarter of fiscal 2010) decreased 3.1%, or $38.7 million, during the thirty-nine weeks ended December 30, 2010 from the comparable period last year. Attendance was negatively impacted by less favorable film product during the thirty-nine weeks ended December 30, 2010 as compared to the thirty-nine weeks ended December 31, 2009. Concessions revenues increased 5.7%, or $27.8 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009, due to a 5.0% increase in average concessions per patron and the increase in attendance, which was primarily due to the acquisition of Kerasotes. The increase in concession

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revenues includes approximately $54.6 million from Kerasotes. The increase in concessions per patron includes the impact of concession price and size increases placed in effect during the third quarter of fiscal 2010 and the second and third quarters of fiscal 2011, and a shift in product mix to higher priced items. Other theatre revenues increased 6.1%, or $2.7 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009, primarily due to increases in advertising revenues, package ticket sales, and theatre rentals. The increase in other theatre revenues includes $2.7 million from Kerasotes.

        Operating Costs and Expenses.    Operating costs and expenses increased 6.8%, or $117.1 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009. The effect of the acquisition of Kerasotes was an increase in operating costs and expenses of approximately $174.9 million. Film exhibition costs increased 1.1%, or $7.9 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009 due to the increase in admissions revenues, partially offset by the decrease in film exhibition costs as a percentage of admissions revenues. As a percentage of admissions revenues, film exhibition costs were 52.8% in the current period and 54.4% in the prior year period. Concession costs increased 19.9%, or $10.6 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009 due to an increase in concession costs as a percentage of concession revenues and the increase in concession revenues. As a percentage of concessions revenues, concession costs were 12.4% in the current period compared with 11.0% in the prior period, primarily due to the concession price and size increases, a shift in product mix from higher to lower margin items, and concession offers targeting attendance growth. As a percentage of revenues, operating expense was 26.1% in the current period as compared to 24.8% in the prior period. Gains were recorded on disposition of assets during the thirty-nine weeks ended December 30, 2010 which reduced operating expenses by approximately $10.3 million, primarily due to the sale of a divested legacy AMC theatre in conjunction with the acquisition of Kerasotes. Rent expense increased 7.6%, or $25.0 million, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009, primarily due to increased rent as a result of the acquisition of Kerasotes of approximately $30.4 million.

        We continually monitor the performance of our theatres, and factors such as changing consumer preferences for filmed entertainment and our inability to sublease or utilize vacant space could negatively impact operating results and result in future screen closures, abandonments, sales, dispositions and significant theatre and other closure charges prior to expiration of underlying lease agreements.

General and Administrative Expense:

        Merger, Acquisition and Transaction Costs.    Merger, acquisition and transaction costs increased $12.4 million during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009. Current year costs primarily consist of costs related to the acquisition of Kerasotes.

        Management Fees.    Management fees were unchanged during the thirty-nine weeks ended December 30, 2010. Management fees of $1.3 million are paid quarterly, in advance, to our Sponsors in exchange for consulting and other services.

        Other.    Other general and administrative expense increased 0.3%, or $143,000, during the thirty-nine weeks ended December 30, 2010 compared to the thirty-nine weeks ended December 31, 2009 primarily due to increases in salaries expense and estimated expense related to our complete withdrawal from a union-sponsored pension plan of $2.7 million, partially offset by decreases in incentive compensation expense related to declines in operating performance. During the thirty-nine

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weeks ended December 31, 2009, we recorded $1.4 million of expense related to a complete withdrawal from a union-sponsored pension plan.

        Depreciation and Amortization.    Depreciation and amortization increased 9.8%, or $13.9 million, compared to the prior period. Increases in depreciation and amortization expense during the thirty-nine weeks ended December 30, 2010 are the result of increased net book value of theatre assets primarily due to the acquisition of Kerasotes, which contributed $20.5 million of depreciation expense, partially offset by decreases in the declining net book value of legacy theatre assets.

        Other Expense (Income).    Other expense (income) includes $(11.8) million and $(11.5) million of income related to the derecognition of gift card liabilities, as to which we believe future redemption to be remote, during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. Other expense (income) includes a loss on extinguishment of indebtedness related to the redemption of our 11% senior subordinated notes due 2016 of $7.6 million, expense related to the modification of our senior secured credit facility term loan due 2013 of $3.0 million, our senior secured credit facility revolver of $367,000 and loss on redemption of 12% senior discount notes due 2014 of $10.7 million. Other expense (income) includes a loss of $11.3 million related to the redemption of our 85/8% Senior Notes due 2012 and a gain on extinguishment of indebtedness related to the parent term loan facility of $85.2 million during the thirty-nine weeks ended December 31, 2009.

        Interest Expense.    Interest expense increased 5.3%, or $6.9 million, primarily due to an increase in interest expense related to the issuance of our 8.75% Senior Notes due 2019 (the "Notes due 2019") on June 9, 2009 and the Notes due 2020 on December 15, 2010.

        Equity in Earnings of Non-Consolidated Entities.    Equity in earnings of non-consolidated entities was $17.1 million in the current period compared to $18.1 million in the prior period. Equity in earnings related to our investment in National CineMedia, LLC were $23.1 million and $20.7 million for the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. Equity in losses related to our investment in Digital Cinema Implementation Partners, LLC ("DCIP") were $5.4 million and $2.2 million for the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively.

        Gain on NCM, Inc. Stock Sale.    The gain on NCM, Inc. shares of common stock sold during the thirty-nine weeks ended December 30, 2010 was $64.6 million. See Note 6—"Investments" to our unaudited consolidated financial statements included elsewhere in this prospectus for further information.

        Investment Income.    Investment income was $387,000 for the thirty-nine weeks ended December 30, 2010 compared to $213,000 for the thirty-nine weeks ended December 31, 2009.

        Income Tax Provision.    The income tax provision from continuing operations was $2.1 million for the thirty-nine weeks ended December 30, 2010 and $32.1 million for the thirty-nine weeks ended December 31, 2009. See Note 8—"Income Taxes" to our unaudited consolidated financial statements included elsewhere in this prospectus for further information.

        Earnings from Discontinued Operations, Net.    On December 29, 2008, we sold our operations in Mexico, including 44 theatres and 493 screens. The results of operations of the Cinemex theatres have been classified as discontinued operations for all periods presented.

        Net Earnings.    Net earnings (loss) were ($4.4) million and $37.8 million for the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. Net loss during the thirty-nine weeks ended December 30, 2010 were positively impacted by a gain on sale of NCM, Inc. shares of $64.6 million and a gain on disposition of assets of approximately $10.3 million, and negatively impacted by increased merger and acquisition costs of approximately $12.4 million primarily due to the

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acquisition of Kerasotes, loss on extinguishment and modification of indebtedness of $21.8 million and increased interest expense of $6.9 million. Net earnings during the thirty-nine weeks ended December 31, 2009 were negatively impacted by an expense of $11.3 million related to the redemption of our 85/8% Senior Notes due 2012, positively impacted by a $85.2 million gain on extinguishment related to the parent term loan facility and negatively impacted by a provision for income tax expense of $32.1 million.

For the Year Ended April 1, 2010 and April 2, 2009

        Revenues.    Total revenues increased 6.7%, or $152.3 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009. Admissions revenues increased 8.3%, or $131.5 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009, due to a 6.1% increase in average ticket prices and a 2.1% increase in attendance. Admissions revenues at comparable theatres (theatres opened on or before the first quarter of fiscal 2009) increased 8.5%, or $131.5 million, during the year ended April 1, 2010 from the comparable period last year. The increase in average ticket price was primarily due to increases in attendance from IMAX and 3D film product where we are able to charge more per ticket than for a standard 2D film, as well as our practice of periodically reviewing ticket prices and making selective adjustments based upon such factors as general inflationary trends and conditions in local markets. Attendance was positively impacted by more favorable 3D and IMAX film product during the year ended April 1, 2010 as compared to the year ended April 2, 2009, as well as by an increase in the number of IMAX and 3D screens that we operate. Concessions revenues increased 3.3%, or $20.5 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009, due primarily to the increase in attendance. Other theatre revenues increased 0.4%, or $262,000, during the year ended April 1, 2010 compared to the year ended April 2, 2009, primarily due to increases in on-line ticket fees, partially offset by a reduction in theatre rentals.

        Operating costs and expenses.    Operating costs and expenses increased 1.8%, or $40.4 million during the year ended April 1, 2010 compared to the year ended April 2, 2009. Film exhibition costs increased 10.2%, or $86.0 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009 due to the increase in admissions revenues and the increase in film exhibition costs as a percentage of admissions revenues. As a percentage of admissions revenues, film exhibition costs were 54.2% in the current period and 53.3% in the prior year period primarily due to an increase in admissions revenues on higher grossing films, which typically carry a higher film cost as a percentage of admissions revenues. Concession costs increased 7.5%, or $5.1 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009 due to an increase in concession costs as a percentage of concessions revenues and the increase in concession revenues. As a percentage of concessions revenues, concession costs were 11.3% in the current period compared with 10.8% in the prior period. As a percentage of revenues, operating expense was 25.3% in the current period as compared to 25.4% in the prior period. Rent expense decreased 1.8%, or $8.1 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009 primarily due to rent reductions from landlords related to their failure to meet co-tenancy provisions in certain lease agreements and renegotiations on more favorable terms. Rent reductions related to co-tenancy may not continue should our landlords meet the related co-tenancy provisions in the future.

        Merger, acquisition and transaction costs.    Merger, acquisition and transaction costs increased $1.1 million during the year ended April 1, 2010 compared to the year ended April 2, 2009 primarily due to costs incurred related to the Kerasotes acquisition during the current year.

        Management fees.    Management fees were unchanged during the year ended April 1, 2010. Management fees of $1.3 million are paid quarterly, in advance, to our Sponsors in exchange for consulting and other services.

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        Other.    Other general and administrative expense increased 8.3%, or $4.5 million, during the year ended April 1, 2010 compared to the year ended April 2, 2009 due primarily to increases in annual incentive compensation of approximately $12 million based on improved operating performance and increases in net periodic pension expense of $4.7 million, partially offset by decreases in cash severance payments of $7 million to our former Chief Executive Officer made in the prior year and a decrease in expense related to a union-sponsored pension plan of $3.9 million. During the year ended April 2, 2009, we recorded $5.3 million of expense related to our partial withdrawal liability for a union-sponsored pension plan. During the year ended April 1, 2010, we recorded $1.4 million of expense related to our estimated complete withdrawal from the union-sponsored pension plan.

        Depreciation and Amortization.    Depreciation and amortization decreased 6.5%, or $13.1 million, compared to the prior year due primarily to the impairment of long-lived assets in fiscal 2009.

        Impairment of Long-Lived Assets.    During the year ended April 1, 2010, we recognized non-cash impairment losses of $3.8 million related to theatre fixed assets and real estate recorded in other long-term assets. We recognized an impairment loss of $2.3 million on five theatres with 41 screens (in Florida, California, New York, Utah and Maryland). Of the theatre charge, $2.3 million was related to property, net. We also adjusted the carrying value of undeveloped real estate assets based on a recent appraisal which resulted in an impairment charge of $1.4 million. During the year ended April 2, 2009, we recognized non-cash impairment losses of $73.6 million related to theatre fixed assets, internal use software and assets held for sale. We recognized an impairment loss of $65.6 million on 34 theatres with 520 screens (in Arizona, California, Canada, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, New York, North Carolina, Ohio, Texas, Virginia, Washington and Wisconsin). Of the theatre charge, $1.4 million was related to intangible assets, net, and $64.3 million was related to property, net. We recognized an impairment loss on abandonment of internal use software, recorded in other long-term assets of $7.1 million when management determined that the carrying value would not be realized through future use. We adjusted the carrying value of our assets held for sale to reflect the subsequent sales proceeds received in January 2009 and declines in fair value, which resulted in impairment charges of $786,000.

        Other (Income) Expense.    Other (income) expense includes $13.6 million and $14.1 million of income related to the derecognition of gift card liabilities, as to which we believe future redemption to be remote, during the year ended April 1, 2010 and April 2, 2009, respectively. Other (income) expense includes a gain on extinguishment of indebtedness of $85.2 million related to the Parent term loan facility and a loss on extinguishment of indebtedness of $11.3 million related to the Cash Tender Offer during the year ended April 1, 2010.

        Interest Expense.    Interest expense decreased 7.7%, or $14.6 million, primarily due to a decrease in interest rates on the senior secured credit facility, extinguishment of debt from the Cash Tender Offer and partial extinguishment of the Parent term loan facility, partially offset by an increase in interest expense related to the issuance of the Notes due 2019.

        Equity in Earnings of Non-Consolidated Entities.    Equity in earnings of non-consolidated entities was $30.3 million in the current year compared to $24.8 million in the prior year. Equity in earnings related to our investment in NCM LLC were $34.4 million and $27.7 million for the year ended April 1, 2010 and April 2, 2009, respectively. We recognized an impairment loss of $2.7 million related to an equity method investment in one U.S. motion picture theatre during the year ended April 2, 2009.

        Investment Income.    Investment income was $287,000 for the year ended April 1, 2010 compared to $1.8 million for the year ended April 2, 2009. The year ended April 2, 2009 includes a gain of $2.4 million from the May 2008 sale of our investment in Fandango, which was the result of receiving the final distribution from the general claims escrow account. During the year ended April 2, 2009, we

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recognized an impairment loss of $1.5 million related to unrealized losses previously recorded in accumulated other comprehensive income on marketable securities related to one of our deferred compensation plans when we determined the decline in fair value below historical cost to be other than temporary.

        Income Tax Provision (Benefit).    The income tax provision (benefit) from continuing operations was a benefit of $36.3 million for the year ended April 1, 2010 and a provision of $5.8 million for the year ended April 2, 2009. Our income tax benefit in fiscal 2010 includes the release of $55.2 million of valuation allowance for deferred tax assets. See note 9 to the audited consolidated financial statements included elsewhere in this prospectus for our effective income tax rate reconciliation.

        Earnings (Loss) from Discontinued Operations, Net.    On December 29, 2008, we sold our operations in Mexico, including 44 theatres and 493 screens. The results of operations of the Cinemex theatres have been classified as discontinued operations for all years presented and include bad debt expense related to amounts due from Cinemex of $8.9 million for the year ended April 1, 2010. See note 2 to the audited consolidated financial statements included elsewhere in this prospectus for the components of the earnings from discontinued operations.

        Net Earnings (Loss).    Net earnings (loss) were $79.9 million and $(149 million) for the year ended April 1, 2010 and April 2, 2009, respectively. Net earnings were favorably impacted by a gain on extinguishment of indebtedness of $85.2 million related to the Parent term loan facility and a $55.2 million reduction in the valuation allowance for deferred income tax assets. Net earnings during the year ended April 1, 2010 were negatively impacted by an expense of $11.3 million related to the Cash Tender Offer and by losses of $8.9 million related to the allowance for doubtful accounts and direct write-offs of amounts due from Cinemex included in discontinued operations. Net loss for the year ended April 2, 2009 was primarily due to impairment charges of $73.5 million.

For the Year Ended April 2, 2009 and April 3, 2008

        Revenues.    Total revenues decreased 2.9%, or $67.6 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008. Fiscal year 2009 includes 52 weeks and fiscal year 2008 includes 53 weeks which we estimate contributed approximately $30 million to the decline in our total revenues. Admissions revenues decreased 2.2%, or $35.3 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008, due to a 5.5% decrease in attendance partially offset by a 3.6% increase in average ticket price. The increase in average ticket price was primarily due to our practice of periodically reviewing ticket prices and making selective adjustments based upon such factors as general inflationary trends and conditions in local markets. Admissions revenues at comparable theatres (theatres opened on or before the first quarter of fiscal 2008) decreased 4.1%, or $63.8 million, during the year ended April 2, 2009 from the comparable period last year. Based upon available industry sources, box office revenues of our comparable theatres slightly underperformed the overall industry comparable theatres in the markets where we operate. We believe our underperformance is primarily the result of changes in distribution patterns and an increase in the number of prints released in our markets. While our box office performance on such films was in line with our expectations, the increase in prints in our market diluted our overall performance against the industry. Concessions revenues decreased 3.4%, or $22.1 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008 due to the decrease in attendance partially offset by a 2.2% increase in average concessions per patron. Other theatre revenues decreased 14.8%, or $10.2 million, during the year ended April 2, 2009 compared to year ended April 3, 2008, primarily due to a decrease in advertising revenues. See note 1 to the audited consolidated financial statements included elsewhere in this prospectus for discussion of the change in estimate for revenues recorded during the years ended April 2, 2009 and April 3, 2008.

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        Operating costs and expenses.    Operating costs and expenses increased 2.1%, or $46.1 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008. Film exhibition costs decreased 2.0%, or $17.6 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008 due to the decrease in admissions revenues partially offset by an increase in film exhibition costs as a percentage of admission revenues. As a percentage of admissions revenues, film exhibition costs were 53.3% in the current year as compared with 53.2% in the prior year. Concession costs decreased 2.6%, or $1.8 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008 due to the decrease in concession revenues partially offset by an increase in concession costs as a percentage of concessions revenues. As a percentage of concessions revenues, concession costs were 10.8% in the current year and 10.7% in the prior year. As a percentage of revenues, operating expense was 25.4% in the current year and 24.5% in the prior year. Operating expense in the current and prior year includes $2.3 million and $21 million of theatre and other closure income, respectively, due primarily to lease terminations negotiated on favorable terms. Rent expense increased 2.1%, or $9.4 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008 due primarily to the opening of new theatres. Preopening expense decreased $1.7 million during the year ended April 2, 2009 due to a decline in screen additions.

        Merger, acquisition and transaction costs.    Merger, acquisition and transaction costs decreased $5.8 million during the year ended April 2, 2009 compared to the year ended April 3, 2008. Prior year costs are primarily comprised of professional and consulting expenses related to a proposed initial public offering of common stock that was withdrawn on June 19, 2007 and preacquisition expenses for casualty insurance losses that occurred prior to the merger with Loews.

        Management fees.    Management fees were unchanged during the year ended April 2, 2009. Management fees of $1.3 million are paid quarterly, in advance, to our Sponsors in exchange for consulting and other services.

        Other.    Other general and administrative expense increased 37.7%, or $14.7 million, during the year ended April 2, 2009 compared to the year ended April 3, 2008. The increase in other general and administrative expenses is primarily due to a cash severance payment of $7 million to our former Chief Executive Officer and an expense of $5.3 million related to our partial withdrawal liability for a union-sponsored pension plan, partially offset by a pension curtailment gain of $1.1 million as a result of the retirement of our former chief executive officer.

        Depreciation and Amortization.    Depreciation and amortization decreased 9.3%, or $20.7 million, compared to the prior year due primarily to certain intangible assets becoming fully amortized, the closing of theatres and impairment of long-lived assets.

        Impairment of Long-Lived Assets.    During fiscal 2009 we recognized non-cash impairment losses of $73.5 million related to theatre fixed assets, internal use software and assets held for sale. We recognized an impairment loss of $65.6 million on 34 theatres with 520 screens (in Arizona, California, Canada, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, New York, North Carolina, Ohio, Texas, Virginia, Washington and Wisconsin). Of the theatre charge, $1.4 million was related to intangible assets, net, and $64.3 million was related to property, net. We recognized an impairment loss on abandonment of internal use software, recorded in other long-term assets of $7.1 million when management determined that the carrying value would not be realized through future use, we adjusted the carrying value of our assets held for sale to reflect the sales proceeds received in fiscal 2009 and declines in fair value, which resulted in impairment charges of $786,000. During fiscal 2008 we recognized a non-cash impairment loss of $8.9 million that reduced property, net on 17 theatres with 176 screens (in New York, Maryland, Indiana, Illinois, Nebraska, Oklahoma, California, Arkansas, Pennsylvania, Washington, and the District of Columbia).

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        Other Income.    Other income includes $14.1 million and $11.3 million of income related to the derecognition of gift card liabilities, as to which we believe future redemption to be remote, during the year ended April 2, 2009 and April 3, 2008, respectively. Other income includes insurance recoveries related to Hurricane Katrina of $1.2 million for property losses in excess of property carrying cost and $397,000 for business interruption during the year ended April 3, 2008.

        Interest Expense.    Interest expense decreased 7.6%, or $15.5 million, primarily due to decreased interest rates on the senior secured credit facility.

        Equity in Earnings of Non-Consolidated Entities.    Equity in earnings of non-consolidated entities was $24.8 million in the current year compared to $43 million in the prior year. Equity in earnings related to our investment in NCM LLC were $27.7 million and $22.2 million for the year ended April 2, 2009 and April 3, 2008, respectively. Equity in earnings related to HGCSA was $18.7 million during the year ended April 3, 2008 and includes the gain related to the disposition of $18.8 million. We recognized an impairment loss of $2.7 million related to an equity method investment in one U.S. motion picture theatre during the year ended April 2, 2009.

        Investment Income.    Investment income was $1.8 million for the year ended April 2, 2009 compared to $24 million for the year ended April 3, 2008. The year ended April 2, 2009 and April 3, 2008 include a gain on the sale of our investment in Fandango of $2.4 million and $16 million, respectively. Interest income decreased $6.7 million from the prior year primarily due to decreases in temporary investments and decreases in rates of interest earned on temporary investments. During the year ended April 2, 2009, we recognized an impairment loss of $1.5 million related to unrealized losses previously recorded in accumulated other comprehensive income on marketable securities related to one of our deferred compensation plans when we determined the decline in fair value below historical cost to be other than temporary.

        Income Tax Provision (Benefit).    The income tax provision (benefit) from continuing operations was $5.8 million for the year ended April 2, 2009 and $(7.6 million) for the year ended April 3, 2008 with the reduction due primarily to the decrease in earnings from continuing operations before income taxes. See note 9 to the audited consolidated financial statements included elsewhere in this prospectus.

        Earnings from Discontinued Operations, Net.    On December 29, 2008, we sold our operations in Mexico, including 44 theatres and 493 screens. The results of operations of the Cinemex theatres have been classified as discontinued operations, and information presented for all years reflects the new classification. See note 2 to the audited consolidated financial statements included elsewhere in this prospectus for the components of the earnings from discontinued operations.

        Net Loss.    Net losses were $149 million and $6.2 million for the year ended April 2, 2009 and April 3, 2008, respectively. The increase in net loss was primarily due to impairment charges of $73.5 million in the current year and the recognition of a gain on the disposition of HGCSA of $18.8 million, a gain on the disposition of Fandango of $16 million and theatre and other closure income of $21 million which were recorded in the prior year.

Liquidity and Capital Resources

        Our consolidated revenues are primarily collected in cash, principally through box office admissions and theatre concessions sales. We have an operating "float" which partially finances our operations and which generally permits us to maintain a smaller amount of working capital capacity. This float exists because admissions revenues are received in cash, while exhibition costs (primarily film rentals) are ordinarily paid to distributors from 20 to 45 days following receipt of box office admissions revenues. Film distributors generally release the films which they anticipate will be the most successful during the summer and holiday seasons. Consequently, we typically generate higher revenues during such periods.

        We fund the costs of constructing, maintaining and remodeling new theatres through existing cash balances, cash generated from operations or borrowed funds, as necessary. We generally lease our theatres pursuant to long-term non-cancelable operating leases which may require the developer, who owns the property, to reimburse us for the construction costs. We may decide to own the real estate assets of new theatres and, following construction, sell and leaseback the real estate assets pursuant to long-term non-cancelable operating leases.

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        We believe that cash generated from operations and existing cash and equivalents will be sufficient to fund operations and planned capital expenditures and acquisitions currently and for at least the next 12 months and enable us to maintain compliance with covenants related to the Parent term loan facility, the senior secured credit facility and our 8% Senior Subordinated Notes due 2014 (the "Notes due 2014"), Discount Notes due 2014, 11% Senior Subordinated Notes due 2016 (the "Notes due 2016"), Notes due 2019 and 9.75% Senior Subordinated Notes due 2020 (the "Notes due 2020"). We are considering various options with respect to the utilization of cash and equivalents on hand in excess of our anticipated operating needs. Such options might include, but are not limited to, acquisitions of theatres or theatre companies, repayment of our corporate borrowings and payment of dividends.

Cash Flows from Operating Activities

        Cash flows provided by operating activities, as reflected in the consolidated statements of cash flows included elsewhere in this prospectus, were $36.8 million and $201.9 million during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. The decrease in cash flows provided by operating activities for the thirty-nine weeks ended December 30, 2010 was primarily due to increased payments related to the retirement of indebtedness, an increase in payments on accounts payables and accrued expenses and other liabilities, including payments of amounts acquired in the Kerasotes acquisition as well as payments made for merger, acquisition and transaction costs in connection with the Kerasotes acquisition. Cash flows during the thirty-nine weeks ended December 30, 2010 include third party modification fees of $2.9 million related to the modification of our senior secured credit facility, which reduced our cash flows from operating activities. We had working capital surplus as of December 30, 2010 and April 1, 2010 of $147.3 million and $256.0 million, respectively. Working capital includes $165.6 million and $125.8 million of deferred revenues as of December 30, 2010 and April 1, 2010, respectively. We have the ability to borrow against our senior secured credit facility to meet obligations as they come due (subject to limitations on the incurrence of indebtedness in our various debt instruments) and could incur indebtedness of $192.5 million on our senior secured credit facility to meet these obligations as of December 30, 2010.

        Cash flows provided by operating activities, as reflected in the consolidated statements of cash flows included elsewhere in this prospectus, were $198.9 million, $167.2 million and $201.2 million during the years ended April 1, 2010, April 2, 2009 and April 3, 2008 respectively. The increase in operating cash flows during the year ended April 1, 2010 is primarily due to an increase in accrued expenses and other liabilities as a result of increases in accrued interest and annual incentive compensation and the increase in attendance. The decrease in operating cash flows during the year ended April 2, 2009 is primarily due to the increase in net loss, which was partially offset by an increase in non-cash impairment charges. We had working capital surplus as of April 1, 2010 and April 2, 2009 of $256 million and $260.7 million, respectively. Working capital includes $125.8 million and $121.6 million of deferred revenue as of April 1, 2010 and April 2, 2009, respectively.

Cash Flows from Investing Activities

        Cash flows used in investing activities, as reflected in the consolidated statements of cash flows included elsewhere in this prospectus, were $198.3 million and $59.7 million, during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. Cash outflows from investing activities include capital expenditures of $84.1 million and $59.5 million during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. Our capital expenditures primarily consisted of maintaining our theatre circuit, technology upgrades, strategic initiatives and remodels. We expect that our gross capital expenditures cash outflows will be approximately $140.0 million to $150.0 million for fiscal 2011.

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        During the thirty-nine weeks ended December 30, 2010, we paid $280.6 million for the purchase of Kerasotes theatres at closing, net of cash acquired. The purchase included working capital and other purchase price adjustments as described in the Unit Purchase Agreement.

        During the thirty-nine weeks ended December 30, 2010, we received net proceeds of $102.2 million from the sale of 6,655,193 shares of common stock of NCM, Inc. for $16.00 per share and reduced our related investment in NCM by $37.6 million, the average carrying amount of the shares sold.

        We received $57.4 million in cash proceeds from the sale of certain theatres required to be divested in connection with the Kerasotes acquisition during the thirty-nine weeks ended December 30, 2010 and received $991,000 for the sale of real estate acquired from Kerasotes.

        Cash provided by (used in) investing activities, as reflected in the Consolidated Statement of Cash Flows were $(96.3 million), $100.9 million and $(139.4 million) during the years ended April 1, 2010, April 2, 2009 and April 3, 2008, respectively. On March 26, 2010, we acquired 117 digital projection systems from third party lessors for $6.8 million and sold these systems together with seven digital projectors that we owned to DCIP for cash proceeds of $6.6 million on the same day. Cash outflows from investing activities include capital expenditures of $97 million during the year ended April 1, 2010. We expect that our gross capital expenditures in fiscal 2011 will be approximately $130 million to $160 million.

        Cash flows for the year ended April 2, 2009 include proceeds from the sale of Cinemex of $224.4 million and proceeds from the sale of Fandango of $2.4 million. We have received an additional $4.3 million in purchase price adjustments from Cinemex in respect of tax payments and refunds and a working capital calculation and post closing adjustments during the year ended April 1, 2010. Cash flows for the year ended April 3, 2008 include proceeds from the disposal of HGCSA and Fandango of $28.7 million and $18 million, respectively.

        We fund the costs of constructing new theatres using existing cash balances; cash generated from operations or borrowed funds, as necessary. We generally lease our theatres pursuant to long-term non-cancelable operating leases which may require the developer, who owns the property, to reimburse us for the construction costs. We may decide to own the real estate assets of new theatres and, following construction, sell and leaseback the real estate assets pursuant to long-term non-cancelable operating leases.

Cash Flows from Financing Activities

        Cash flows provided by (used in) financing activities, as reflected in the consolidated statement of cash flows included elsewhere in this prospectus, were $352.9 million and $(32.7) million during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively.

        During the thirty-nine weeks ended December 30, 2010, we made payments of $170.7 million to redeem our 12% Senior Discount Notes due 2014 of which $120.5 million is classified as a financing activity and $50.2 million is classified as an operating activity because it was attributable to amounts historically accreted through interest expense as part of operating activities related to original issue discount.

        Proceeds from the issuance of the 9.75% Senior Notes due 2020 were $600.0 million and deferred financing costs paid related to the issuance of the 9.75% Senior Notes due 2020 were $12.0 million during the thirty-nine weeks ended December 30, 2010. In addition, deferred financing costs paid related to the senior secured credit facility were $1.7 million. During the thirty-nine weeks ended December 31, 2009, proceeds from the issuance of the 8.75% Senior Notes due 2019 were $585.5 million and deferred financing costs paid related to the issuance of the 8.75% Senior Notes due 2019 were $16.3 million.

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        During the thirty-nine weeks ended December 30, 2010, we made principal payments of $95.1 million to repurchase a portion of our 11% Senior Subordinated Notes due 2016. In addition, we made payments for tender offer and consent consideration of $5.8 million for our Notes due 2016. We redeemed the remaining $229.9 million aggregate principal amount outstanding Notes due 2016 at a price of $1,055 per $1,000 principal amount on February 1, 2011 in accordance with the terms of the indenture. During the thirty-nine weeks ended December 31, 2009, we made principal payments of $250.0 million in connection with the redemption of our 85/8% Senior Notes due 2012 and repaid $185.0 million of borrowings under our revolving credit facility.

        During fiscal 2010, we made payments that reduced the principal balance of the Parent's term loan facility from $466.9 million to $193.3 million, $160.0 million of which were made in the 39 weeks ended December 31, 2009. During fiscal 2009, we borrowed $185 million under our senior secured credit facility and repaid this amount in the 13 weeks ended July 2, 2009. During fiscal 2008, we made principal payments of $26.3 million on our corporate borrowings, capital and financing lease obligation, and mortgage obligations. In fiscal 2008, we also received proceeds of $396.0 million under the Parent's term loan facility and used the proceeds to pay a portion of a $652.8 million cash dividend paid to our stockholders.

        Concurrently with the closing of the merger of Loews with AMCE, AMCE entered into a senior secured credit facility, which is with a syndicate of banks and other financial institutions and provides financing of up to $850 million, consisting of a $650 million term loan facility with a maturity date of January 26, 2013 and a $200 million revolving credit facility that matures in 2012. The revolving credit facility includes borrowing capacity for available letters of credit and for swingline borrowings on same-day notice.

        Borrowings under our senior secured credit facility bear interest at a rate equal to an applicable margin plus, at our option, either a base rate or LIBOR. The current applicable margin for borrowings under the revolving credit facility is 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR borrowings, and the current applicable margin for borrowings under the term loan facility is 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR borrowings. The applicable margin for such borrowings may be reduced, subject to attaining certain leverage ratios. In addition to paying interest on outstanding principal under the senior secured credit facility, we are required to pay a commitment fee to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder at a rate equal to 0.25%. We also pay customary letter of credit fees. We may voluntarily repay outstanding loans under the senior secured credit facility at any time without premium or penalty, other than customary "breakage" costs with respect to LIBOR loans. We are required to repay $1.6 million of the term loan quarterly, beginning March 30, 2006 through September 30, 2012, with any remaining balance due on January 26, 2013.

        On February 24, 2004, AMCE sold $300 million aggregate principal amount of the Notes due 2014. The Notes due 2014 bear interest at the rate of 8% per annum, payable in March and September. The Notes due 2014 are redeemable at our option, in whole or in part, at any time on or after March 1, 2009 at 104.000% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after March 1, 2012, plus in each case interest accrued to the redemption date.

        On January 26, 2006, AMCE sold $325 million aggregate principal amount of the Notes due 2016. The Notes due 2016 bear interest at the rate of 11% per annum, payable February 1 and August 1 of each year. The Notes due 2016 are redeemable at our option, in whole or in part, at any time on or after February 1, 2011 at 105.5% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after February 1, 2014, plus in each case interest accrued to the redemption date.

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        On June 9, 2009, AMCE issued $600 million aggregate principal amount of Notes due 2019. Proceeds from the issuance of the notes were $585.5 million and were used to redeem the then outstanding $250.0 million aggregate principal amount of the Fixed Notes due 2012. Deferred financing costs paid related to the issuance of the notes were $16.3 million. The Notes due 2019 bear interest at the rate of 8.75% per annum, payable in June and December of each year. The Notes due 2019 are redeemable at our option, in whole or in part, at any time on or after June 1, 2014 at 104.375% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after June 1, 2017, plus interest accrued to the redemption date.

        On December 15, 2010, AMCE completed the offering of $600.0 million aggregate principal amount of the Notes due 2020. The Notes due 2020 mature on December 1, 2020, pursuant to an indenture dated as of December 15, 2010, among us, the Guarantors named therein and U.S. Bank National Association, as trustee (the "Indenture"). The Indenture provides that the Notes due 2020 are AMCE's general unsecured senior subordinated obligations and are fully and unconditionally guaranteed on a joint and several senior subordinated unsecured basis by all of its existing and future domestic restricted subsidiaries that guarantee its other indebtedness. We will pay interest on the notes at 9.75% per annum, semi-annually in arrears on June 1 and December 1, commencing on June 1, 2011. We may redeem some or all of the Notes due 2020 at any time on or after December 1, 2015, at the redemption prices set forth in the Indenture. We may redeem the Notes due 2020 on or after December 1, 2018 at a price equal to 100% of the principal amount of the Notes due 2020 redeemed plus accrued and unpaid interest to the redemption date. In addition, we may redeem up to 35% of the aggregate principal amount of the Notes due 2020 using net proceeds from certain equity offerings completed prior to December 1, 2013.

        On December 15, 2010, AMCE entered into a third amendment to our senior secured credit facility dated as of January 26, 2006 to, among other things: (i) extend the maturity of the term loans held by accepting lenders and to increase the interest rate with respect to such term loans, (ii) replace our existing revolving credit facility (with higher interest rates and a longer maturity than the existing revolving credit facility), and (iii) amend certain of the existing covenants therein. The following are key terms of the amendment:

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        As of December 30, 2010, we were in compliance with all financial covenants relating to our Parent term loan facility, our senior secured credit facility, the Notes due 2014, the Discount Notes due 2014, the Notes due 2016, the Notes due 2019 and the Notes due 2020.

New Post-IPO Governance Arrangements

        In connection with this offering, the Sponsors and certain of our pre-existing stockholders will enter into an Amended and Restated Stockholders Agreement, which, together with our Second Amended and Restated Certificate of Incorporation and the Management Stockholders Registration Rights Agreement, will define the rights of such stockholders post-initial public offering with respect to voting, governance, ownership and transfer of our stock. See "Certain Relationships and Related Party Transactions—Governance Agreements."

Contractual Obligations

        Pro Forma.    Minimum annual cash payments required under existing capital and financing lease obligations, maturities of corporate borrowings, future minimum rental payments under existing operating leases, furniture, fixtures, and equipment and leasehold purchase provisions, ADA related betterments and pension funding that have initial or remaining non-cancelable terms in excess of one year as of April 1, 2010 on a pro forma basis are as follows:

(In thousands)
  Minimum
Capital and
Financing
Lease
Payments
  Principal
Amount of
Corporate
Borrowings(1)
  Interest
Payments on
Corporate
Borrowings(2)
  Minimum
Operating
Lease
Payments
  Acquisitions
and Capital
Related
Betterments(3)
  Pension
Funding(4)
  Pro Forma
Total
Commitments
 

2011

  $ 10,096   $ 6,500   $ 130,250   $ 436,448   $ 19,234   $ 4,754   $ 607,282  

2012

    8,894     6,500     130,064     438,158     14,061     976     598,653  

2013

    7,926     145,287     129,454     425,731     1,000         709,398  

2014

    7,612     5,004     127,227     399,275     1,000         540,118  

2015

    7,683     5,004     127,051     395,984     1,000         536,722  

Thereafter

    76,304     1,654,080     581,638     2,500,207             4,812,229  
                               

Total

  $ 118,515   $ 1,822,375   $ 1,225,684   $ 4,595,803   $ 36,295   $ 5,730   $ 7,804,402  
                               

(1)
Represents cash requirements for the payment of principal on corporate borrowings. Total amount does not equal carrying amount due to unamortized discounts on issuance.

(2)
Interest expense on the term loan portion of our senior secured credit facility was estimated at 1.76% for the Term Loan due 2013 and 3.51% for the Term Loan due 2016 based upon the interest rate in effect as of December 30, 2010.

(3)
Includes committed capital expenditures and acquisitions including the estimated cost of ADA related betterments. Does not include planned, but non-committed capital expenditures.

(4)
Historically, we fund our pension plan such that the plan is 90% funded. The plan has been frozen effective December 31, 2006. The funding requirement has been estimated based upon our expected funding amount. Also included are payments due under a withdrawal liability for a union sponsored plan. The retiree health plan is not funded.

        Historical.    Minimum annual cash payments required under existing capital and financing lease obligations, maturities of corporate borrowings, future minimum rental payments under existing operating leases, furniture, fixtures, and equipment and leasehold purchase provisions, ADA related

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betterments and pension funding that have initial or remaining non-cancelable terms in excess of one year as of April 1, 2010 are as follows:

(In thousands)
  Minimum
Capital and
Financing
Lease
Payments
  Principal
Amount of
Corporate
Borrowings(1)
  Interest
Payments on
Corporate
Borrowings(2)
  Minimum
Operating
Lease
Payments
  Acquisitions
and Capital
Related
Betterments(3)
  Pension
Funding(4)
  Historical
Total
Commitments
 

2011

  $ 10,096   $ 572,295   $ 166,684   $ 436,448   $ 19,234   $ 4,754   $ 1,209,511  

2012

    8,894     6,500     154,064     438,158     14,061     976     622,653  

2013

    7,926     344,260     178,098     425,731     1,000         957,015  

2014

    7,612     305,004     149,227     399,275     1,000         862,118  

2015

    7,683     5,004     127,051     395,984     1,000         536,722  

Thereafter

    76,304     1,654,080     581,638     2,500,207             4,812,229  
                               

Total

  $ 118,515   $ 2,887,143   $ 1,356,762   $ 4,595,803   $ 36,295   $ 5,730   $ 9,000,248  
                               

(1)
Represents cash requirements for the payment of principal on corporate borrowings. Total amount does not equal carrying amount due to unamortized discounts on issuance. Fiscal 2011 principal payments include the repayment of $325.0 million on the Notes due 2016 and $240.8 million on the Discount Notes due 2014, which occurred in January and February of 2011.

(2)
Interest expense on the term loan portion of our senior secured credit facility was estimated at 1.76% for the Term Loan due 2013 and 3.51% for the Term Loan due 2016 based upon the interest rates in effect as of December 30, 2010.

(3)
Includes committed capital expenditures and acquisitions, including the estimated cost of ADA related betterments. Does not include planned, but non-committed capital expenditures.

(4)
We fund our pension plan such that the plan is in compliance with Employee Retirement Income Security Act ("ERISA") and the plan is not considered "at risk" as defined by ERISA guidelines. The plan has been frozen effective December 31, 2006. Also included are payments due under a withdrawal liability for a union sponsored plan. The retiree health plan is not funded.

        We have recognized an obligation for unrecognized benefits of $33.8 million and $34.5 million as of December 30, 2010 and April 1, 2010, respectively. There are currently unrecognized tax benefits which we anticipate will be resolved in the next 12 months; however, we are unable at this time to estimate what the impact on our effective tax rate will be. Any amounts related to these items are not included in the tables above.

Fee Agreement

        In connection with the holdco merger, on June 11, 2007, Parent, Holdings, AMCE and the Sponsors entered into a Fee Agreement (the "Management Fee Agreement"), which replaced the December 23, 2004 fee agreement among Holdings, AMCE and the Sponsors, as amended and restated on January 26, 2006 entered into in connection with the merger with LCE Holdings (the "original fee agreement"). The Management Fee Agreement provides for an annual management fee of $5 million, payable quarterly and in advance to our Sponsors, on a pro rata basis, until the twelfth anniversary from December 23, 2004, as well as reimbursements for each Sponsor's respective out-of-pocket expenses in connection with the management services provided under the Management Fee Agreement.

        In addition, the Management Fee Agreement provides for reimbursements by AMCE to the Sponsors for their out-of-pocket expenses, and by AMCE to Parent of up to $3.5 million for fees payable by Parent in any single fiscal year in order to maintain Parents' and AMCE's corporate existence, corporate overhead expenses and salaries or other compensation of certain employees.

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        Upon the consummation of a change in control transaction or an IPO, the Sponsors will receive, in lieu of quarterly payments of the annual management fee, an automatic fee equal to the net present value of the aggregate annual management fee that would have been payable to the Sponsors during the remainder of the term of the fee agreement (assuming a twelve year term from the date of the original fee agreement), calculated using the treasury rate having a final maturity date that is closest to the twelfth anniversary of the date of the original fee agreement date. As of December 30, 2010, we estimate this amount would be $26.1 million should a change in control transaction or an IPO occur. We expect to record any lump sum payment to the Sponsors as a dividend.

        The Management Fee Agreement also provides that AMCE will indemnify the Sponsors against all losses, claims, damages and liabilities arising in connection with the management services provided by the Sponsors under the fee agreement.

Investment in NCM LLC

        As of December 30, 2010, we held an investment in 16.98% of NCM LLC accounted for following the equity method. The fair market value of these shares is approximately $375.5 million as of December 30, 2010. Because we have little tax basis in these units, the sale of all these units at December 30, 2010 would require us to report taxable income of approximately $508.8 million including distributions received from NCM LLC that were previously deferred. Our investment in NCM LLC is a source of liquidity for us and we expect that any sales we may make of NCM LLC units would be made in such a manner to most efficiently manage any related tax liability. We have available net operating loss carryforwards which could reduce any related tax liability.

Impact of Inflation

        Historically, the principal impact of inflation and changing prices upon us has been to increase the costs of the construction of new theatres, the purchase of theatre equipment, rent and the utility and labor costs incurred in connection with continuing theatre operations. Film exhibition costs, our largest cost of operations, are customarily paid as a percentage of admissions revenues and hence, while the film exhibition costs may increase on an absolute basis, the percentage of admissions revenues represented by such expense is not directly affected by inflation. Except as set forth above, inflation and changing prices have not had a significant impact on our total revenues and results of operations.

New Accounting Pronouncements

        See note 1 to the audited consolidated financial statements included elsewhere in this prospectus for further information regarding recently issued accounting standards.

Quantitative and Qualitative Disclosures about Market Risk

        We are exposed to various market risks including interest rate risk and foreign currency exchange rate risk.

        Market risk on variable-rate financial instruments.    We maintain a senior secured credit facility, comprised of a $192.5 million revolving credit facility and a $650.0 term loan facility, which permits borrowings at a rate equal to an applicable margin plus, at our option, either a base rate or LIBOR. Increases in market interest rates would cause interest expense to increase and earnings before income taxes to decrease. The change in interest expense and earnings before income taxes would be dependent upon the weighted average outstanding borrowings during the reporting period following an increase in market interest rates. We had no borrowings on our revolving credit facility as of December 30, 2010 and had $619.1 million outstanding under the term loan facility on December 30, 2010. A 100 basis point change in market interest rates would have increased or decreased interest expense on our senior secured credit facility on an historical and pro forma basis by $6.5 million during

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the 52 weeks ended April 1, 2010 and $4.7 million during the 39 weeks ended December 30, 2010. A 100 basis point change in market interest rates would have increased or decreased historical interest expense on the parent term loan facility by $2.0 million during the 52 weeks ended April 1, 2010 and $1.5 million during the 39 weeks ended December 30, 2010. On a pro forma basis, the impact of a 100 basis point change in market interest rates would be $0 for the 39 weeks ended December 30, 2010 and 52 weeks ended April 1, 2010 on the parent term loan facility as the parent term loan facility would be extinguished.

        Market risk on fixed-rate financial instruments.    Included in current maturities and long-term corporate borrowings are principal amounts of $229.9 million of our Notes due 2016, $300.0 million of our Notes due 2014, approximately $70 million of our Discount Notes due 2014, $600.0 million of our Notes due 2019, and $600.0 million of our Notes due 2020. Increases in market interest rates would generally cause a decrease in the fair value of the Notes due 2016, Notes due 2014, Discount Notes due 2014, Notes due 2019, and the Notes due 2020 and a decrease in market interest rates would generally cause an increase in fair value of the Notes due 2016, Notes due 2014, Discount Notes due 2014, Notes due 2019 and the Notes due 2020.

        Foreign currency exchange rates.    We currently operate theatres in Canada, France and the United Kingdom. As a result of these operations, we have assets, liabilities, revenues and expenses denominated in foreign currencies. The strengthening of the U.S. dollar against the respective currencies causes a decrease in the carrying values of assets, liabilities, revenues and expenses denominated in such foreign currencies and the weakening of the U.S. dollar against the respective currencies causes an increase in the carrying values of these items. The increases and decreases in assets, liabilities, revenues and expenses are included in accumulated other comprehensive income. Changes in foreign currency exchange rates also impact the comparability of earnings in these countries on a year-to-year basis. As the U.S. dollar strengthens, comparative translated earnings decrease, and as the U.S. dollar weakens comparative translated earnings from foreign operations increase. A 10% increase in the value of the U.S. dollar against all foreign currencies of countries where we currently operate theatres would increase earnings before income taxes for the 39 weeks ended December 30, 2010 by approximately $608,000 and decrease accumulated other comprehensive loss by approximately $8.2 million, respectively, as of December 30, 2010. A 10% decrease in the value of the U.S. dollar against all foreign currencies of countries where we currently operate theatres would decrease earnings before income taxes for the 39 weeks ended December 30, 2010 by approximately $202,000 and increase accumulated other comprehensive loss by approximately $10.0 million, respectively, as of December 30, 2010.

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BUSINESS

        We are one of the world's leading theatrical exhibition companies. As of December 30, 2010, we owned, operated or held interests in 361 movie theatres with a total of 5,203 screens, approximately 99% of which were located in the United States and Canada. Our theatres are primarily located in major metropolitan markets, which we believe offer strategic, operational and financial advantages. We also have a modern, highly productive theatre circuit that leads the theatrical exhibition industry in key asset quality and performance metrics, such as screens per theatre and per theatre productivity measures. Our industry leading performance is largely driven by the quality of our theatre sites, our operating practices, which focus on delivering the best customer experience through consumer-focused innovation, and, most recently, our implementation of premium sight and sound formats, which we believe will be key components of the future movie-going experience. As of December 30, 2010, we are the largest IMAX exhibitor in the world with a 45% market share in the United States and more than twice the screen count of the second largest U.S. IMAX exhibitor, and each of our local installations is protected by geographic exclusivity.

        Approximately 200 million consumers have attended our theatres each year for the past five years. We offer these consumers a fully immersive out-of-home entertainment experience by featuring a wide array of entertainment alternatives, including popular movies, throughout the day and at different price points. This broad range of entertainment alternatives appeals to a wide variety of consumers across different age, gender, and socioeconomic demographics. For example, in addition to traditional film programming, we offer more diversified programming that includes independent and foreign films, performing arts, music and sports. We also offer food and beverage alternatives beyond traditional concession items, including made-to-order meals, customized coffee, healthy snacks and dine-in theatre options, all designed to create further service and selection for our consumers. We believe there is potential for us to further increase in our annual attendance as we gain market share from other in-home and out-of-home entertainment options.

        Our large annual attendance made us an important partner to content providers who want access and distribution to consumers. AMC currently generates 16% more estimated unique visitors per year (33.3 million) than HBO's subscribers (28.6 million) and 67% more than Netflix's subscribers (20.0 million) according to the October 14, 2010 Hollywood Reporter, the December 31, 2010 Netflix Form 10-K and the Theatrical Market Statistics 2010 report from the Motion Picture Association of America. Further underscoring our importance to the content providers, AMC represents approximately 17% to 20%, on average, of each of the 6 largest grossing studios' U.S. box office revenues. Average annual film rental payments to each of these studios ranged from approximately $100 million to $160 million.

        For the 52 weeks ended December 30, 2010, the fiscal year ended April 1, 2010 and the 39 weeks ended December 30, 2010, we generated pro forma revenues of approximately $2.6 billion, $2.7 billion and $1.9 billion, respectively, pro forma Adjusted EBITDA (as defined on page 13) of $329.7 million, $365.2 million and $253.1 million, respectively, and pro forma earnings from continuing operations of $66.3 million, $66.6 million and $8.8 million, respectively. We reported revenues of approximately $2.4 billion, Adjusted EBITDA of $327.9 million, earnings from continuing operations of $87.4 million and net earnings of $79.9 million in fiscal 2010. For fiscal 2009 and 2008, we reported revenues of approximately $2.3 billion and $2.3 billion, Adjusted EBITDA of $294.7 million and $347.6 million, losses from continuing operations of $158.8 million and $8.0 million, and net losses of $149.0 million and $6.2 million, respectively.

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        The following table provides detail with respect to digital delivery, 3D projection, large screen formats, such as IMAX and our proprietary ETX, and deployment of our enhanced food and beverage offerings as deployed throughout our circuit on December 30, 2010.

Format
  Theatres   Screens   Planned
Deployed Screens
FYE 2011
  Planned
Deployed Screens
FYE 2012
 

Digital

    292     1,660     2,255     3,866  

3D

    292     810     1,561     2,245  

IMAX (3D enabled)

    107     107     107     127  

ETX (3D enabled)

    11     11     14     17  

Dine-in theatres

    7     61     61     87  

        The following table provides detail with respect to the geographic location of our Theatrical Exhibition circuit as of December 30, 2010:

Theatrical Exhibition
  Theatres(1)   Screens(1)  
California     44     672  
Illinois     46     506  
Texas     21     413  
Florida     20     366  
New Jersey     23     304  
New York     24     266  
Indiana     22     262  
Michigan     10     184  
Arizona     9     183  
Georgia     11     177  
Colorado     13     173  
Missouri     12     140  
Washington     11     137  
Massachusetts     10     129  
Maryland     12     127  
Pennsylvania     10     126  
Virginia     7     113  
Minnesota     7     111  
Ohio     6     94  
Louisiana     5     68  
Wisconsin     4     63  
North Carolina     3     60  
Oklahoma     3     60  
Kansas     2     48  
Connecticut     2     36  
Iowa     2     31  
Nebraska     1     24  
District of Columbia     3     22  
Kentucky     1     20  
Arkansas     1     16  
South Carolina     1     14  
Nevada     1     10  
Utah     1     9  
Canada     8     184  
China (Hong Kong)(2)     2     13  
France     1     14  

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Theatrical Exhibition
  Theatres(1)   Screens(1)  
United Kingdom     2     28  
           
  Total Theatrical Exhibition     361     5,203  
           

(1)
Included in the above table are eight theatres and 96 screens that we manage or in which we have a partial interest. We manage three theatres where we receive a fee from the owner and where we do not own any economic interest in the theatre. We manage and own 50% economic interests in three theatres accounted for following the equity method and own a 50% economic interest in one IMAX screen accounted for following the equity method.

(2)
In Hong Kong, we maintain a partial interest represented by a license agreement for use of our trademark.

        We were founded in 1920 and since then have pioneered many of the theatrical exhibition industry's most important innovations, including the multiplex theatre format in the early 1960s and the North American megaplex theatre format in the mid-1990s. In addition, we have acquired some of the most respected companies in the theatrical exhibition industry, including Loews, General Cinema and, more recently, Kerasotes. Our historic growth has been driven by a combination of organic growth and acquisition strategies, in addition to strategic alliances and partnerships that highlight our ability to capture innovation and value beyond the traditional exhibition space. For example:

        Consistent with our history and culture of innovation, we believe we have pioneered a new way of thinking about theatrical exhibition: as a consumer entertainment provider. This vision, which introduces a strategic and marketing overlay to traditional theatrical exhibition, has been instrumental in driving and redirecting our future strategy.

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        The following table sets forth our historical information, on a continuing operations basis, concerning new builds (including expansions), acquisitions and dispositions and end-of-period operated theatres and screens through December 30, 2010:

 
  New Builds   Acquisitions   Closures/Dispositions   Total Theatres  
Fiscal Year
  Number of
Theatres
  Number of
Screens
  Number of
Theatres
  Number of
Screens
  Number of
Theatres
  Number of
Screens
  Number of
Theatres
  Number of
Screens
 

2006

    7     106     116     1,363     7     60     335     4,770  

2007

    7     107     2     32     26     243     318     4,666  

2008

    9     136             18     196     309     4,606  

2009

    6     83             8     77     307     4,612  

2010

    1     6             11     105     297     4,513  

2011 through December 30, 2010

    4     55     95     960     35     325     361     5,203  
                                       

    34     493     213     2,355     105     1,006              
                                       

        We have also created and invested in a number of allied businesses and strategic initiatives that have created differentiated viewing formats and experiences, greater variety in food and beverage options and value appreciation for our company. We believe these initiatives will continue to generate incremental value for our company in the future. For example:

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Our Competitive Strengths

        We believe our leadership in major metropolitan markets, superior asset quality and continuous focus on innovation and the guest experience have positioned us well to capitalize disproportionately on trends providing momentum to the theatrical exhibition industry as a whole, particularly the mass adoption of digital and 3D technologies. We believe we can gain additional share of wallet from the consumer by broadening our offerings to them and increasing our engagement with them. We can then enable marketers and partners, such as NCM, to engage with our guests deriving further financial value and benefit. We believe our management team is uniquely equipped to execute our strategy to realize these opportunities, making us a particularly effective competitor in our industry and positioning us well for future growth. Our competitive strengths include:

        Broad National Reach.    Thirty-nine percent (39%) of Americans (or approximately 120 million consumers) live within 10 miles of an AMC theatre. This proximity and convenience, along with the affordability and diversity of our film product, drive approximately 200 million consumers into our theatres each year, or approximately 33.3 million unique visitors annually. We believe our ability to serve a broad consumer base across numerous entertainment occasions, such as teenage socializing, romantic dates and group events, is a competitive advantage. Our consumer reach, operating scale, access to diverse content and marketing platforms are valuable to content providers and marketers who want to access this broad and diverse audience.

        Major Market Leader.    We maintain the leading market share within our markets. As of December 30, 2010, we operated in 24 of the top 25 DMAs and had the number one or two market share in each of the top 15 DMAs, including New York City, Los Angeles, Chicago, Philadelphia, San Francisco, Boston and Dallas. In addition, 75% of our screens were located in the top 25 DMAs and 89% were located in the top 50 DMAs. Population growth from 2008 through 2013 is projected by Nielsen Claritas to be 5.8% in the top 25 DMAs and 5.9% in the top 50 DMAs, compared to only 2.9% in all other DMAs. Our strong presence in the top DMAs makes our theatres more visible and therefore strategically more important to content providers who rely on these markets for a disproportionately large share of box office receipts. According to Rentrak, during the 52 weeks ended

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December 30, 2010, 59% of all U.S. box office receipts were derived from the top 25 DMAs and 75% were derived from the top 50 DMAs. In certain of our densely populated major metropolitan markets, we believe a scarcity of attractive retail real estate opportunities enhances the strategic value of our existing theatres. We also believe the complexity inherent in operating in these major metropolitan markets is a deterrent to other less sophisticated competitors, protecting our market share position.

        We believe that customers in our major metropolitan markets are generally more affluent and culturally diverse than those in smaller markets. Traditionally, our strong presence in these markets has created a greater opportunity to exhibit a broad array of programming and premium formats, which we believe drives higher levels of attendance at our theatres. This has allowed us to generate higher per screen and per theatre operating metrics. For example, our pro forma average ticket price in the United States was $8.80 for our 52 weeks ended December 30, 2010, as compared to $7.89 for the industry as a whole for the 12 months ended December 31, 2010.

        Modern, Highly Productive Theatre Circuit.    We believe the combination of our strong major market presence, focus on a superior guest experience and core operating strategies enables us to deliver industry-leading theatre level operating metrics. Our circuit averages 14 screens per theatre, which is more than twice the National Association of Theatre Owners average of 6.7 for calendar year 2010 and higher than any of our peers. For the 52 weeks ended December 30, 2010, on a pro forma basis, our theatre exhibition circuit generated attendance per average theatre of 568,000 (higher than any of our peers) revenues per average theatre of $7.0 million and operating cash flows before rent (defined as Adjusted EBITDA before rent and G&A-Other) per average theatre of $2.4 million. Over the past five fiscal years, we invested an average of $131.3 million per year to improve and expand our theatre circuit, contributing to the modern portfolio of theatres we operate today.

        Leader in Deployment of Premium Formats.    We also believe our strong major market presence and our highly productive theatre circuit allow us to take greater advantage of incremental revenue-generating opportunities associated with the premium services that will define the future of the theatrical business, including digital delivery, 3D projection, large screen formats, such as IMAX and our proprietary ETX offering, and alternative programming. As the industry's digital conversion accelerates, we believe we have established a differentiated leadership position in premium formats. For example, we are the world's largest IMAX exhibitor with 107 screens as of December 30, 2010, all of which are 3D enabled, and we expect to increase our IMAX screen count to 127 by the end of fiscal year 2012. We are able to charge a premium price for the IMAX experience, which, in combination with higher attendance levels, produces average weekly box office per print that is 300% greater than standard 2D versions of the same movie. The availability of IMAX and 3D content has increased significantly from calendar year 2005 to 2010. During this period, available 3D content increased from 3 titles to 26 titles while available IMAX content increased from 5 titles to 14 titles. Industry film grosses for available 3D products increased from $191.0 million to approximately $3.0 billion, while industry film grosses for available IMAX products increased from $864.0 million to approximately $3.0 billion over this time period. This favorable trend continues in calendar year 2011 with 34 3D titles and 20 IMAX titles slated to open, including highly successful franchise installments such as Pirates of the Caribbean: On Stranger Tides, Kung Fu Panda: The Kaboom of D, Transformers: Dark of the Moon, Harry Potter and the Deathly Hallows, Part 2 and Mission Impossible-Ghost Protocal. The film release calendar for calendar year 2012 is beginning to solidify with 22 3D titles and 4 IMAX titles already announced, including sequels of high profile franchises such as Spiderman, Men in Black, James Bond, Bourne Legacy, Batman and a 3D version of Star Wars. We expect that additional 3D and IMAX titles will be announced as the beginning of 2012 approaches.

        Innovative Growth Initiatives in Food and Beverage.    We believe our theatre circuit is better positioned than our peer competitors' to generate additional revenue from broader and more diverse food and beverage offerings, in part due to our markets' larger, more diverse and more affluent customer base and our management's extensive experience in guest services, specifically within the food and beverage industry. Our annual food and beverage sales exceed the domestic food service sales

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generated from 18 of the top 75 ranked restaurants chains in the U.S., while representing only approximately 27% of our total revenue. To capitalize on this opportunity, we have currently introduced one or more proprietary food and beverage offerings in 145 theatres, and we intend to deploy these offerings across our theatre circuit based on the needs and specific circumstances of each theatre. Our wide range of food and beverage offerings features expanded menus, enhanced concession formats and unique dine-in theatre options, which we believe appeals to a larger cross section of potential customers. For example, in fiscal 2009 we converted a small, six-screen theatre in Atlanta, Georgia to a dine-in theatre facility with full kitchen facilities, seat side services and with a separate bar and lounge area. From fiscal 2008 to fiscal 2010, this theatre's attendance increased over 60%, revenues more than doubled, and operating cash flow and margins increased significantly. We plan to continue to invest in one or more enhanced food and beverage offerings across 125 to 150 theatres over the next three years.

        Our current food and beverage initiatives include:

        Strong Cash Flow Generation.    We believe that our major market focus and highly productive theatre circuit have enabled us to generate significant and stable cash flow provided by operating activities. For the 52 weeks ended December 30, 2010, on a pro forma basis, our net cash provided by operating activities totaled $87.0 million. For the fiscal year ended April 1, 2010, on a pro forma basis, our net cash provided by operating activities totaled $245.7 million. This strong cash flow will enable us to continue our deployment of premium formats and services and to finance planned capital expenditures without relying on the capital markets for funding. In addition, in future years, we expect to continue to generate cash flow sufficient to allow us to grow our revenues, maintain our facilities, service our indebtedness and make dividend payments to our stockholders.

        Management Team Uniquely Positioned to Execute.    Our management team has a unique combination of industry experiences and skill-sets, equipping them to effectively execute our strategies. Our CEO's broad experience in a number of consumer packaged goods and entertainment-related businesses expands our growth perspectives beyond traditional theatrical exhibition and has increased our focus on providing more value to our guests. Recent additions, including a Chief Marketing Officer, Senior Vice President of Strategy and Strategic Partnerships and heads of Food and Beverage, Programming and Development/Real Estate, augment our deep bench of industry experience. The expanded breadth of our management team complements the established team that is focused on for operational excellence, innovation and successful industry consolidation.


Our Strategy

        Our strategy is to leverage our modern theatre circuit and major market position to lead the industry in consumer-focused innovation and financial operating metrics. The use of emerging premium formats and our focus on the guest experience give us a unique opportunity to leverage our theatre circuit and major market position across our platform. Our primary goal is to maintain our company's and the industry's social relevance and to offer consumers distinctive, affordable and compelling out-of-

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home entertainment alternatives that capture a greater share of their personal time and spend. We have a two-pronged strategy to accomplish this goal: first, drive consumer-related growth and second, focus on operational excellence.

        Drive Consumer-Related Growth    

        Capitalize on Premium Formats.    Technical innovation has allowed us to enhance the consumer experience through premium formats such as IMAX and 3D. Our customers are willing to pay a premium price for this differentiated entertainment experience. When combined with our major markets' customer base, operating a digital theatre circuit will enhance our capacity utilization and dynamic pricing capabilities, enabling us to achieve higher ticket prices for premium formats, and provide incremental revenue from the exhibition of alternative content such as live concerts, sporting events, Broadway shows, opera and other non-traditional programming. We have already seen success from the Metropolitan Opera, with respect to which, during fiscal 2010, we programmed 23 performances in 75 theatres and charged an average ticket price of $18. Within each of our major markets, we are able to charge a premium for these services relative to our smaller markets. We will continue to broaden our content offerings through the installation of additional IMAX, ETX and RealD systems and the presentation of attractive alternative content. For example:

        Broaden and Enhance Food and Beverage Offerings.    To address consumer trends, we are expanding our menu of premium food and beverage products to include made-to-order meals, customized coffee, healthy snacks, alcohol and other gourmet products. We plan to invest across a spectrum of enhanced food and beverage formats, from simple, less capital-intensive concession design improvements to the development of new dine-in theatre options. We have successfully implemented our dine-in theatre offerings to rejuvenate theatres approaching the end of their useful lives as traditional movie theatres

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and, in some of our larger theatres to more efficiently leverage their additional capacity. The costs of these conversions in some cases are partially covered by investments from the theatre landlord. We plan to continue to invest in one or more enhanced food and beverage offerings across 125 to 150 theatres over the next three years.

        Maximize Guest Engagement and Loyalty.    In addition to differentiating the AMC Entertainment movie-going experience by deploying new sight and sound formats, as well as food and beverage offerings, we are also focused on creating differentiation through guest marketing. We are already the most recognized theatre exhibition brand, with almost 60% brand awareness in the United States. We are actively marketing our own "AMC experience" message to our customers, focusing on every aspect of a customer's engagement with AMC, from the moment a guest visits our website or purchases a ticket to the moment he leaves our theatre. We have also refocused our marketing to drive active engagement with our customers through a redesigned website, Facebook, Twitter and push email campaigns. As of March 8, 2011, we had approximately 567,000 "likes" on Facebook, and we engaged directly with our guests via close to 32 million emails in fiscal 2010. In addition, our frequent moviegoer loyalty program is scheduled to re-launch during 2011 with a new, more robust fee-based program. Our loyalty program currently has approximately 1.5 million active members. Additional marketing initiatives include:

        Focus on Operational Excellence    

        Disciplined Approach to Theatre Portfolio Management.    We evaluate the potential for new theatres and, where appropriate, replace underperforming theatres with newer, more modern theatres that offer amenities consistent with our portfolio. We also intend to selectively pursue acquisitions where the characteristics of the location, overall market and facilities further enhance the quality of our theatre portfolio. We presently have no current plans, proposals or understandings regarding any such acquisitions. Historically, we have demonstrated a successful track record of integrating acquisitions such as Loews, General Cinema and Kerasotes. For example, our January 2006 acquisition of Loews combined two leading theatrical exhibition companies, each with a long history of operating in the industry, thereby increasing the number of screens we operated by 47%.

        Continue to Achieve Operating Efficiencies.    We believe that the size of our theatre circuit, our major market concentration and the breadth of our operations will allow us to continue to achieve economies of scale and further improve operating margins. Our operating strategies are focused in the following areas:

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Film Licensing

        We predominantly license "first-run" motion pictures from distributors owned by major film production companies and from independent distributors. We license films on a film-by-film and theatre-by-theatre basis. We obtain these licenses based on several factors, including number of seats and screens available for a particular picture, revenue potential and the location and condition of our theatres. We pay rental fees on a negotiated basis.

        During the period from 1990 to 2009, the annual number of first-run motion pictures released by distributors in the United States ranged from a low of 370 in 1995 to a high of 633 in 2008, according to the Motion Picture Association 2009 Theatrical Market Statistics.

        North American film distributors typically establish geographic film licensing zones and generally allocate available film to one theatre within each zone. Film zones generally encompass a radius of three to five miles in metropolitan and suburban markets, depending primarily upon population density. In film zones where we are the sole exhibitor, we obtain film licenses by selecting a film from among those offered and negotiating directly with the distributor. As of April 1, 2010, approximately 88% of our screens in the United States and Canada were located in film licensing zones where we are the sole exhibitor.

        Our licenses typically state that rental fees are based on either aggregate terms established prior to the opening of the picture or on a mutually agreed settlement upon the conclusion of the picture run. Under an aggregate terms formula, we pay the distributor a specified percentage of box office receipts or pay based on a scale of percentages tied to different amounts of box office gross. The settlement process allows for negotiation based upon how a film actually performs.

        There are several distributors which provide a substantial portion of quality first-run motion pictures to the exhibition industry. These include Paramount Pictures, Twentieth Century Fox, Warner Bros. Distribution, Buena Vista Pictures (Disney), Sony Pictures Releasing, and Universal Pictures. Films licensed from these distributors accounted for approximately 84% of our U.S. and Canadian admissions revenues during fiscal 2010. Our revenues attributable to individual distributors may vary significantly from year to year depending upon the commercial success of each distributor's motion pictures in any given year. In fiscal 2010, no single distributor accounted for more than 20% of our box office admissions.

Concessions

        Concessions sales are our second largest source of revenue after box office admissions. Concessions items include popcorn, soft drinks, candy, hot dogs and other products. Different varieties of candy and soft drinks are offered at our theatres based on preferences in that particular geographic region. We have also implemented "combo-meals," which offer a pre-selected assortment of concessions products and offer co-branded and private label products that are unique to us.

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        Our strategy emphasizes prominent and appealing concessions counters designed for rapid service and efficiency. We design our megaplex theatres to have more concessions capacity to make it easier to serve larger numbers of customers. Strategic placement of large concessions stands within theatres increases their visibility, aids in reducing the length of lines, allows flexibility to introduce new concepts and improves traffic flow around the concessions stands.

        We negotiate prices for our concessions products and supplies directly with concessions vendors on a national or regional basis to obtain high volume discounts or bulk rates and marketing incentives.

        Our entertainment and dining experience at certain theatres features casual and premium upscale dine-in theatre options as well as bar and lounge areas.

Properties

        The following table sets forth the general character and ownership classification of our theatre circuit, excluding unconsolidated joint ventures and managed theatres, as of December 30, 2010:

Property Holding Classification
  Theatres   Screens  

Owned

    26     195  

Leased pursuant to ground leases

    6     73  

Leased pursuant to building leases

    321     4,839  
           
 

Total

    353     5,107  
           

        Our theatre leases generally have initial terms ranging from 15 to 20 years, with options to extend the leases for up to 20 additional years. The leases typically require escalating minimum annual rent payments and additional rent payments based on a percentage of the leased theatre's revenue above a base amount and require us to pay for property taxes, maintenance, insurance and certain other property-related expenses. In some instances, our escalating minimum annual rent payments are contingent upon increases in the consumer price index. In some cases, our rights as tenant are subject and subordinate to the mortgage loans of lenders to our lessors, so that if a mortgage were to be foreclosed, we could lose our lease. Historically, this has never occurred.

        We lease our corporate headquarters in Kansas City, Missouri.

        Currently, the majority of the concessions, projection, seating and other equipment required for each of our theatres are owned. In the future, we expect the majority of our digital projection equipment to be leased from DCIP.

Employees

        As of December 30, 2010, we employed approximately 1,000 full-time and 17,000 part-time employees. Approximately 40% of our U.S. theatre associates were paid the minimum wage.

        Fewer than 2% of our U.S. employees, consisting primarily of motion picture projectionists, are represented by a union, the International Alliance of Theatrical Stagehand Employees and Motion Picture Machine Operators (and affiliated local unions). We believe that our relationship with this union is satisfactory. We consider our employee relations to be good.

Theatrical Exhibition Industry and Competition

        Theatrical exhibition is the primary initial distribution channel for new motion picture releases, and we believe that the theatrical success of a motion picture is often the most important factor in establishing the film's value in the other parts of the product life cycle (DVD, cable television and other ancillary markets).

        Theatrical exhibition has demonstrated long-term steady growth. U.S. and Canadian box office revenues increased from $5.0 billion in 1989 to $10.5 billion in 2010, driven by increases in both ticket

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prices and attendance. In calendar 2010, industry box office revenues for the United States and Canada were $10.5 billion, essentially unchanged from 2009.

        The following table represents information about the exhibition industry obtained from the National Association of Theatre Owners ("NATO") and Rentrak.

Calendar Year
  Box Office
Revenues
(in millions)
  Attendance
(in millions)
  Average
Ticket
Price
  Number of
Theatres
  Indoor
Screens
  Screens
Per
Theatre
 

2010

  $ 10,515     1,334   $ 7.89     5,773     38,892     6.7  

2009

    10,600     1,414     7.50     5,561     38,605     6.9  

2008

    9,634     1,341     7.18     5,403     38,934     7.2  

2007

    9,632     1,400     6.88     5,545     38,159     6.9  

2006

    9,170     1,401     6.55     5,543     37,776     6.8  

2005

    8,820     1,376     6.41     5,713     37,092     6.5  

        There are approximately 816 companies competing in the North American theatrical exhibition industry, approximately 442 of which operate four or more screens. Industry participants vary substantially in size, from small independent operators to large international chains. Based on information obtained from Rentrak, we believe that the four largest exhibitors (in terms of box office revenue) generated approximately 59% of the box office revenues in 2010. This statistic is up from 33% in 2000 and is evidence that the theatrical exhibition business in the United States and Canada has been consolidating. According to NATO, average screens per theatre have increased from 6.5 in 2005 to 6.7 in 2010, which we believe is indicative of the industry's development of megaplex theatres.

        Our theatres are subject to varying degrees of competition in the geographic areas in which they operate. Competition is often intense with respect to attracting patrons, licensing motion pictures and finding new theatre sites. Where real estate is readily available, there are few barriers preventing another company from opening a theatre near one of our theatres, which may adversely affect operations at our theatre. However, in certain of our densely populated major metropolitan markets, we believe a scarcity of attractive retail real estate opportunities enhances the strategic value of our existing theatres. We also believe the complexity inherent in operating in these major metropolitan markets is a deterrent to other less sophisticated competitors, protecting our market share position.

        The theatrical exhibition industry faces competition from other forms of out-of-home entertainment, such as concerts, amusement parks and sporting events, and from other distribution channels for filmed entertainment, such as cable television, pay per view and home video systems, as well as from all other forms of entertainment.

        Movie-going is a compelling consumer out-of-home entertainment experience. Movie theatres currently garner a relatively small share of consumer entertainment time and spend, leaving significant room for expansion and growth in the U.S. In addition, our industry benefits from available capacity to satisfy additional consumer demand without capital investment.

        As major studio releases have declined in recent years, we believe companies like Open Road Films could fill an important gap that exists in the market today for consumers, movie producers and theatrical exhibitors by providing a broader availability of movies to consumers. Theatrical exhibitors are uniquely positioned to not only support, but also benefit from new distribution companies and content providers. We believe the theatrical exhibition industry will continue to be attractive for a number of key reasons, including:

        A Highly Popular and Affordable Out-of-Home Entertainment Experience.    Going to the movies has been one of the most popular and affordable out-of-home entertainment options for decades. The estimated average price of a movie ticket was $7.89 in calendar 2010, considerably less than other out-of-home entertainment alternatives such as concerts and sporting events. In calendar 2010, attendance at indoor movie theatres in the United States and Canada was 1.3 billion. This contrasts to

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the 111 million combined annual attendance generated by professional baseball, basketball and football over the same period.

        Adoption of Digital Technology.    The theatrical exhibition industry is well underway in its overall conversion from film-based to digital projection technology. This digital conversion will position the industry with lower distribution and exhibition expenses, efficient delivery of alternative content and niche programming, and premium experiences for consumers. Digital projection also results in a premium visual experience for patrons, and digital content gives the theatre operator greater flexibility in programming. The industry will benefit from the conversion to digital delivery, alternative content, 3D formats and dynamic pricing models. As theatre exhibitors have adopted digital technology, the theatre circuits have shown enhanced productivity, profitability and efficiency. Digital technology has increased attendance and average ticket prices. Digital technology also facilitates live and pre-recorded networked and single-site meetings and corporate events in movie theatres and will allow for the distribution of live and pre-recorded entertainment content and the sale of associated sponsorships.

        Long History of Steady Growth.    The theatrical exhibition industry has produced steady growth in revenues over the past several decades. In recent years, net new build activity has slowed, and screen count has rationalized and is expected to decline in the near term before stabilizing, thereby increasing revenue per screen for existing theatres. The combination of the popularity of movie-going, its steady long-term growth characteristics and consolidation and the industry's relative maturity makes theatrical exhibition a high cash flow generating business today. Box office revenues in the United States and Canada have increased from $5.0 billion in 1989 to $10.5 billion in 2010, driven by increases in both ticket prices and attendance across multiple economic cycles. The industry has also demonstrated its resilience to economic downturns; during four of the last six recessions, attendance and box office revenues grew an average of 8.1% and 12.3%, respectively. In 2009, 32 films grossed over $100.0 million, compared to 25 in the prior year, helping to establish a new industry box office record for the year.

        Importance to Content Providers.    We believe that the theatrical success of a motion picture is often the key determinant in establishing the film's value in the other parts of the product life cycle, such as DVD, cable television, merchandising and other ancillary markets. For each $1 of theatrical box office receipts, an average of $1.33 of additional revenue is generated in the remainder of a film's product life cycle. As a result, we believe motion picture studios will continue to work cooperatively with theatrical exhibitors to ensure the continued value of the theatrical window.

Regulatory Environment

        The distribution of motion pictures is, in large part, regulated by federal and state antitrust laws and has been the subject of numerous antitrust cases. The consent decrees resulting from one of those cases, to which we were not a party, have a material impact on the industry and us. Those consent decrees bind certain major motion picture distributors and require the motion pictures of such distributors to be offered and licensed to exhibitors, including us, on a film-by-film and theatre-by-theatre basis. Consequently, we cannot assure ourselves of a supply of motion pictures by entering into long-term arrangements with major distributors, but must compete for our licenses on a film-by-film and theatre-by-theatre basis.

        Our theatres must comply with Title III of the Americans with Disabilities Act, or ADA. Compliance with the ADA requires that public accommodations "reasonably accommodate" individuals with disabilities and that new construction or alterations made to "commercial facilities" conform to accessibility guidelines unless "structurally impracticable" for new construction or technically infeasible for alterations. Non-compliance with the ADA could result in the imposition of injunctive relief, fines, and awards of damages to private litigants or additional capital expenditures to remedy such noncompliance. Although we believe that our theatres are in substantial compliance with the ADA, in January 1999 the Civil Rights Division of the Department of Justice, or the Department, filed suit against us alleging that certain of our theatres with stadium-style seating violate the ADA. In separate

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rulings in 2002 and 2003, the Court ruled against us in the "line of sight" and the "non-line of sight" aspects of this case. In 2003, the Court entered a consent order and final judgment about the non-line of sight aspects of this case. On December 5, 2008, the Ninth Circuit Court of Appeals reversed the trial court as to the appropriate remedy and remanded the case back to the trial court for findings consistent with its decision. The Company and the Department have reached a settlement regarding the extent of betterments related to the remaining remedies required for line-of-sight violations which the parties believe are consistent with the Ninth Circuit's decision. The trial court approved the settlement on November 29, 2010. The improvements will likely be made over a five year term. The company has recorded a liability of $75,000 for compensation to claimants and fines related to this matter.

        As an employer covered by the ADA, we must make reasonable accommodations to the limitations of employees and qualified applicants with disabilities, provided that such reasonable accommodations do not pose an undue hardship on the operation of our business. In addition, many of our employees are covered by various government employment regulations, including minimum wage, overtime and working conditions regulations.

        Our operations also are subject to federal, state and local laws regulating such matters as construction, renovation and operation of theatres as well as wages and working conditions, citizenship, health and sanitation requirements and licensing. We believe our theatres are in material compliance with such requirements.

        We also own and operate theatres and other properties which may be subject to federal, state and local laws and regulations relating to environmental protection. Certain of these laws and regulations may impose joint and several liability on certain statutory classes of persons for the costs of investigation or remediation of contamination, regardless of fault or the legality of original disposal. We believe our theatres are in material compliance with such requirements.

Seasonality

        Our revenues are dependent upon the timing of motion picture releases by distributors. The most marketable motion pictures are usually released during the summer and the year-end holiday seasons. Therefore, our business is highly seasonal, with higher attendance and revenues generally occurring during the summer months and holiday seasons. Our results of operations may vary significantly from quarter to quarter.

Legal Proceedings

        In the normal course of business, we are party to various legal actions. Except as described below, management believes that the potential exposure, if any, from such matters would not have a material adverse effect on the financial condition, cash flows or results of operations of the Company.

        United States of America v. AMC Entertainment Inc. and American Multi-Cinema, Inc. (No. 99 01034 FMC (SHx), filed in the U.S. District Court for the Central District of California). On January 29, 1999, the Department filed suit alleging that our stadium-style theatres violated the ADA and related regulations. The Department alleged that we had failed to provide persons in wheelchairs seating arrangements with lines-of-sight comparable to the general public. The Department alleged various non-line-of-sight violations as well. The Department sought declaratory and injunctive relief regarding existing and future theatres with stadium-style seating, compensatory damages in the approximate amount of $75,000 and a civil penalty of $110,000.

        As to line-of-sight matters, the trial court entered summary judgment in favor of the Department as to both liability and as to the appropriate remedy. On December 5, 2008, the Ninth Circuit Court of Appeals reversed the trial court as to the appropriate remedy and remanded the case back to the trial court for findings consistent with its decision. We reached a settlement with the Department regarding the extent of betterments and remedies required for line-of-sight violations which the parties believe are consistent with the Ninth Circuit's decision. The trial court approved the settlement on

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November 29, 2010. The betterments will be made over a 5 year term and the company estimates the unpaid cost of such betterments to be approximately $5.0 million. The company has recorded a liability of $75,000 for compensation to claimants and fines related to this matter.

        As to the non-line-of-sight aspects of the case, on January 21, 2003, the trial court entered summary judgment in favor of the Department on matters such as parking areas, signage, ramps, location of toilets, counter heights, ramp slopes, companion seating and the location and size of handrails. On December 5, 2003, the trial court entered a consent order and final judgment on non-line-of-sight issues under which we agreed to remedy certain violations at our stadium-style theatres and at certain theatres we may open in the future. Currently we estimate that remaining betterments are required at approximately 45 stadium-style theatres. We estimate that the unpaid costs of these betterments will be approximately $16.7 million. The estimate is based on actual costs incurred on remediation work completed to date. The actual costs of betterments may vary based on the results of surveys of the remaining theatres.

        Michael Bateman v. American Multi-Cinema, Inc. (No. CV07-00171). In January 2007, a class action complaint was filed against American Multi-Cinema, Inc. in the Central District of the United States District Court of California (the "District Court") alleging violations of the Fair and Accurate Credit Transactions Act ("FACTA"). FACTA provides in part that neither expiration dates nor more than the last five numbers of a credit or debit card may be printed on receipts given to customers. FACTA imposes significant penalties upon violators where the violation is deemed to have been willful. Otherwise damages are limited to actual losses incurred by the card holder. On October 24, 2008, the District Court denied plaintiff's renewed motion for class certification. On September 27, 2010, the Ninth Circuit Court of Appeals vacated the District Court's order and remanded the proceedings for a new determination consistent with their opinion. We filed our Petition for En Banc and/or Panel Rehearing on October 8, 2010. The parties have reached a tentative settlement, subject to court approval, which is not expected to have a material adverse impact on our financial condition.

        On May 14, 2009, Harout Jarchafjian filed a similar lawsuit alleging that we willfully violated FACTA and seeking statutory damages, but without alleging any actual injury (Jarchafjian v. American Multi-Cinema, Inc. (C.D. Cal. Case No. CV09-03434). The Jarchafjian case has been deemed related to the Bateman case and was stayed pending a Ninth Circuit decision in the Bateman case, which has now been issued. The parties have reached a tentative settlement, subject to court approval, which is not expected to have a material adverse impact on our financial condition.

        Union Sponsored Pension Plan.    On November 7, 2008, the Company received notice of a written demand for payment of a partial withdrawal liability assessment from a collectively bargained multiemployer pension plan that covers certain of its unionized theatre employees. Based on a payment schedule that the Company received from this plan in December 2008, the Company began making quarterly payments on January 1, 2009 related to the $5.3 million in partial withdrawal liability. In the second quarter of fiscal 2010, the Company made a complete withdrawal from the plan which triggered an additional liability of $1.4 million which was assessed by the plan on April 19, 2010. As of April 1, 2010, the Company has recorded a liability related to this matter in the amount of $4.0 million and has made contributions including interest charges of approximately $2.9 million. The final withdrawal liability amount may be adjusted based on a legal review of the plan's assessment, the Company's records and ensuing discussions with the plan's trustees.

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MANAGEMENT

        Our business and affairs are managed by our board of directors currently consisting of nine members. Gerardo I. Lopez, our Chief Executive Officer, is a director of Parent. Aaron J. Stone is our Chairman of the Board and a non-employee director. The role of Chairman of the Board is held by Mr. Stone to represent the interest of stockholders.

        The following table sets forth certain information regarding our directors, executive officers and key employees as of December 31, 2010:

Name
  Age   Position(s) Held
Aaron J. Stone     37   Chairman of the Board, Director (Parent and AMCE)
Gerardo I. Lopez     51   Chief Executive Officer, President and Director (Parent, AMCE and American Multi-Cinema, Inc.)
Dana B. Ardi     62   Director (Parent and AMCE)
Stephen P. Murray     48   Director (Parent and AMCE)
Stan Parker     34   Director (Parent and AMCE)
Phillip H. Loughlin     43   Director (Parent and AMCE)
Eliot P. S. Merrill     40   Director (Parent and AMCE)
Kevin J. Maroni     48   Director (Parent and AMCE)
Craig R. Ramsey     59   Executive Vice President and Chief Financial Officer (Parent, AMCE and American Multi-Cinema, Inc.); Director (American Multi-Cinema, Inc.)
John D. McDonald     53   Executive Vice President, U.S. Operations (Parent, AMCE and American Multi-Cinema, Inc.); Director (American Multi-Cinema, Inc.)
Mark A. McDonald     52   Executive Vice President, Global Development (Parent, AMCE and American Multi-Cinema, Inc.)
Stephen A. Colanero     44   Executive Vice President and Chief Marketing Officer (Parent, AMCE and American Multi-Cinema, Inc.)
Robert J. Lenihan     56   President, Film Programming (Parent, AMCE and American Multi-Cinema, Inc.)
Samuel D. Gourley     59   President, AMC Film Programming (Parent, AMCE and American Multi-Cinema, Inc.)
Kevin M. Connor     48   Senior Vice President, General Counsel and Secretary (Parent, AMCE and American Multi-Cinema, Inc.)
Michael W. Zwonitzer     46   Senior Vice President Finance (Parent, AMCE and American Multi-Cinema, Inc.)
Chris A. Cox     44   Senior Vice President and Chief Accounting Officer (Parent, AMCE and American Multi-Cinema, Inc.)
Terry W. Crawford     53   Senior Vice President and Treasurer (Parent, AMCE and American Multi-Cinema, Inc.)
George Patterson     57   Senior Vice President, Food and Beverage (American Multi-Cinema, Inc.)
Elizabeth Frank     41   Senior Vice President, Strategy & Strategic Partnerships (AMCE)

        All our current executive officers hold their offices at the pleasure of our board of directors, subject to rights under their respective employment agreements in some cases. There are no family relationships between or among any directors and executive officers, except that Messrs. John D. McDonald and Mark A. McDonald are brothers.

        Mr. Aaron J. Stone has served as Chairman of the Board of Parent and AMCE since February 2009. Mr. Stone has served as a Director of Parent since June 2007, and has served as a Director of

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AMCE since December 2004. Mr. Stone is a Senior Partner of Apollo Management, L.P., where he has been employed since 1997 and which, together with its affiliates, acts as manager of Apollo and related private securities investment funds. Mr. Stone also serves on the boards of directors of Connections Academy, LLC, Hughes Communications, Inc., Hughes Network Systems, LLC, Hughes Telematics, Inc., and Parallel Petroleum. Mr. Stone currently serves on the compensation committee of Hughes Communications, Inc. and the audit committee of Hughes Network Systems, LLC. Mr. Stone has also served on the boards of directors of Educate Inc.; Intelstat, Ltd.; and Skyterra Communications Inc., among others. Mr. Stone served on the audit committees of Educate Inc. and Intelstat, Ltd. Prior to joining Apollo, Mr. Stone was a member of the Mergers and Acquisition Group at Smith Barney, Inc. Mr. Stone graduated cum laude with an A.B. degree from Harvard College. Mr. Stone has over 15 years of experience in analyzing and investing in public and private companies and led the diligence of Apollo's investment in AMC, and he provides our board with insight into strategic and financial matters of interest to AMC's management and shareholders.

        Mr. Gerardo I. Lopez has served as Chief Executive Officer, President and a Director of Parent and AMCE since March 2009. Prior to joining the Company, Mr. Lopez served as Executive Vice President of Starbucks Coffee Company and President of its Global Consumer Products, Seattle's Best Coffee and Foodservice divisions from September 2004 to March 2009. Prior thereto, Mr. Lopez served as President of the Handleman Entertainment Resources division of Handleman Company from November 2001 to September 2004. Mr. Lopez also serves on the boards of directors of SilkRoute Global, NCM LLC and DCIP. Mr. Lopez holds a B.S. degree in Marketing from George Washington University and a M.B.A. in Finance from Harvard Business School. Mr. Lopez has over 24 years of experience in marketing, sales and operations and management in public and private companies. His prior experience includes management of multi-billion-dollar operations and groups of over 2,500 associates.

        Dr. Dana B. Ardi has served as a Director of Parent and AMCE since April 2009. Dr. Ardi serves as Managing Director and Founder of Corporate Anthropology Advisors LLC, a human capital advisory firm that provides consulting and restructuring services to companies across diverse industry sectors. Prior to founding Corporate Anthropology Advisors LLC in 2009, Dr. Ardi served as a Managing Director at CCMP Capital Advisors, LLC from August 2006 through January 2009, as a Partner at J.P. Morgan Partners, LLC from June 2001 to July 2006, as a Partner at Flatiron Partners, LLC from 1999 to June 2001, as Co-chair of the Global Communications, Entertainment and Technology practice of TMP Worldwide from 1995 to 1999 and prior thereto, Dr. Ardi served as Senior Vice President of New Media at R.R. Donnelley & Sons Company. Dr. Ardi also serves on the board of directors of New Yorkers for Parks and the board of trustees of Chancellor University's Jack Welch Management Institute. Dr. Ardi provides our board of directors with insight and perspective on organizational design, succession planning, leadership training, executive search and tactical human resources matters. Dr. Ardi holds a B.S. degree from the State University of New York at Buffalo and M.S. and Ph.D. degrees in Education from Boston College.

        Mr. Stephen P. Murray has served as a Director of Parent since June 2007, and has served as a Director of AMCE since December 2004. Mr. Murray serves on the compensation committee of Parent. Since March 2007 Mr. Murray has served as President and Chief Executive Officer of CCMP Capital Advisors, LLC, a private equity firm formed in August 2006 by the former buyout and growth equity investment team of J.P. Morgan Partners, LLC, a private equity division of JPMorgan Chase & Co. From August 2006 to March 2007, Mr. Murray served as President and Chief Operating Officer of CCMP Capital Advisors, LLC. From 1989 through July 2006, Mr. Murray was employed by J.P. Morgan Partners and its predecessor entities, and became a Partner in 1994. Prior to joining J.P. Morgan Partners, LLC in 1989, Mr. Murray served as a Vice President with the Middle-Market Lending Division of Manufacturers Hanover. Mr. Murray focuses on investments in Consumer, Retail and Services, and Healthcare Infrastructure. Mr. Murray also serves on the boards of directors of

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ARAMARK Holdings Corporation, Caremore Medical Enterprises, Generac Power Systems, Chef's Warehouse, Crestcom, Jetro Holdings, Inc., LHP Hospital Group, Noble Environmental Power, Octagon Credit Investors, Quiznos Subs, Strongwood Insurance and Warner Chilcott. Mr. Murray holds a B.A. degree from Boston College and a M.B.A. from Columbia Business School. Mr. Murray has over 20 years of experience as a private equity investment professional and provides our board with insight and perspective on general investment and financial matters.

        Mr. Stan Parker has served as a Director of Parent since June 2007, and has served as a Director of AMCE since December 2004. Mr. Parker has been affiliated with Apollo and its related investment advisors and investment managers since 2000 and has been a Partner since 2005. Prior to joining Apollo in 2000, Mr. Parker was employed by Salomon Smith Barney, Inc. Mr. Parker also serves on the boards of directors of Affinion, CEVA Group Plc and Momentive Performance Materials. Mr. Parker holds a B.S. degree in Economics from The Wharton School of Business at the University of Pennsylvania. Mr. Parker has over 12 years of experience in analyzing and investing in public and private companies. Mr. Parker participated in the diligence of Apollo's investment in AMC and provides our board with insight into strategic and financial matters of interest to AMC's management and shareholders.

        Mr. Philip H. Loughlin has served as a Director of Parent and AMCE since January 2009. Mr. Loughlin joined Bain Capital in 1996 and has been a Managing Director since 2003. Prior to joining Bain Capital, Mr. Loughlin was a Consultant at Bain & Company, where he worked in the telecommunications, industrial manufacturing and consumer products industries. Mr. Loughlin has also served in operating roles at Eagle Snacks, Inc. and Norton Company. Mr. Loughlin also serves on the boards of directors of OSI Restaurant Partners, Inc., Ariel Holdings, Ltd., Applied Systems, Inc. and the National Pancreas Foundation. Mr. Loughlin serves on the audit committee of OSI Restaurant Partners. Mr. Loughlin previously served on the boards of directors of Burger King Corporation, Loews Cineplex Entertainment, Brenntag A.G., Professional Services Industries, Inc. and Cinemex and on the audit committees of Burger King Corporation and Loews Cineplex Entertainment. Mr. Loughlin received a M.B.A. from Harvard Business School where he was a Baker Scholar and graduated cum laude with an A.B. degree from Dartmouth College. Mr. Loughlin has 14 years of experience as a private equity investor, participated in the evaluation of Bain Capital's original investment in Loews and has significant experience in serving on boards of directors.

        Mr. Eliot P. S. Merrill has served as a Director of Parent and AMCE since January 2008. Mr. Merrill is a Managing Director of The Carlyle Group focusing on buyout opportunities in the media and telecommunications sectors. Prior to joining Carlyle in 2001, Mr. Merrill was a Principal at Freeman Spogli & Co., a buyout fund with offices in New York and Los Angeles. From 1995 to 1997, Mr. Merrill worked at Dillon Read & Co. Inc. Prior thereto, Mr. Merrill worked at Doyle Sailmakers, Inc. Mr. Merrill also serves as a director of The Nielsen Company B.V. Mr. Merrill holds an A.B. degree from Harvard College. Mr. Merrill has over 13 years of experience in the private equity industry and has focused on the analysis, assessment and capitalization of new acquisitions and existing portfolio companies. Prior to the Loews Mergers, Mr. Merrill served on the audit committee of Loews Cineplex Entertainment Corporation.

        Mr. Kevin J. Maroni has served as a Director of Parent and AMCE since April 2008. Mr. Maroni serves as Senior Managing Director of Spectrum Equity Investors ("Spectrum"), an investment firm with offices in Boston and Menlo Park. Mr. Maroni has served on the boards of directors of numerous public and private companies, including most recently Consolidated Communications, Inc. from 2002 - 2005; NEP Broadcasting, L.P. from 2004-2007; and Classic Media, L.P. from 2006-2007. Prior to joining Spectrum at inception in 1994, Mr. Maroni worked at Time Warner, Inc. and Harvard Management Company's private equity affiliate. Mr. Maroni has also served as a trustee of numerous non-profit institutions, which currently include National Geographic Ventures; the John F. Kennedy Library Foundation and the Park School. Mr. Maroni holds a B.A. degree from the University of

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Michigan and a M.B.A. from Harvard University. Mr. Maroni has over 20 years of experience as a private equity investor and has experience in serving on a number of public and private company boards of directors.

        Mr. Craig R. Ramsey has served as Executive Vice President and Chief Financial Officer of Parent since June 2007. Mr. Ramsey has served as Executive Vice President and Chief Financial Officer of AMCE and American Multi-Cinema, Inc. since April 2003. Previously, Mr. Ramsey served as Executive Vice President, Chief Financial Officer and Secretary of AMCE and American Multi-Cinema, Inc. since April 2002. Mr. Ramsey served as Senior Vice President, Finance, Chief Financial Officer and Chief Accounting Officer, of AMCE and American Multi-Cinema, Inc. from August 1998 until May 2002. Mr. Ramsey has served as a Director of American Multi-Cinema, Inc. since September 1999. Mr. Ramsey was elected Chief Accounting Officer of AMCE and American Multi-Cinema, Inc. in February 2000. Mr. Ramsey served as Vice President, Finance from January 1997 to October 1999 and prior thereto, Mr. Ramsey served as Director of Information Systems and Director of Financial Reporting since joining American Multi-Cinema, Inc. in February 1995. Mr. Ramsey currently serves as a member of the board of directors of Movietickets.com and has previously served on the board of directors of Bank Midwest. Mr. Ramsey holds a B.S. degree in Accounting and Business Administration from the University of Kansas.

        Mr. John D. McDonald has served as Executive Vice President, U.S. Operations of Parent and AMCE since July 2009. Mr. McDonald has served as Director of American Multi-Cinema, Inc. since November 2007 and has served as Executive Vice President, U.S. Operations of American Multi-Cinema, Inc. since July 2009. Prior to July 2009, Mr. McDonald served as Executive Vice President, U.S. and Canada Operations of American Multi-Cinema, Inc. effective October 1998. Mr. McDonald served as Senior Vice President, Corporate Operations from November 1995 to October 1998. Mr. McDonald is a member of the National Association of Theatre Owners Advisory board of directors. Mr. McDonald has successfully managed the integration for the Gulf States, General Cinema, and Loews mergers and acquisitions. Mr. McDonald attended California State Polytechnic University where he studied economics and history.

        Mr. Mark A. McDonald has served as Executive Vice President, Global Development since July 2009 of Parent and AMCE. Prior thereto, Mr. McDonald served as Executive Vice President, International Operations of Parent, Holdings and AMCE from October 2008 to July 2009. Mr. McDonald has served as Executive Vice President, International Operations of American Multi-Cinema, Inc., and AMC Entertainment International, Inc. ("AMCEI"), a subsidiary of American Multi-Cinema, Inc., since March 2007 and December 1998, respectively. Prior thereto, Mr. McDonald served as Senior Vice President, Asia Operations from November 1995 until his appointment as Executive Vice President, International Operations and Film in December 1998. Mr. McDonald served on the board of directors of AMCEI from March 2007 to May 2010. Mr. McDonald holds a B.A. degree from the University of Southern California and a M.B.A. from the Anderson School at University of California Los Angeles.

        Mr. Stephen A. Colanero has served as Executive Vice President and Chief Marketing Officer of Parent and AMCE since December 2009. Prior to joining AMC, Mr. Colanero served as Vice President of Marketing for RadioShack Corporation from April 2008 to December 2009. Mr. Colanero also served as Senior Vice President of Retail Marketing for Washington Mutual Inc. from February 2006 to August 2007 and as Senior Vice President, Strategic Marketing for Blockbuster Inc. from November 1994 to January 2006. Mr. Colanero holds a B.S. degree in Accounting from Villanova University and a M.B.A. in Marketing and Strategic Management from The Wharton School at the University of Pennsylvania.

        Mr. Robert J. Lenihan has served as President, Programming, of Parent and AMCE since April 2009. Prior to joining AMC, Mr. Lenihan served as Executive Vice President for Loews Cineplex

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Entertainment Corp from August 1998 to February 2002. Mr. Lenihan was appointed Senior Vice President and Head Film Buyer at Mann Theatres in 1985 and served in that capacity at Act III Theatres, Century Theatres, Sundance Cinemas and most recently at Village Roadshow. Mr. Lenihan holds a B.S. degree from Rowan University.

        Mr. Samuel D. "Sonny" Gourley has served as President of AMC Film Programming of Parent and AMCE since December 2009. Mr. Gourley has served as President of AMC Film Programming a Division of AMC since November 2005. Prior thereto, Mr. Gourley served as Executive Vice President, National Film from November 2002 to November 2005 and Executive Vice President, East Film from November 1999 to November 2002. Mr. Gourley currently serves on the advisory board of Tent 25 Variety—The Children's Charity located in Los Angeles, as well as serving on the board of the local Tent 8 Variety—The Children's Charity in Kansas City. Mr. Gourley holds a B.A. degree in English from Miami University in Oxford, Ohio.

        Mr. Kevin M. Connor has served as Senior Vice President, General Counsel and Secretary of Parent since June 2007. Mr. Connor has served as Senior Vice President, General Counsel and Secretary of AMCE and American Multi-Cinema, Inc. since April 2003. Prior to April 2003, Mr. Connor served as Senior Vice President, Legal of AMCE and American Multi-Cinema, Inc. beginning November 2002. Prior thereto, Mr. Connor was in private practice in Kansas City, Missouri as a partner with the firm Seigfreid, Bingham, Levy, Selzer and Gee from October 1995. Mr. Connor holds a Bachelor of Arts degree in English and History from Vanderbilt University, a Juris Doctorate degree from the University of Kansas School of Law and a LLM in Taxation from the University of Missouri—Kansas City.

        Mr. Michael W. Zwonitzer has served as Senior Vice President, Finance of Parent and AMCE since July 2009. Prior thereto, Mr. Zwonitzer served as Vice President, Finance of Parent and Holdings since June 2007 and December 2004, respectively. Mr. Zwonitzer has served as Vice President, Finance of AMCE and American Multi-Cinema, Inc. since September 2004 and prior thereto, Mr. Zwonitzer served as Director of Finance from December 2002 to September 2004 and Manager of Financial Analysis from November 2000 to December 2002. Mr. Zwonitzer joined AMC in June 1998. Mr. Zwonitzer holds a B.S. degree in Accounting from the University of Missouri.

        Mr. Chris A. Cox has served as Senior Vice President and Chief Accounting Officer of Parent since June 2010. Prior thereto Mr. Cox served as Vice President and Chief Accounting Officer of Parent and Holdings since June 2007 and December 2004, respectively. Mr. Cox has served as Vice President and Chief Accounting Officer of AMCE and American Multi-Cinema, Inc. since May 2002. Prior to May 2002, Mr. Cox served as Vice President and Controller of American Multi-Cinema, Inc. since November 2000. Previously, Mr. Cox served as Director of Corporate Accounting for the Dial Corporation from December 1999 until November 2000. Mr. Cox holds a Bachelor's of Business Administration in Accounting and Finance degree from the University of Iowa.

        Mr. Terry W. Crawford has served as Senior Vice President and Treasurer of Parent since June 2010. Previously, Mr. Crawford served as Vice President and Treasurer of Parent since June 2007 and of Holdings, AMCE and American Multi-Cinema, Inc. since April 2005. Prior thereto, Mr. Crawford served as Vice President and Assistant Treasurer of Holdings, AMCE and American Multi-Cinema, Inc. from December 2004 until April 2005. Previously, Mr. Crawford served as Vice President, Assistant Treasurer and Assistant Secretary of AMCE from May 2002 until December 2004 and American Multi-Cinema, Inc. from January 2000 until December 2004. Mr. Crawford served as Assistant Treasurer and Assistant Secretary of AMCE from September 2001 until May 2002 and AMC from November 1999 until December 2004. Mr. Crawford served as Assistant Secretary of AMCE from March 1997 until September 2001 and American Multi-Cinema, Inc. from March 1997 until November 1999. Prior to joining AMC, Mr. Crawford served as Vice President and Treasurer for Metmor Financial, Inc., a wholly-owned subsidiary of Metropolitan Life Insurance Company. Mr. Crawford holds a B.S. degree in Business from Emporia State University and a M.B.A. from the University of Missouri—Kansas City.

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        Mr. George Patterson has served as Senior Vice President of Food and Beverage of American Multi-Cinema, Inc. since February 2010. Prior thereto, Mr. Patterson served as Director of Asset Strategy and Multibrand Execution for YUM Brands from 2002 to 2010. Prior to joining YUM Brands, Mr. Patterson was Co-founder and COO of Cool Mountain Creamery and Café from 1997 to 2002. Prior to developing Cool Mountain Creamery and Café, Mr. Patterson was Regional Vice President for Wendy's International restaurants. Mr. Patterson holds a B.A. degree from the University of Florida.

        Elizabeth Frank has served as Senior Vice President of Strategy and Strategic Partnerships for AMCE since July 2010. Prior to joining AMCE, Ms. Frank served as Senior Vice President of Global Programs for AmeriCares. Prior to AmeriCares, Ms. Frank served as Vice President of Corporate Strategic Planning for Time Warner Inc. Prior to Time Warner Inc., Ms. Frank was a partner at McKinsey & Company for nine years. Ms. Frank currently serves on the Board of Directors for the Global Health Council. Ms. Frank holds a Bachelor of Business Administration degree from Lehigh University and a Masters of Business Administration from Harvard University.

Board of Directors

        Upon the closing of this offering, we will amend and restate our current certificate of incorporation and file such amended and restated certificate of incorporation with the State of Delaware. Pursuant to such amended and restated certificate of incorporation, our board of directors will consist of between 7 and 15 directors. A majority of the board of directors will constitute a quorum for board meetings. The convening of a special meeting will be subject to advance written notice to all directors.

        We intend to avail ourselves of the "controlled company" exception under the applicable national securities exchange rules, which eliminates the requirement that we have a majority of independent directors on our board of directors and that we have compensation and nominating committees composed entirely of independent directors, but retains the requirement that we have an audit committee composed entirely of independent members. Our board of directors currently consists of nine directors. Prior to the consummation of this offering, we will add one independent director to our board. Within three months following the closing of this offering, our board of directors will consist of 11 directors, including two independent directors designated by the Sponsors one of which was designated prior to the consummation of this offering. We expect to add one additional independent director, also designated by the Sponsors, to our board of directors within 12 months after the closing of this offering.

        Pursuant to our amended and restated certificate of incorporation, our board of directors will be divided into three classes. The members of each class will serve for a staggered, three-year term. Upon the expiration of the term of a class of directors, directors in that class will be elected for three-year terms, subject to the Sponsors' board designation rights, at the annual meeting of stockholders in the year in which their term expires. The classes are composed as follows:

        Any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of

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our directors. This classification of our board of directors may have the effect of delaying or preventing changes in control of our company.

        If at any time we cease to be a "controlled company" under the applicable national securities exchange rules, the board of directors will take all action necessary to comply with such national securities exchange rules, including appointing a majority of independent directors to the board and establishing certain committees composed entirely of independent directors.

Committees of the Board of Directors

        Upon consummation of this offering, our audit committee will consist of                                ,                                 and                                 (the "Audit Committee"). The board of directors has determined that Mr.             qualifies as an Audit Committee financial expert as defined in Item 401(h) of Regulation S-K. Mr.             is independent as independence is defined in Rule 10A-3(b)(i) under the Exchange Act or under the applicable section of the national securities exchange rules. Within three months of the closing of this offering, the Audit Committee will be comprised of Mr.             , Mr.             and one additional independent director designated by the Sponsors. Within one year of the closing of this offering, we will nominate one additional independent director to replace Mr.              on the Audit Committee so that our Audit Committee will be comprised of three independent members, all of whom will be financially literate.

        The principal duties and responsibilities of our Audit Committee are as follows:

        The Audit Committee will have the power to investigate any matter brought to its attention within the scope of its duties. It will also have the authority to retain counsel and advisors to fulfill its responsibilities and duties.

        Upon consummation of this offering, our compensation committee will consist of                          ,                                 ,                                 and                                 (the "Compensation Committee").

        The principal duties and responsibilities of our Compensation Committee are as follows:

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        Upon consummation of this offering, our nominating committee will consist of                                ,                                 ,                                 and                                 .

        The principal duties and responsibilities of the nominating committee will be as follows:

Code of Business Conduct and Ethics

        We have a Code of Business Conduct and Ethics that applies to all of our associates, including our principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions. These standards are designed to deter wrongdoing and to promote honest and ethical conduct. The Code of Business Conduct and Ethics, which address the subject areas covered by the SEC's rules, are posted on our website: www.amcentertainment.com under "Investor Relations—Corporate Governance." Any substantive amendment to, or waiver from, any provision of the Code of Business Conduct and Ethics with respect to any senior executive or financial officer shall be posted on this website. The information contained on our website is not part of this prospectus.

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COMPENSATION DISCUSSION AND ANALYSIS

        This section discusses the material elements of compensation awarded to, earned by or paid to our principal executive officer, our principal financial officer, our three other most highly compensated executive officers as well as an additional executive officer whose compensation otherwise would have been subject to reporting had there not been any option grants in fiscal 2010. These individuals are referred to as the "Named Executive Officers."

        Our executive compensation programs are determined and approved by our Compensation Committee. None of the Named Executive Officers are members of the Compensation Committee or otherwise had any role in determining the compensation of other Named Executive Officers, although the Compensation Committee does consider the recommendations of our Chief Executive Officer in setting compensation levels for our executive officers other than the Chief Executive Officer.

Executive Compensation Program Objectives and Overview

        The goals of the Compensation Committee with respect to executive compensation are to attract, retain, motivate and reward talented executives, to tie annual and long-term compensation incentives to the achievement of specified performance objectives, and to achieve long-term creation of value for our stockholders by aligning the interests of these executives with those of our stockholders. To achieve these goals, we endeavor to maintain compensation plans that are intended to tie a substantial portion of executives' overall compensation to key strategic, operational and financial goals such as achievement of budgeted levels of adjusted EBITDA or revenue, and other non-financial goals that the Compensation Committee deems important. From time to time, the Compensation Committee evaluates individual executive performance with a goal of setting compensation at levels they believe, based on industry comparables and their general business and industry knowledge and experience, are comparable with executives in other companies of similar size and stage of development operating in the theatrical exhibition industry and similar retail type businesses, while taking into account our relative performance and our own strategic goals.

        We conduct a periodic review of the aggregate level of our executive compensation as part of the annual budget review and annual performance review processes, which includes determining the operating metrics and non-financial elements used to measure our performance and to compensate our executive officers. This review is based on our knowledge of how other theatrical exhibition industry and similar retail type businesses measure their executive performance and on the key operating metrics that are critical in our effort to increase the value of our company.

Current Executive Compensation Program Elements

        Our executive compensation program consists of the elements described in the following sections. The Compensation Committee determines the portion of compensation allocated to each element for each individual Named Executive Officer. Our Compensation Committee expects to continue these policies in the short term but will reevaluate the current policies and practices as it considers advisable.

        The Compensation Committee believes based on their general business and industry experience and knowledge that the use of the combination of base salary, discretionary annual performance bonuses, and long-term incentives (including stock option or other stock-based awards) offers the best approach to achieving our compensation goals, including attracting and retaining talented and capable executives and motivating our executives and other officers to expend maximum effort to improve the business results, earnings and overall value of our business.

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Base Salaries

        Base salaries for our Named Executive Officers are established based on the scope of their responsibilities, taking into account competitive market compensation for similar positions, as well as seniority of the individual, our ability to replace the individual and other primarily judgmental factors deemed relevant by the Compensation Committee. Generally, we believe that executive base salaries should be targeted near the median of the range of salaries for executives in similar positions with similar responsibilities at comparable companies, in line with our compensation philosophy, but we do not make any determinations or changes in compensation in reaction to market data alone. The Compensation Committee's goal is to provide total compensation packages that are competitive with prevailing practices in our industry and in the geographic markets in which we conduct business. However, the Compensation Committee retains flexibility within the compensation program to respond to and adjust for specific circumstances and our evolving business environment. Periodically, the Company obtains information regarding the salaries of employees at comparable companies, including approximately 150 multi-unit businesses in the retail, entertainment and food service industries. Base salaries for our Named Executive Officers are reviewed at appropriate times by the Compensation Committee and may be increased from time to time pursuant to such review and/or in accordance with guidelines contained in the various employment agreements in order to realign salaries with market levels after taking into account individual responsibilities, performance and experience. Base salaries for our Named Executive Officers were essentially unchanged from fiscal 2009 to fiscal 2010.

Annual Performance Bonus

        The Compensation Committee has the authority to award annual performance bonuses to our Named Executive Officers. Under the current employment agreements, each Named Executive Officer is eligible for an annual bonus based on our annual incentive compensation program as it may exist from time to time. We believe that annual bonuses based on performance serve to align the interests of management and stockholders, and our annual bonus program is primarily designed to reward increases in adjusted EBITDA. Individual bonuses are performance based and, as such, can be highly variable from year to year. The annual incentive bonuses for our Named Executive Officers are determined by our Compensation Committee and, except with respect to his own bonus, our chief executive officer, based on our annual incentive compensation program as it may exist from time to time. For fiscal 2010, the annual incentive compensation program was based on a company component and an individual component. The company component was based primarily on attainment of an adjusted EBITDA target of $314,811,000. The plan guideline was that no company performance component of the bonus would be paid below attainment of 90% of targeted adjusted EBITDA and that upon attainment of 100% of targeted adjusted EBITDA, each Named Executive Officer would receive 100% of his assigned bonus target. Upon attainment of 110% of targeted adjusted EBITDA, each Named Executive Officer would receive a maximum of 200% of his assigned bonus target. The individual component of the bonus does not have an adjusted EBITDA threshold but is based on achievement of key performance measures and overall performance and contribution to our strategic and financial goals. Under the annual incentive compensation program, our Compensation Committee and, except with respect to his own bonus, chief executive officer, retain discretion to decrease or increase bonuses relative to the guidelines based on qualitative or other objective factors deemed relevant by the Compensation Committee.

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        The following table summarizes the company component upon attainment of 100% of targeted adjusted EBITDA and the individual component of the annual performance bonus plan for fiscal 2010:

 
  Company
Component at
100% Target
  Individual
Component
 

Gerardo I. Lopez

  $ 392,000   $ 98,000  

Craig R. Ramsey

    200,200     50,050  

John D. McDonald

    200,200     50,050  

Robert J. Lenihan

    151,400     37,850  

Kevin M. Connor

    156,000     39,000  

Samuel D. Gourley

    138,000     34,500  

        Our annual bonuses have historically been paid in cash and traditionally have been paid in a single installment in the first quarter following the completion of a given fiscal year. Pursuant to current employment agreements, each Named Executive Officer is eligible for an annual bonus pursuant to the annual incentive plan in place at the time. The Compensation Committee has discretion to increase the annual bonus paid to our Named Executive Officers using its judgment if the Company exceeds certain financial goals, or to reward for achievement of individual annual performance objectives. Our Compensation Committee and the Board of Directors have approved bonus amounts that have been paid in fiscal 2011 for the performance during fiscal 2010. We obtained an adjusted EBITDA of 104% of target for fiscal 2010 which is equivalent to an approximate 142% payout of the assigned bonus target. The individual component of the bonus was determined following a review of each Named Executive Officer's individual performance and contribution to our strategic and financial goals. For fiscal 2010, this review was conducted during the first quarter of fiscal 2011.

Special Incentive Bonus

        Pursuant to his employment agreement, Mr. Gerardo Lopez is entitled to a one-time special incentive bonus of $2,000,000 that vests at the rate of $400,000 per year over five years, effective March 2009, provided that he remains employed on each vesting date. The first three installments of the special incentive bonus are payable on the third anniversary and the fourth and fifth installments are payable upon vesting. The special incentive bonus of $2,000,000 shall immediately vest in full upon Mr. Lopez's involuntary termination within twelve months after a change of control, as defined in the employment agreement. As of April 1, 2010, Mr. Lopez has vested in one-fifth, or $400,000, of this special incentive bonus to be paid on his third anniversary.

Long Term Incentive Equity Awards

        In connection with the holdco merger, on June 11, 2007, we adopted an amended and restated 2004 stock option plan (formerly known as the 2004 Stock Option Plan), which provides for the grant of incentive stock options (within the meaning of Section 422 of the Internal Revenue Code) and non-qualified stock options to acquire our common stock to eligible employees and consultants and our non-employee directors. Options granted under the plan vest in equal installments over three to five years from the grant date, subject to the optionee's continued service with Parent or one of its subsidiaries. The Compensation Committee approved stock option grants to Mr. Robert Lenihan and Mr. Samuel Gourley during fiscal 2010.

Retirement Benefits

        We provide retirement benefits to the Named Executive Officers under both qualified and non-qualified defined-benefit and defined-contribution retirement plans. The Defined Benefit Retirement Income Plan for Certain Employees of American Multi-Cinema, Inc. ("AMC Defined

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Benefit Retirement Income Plan") and the AMC 401(k) Savings Plan are both tax-qualified retirement plans in which the Named Executive Officers participate on substantially the same terms as our other participating employees. However, due to maximum limitations imposed by the Employee Retirement Income Security Act of 1974 ("ERISA") and the Internal Revenue Code on the annual amount of a pension which may be paid under a qualified defined-benefit plan and on the maximum amount that may be contributed to a qualified defined-contribution plan, the benefits that would otherwise be payable to the Named Executive Officers under the Defined Benefit Retirement Income Plan are limited. Because we did not believe that it was appropriate for the Named Executive Officers' retirement benefits to be reduced because of limits under ERISA and the Internal Revenue Code, we had established non-qualified supplemental defined-benefit plans that permit the Named Executive Officers to receive the same benefit that would be paid under our qualified defined-benefit plan up to the old IRS limit, as indexed, as if the Omnibus Budget Reconciliation Act of 1993 had not been in effect. On November 7, 2006, our Board of Directors approved a proposal to freeze the AMC Defined Benefit Retirement Income Plan and our supplemental defined-benefit plans, the AMC Supplemental Executive Retirement Plan and the AMC Retirement Enhancement Plan, effective as of December 31, 2006. The Compensation Committee determined that these types of plans are not as effective as other elements of compensation in aligning executives' interests with the interests of stockholders, a particularly important consideration for a public company. As a result, the Compensation Committee determined to freeze these plans. Benefits no longer accrue under the AMC Defined Benefit Retirement Income Plan, the AMC Supplemental Executive Retirement Plan or the AMC Retirement Enhancement Plan for our Named Executive Officers or for other participants.

        Effective for fiscal year 2010, under our 401(k) Savings Plan, we matched 50% of each eligible employee's elective contributions up to 6% of the employee's eligible compensation. Previously, Holdings matched 100% of elective contributions up to 5% of employee compensation.

        The "Pension Benefits" table and related narrative section "—Pension and Other Retirement Plans" below describes our qualified and non-qualified defined-benefit plans in which our Named Executive Officers participate.

Non-Qualified Deferred Compensation Program

        Named Executive Officers are permitted to elect to defer base salaries and their annual bonuses under the AMC Non-Qualified Deferred Compensation Plan. We believe that providing the Named Executive Officers with deferred compensation opportunities is a cost-effective way to permit officers to receive the tax benefits associated with delaying the income tax event on the compensation deferred, even though the related deduction for the Companies is also deferred.

        The "Non-Qualified Deferred Compensation" table and related narrative section "—Non-Qualified Deferred Compensation Plan" below describe the non-qualified deferred compensation plan and the benefits thereunder.

Severance and Other Benefits Upon Termination of Employment

        We believe that severance protections, particularly in the context of a change in control transaction, can play a valuable role in attracting and retaining key executive officers. Accordingly, we provide such protections for each of the Named Executive Officers and for other of our senior officers in their respective employment agreements. The Compensation Committee evaluates the level of severance benefits provided to Named Executive Officers on a case-by-case basis. We consider these severance protections consistent with competitive practices.

        As described in more detail below under "—Potential Payments Upon Termination or Change in Control" pursuant to their employment agreements, each of the Named Executive Officers would be entitled to severance benefits in the event of termination of employment without cause and certain

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Named Executive Officers would be entitled to severance benefits due to death or disability. In the case of Mr. Lopez, resignation for good reason would also entitle the employee to severance benefits. We have determined that it is appropriate to provide these executives with severance benefits under these circumstances in light of their positions and as part of their overall compensation package.

        We believe that the occurrence, or potential occurrence, of a change in control transaction will create uncertainty regarding the continued employment of our executive officers. This uncertainty results from the fact that many change in control transactions result in significant organizational changes, particularly at the senior executive level. In order to encourage certain of our executive officers to remain employed with us during an important time when their prospects for continued employment following the transaction are often uncertain, we provide the executives with severance benefits if they terminate their employment within a certain number of days following specified changes in their compensation, responsibilities or benefits following a change in control. No claim for severance due to a change in control has been made by an executive who is a party to an employment agreement providing for such severance benefits since the merger of Marquee Inc. with AMCE (then a change in control for purposes of the agreements). The severance benefits for these executives are generally determined as if they continued to remain employed by us for two years following their actual termination date.

Perquisites

        The perquisites provided to each Named Executive Officer during fiscal 2010, 2009 and 2008 are reported in the All Other Compensation column of the "Summary Compensation Table" below, and are further described in footnote (5) to that table. Perquisites consist of matching contributions under our 401(k) savings plan, which is a qualified defined contribution plan, life insurance premiums, awards and gifts, relocation expenses, on-site parking, and an award of theatre chairs. Perquisites are benchmarked and reviewed, revised and approved by the Compensation Committee every year.

Policy with Respect to Section 162(m)

        Section 162(m) of the Internal Revenue Code generally disallows public companies a tax deduction for compensation in excess of $1,000,000 paid to their chief executive officers and the four other most highly compensated executive officers unless certain performance and other requirements are met. Our intent generally is to design and administer executive compensation programs in a manner that will preserve the deductibility of compensation paid to our executive officers, and we believe that a substantial portion of our current executive compensation program (including the stock options and other awards that may be granted to our Named Executive Officers as described above) satisfies the requirements for exemption from the $1,000,000 deduction limitation. However, we reserve the right to design programs that recognize a full range of performance criteria important to our success, even where the compensation paid under such programs may not be deductible. The Compensation Committee will continue to monitor the tax and other consequences of our executive compensation program as part of its primary objective of ensuring that compensation paid to our executive officers is reasonable, performance-based and consistent with the goals of AMC Entertainment and our stockholders.

Actions Taken After Fiscal 2010

        On July 8, 2010, our board of directors approved the adoption of the AMC Entertainment Holdings, Inc. 2010 Equity Incentive Plan, which is described in more detail under "—Equity Incentive Plans" below. Our Compensation Committee intends that future equity-based awards will be made pursuant to the 2010 Equity Incentive Plan.

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Summary Compensation Table

        The following table presents information regarding compensation of our principal executive officer, our principal financial officer, our three other most highly compensated executive officers for services rendered during fiscal 2010 as well as an additional executive officer whose compensation otherwise would have been subject to reporting had there not been any option grants in fiscal 2010. These individuals are referred to as "Named Executive Officers."

Name and Principal
Position(1)
  Year   Salary
($)
  Bonus
($)
  Stock
Awards
($)
  Option
Awards
($)(2)
  Non-Equity
Incentive
Plan
Compensation
($)(3)
  Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(4)
  All Other
Compensation
($)(5)
  Total
($)
 

Gerardo I. Lopez

    2010   $ 700,003   $ 400,000   $   $   $ 674,240   $   $ 66,220   $ 1,840,463  
 

Chief Executive Officer, President and Director (Parent, Holdings, AMCE and American Multi-Cinema, Inc.)

    2009     64,615             2,068,847             16,570     2,150,032  

Craig R. Ramsey

   
2010
   
385,000
   
   
   
   
346,847
   
83,470
   
6,656
   
821,973
 
 

Executive Vice President

    2009     383,508                         16,634     400,142  
 

and Chief Financial Officer (Parent, Holdings, AMCE and American Multi-Cinema, Inc.)

    2008     374,183                         29,365     403,548  

John D. McDonald

   
2010
   
385,000
   
   
   
   
344,344
   
134,080
   
9,419
   
872,843
 
 

Executive Vice President

    2009     383,508                         21,626     405,134  
 

North American Operations (Parent, Holdings, AMCE and American Multi-Cinema, Inc.)

    2008     374,182                         28,356     402,538  

Robert J. Lenihan

   
2010
   
376,885
   
   
   
138,833
   
252,838
   
   
48,762
   
817,318
 
 

President, Film Programming (Parent, Holdings, AMCE and American Multi-Cinema, Inc.)

                                                       

Kevin M. Connor

   
2010
   
325,000
   
   
   
   
260,520
   
12,201
   
8,205
   
605,926
 
 

Senior Vice President,

    2009     323,658                         16,123     339,781  
 

General Counsel and Secretary (Parent, Holdings, AMCE and American Multi-Cinema, Inc.)

    2008     321,696                         25,230     346,926  

Samuel D. Gourley

   
2010
   
287,500
   
   
   
92,962
   
230,460
   
169,091
   
40,393
   
820,406
 
 

President, AMC Film Programming (Parent, Holdings, AMCE and American Multi-Cinema, Inc.)

                                                       

(1)
The principal positions shown are at April 1, 2010. Compensation for Mr. Gerardo Lopez, Mr. Robert Lenihan, and Mr. Samuel Gourley is provided for years where they were Named Executive Officers only.

(2)
As required by the SEC Rules, amounts shown in the column, "Option Awards," presents the aggregate grant date fair value of option awards granted in the fiscal year in accordance with accounting rules ASC 718, Compensation—Stock Compensation. These amounts reflect the Company's accounting expense and do not correspond to the actual value that will be realized by the Named Executive Officers. Options are to acquire shares of our common stock.

In May 2009, Mr. Robert Lenihan and Mr. Samuel Gourley received a stock option grant to purchase        and        of our common shares, respectively, at a price equal to $        per share. The options will vest in five equal annual installments, subject to continued employment. The options will expire after ten years from the date of the grant. The valuation assumptions used for these option awards are provided in note 1 to the Company's consolidated financial statements contained elsewhere in this prospectus.

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(3)
The Compensation Committee has determined the amounts of the annual incentive plan compensation that will be paid to each Named Executive Officer for fiscal 2010. We paid those amounts during the first quarter of fiscal 2011. No bonuses were earned in fiscal 2009 and 2008 under the annual incentive bonus program as we did not meet the minimum targeted adjusted EBITDA threshold established by the Compensation Committee. Further discussion on the annual incentive bonus program for the Named Executive Officers can be found in the Compensation Discussion and AnalysisAnnual Performance Bonus section.

(4)
The following table represents the aggregate increases and decreases in actuarial present value of each officer's accumulated benefit amounts. The aggregate decreases in actuarial present value amounts have been omitted from the Summary Compensation Table:

 
   
  Defined
Benefit Plan
  Supplemental
Executive
Retirement
Plan
 

Craig R. Ramsey

    2010   $ 42,764   $ 22,173  

    2009     (2,109 )   (1,094 )

    2008     (3,426 )   (1,776 )

John D. McDonald

   
2010
   
87,134
   
45,179
 

    2009     (35,248 )   (18,276 )

    2008     (13,050 )   (6,766 )

Kevin M. Connor

   
2010
   
8,635
   
3,566
 

    2009     (4,394 )   (1,814 )

    2008     (1,849 )   (3,567 )

Samuel D. Gourley

   
2010
   
113,326
   
55,765
 
(5)
All Other Compensation is comprised of Company matching contributions under our 401(k) savings plan which is a qualified defined contribution plan, life insurance premiums, automobile related benefits, awards / gifts, relocation expenses, on-site parking, and an award of theatre chairs. The following table summarizes "All Other Compensation" provided to the Named Executive Officers:

 
   
   
   
   
   
   
  Additional All Other
Compensation
 
 
   
  Perquisites and Other Personal Benefits   Company
Matching
Contributions
to 401(k)
Plan
   
 
 
   
  Car
Allowance
  Awards/Gifts   Theatre
Chairs
  Relocation
Expenses
  On-Site
Parking
  Life Insurance
Premiums
 

Gerardo I. Lopez

    2010   $   $ 100   $   $ 64,326   $   $   $ 1,794  

    2009                 16,570              

Craig R. Ramsey

   
2010
   
   
100
   
   
   
   
3,202
   
3,354
 

    2009     1,500     305                 11,475     3,354  

    2008     13,500     254                 12,128     3,483  

John D. McDonald

   
2010
   
   
1,500
   
   
   
   
6,125
   
1,794
 

    2009     1,500     305                 18,027     1,794  

    2008     13,500     254                 12,739     1,863  

Robert J. Lenihan

   
2010
   
   
   
   
45,883
   
170
   
   
2,709
 

Kevin M. Connor

   
2010
   
   
   
   
   
   
7,125
   
1,080
 

    2009     1,350     305     2,366             11,061     1,041  

    2008     12,150     254                 11,781     1,045  

Samuel D. Gourley

   
2010
   
   
1,502
   
   
31,107
   
170
   
4,900
   
2,714
 

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Compensation of Named Executive Officers

        The Summary Compensation Table above quantifies the value of the different forms of compensation earned by or awarded to our Named Executive Officers in fiscal 2010. The primary elements of each Named Executive Officer's total compensation reported in the table are base salary and annual bonus.

        The Summary Compensation Table should be read in conjunction with the tables and narrative descriptions that follow. A description of the material terms of each Named Executive Officer's base salary and annual bonus is provided below.

        The "Pension Benefits" table and related description of the material terms of our pension plans describe each Named Executive Officer's retirement benefits under the Companies' defined-benefit pension plans to provide context to the amounts listed in the Summary Compensation Table. The discussion in the section "Potential Payments Upon Termination or Change in Control" explains the potential future payments that may become payable to our Named Executive Officers.

Description of Employment Agreements—Salary and Bonus Amounts

        We have entered into employment agreements with each of Messrs. Lopez, Ramsey, McDonald, Lenihan, Connor, and Gourley. Provisions of these agreements relating to outstanding equity incentive awards and post-termination of employment benefits are discussed below.

        Gerardo I. Lopez.    On February 23, 2009, we entered into an employment agreement with Gerardo I. Lopez to serve as its Chief Executive Officer and President. The term of the agreement is for three years, with automatic one-year extensions each year. The agreement provides that Mr. Lopez will receive an initial annualized base salary of $700,000. The Compensation Committee, based on its review, has discretion to increase (but not reduce) the base salary each year. Mr. Lopez's target incentive bonus for fiscal 2010 was equal to 70% of his annual base salary. In addition, Mr. Lopez is receiving a one-time special incentive bonus that vests at the rate of $400,000 per year over five years, effective March 2009, provided he remains employed on each vesting date. The first three installments of the special incentive bonus are payable on the third anniversary and the fourth and fifth installments are payable upon vesting. Upon approval by the Compensation Committee, Mr. Lopez received a grant of options to purchase         shares of our common stock. The options will vest in five equal annual installments, subject to Mr. Lopez's continued employment. In making its determination with respect to salary and bonus levels, the Compensation Committee considers the factors discussed in the "Current Executive Compensation Program Elements" of the Compensation Discussion and Analysis above. The agreement also provides that Mr. Lopez will be eligible for benefits offered by the Company to other executive officers and will be entitled to reimbursements for expenses reasonably incurred in connection with related business expenses and travel. Change in control, severance arrangements and restrictive covenants in Mr. Lopez's employment agreement are discussed in detail below in the narrative section "Potential Payments Upon Termination or Change in Control."

        Craig R. Ramsey.    On July 1, 2001, we entered into an employment agreement with Craig R. Ramsey who serves as the Executive Vice President and Chief Financial Officer and reports directly to our President and Chief Executive Officer. The term of the agreement is for two years, with automatic one-year extensions each year. The agreement provides that Mr. Ramsey will receive an initial annualized base salary of $275,000. The agreement also provides for annual bonuses for Mr. Ramsey based on the applicable incentive compensation program of the company. In making its determination with respect to salary and bonus levels, the Compensation Committee considers the factors discussed in the "Current Executive Compensation Program Elements" of the Compensation Discussion and Analysis above. In addition, the agreement provides that Mr. Ramsey will be eligible for benefits offered by the Company to other executive officers and will be entitled to reimbursements for expenses reasonably incurred in connection with business travel and entertainment. Change in control and

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severance arrangements in Mr. Ramsey's employment agreement are discussed in detail below in the narrative section "Potential Payments Upon Termination or Change in Control."

        John D. McDonald.    On July 1, 2001, we entered into an employment agreement with John D. McDonald, who serves as an Executive Vice President, North America Operations. Mr. McDonald reports directly to our President and Chief Operating Officer or such officer's designee. The term of the agreement is for two years, with automatic one-year extensions each year. The agreement provides that Mr. McDonald will receive an initial annualized base salary of $275,000. The agreement also provides for annual bonuses for Mr. McDonald based on the applicable incentive compensation program of the Company. In making its determination with respect to salary and bonus levels, the Compensation Committee considers the factors discussed in the "Current Executive Compensation Program Elements" of the Compensation Discussion and Analysis above. In addition, the agreement provides that Mr. McDonald will be eligible for benefits offered by the Company to other executive officers and will be entitled to reimbursements for expenses reasonably incurred in connection with business travel and entertainment. Change in control and severance arrangements in Mr. McDonalds' employment agreements are discussed in detail below in the narrative section "Potential Payments Upon Termination or Change in Control."

        Robert J. Lenihan.    On April 7, 2009, we entered into an employment agreement with Robert J. Lenihan who serves as the President of Film Programming. The term of the agreement is for two years, with automatic one-year extensions each year. The agreement provides that Mr. Lenihan will receive an initial annualized base salary of $410,000 subject to review by the Board of Directors or the Compensation Committee. Based on their review, the Board of Directors or the Compensation Committee have discretion to increase (but not reduce) the base salary each year. The agreement also provides for annual bonuses for Mr. Lenihan based on the applicable incentive compensation program of the Company. The target incentive bonus for each fiscal year during the period of employment shall equal 50% of the base salary. In making its determination with respect to salary and bonus levels, the Compensation Committee considers the factors discussed in the "Current Executive Compensation Program Elements" of the Compensation Discussion and Analysis above. In addition, the agreement provides that Mr. Lenihan will be eligible for benefits offered by the Company to other executive officers and will be entitled to reimbursements for expenses reasonably incurred in connection with carrying out the Executive's duties for the Company. Change in control and severance arrangements in Mr. Lenihan's employment agreement are discussed in detail below in the narrative section "Potential Payments Upon Termination or Change in Control."

        Kevin M. Connor.    On November 6, 2002, we entered into an employment agreement with Kevin M. Connor who serves as the Senior Vice President, General Counsel and Secretary of the Company. The term of the agreement is for two years, with automatic one-year extensions each year. The agreement provides that Mr. Connor will receive an initial annualized base salary of $225,000. The agreement also provides for annual bonuses for Mr. Connor based on the applicable incentive compensation program of the Company. In making its determination with respect to salary and bonus levels, the Committee considers the factors discussed in the "Current Executive Compensation Program Elements" of the Compensation Discussion and Analysis above. In addition, the agreement provides that Mr. Connor will be eligible for benefits offered by the Company to other executive officers and will be entitled to reimbursements for expenses reasonably incurred in connection with business travel and entertainment. Change in control and severance arrangements in Mr. Connor's employment agreement are discussed in detail below in the narrative section "Potential Payments Upon Termination or Change in Control."

        Samuel D. Gourley.    On July 1, 2001, we entered into an employment agreement with Samuel D. Gourley who serves as the President of AMC Film Programming. The term of the agreement is for one year, with automatic one-year extensions each year. The agreement provides that Mr. Gourley will

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receive an initial annualized base salary of $197,608 plus an additional $17,500 on an annual basis as a market allowance subject to review by the President, AMC Film Marketing and EVP North America Film Operations, with the approval of our President and Chief Operating Officer. The agreement also provides for annual bonuses for Mr. Gourley based on the applicable incentive compensation program of the Company. In making its determination with respect to salary and bonus levels, the Compensation Committee considers the factors discussed in the "Current Executive Compensation Program Elements" of the Compensation Discussion and Analysis above. In addition, the agreement provides that Mr. Gourley will be eligible for benefits offered by the Company to other executive officers and will be entitled to reimbursements for expenses reasonably incurred in connection with business travel and entertainment. Change in control and severance arrangements in Mr. Gourley's employment agreement are discussed in detail below in the narrative section "Potential Payments Upon Termination or Change in Control."


Grants of Plan-based Awards—Fiscal 2010

        The following table summarizes equity awards granted to named executive officers during fiscal 2010:

 
   
   
   
   
   
   
   
  All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
  All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
   
   
 
 
   
  Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards
  Estimated Future Payouts
Under Equity Incentive
Plan Awards
  Exercise
Or Base
Price of
Option
Awards
($/Sh)
  Grant Date
Fair Value
of Stock
and
Option
Awards
 
Name
  Grant
Date
  Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
($)
  Target
($)
  Maximum
($)
 

Robert J. Lenihan

    05/28/2009   $   $   $   $   $   $                   $  

Samuel D. Gourley

    05/28/2009   $   $   $   $   $   $                   $  

        On May 28, 2009, Mr. Lenihan and Mr. Gourley received a grant of stock options to purchase        and         shares, respectively of Class N Common Stock at a price equal to $        per share. The options will vest in five equal annual installments, subject to their continued employment. The options shall expire after ten years from the date of the grant. The Company accounts for stock options using the fair value method of accounting and has elected to use the simplified method for estimating the expected term for "plain vanilla" share option grants as it does not have enough historical experience to provide a reasonable estimate. See note 8 to the Company's consolidated financial statements contained elsewhere in this prospectus for more information.

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Outstanding Equity Awards at end of Fiscal 2010

        The following table presents information regarding the outstanding equity awards held by each of our Named Executive Officers as of April 1, 2010, including the vesting dates for the portions of these awards that had not vested as of that date:

 
  Option Awards   Stock Awards  
Name
  Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
  Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
  Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
  Option
Exercise
Price ($)
  Option
Expiration
Date
  Number
of Shares
or Units
of Stock
That Have
Not Vested
(#)
  Market
Value of
Shares or
Units of
Stock
That Have
Not Vested
($)
  Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
(#)
  Equity
Incentive
Plan Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not Vested
($)
 

Gerardo I. Lopez(1)

                            03/06/2019                          

Craig R. Ramsey(2)(3)

                            12/23/2014                          

John D. McDonald(2)(3)

                            12/23/2014                          

Robert J. Lenihan(4)

                            05/28/2019                          

Kevin M. Connor(2)(3)

                            12/23/2014                          

Samuel D. Gourley(4)

                            05/28/2019                          

(1)
The options vest at a rate of 20% per year commencing on March 6, 2010.

(2)
The options vest at a rate of 20% per year commencing on December 23, 2005.

(3)
The option exercise price per share of $            was adjusted to $            per share pursuant to the anti-dilution provisions of the 2004 Stock Option Plan to give effect to the payment of a one-time nonrecurring dividend on June 15, 2007 of $652.8 million to the holders of our then outstanding                     shares of common stock.

(4)
The options vest at a rate of 20% per year commencing on May 28, 2010.


Option Exercises and Stock Vested—Fiscal 2010

        None of our Named Executive Officers exercised options or held any outstanding stock awards during fiscal 2010.

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Pension Benefits

        The following table presents information regarding the present value of accumulated benefits that may become payable to the Named Executive Officers under our qualified and nonqualified defined-benefit pension plans.

Name
  Plan Name   Number of
Years Credited
Service
(#)
  Present Value
of Accumulated
Benefit(1)
($)
  Payments
During Last
Fiscal Year
($)
 

Gerardo I. Lopez

        $   $  

Craig R. Ramsey

  Defined Benefit Retirement Income Plan     12.00     179,849      

  Supplemental Executive Retirement Plan     12.00     93,250      

John D. McDonald

  Defined Benefit Retirement Income Plan     31.05     317,871      

  Supplemental Executive Retirement Plan     31.05     164,814      

Robert J. Lenihan

               

Kevin M. Connor

  Defined Benefit Retirement Income Plan     4.00     27,596      

  Supplemental Executive Retirement Plan     4.00     11,396      

Samuel D. Gourley

  Defined Benefit Retirement Income Plan     31.80     476,600      

  Supplemental Executive Retirement Plan     31.80     234,524      

(1)
The accumulated benefit is based on service and earnings considered by the plans for the period through April 1, 2010. It includes the value of contributions made by the Named Executive Officers throughout their careers. The present value has been calculated assuming the Named Executive Officers will remain in service until age 65, the age at which retirement may occur without any reduction in benefits, and that the benefit is payable under the available forms of annuity consistent with the plans. The interest assumption is 6.16%. The post-retirement mortality assumption is based on the 2010 IRS Prescribed Mortality-Static Annuitant, male and female mortality table. See note 11 to the Company's consolidated financial statements contained elsewhere in this prospectus for more information.

Pension and Other Retirement Plans

        We provide retirement benefits to the Named Executive Officers under the terms of qualified and non-qualified defined-benefit plans. The AMC Defined Benefit Retirement Income Plan is a tax-qualified retirement plan in which the Named Executive Officers participate on substantially the same terms as our other participating employees. However, due to maximum limitations imposed by ERISA and the Internal Revenue Code on the annual amount of a pension which may be paid under a qualified defined-benefit plan, the benefits that would otherwise be payable to the Named Executive Officers under the Defined Benefit Retirement Income Plan are limited. Because we did not believe that it was appropriate for the Named Executive Officers' retirement benefits to be reduced because of limits under ERISA and the Internal Revenue Code, we have non-qualified supplemental defined-benefit plans that permit the Named Executive Officers to receive the same benefit that would be paid under our qualified defined-benefit plan up to the old IRS limit, as indexed, as if the Omnibus Budget Reconciliation Act of 1993 had not been in effect. On November 7, 2006, our Board of Directors approved a proposal to freeze the AMC Defined Benefit Retirement Income Plan, and our supplemental plans, the AMC Supplemental Executive Retirement Plan and the AMC Retirement Enhancement Plan, effective as of December 31, 2006. As amended, benefits do not accrue after December 31, 2006, but vesting continues for associates with less than five years of vesting service. The material terms of the AMC Defined Benefit Retirement Income Plan, the AMC Supplemental Executive Retirement Plan and the AMC Retirement Enhancement Plan are described below.

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        AMC Defined Benefit Retirement Income Plan.    The AMC Defined Benefit Retirement Income Plan is a non-contributory defined-benefit pension plan subject to the provisions of ERISA. As mentioned above, the plan was frozen effective December 31, 2006.

        The plan provides benefits to certain of our employees based upon years of credited service and the highest consecutive five-year average annual remuneration for each participant. For purposes of calculating benefits, average annual compensation is limited by Section 401(a)(17) of the Internal Revenue Code, and is based upon wages, salaries and other amounts paid to the employee for personal services, excluding certain special compensation. Under the defined benefit plan, a participant earns a vested right to an accrued benefit upon completion of five years of vesting service.

        AMC Supplemental Executive Retirement Plan.    AMC also sponsors a Supplemental Executive Retirement Plan to provide the same level of retirement benefits that would have been provided under the retirement plan had the federal tax law not been changed in the Omnibus Budget Reconciliation Act of 1993 to reduce the amount of compensation which can be taken into account in a qualified retirement plan. The plan was frozen, effective December 31, 2006, and no new participants can enter the plan and no additional benefits can accrue thereafter.

        Subject to the forgoing, any individual who is eligible to receive a benefit from the AMC Defined Benefit Retirement Income Plan after qualifying for early, normal or late retirement benefits thereunder, the amount of which is reduced by application of the maximum limitations imposed by the Internal Revenue Code, is eligible to participate in the Supplemental Executive Retirement Plan.

        The benefit payable to a participant equals the monthly amount the participant would receive under the AMC Defined Benefit Retirement Income Plan without giving effect to the maximum recognizable compensation for qualified retirement plan purposes imposed by the Internal Revenue Code, as amended by Omnibus Budget Reconciliation Act of 1993, less the monthly amount of the retirement benefit actually payable to the participant under the AMC Defined Benefit Retirement Income Plan, each as calculated as of December 31, 2006. The benefit is an amount equal to the actuarial equivalent of his/her benefit, computed by the formula above, payable in either a lump sum (in certain limited circumstances, specified in the plan) or equal semi-annual installments over a period of two to ten years, with such form, and, if applicable, period, having been irrevocably elected by the participant.

        If a participant's employment terminates for any reason (or no reason) before the earliest date he/she qualifies for early, normal or late retirement benefits under the AMC Defined Benefit Retirement Income Plan, no benefit is payable under the Supplemental Executive Retirement Plan.

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Nonqualified Deferred Compensation

        The following table presents information regarding the contributions to and earnings on the Named Executive Officers' deferred compensation balances during fiscal 2010, and also shows the total deferred amounts for the Named Executive Officers at the end of fiscal 2010:

Name
  Executive
Contributions
in Last FY
($)
  Registrant
Contributions
in Last FY
($)(1)
  Aggregate
Earnings in
Last FY
($)
  Aggregate
Withdrawals/
Distributions
($)
  Aggregate
Balance at
Last FYE
($)
 

Gerardo I. Lopez

  $   $ 400,000   $   $   $ 400,000  

Craig R. Ramsey

    11,550         24,530         137,887  

John D. McDonald

    10,661         2,414         14,636  

Robert J. Lenihan

                     

Kevin M. Connor

                     

Samuel D. Gourley

                     

(1)
The activity for Mr. Lopez reflects the vested portion of his Special Incentive Bonus.

Non-Qualified Deferred Compensation Plan

        We permit the Named Executive Officers and other key employees to elect to receive a portion of their compensation reported in the Summary Compensation Table on a deferred basis. Deferrals of compensation during fiscal 2010 and in recent years have been made under the AMC Non-Qualified Deferred Compensation Plan. Participants of the plan are able to defer annual salary and bonus (excluding commissions, expense reimbursement or allowances, cash and non-cash fringe benefits and any stock-based incentive compensation). Amounts deferred under the plans are credited with an investment return determined as if the participant's account were invested in one or more investment funds made available by the Committee and selected by the participant. We may, but need not, credit the deferred compensation account of any participant with a discretionary or profit sharing credit as determined by us. The deferred compensation account will be distributed either in a lump sum payment or in equal annual installments over a term not to exceed 10 years as elected by the participant and may be distributed pursuant to in-service withdrawals pursuant to certain circumstances. Any such payment shall commence upon the date of a "Qualifying Distribution Event" (as such term is defined in the Non-Qualified Deferred Compensation Plan). The Qualifying Distribution Events are designed to be compliant with Section 409A of the Internal Revenue Code.

        Pursuant to his employment agreement, Mr. Gerardo Lopez is entitled to a one-time special incentive bonus of $2,000,000 that vests at the rate of $400,000 per year over five years, effective March 2009, provided that he remains employed on each vesting date. The first three installments of the special incentive bonus are payable on the third anniversary and the fourth and fifth installments are payable upon vesting. The special incentive bonus of $2,000,000 shall immediately vest in full upon Mr. Lopez's involuntary termination within twelve months after a change of control, as defined in the employment agreement. As of April 1, 2010, Mr. Lopez has vested in one-fifth, or $400,000, of this special incentive bonus to be paid on his third anniversary.

Potential Payments Upon Termination or Change in Control

        The following section describes the benefits that may become payable to certain Named Executive Officers in connection with a termination of their employment and/or a change in control, changes in responsibilities, salary or benefits. In addition to the benefits described below, outstanding equity-based awards held by our Named Executive Officers may also be subject to accelerated vesting in connection with a change in control of Holdings under the terms of our 2004 Stock Option Plan. Furthermore, upon a termination following a "Change of Control" (as such term is defined in the AMC Retirement

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Enhancement Plan), the Named Executive Officer is entitled to his accrued benefits payable thereunder in a form of payment that he has previously chosen. The Retirement Enhancement Plan and the present value of benefits accumulated under the plan are described above in the table "Pension Benefits" and the accompanying narrative "Pension and Other Retirement Plans."

        Assumptions.    As prescribed by the SEC's disclosure rules, in calculating the amount of any potential payments to the Named Executive Officers under the arrangements described below, we have assumed that the applicable triggering event (i.e., termination of employment and/or change in control) occurred on the last business day of fiscal 2010 and that the price per share of our common stock is equal to the fair market value of a share of our common stock as of that date.

Gerardo I. Lopez

        Mr. Lopez's employment agreement, described above under "—Description of Employment Agreements—Salary and Bonus Amounts," provides for certain benefits to be paid to Mr. Lopez in connection with a termination of his employment under the circumstances described below.

        Severance Benefits.    In the event Mr. Lopez's employment is terminated as a result of an involuntary termination during the employment term without cause pursuant to a termination for death, "Disability", or by Mr. Lopez pursuant to a termination for "Good Reason" or after a "Change of Control" (as those terms are defined in the employment agreement), Mr. Lopez will be entitled to severance pay equal to two times the sum of his base salary plus the average of each Incentive Bonus paid to the Executive during the 24 months preceding the severance date (or previous year, if he has not been employed for two bonus cycles as of the severance date). If his employment is terminated before determination of the first Incentive Bonus for which he is eligible under the agreement, then the amount shall be based upon the average actual percentage of target bonus paid to executive officers who participated in the Company's annual bonus plan in the preceding year. In addition, upon such a qualifying termination, the stock options granted pursuant to the employment agreement shall vest in full. The special incentive bonus equal to $2,000,000, which vests in equal annual installments over five years, shall immediately vest and be paid in full upon the involuntary termination of employment within twelve months after a change of control.

        If Mr. Lopez had terminated employment with us on April 1, 2010 pursuant to his employment agreement under the circumstances described in the preceding paragraph, we estimate that he would have been entitled to a cash payment equal to $1,400,000. This amount is derived by multiplying two by the sum of $700,000, which represents Mr. Lopez's annualized base salary rate in effect on April 1, 2010. Additionally, Mr. Lopez would have been entitled to accelerated vesting of unvested stock options with a grant date fair value of $2,068,847 (based on a Black Sholes formula as of March 6, 2009). The special incentive bonus of $2,000,000 shall immediately vest and be paid in full upon Mr. Lopez's involuntary termination within twelve months after a change of control.

Other Named Executive Officers

        The employment agreements for each of the other Named Executive Officers, described above under "—Description of Employment Agreements—Salary and Bonus Amounts," provide for certain benefits to be paid to the executive in connection with a termination of his employment under the circumstances described below and/or a change in control.

        Severance Benefits.    In the event the executive's employment is terminated during the employment term as a result of the executive's death or "Disability" or by us pursuant to a "Termination Without Cause" or by the executive following certain changes in his responsibilities, annual base salary or benefits, the executive (or his personal representative) will be entitled to a lump cash severance payment equal to one or two years of his base salary then in effect.

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        Upon a termination of employment with us on April 1, 2010 under the circumstances described in the preceding paragraph, we estimate that each Named Executive Officer (other than Mr. Lopez) would have been entitled to a lump sum cash payment as follows: Mr. Craig Ramsey—$770,000; Mr. John McDonald—$770,000; Mr. Robert Lenihan—$820,000; Mr. Kevin Connor—$650,000; and Mr. Samuel Gourley—$287,500. These amounts are derived by multiplying two by the respective executive's annualized base salary rate in effect on April 1, 2010, except for Mr. Gourley who would receive a lump sum amount equal to one year base salary plus the amount of any annual market allowance. Mr. Lenihan is not entitled to severance benefits for an employment termination resulting from death or "Disability".

        Restrictive Covenants.    Pursuant to each Named Executive Officer's employment agreement, the executive has agreed not to disclose any confidential information of ours at any time during or after his employment with American Multi-Cinema, Inc./AMCE.

Director Compensation—Fiscal 2010

        The following section presents information regarding the compensation paid during fiscal 2010 to members of our Board of Directors who are not also our employees (referred to herein as "Non-Employee Directors"). The compensation paid to Mr. Gerardo I. Lopez, who is also an employee, is presented above in the Summary Compensation Table and the related explanatory tables. Mr. Lopez did not receive additional compensation for his service as a director.

Non-Employee Directors

        We paid our directors an annual cash retainer of $50,000, plus $1,500 for each meeting of the board of directors they attended in person or by phone, plus $1,000 for each committee meeting they attended. We also reimbursed all directors for any out-of-pocket expenses incurred by them in connection with their services provided in such capacity.

        The following table presents information regarding the compensation of our non-employee Directors in fiscal 2010:

Name
  Fees
earned
or paid
in cash
($)
  Stock
Awards
($)
  Option
Awards
($)
  Non-equity
Incentive
Plan
Compensation
($)
  Changes in
Pension
Value and
Nonqualified
Deferred
Compensation
($)
  All other
Compensation
($)
  Total
($)
 

Aaron J. Stone

  $ 59,000   $   $   $   $   $   $ 59,000  

Dr. Dana B. Ardi

  $ 56,000                       $ 56,000  

Stephen P. Murray

  $ 58,000                       $ 58,000  

Stan Parker

  $ 60,000                       $ 60,000  

Philip H. Loughlin

  $ 59,000                       $ 59,000  

Eliot P. S. Merrill

  $ 57,000                       $ 57,000  

Kevin Maroni

  $ 59,000                       $ 59,000  

Travis Reid

  $ 60,000                       $ 60,000  

Compensation Committee Interlocks and Insider Participation

        The Compensation Committee members whose names appear on the Compensation Committee Report were committee members during all of fiscal 2010. No member of the Compensation Committee is or has been a former or current executive officer of the Company or has had any relationships requiring disclosure by the Company under the SEC's rules requiring disclosure of certain relationships and related-party transactions. None of the Company's executive officers served as a

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director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity that has one or more executive officers serving on our Board of Directors or on the Compensation Committee during the fiscal year ended April 1, 2010.

Risk Oversight

        The Board of Directors executes its oversight responsibility for risk management directly and through its Committees, as follows:

        The Audit Committee has primary responsibility for overseeing the Company's Enterprise Risk Management, or "ERM", program. The Company's Director of Reporting and Control, who reports to the Audit Committee quarterly, facilitates the ERM program with consideration given to our Annual Operating Plan and with direct input obtained from the Senior Leadership Team, or "SLT"—the heads of our principal business and corporate functions—and their direct reports, under the executive sponsorship of our Executive Vice President and Chief Financial Officer and our Vice President and Chief Accounting Officer. The Audit Committee's meeting agendas include discussions of individual risk areas throughout the year, as well as an annual summary of the ERM process.

        The Board of Directors' other committees oversee risks associated with their respective areas of responsibility. For example, the Compensation Committee considers the risks associated with our compensation policies and practices, with respect to both executive compensation and compensation generally. The Board of Directors is kept abreast of its committees' risk oversight and other activities via reports of the Committee Chairmen to the full Board. These reports are presented at every regular Board of Directors meeting and include discussions of committee agenda topics, including matters involving risk oversight.

        The Board of Directors considers specific risk topics, including risks associated with our Annual Operating Plan and our capital structure. In addition, the Board of Directors receives detailed regular reports from the members of our SLT that include discussions of the risks and exposures involved in their respective areas of responsibility. Further, the Board of Directors is routinely informed of developments that could affect our risk profile or other aspects of our business.

Policies and Practices as They Relate to Risk Management

        The Compensation Committee believes the elements of the Company's executive compensation program effectively link performance-based compensation to financial goals and stockholder interests without encouraging executives to take unnecessary or excessive risks in the pursuit of those objectives. The Compensation Committee believes that the overall mix of compensation elements is appropriately balanced and does not encourage the taking of short-term risks at the expense of long-term results. Long-term incentives for our executives are awarded in the form of equity instruments reflecting, or valued by reference to, our common stock. Long-term incentive awards are generally made on an annual basis and are subject to a multi-year vesting schedule which helps ensure that award recipients always have significant value tied to long-term stock price performance. The Compensation Committee believes that the combination of granting the majority of long-term incentives in the form of option awards, together with the Company stock actually owned by our executives, appropriately links the long-term interests of executives and stockholders, and balances the short-term nature of annual incentive cash bonuses and any incentives for undue risk-taking in our other compensation arrangements.

Equity Incentive Plans

        As of the date of this prospectus, our employees and directors hold outstanding stock options for the purchase of up to           shares of our common stock. Those options were granted under the AMC Entertainment Holdings, Inc. Amended and Restated 2004 Stock Option Plan (the "2004 Plan") and

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our 2010 Equity Incentive Plan. As of                   , 2011,      of those options had vested and the balance were not vested. The exercise prices of those options ranged from $      per share to $      per share and each of those options had a maximum term of ten years from the applicable date of grant.

        The following sections provide more detailed information concerning our incentive plans and the shares that are available for future awards under these plans. Each summary below is qualified in its entirety by the full text of the relevant plan document and/or option agreement, which has been filed with the Securities and Exchange Commission and is an exhibit to the Form S-1 Registration Statement of which this prospectus is a part and is available through the Securities and Exchange Commission's internet site at http://www.sec.gov.

2004 Plan

        We adopted the 2004 Plan as amended and restated as of July 11, 2007. Under the 2004 Plan, we are generally authorized to grant options to purchase shares of our common stock to certain of our employees, non-employee directors and consultants and certain employees of our subsidiaries. Options under the 2004 Plan are either incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, or nonqualified stock options. All options granted under the plan expire no later than ten years from their date of grant. No new awards will be granted under the 2004 Plan after the consummation of this offering.

        Our Compensation Committee administers the 2004 Plan. As is customary in incentive plans of this nature, the number of shares subject to outstanding awards under the 2004 Plan and the exercise prices of those awards, are subject to adjustment in the event of changes in our capital structure, reorganizations and other extraordinary events. In the event of a corporate event (as defined in the plan), the plan administrator has discretion to provide for the accelerated vesting of awards, among other things.

        Our board of directors or our Compensation Committee may amend or terminate the 2004 Plan at any time. The 2004 Plan requires that certain amendments, to the extent required by applicable law or any applicable listing agency or deemed necessary or advisable by the board of directors, be submitted to stockholders for their approval.

2010 Equity Incentive Plan

        On July 8, 2010, our board of directors and our stockholders approved the adoption of the AMC Entertainment Holdings, Inc. 2010 Equity Incentive Plan (the "2010 Plan").

Purpose

        The purpose of the 2010 Plan is to attract, retain and motivate the officers, employees, non-employee directors, and consultants of us, and any of our subsidiaries and affiliates and to promote the success of our business by providing the participants with appropriate incentives.

Administration

        The 2010 Plan will be administered by the Compensation Committee.

Available Shares

        The aggregate number of shares of our common stock for delivery pursuant to awards granted under the 2010 Plan is            shares (subject to adjustment), which may be either authorized and unissued shares of our common stock or shares of common stock held in or acquired for our treasury.

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        Subject to adjustment as provided for in the 2010 Plan, (i) the number of shares available for granting incentive stock options under the 2010 Plan will not exceed            shares and (ii) the maximum number of shares that may be granted to a participant each year is          . To the extent shares subject to an award are not issued or delivered by reason of (i) the expiration, cancellation, forfeiture or other termination of an award, (ii) the withholding of such shares in satisfaction of applicable taxes or (iii) the settlement of all or a portion of an award in cash, then such shares will again be available for issuance under the 2010 Plan.

Eligibility

        Directors, officers and other employees of us and of any of our subsidiaries and affiliates, as well as others performing consulting services for us or any of our subsidiaries or affiliates will be eligible for grants under the 2010 Plan.

Awards

        The 2010 Plan provides for grants of nonqualified stock options, incentive stock options, stock appreciation rights ("SARs"), restricted stock awards, other stock-based awards or performance-based compensation awards.

        Award agreements under the 2010 Plan generally have the following features, subject to change by the Compensation Committee:

        "Change of Control" unless otherwise specified in the award agreement, means an event or series of events that results in any of the following: (a) a change in our ownership occurs on the date that any one person or more than one person acting as a group (as determined under Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), other than our subsidiaries, acquires ownership of our stock that, together with stock held by such person or group, constitutes more than fifty percent (50%) of our total voting power. However, if any one person (or more than one person acting as a group) is considered to own more than fifty percent (50%) of the total fair market value or total voting power of our stock prior to the acquisition, any acquisition of additional stock by the same person or persons is not considered to cause a change in our ownership; (b) a change in our effective control occurs if, during any twelve-month period, the individuals, who at the beginning of such period constitute our board of directors (the "Incumbent Board"), cease for any reason to constitute at least a majority of the board of directors, provided, however, that if the election, or nomination for election by our stockholders, of any new director was approved by a vote of at least a majority of the Incumbent Board, such new director shall be considered a member of the Incumbent Board, and provided, further, that any reductions in the size of the Board that are instituted voluntarily by the Incumbent Board shall

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not constitute a "Change of Control", and after any such reduction the "Incumbent Board" shall mean the board of directors as so reduced; or (c) a change in the ownership of a substantial portion of our assets occurs on the date that any one person, or more than one person acting as a group (as determined under Treasury Regulation Section 1.409A-3(i)(5)(v)(B)), other than any of our subsidiaries, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or persons) our assets that have a total gross fair market value of more than fifty percent (50%) of the total gross fair market value of all our assets immediately prior to such acquisition or acquisitions. For this purpose, gross fair market value means the value of our assets, or the value of the assets being disposed of, determined in good faith by the board of directors without regard to any liabilities associated with such assets; provided, that, in no event shall a Change of Control be deemed to occur under clause (a), (b) or (c) hereof, for purposes of the 2010 Plan and any award agreement, as a result of (i) an initial public offering of our stock or (ii) a change in the majority of the Incumbent Board in connection with an initial public offering of our stock or a secondary public offering of our stock.

        "Cause" means, (i) a material breach by the participant of any of the participant's obligations under any written agreement with us or any of our affiliates, (ii) a material violation by the participant of any of our policies, procedures, rules and regulations applicable to employees generally or to similarly situated employees, in each case, as they may be amended from time to time in our sole discretion; (iii) the failure by the participant to reasonably and substantially perform his or her duties to us or our affiliates (other than as a result of physical or mental illness or injury) or the failure by the participant to comply with reasonable directives of our board of directors; (iv) the participant's willful misconduct (including abuse of controlled substances) or gross negligence that is injurious to us, our affiliates or any of our respective customers, clients or employees; (v) the participant's fraud, embezzlement, misappropriation of funds or beach of fiduciary duty against us or any of our affiliates (or any predecessor thereto or successor thereof); or (vi) the commission by the participant of a felony or other serious crime involving moral turpitude. Notwithstanding the foregoing, if the participant is a party to an employment agreement with us or any of our affiliates at the time of his or her termination of employment and such employment agreement contains a different definition of "cause" (or any derivation thereof), the definition in such employment agreement will control for purposes of the award agreement.

        In consideration for the grants of the awards, the award agreements subject the participants to certain restrictive covenants and confidentiality obligations.

Adjustment

        In the event of any corporate event or transaction involving us, any of our subsidiaries and/or affiliates such as a merger, reorganization, capitalization, stock split, spin-off, or any similar corporate event or transaction, the Compensation Committee will, to prevent dilution or enlargement of participants' rights under the 2010 Plan, substitute or adjust in its sole discretion the awards.

Amendment and Termination

        Subject to the terms of the 2010 Plan, the Compensation Committee, in its sole discretion, may amend, alter, suspend, discontinue or terminate the 2010 Plan, or any part thereof or any award (or award agreement), at any time. In the event any award is subject to Section 409A of the Internal Revenue Code of 1986, as amended ("Section 409A"), the Compensation Committee may amend the 2010 Plan and/or any award agreement without the applicable participant's prior consent to exempt the 2010 Plan and/or any award from the application of Section 409A, preserve the intended tax treatment of any such award or comply with the requirements of Section 409A.

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PRINCIPAL STOCKHOLDERS

        The following table sets forth certain information regarding beneficial ownership of our capital stock as of December 30, 2010 after giving effect to the Reclassification, with respect to:

 
   
  Percentage of
Shares
Beneficially Owned
 
Name and Address
  Number of Shares
Beneficially Owned
  Before
Offering
  After
Offering
 

5% Beneficial Owners:

                   

J.P. Morgan Partners (BHCA), L.P. and Related Funds(1)(2)

          38.98 %      

Apollo Investment Fund V, L.P. and Related Funds(3)(4)

          38.98 %      

Bain Capital Investors, LLC and Related Funds(5)(6)

          15.13 %      

The Carlyle Group Partners III Loews, L.P. and Related Funds(7)(8)

          15.13 %      

Spectrum Equity Investors IV. L.P. and Related Funds(9)(10)

          9.79 %      

Directors and Named Executive Officers:

          *        

Gerardo I. Lopez(11)(12)

          *        

Craig R. Ramsey(11)(13)

          *        

John D. McDonald(11)(14)

          *        

Robert J. Lenihan(11)(15)

          *        

Kevin M. Connor(11)(16)

          *        

Samuel D. Gourley(11)(17)

          *        

Dr. Dana B. Ardi(1)

          *        

Stephen P. Murray(1)

          *        

Stan Parker(18)

          *        

Aaron J. Stone(18)

          *        

Philip H. Loughlin(5)(6)

          *        

Eliot P. S. Merrill(7)

          *        

Kevin Maroni(9)(19)

          *        

All directors and executive officers as a group (17 persons)

          *        

*
less than 1%

(1)
Represents             shares of common stock owned by J.P. Morgan Partners Global Investors, L.P.,             shares of common stock owned by J.P. Morgan Partners Global Investors Cayman, L.P.,             shares of common stock owned by J.P. Morgan Partners Global Investors Cayman II, L.P.,             shares of common stock owned by AMCE (Ginger), L.P.,             shares of common stock owned by AMCE (Luke), L.P.,             shares of common stock owned by J.P. Morgan Partners Global Investors (Selldown), L.P.,             shares of common stock owned by AMCE (Scarlett), L.P.,              shares of common stock owned by J.P. Morgan Partners Global Investors (Selldown) II, L.P.,             shares of common stock owned by J.P. Morgan Partners Global Fund/AMC/Selldown II, L.P.,             shares of common stock owned by J.P. Morgan Partners Global Investors (Selldown) II-C, L.P., (collectively, the "Global Investor Funds") and              shares of common stock owned by J.P. Morgan Partners (BHCA), L.P. ("JPMP BHCA"). The general partner of the

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(2)
Includes             shares of common stock of certain co-investors, which, pursuant to a voting agreement, must be voted by such co-investors to elect JPMP designees for Parent's board of directors.

(3)
Represents shares owned by the following group of investment funds: (i)              shares of common stock owned by Apollo Investment Fund V, L.P.; (ii)              shares of common stock owned by Apollo Overseas Partners V, L.P.; (iii)               shares of common stock owned by Apollo Netherlands Partners V(A), L.P.; (iv)              shares of common stock owned by Apollo Netherlands Partners V(B), L.P.; and (v)              shares of common stock owned by Apollo German Partners V GmbH & Co. KG (collectively, the "Apollo Funds"). Apollo Advisors V, L.P. ("Advisors V") is the general partner or the managing general partner of each of the Apollo Funds. Apollo Capital Management V, Inc. ("ACM V") is the general partner of Advisors V. Apollo Management V, L.P. ("Management V") serves as the day-to-day manager of each of the Apollo Funds. AIF V Management, LLC ("AIF V LLC") is the general partner of Management V and Apollo Management, L.P. ("Apollo Management") is the sole member and manager of AIF V LLC. Each of Advisors V, ACM V, Management V, AIF V LLC and Apollo Management disclaim beneficial ownership of all shares of common stock owned by the Apollo Funds. The address of the Apollo Funds, Advisors V, Management V, AIF V LLC and Apollo Management is c/o Apollo Management, L.P., Two Manhattanville Road, Suite 203, Purchase, New York 10017.

Leon Black, Joshua Harris and Marc Rowan effectively have the power to exercise voting and investment control over ACM V, with respect to the shares held by the Apollo Funds. Each of Messrs. Black, Harris and Rowan disclaim beneficial ownership of such shares.

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(4)
Includes             shares of common stock of certain co-investors, which, pursuant to a voting agreement, must be voted by such co-investors to elect Apollo designees to Parent's board of directors.

(5)
Represents shares owned by the following group of investment funds associated with Bain: (i)              shares of common stock owned by Bain Capital (Loews) I Partnership, whose administrative member is Bain Capital (Loews) L, L.L.C., whose general partners are Bain Capital (Loews) A Partnership, Bain Capital (Loews) L Partnership and Bain Capital (Loews) P Partnership, each of whose general partners are (x) Bain Capital Holdings (Loews) I, L.P., whose general partner is Bain Capital Partners VII, L.P., whose general partner is Bain Capital Investors, LLC ("BCI") and (y) Bain Capital AIV (Loews) II, L.P., whose general partner is Bain Capital Partners VIII, L.P., whose general partner is BCI and (ii)              shares of common stock owned by Bain Capital AIV (Loews) II, L.P., whose general partner is Bain Capital Partners VIII, L.P., whose general partner is BCI. The address of Mr. Loughlin and each of the Bain entities is c/o Bain Capital Partners, LLC, 111 Huntington Avenue, Boston, Massachusetts 02199.

BCI, by virtue of the relationships described above, may be deemed to have voting or investment control with respect to the shares held by each of the Bain entities. BCI disclaims beneficial ownership of such shares.

(6)
Voting and investment control over the shares held by Bain Capital (Loews) I Partnership and Bain Capital AIV (Loews) II, L.P. is exercised by the investment committee of BCI. Members of the investment committee are Andrew B. Balson, Steven W. Barnes, Joshua Bekenstein, John P. Connaughton, Todd Cook, Paul B. Edgerley, Christopher Gordon, Blair Hendrix, Jordan Hitch, Matthew S. Levin, Ian K. Loring, Philip Loughlin, Mark E. Nunnelly, Stephen G. Pagliuca, Mark Verdi, Michael Ward and Stephen M. Zide, each of whom disclaims beneficial ownership of the shares.

(7)
Represents shares owned by the following group of investment funds affiliated with Carlyle: (i)              shares of common stock owned by Carlyle Partners III Loews, L.P., whose general partner is TC Group III, L.P., whose general partners is TC Group III, L.L.C., whose sole managing member is TC Group, L.L.C., whose sole managing member is TCG Holdings, L.L.C. and (ii)              shares of common stock owned by CP III Coinvestment, L.P., whose general partner is TC Group III, L.P., whose general partner is TC Group III, L.L.C., whose sole managing member is TC Group, L.L.C., whose sole managing member is TCG Holdings, L.L.C. Mr. Merrill is a Managing Director of the Carlyle Group, and in such capacity, may be deemed to share beneficial ownership of the shares of common stock held by investment funds associated with or designated by the Carlyle Group. Mr. Merrill expressly disclaims beneficial ownership of the shares held by the investment funds associated with or designated by the Carlyle Group. The address of Mr. Merrill and the Carlyle Group is c/o The Carlyle Group, 520 Madison Avenue, 42nd floor, New York, New York 10022.

(8)
Voting and investment control over the shares held by Carlyle Partners III Loews, L.P. and CP III Coinvestment, L.P. is exercised by the three-person managing board of TCG Holdings, L.L.C. Members of this managing board are William E. Conway, Jr., Daniel A. D'Aniello and David M. Rubenstein, each of whom disclaims beneficial ownership of the shares.

(9)
Represents shares owned by the following group of investment funds affiliated with Spectrum: (i)              shares of common stock owned by Spectrum Equity Investors IV, L.P., whose general partner is Spectrum Equity Associates IV, L.P., (ii)              shares of common stock owned by Spectrum Equity Investors Parallel IV, L.P. whose general partner is Spectrum Equity Associates IV, L.P., and (iii)              shares of common stock owned by Spectrum IV Investment Managers' Fund, L.P. Kevin Maroni is a Senior Managing Director of Spectrum and disclaims beneficial ownership of any shares beneficially owned by Spectrum. The address of Mr. Maroni

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(10)
Voting and investment control over the shares held by the Spectrum entities is exercised by the investment committees of Spectrum Equity Associates IV, L.P. and Spectrum IV Investment Managers' Fund, L.P. Members of each of these investment committees are Brion B. Applegate, William P. Collatos, Benjamin M. Coughlin, Randy J. Henderson, Michael J. Kennealy, Kevin J. Maroni, Christopher T. Mitchell and Victor E. Parker, each of whom disclaims beneficial ownership of the shares.

(11)
The address of such person is c/o AMC Entertainment Holdings, Inc., 920 Main Street, Kansas City, Missouri 64105.

(12)
Includes             shares underlying options.

(13)
Includes             shares underlying options.

(14)
Includes             shares underlying options.

(15)
Includes             shares underlying options.

(16)
Includes             shares underlying options.

(17)
Includes             shares underlying options.

(18)
Although each of Messrs. Parker and Stone may be deemed a beneficial owner of shares of Parent beneficially owned by Apollo due to his affiliation with Apollo and its related investment managers and advisors, each such person disclaims beneficial ownership of any such shares. The address of Messrs. Parker and Stone is c/o Apollo Management, L.P., 9 West 57th Street, New York, New York 10019.

(19)
Includes             shares underlying options.

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DESCRIPTION OF CERTAIN INDEBTEDNESS

        As of December 30, 2010 we had $2.7 billion of outstanding indebtedness. The following is a summary of provisions relating to our indebtedness.

Senior Secured Credit Facility

        On December 15, 2010, we amended our senior secured credit facility, entered into on January 26, 2006 with a syndicate of banks and other financial institutions, which consists of a:

        The revolving credit facility includes borrowing capacity available for letters of credit and for borrowings on same-day notice, referred to as the swingline loans.

        As of December 30, 2010, we had $619.1 million outstanding under our term loan facility and $192.5 million available under our revolving credit facility.

Interest Rate and Fees

        The borrowings under the senior secured credit facility bear interest at a rate equal to an applicable margin plus, at our option, either (a) a base rate determined by reference to the higher of (1) the base rate of Citibank, N.A. and (2) the federal funds rate plus 1/2 of 1% or (b) a LIBOR rate determined by reference to the offered rate for deposits in U.S. dollars appearing on the applicable Telerate screen for the interest period relevant to such borrowing adjusted for certain additional reserves. The current applicable margin for borrowings under the revolving credit facility is 2.25% with respect to base rate borrowings and 3.25% with respect to LIBOR borrowings (which margins may be reduced subject to our attaining certain leverage ratios), the current applicable margin for borrowings of term B-1 loans under the term loan facility is 0.50% with respect to base rate borrowings and 1.50% with respect to LIBOR borrowings (which margins may be reduced subject to our attaining certain leverage ratios), and the applicable margin for borrowings of term B-2 loans under the term loan facility is 2.25% with respect to base rate borrowings and 3.25% with respect to LIBOR borrowings.

        In addition to paying interest on outstanding principal under the senior secured credit facility, we are required to pay a commitment fee to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder at a rate equal to 0.50%.

Prepayments

        The senior secured credit facility requires us to prepay outstanding term loans, subject to certain exceptions, with:

        We may voluntarily repay outstanding loans under the senior secured credit facility at any time without premium or penalty, other than customary "breakage" costs with respect to LIBOR loans and

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if on or prior to December 15, 2011, we make any prepayments of the term B-2 loans in connection with a repricing transaction, or effect an amendment resulting in a repricing transaction, we must pay a prepayment premium of 1.00% of the term B-2 loans being prepaid.

Amortization

        The balance of term B-1 loans and term B-2 loans made under the term loan facility amortize each year in amounts equal to 1% per annum in equal quarterly installments for (a) the first six years and nine months in the case of term B-1 loans, with the remaining amount payable on January 26, 2013, and (b) the first ten years and nine months in the case of term B-2 loans, with the remaining amount payable on December 15, 2016.

        Principal amounts outstanding under the revolving credit facility are due and payable in full at maturity on December 15, 2015.

Guarantee and Security

        All obligations under the senior secured credit facility are unconditionally guaranteed by, subject to certain exceptions, each of AMCE's existing and future direct and indirect wholly-owned domestic subsidiaries.

        All obligations under the senior secured credit facility, and the guarantees of those obligations (as well as cash management obligations and any interest hedging or other swap agreements), are secured by substantially all of our assets as well as those of each subsidiary guarantor, including, but not limited to, the following, and subject to certain exceptions:

Certain Covenants and Events of Default

        The senior secured credit facility contains a number of covenants that, among other things, restrict, subject to certain exceptions, AMCE's ability, and the ability of AMCE's subsidiaries, to:

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        In addition, the senior secured credit facility requires AMCE, commencing with the fiscal quarter ended September 28, 2006, to maintain a maximum net senior secured leverage ratio as long as the commitments under the revolving credit facility remain outstanding. The senior secured credit facility also contains certain customary affirmative covenants and events of default.

Notes due 2014, Notes due 2016, Notes Due 2019, Notes due 2020, Discount Notes due 2014 and Parent Term Loan Facility

        On February 24, 2004, AMCE sold $300.0 million aggregate principal amount of its Notes due 2014. The Notes due 2014 bear interest at the rate of 8% per annum, payable in March and September of each year. The Notes due 2014 are redeemable at our option, in whole or in part, at any time on or after March 1, 2009 at 104.000% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after March 1, 2012, plus interest accrued to the redemption date. The Notes due 2014 are unsecured and are subordinated to all AMCE's existing and future senior indebtedness (as defined in the indenture for the Notes due 2014). As of December 30, 2010, we had $299.4 million carrying value outstanding under our Notes due 2014.

        On January 26, 2006, AMCE sold $325.0 million aggregate principal amount of its Notes due 2016. The Notes due 2016 bear interest at a rate of 11% per annum, payable in February and August of each year. The Notes due 2016 are redeemable at our option, in whole or in part, at any time on after February 1, 2011 at 105.5% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after February 1, 2014. In addition, AMCE may redeem up to 35% of the aggregate principal amount of the Notes due 2016 using net proceeds from certain equity offerings completed on or prior to February 1, 2009. As of December 30, 2010, we had $229.9 million carrying value outstanding under our Notes due 2016.

        On June 9, 2009, AMCE sold $600.0 million aggregate principal amount of its Notes due 2019. The Notes due 2019 bear interest at the rate of 8.75% per annum, payable in June and December of each year. The Notes due 2019 are redeemable at our option, in whole or in part, at any time on or after June 1, 2014 at 104.375% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after June 1, 2017, plus interest accrued to the redemption date. The Notes due 2019 are unsecured and rank equally with all of AMCE's existing and future senior indebtedness (as defined in the indenture for the Notes due 2019). As of December 30, 2010, we had $587.0 million carrying value outstanding under our Notes due 2019.

        On December 15, 2010, AMCE sold $600.0 million aggregate principal amount of its Notes due 2020. The Notes due 2020 bear interest at a rate of 9.75% per annum, payable in June and December of each year. The Notes due 2020 are redeemable at our option, in whole or in part, at any time on or after December 1, 2015 at 104.875% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after December 1, 2018. In addition, AMCE may redeem up to 35% of the aggregate principal amount of the Notes due 2020 using net proceeds from certain equity offerings completed on or prior to December 1, 2013. As of December 30, 2010, we had $600.0 million carrying value outstanding under our Notes due 2020.

        On August 18, 2004, Holdings sold $304.0 million aggregate principal amount at maturity of its Discount Notes due 2014 for gross proceeds of $169.9 million. On any interest payment date prior to August 15, 2009, Holdings was permitted to commence paying cash interest (from and after such interest payment date) in which case (i) Holdings would be obligated to pay cash interest on each subsequent interest payment date, (ii) the notes would cease to accrete after such interest payment date and (iii) the outstanding principal amount at the maturity of each note would be equal to the accreted value of such notes as of such interest payment date. Holdings commenced paying cash interest on August 16, 2007 and made its first semi-annual interest payment on February 15, 2008 at which time

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the principal became fixed at $240.8 million. The Discount Notes due 2014 are redeemable at our option, in whole or in part, at any time on or after August 15, 2009 at 106.0% of the principal amount thereof, declining ratably to 100.0% of principal amount thereof on or after August 15, 2012 and thereafter, plus interest accrued to redemption date. As of December 30, 2010, we had $70.1 million carrying value outstanding under the Discount Notes due 2014.

        On June 13, 2007, we sold $400.0 million aggregate principal amount of our Parent term loan facility for net proceeds of $396.0 million. Borrowings under the Parent term loan facility bear interest at a rate equal to an applicable margin plus, at our option, either a base rate or LIBOR. The initial applicable margin for borrowings under the Parent term loan facility was 4.00% with respect to base rate borrowings and 5.00% with respect to LIBOR borrowings. Interest on borrowings under the Parent term loan facility is payable on each March 15, June 15, September 15, and December 15, beginning September 15, 2007 by adding such interest for the applicable period to the principal amount of the outstanding loans. We are required to pay an administrative agent fee to the lenders under the Parent term loan facility of $100,000 annually. We may voluntarily repay outstanding loans under the Parent term loan facility, in whole or in part, together with accrued interest to the date of such prepayment on the principal amount prepaid at 100% of principal. As of December 30, 2010, we had $206.7 million carrying value outstanding under the Parent term loan facility.

        The indentures relating to the outstanding notes allow us to incur all permitted indebtedness (as defined therein) without restriction, which includes all amounts borrowed under the senior secured credit facility. The indentures also allow us to incur additional debt as long as it can satisfy the coverage ratio of each indenture after giving effect thereto on a pro forma basis.

        The indentures also contain covenants limiting dividends, purchases or redemptions of stock, transactions with affiliates and mergers and sales of assets, and require us to make an offer to purchase such notes upon the occurrence of a change in control, as defined in the indentures. These covenants are substantially similar to the covenants in all the indentures are subject to a number of important qualifications. The indentures do not impose any limitation on the incurrence of liabilities that are not considered "indebtedness" under the indentures, such as certain sale/leaseback transactions; nor do the note indentures impose any limitation on the amount of liabilities incurred by our subsidiaries, if any, that might be designated as "unrestricted subsidiaries" (as defined in the indentures). Furthermore, we are not restricted from making advances to, or investing in, other entities (including unaffiliated entities) and its subsidiaries are not restricted from entering into agreements restricting its ability to pay dividends or otherwise transfer funds to it.

        The indentures relating to the Notes due 2014, the Notes due 2016 and the Notes due 2020, or collectively, the Subordinated Notes, also contain provisions subordinating AMCE's obligations under those notes to its obligations under its existing senior secured credit facility and other senior indebtedness. These include a provision that applies if there is a payment default under its existing senior secured credit facility or other senior indebtedness and one that applies if there is a non-payment default that permits acceleration of indebtedness under its existing senior secured credit facility. If there is a payment default under the senior secured credit facility or other senior indebtedness, generally no payment may be made on any of the Subordinated Notes until such payment default has been cured or waived or such senior indebtedness had been discharged or paid in full. If there is a non-payment default under the senior secured credit facility, or with respect to designated senior indebtedness (as defined), if any, that would permit the lenders to accelerate the maturity date of the existing senior secured credit facility or any such designated senior indebtedness, no payment may be made on the Subordinated Notes for a period (a "payment blockage period") commencing upon the receipt by the indenture trustees for the Subordinated Notes of notice of such default and ending up to 179 days thereafter. Not more than one payment blockage period may be commenced during any period of 365 consecutive days. Our failure to make payment on any series of Subordinated Notes when due or within any applicable grace period, whether or not occurring under a payment blockage period, will be an event of default with respect to such existing Subordinated Notes.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

        As a public company we will have a policy that will ensure that all transactions with related parties are fair, reasonable and in the parties' best interest. In this regard, generally the board of directors or one of the committees reviews material transactions between the Company and related parties to determine that, in their best business judgment, such transactions meet that standard. The Company believes that each of the transactions described below is on terms at least as favorable to it as could have been obtained from an unaffiliated third party. Set forth below is a description of certain transactions which have occurred since March 29, 2007 or which involve obligations that remain outstanding as of December 30, 2010.

        For a description of certain employment agreements between us and Messrs. Gerardo I. Lopez, John D. McDonald, Craig R. Ramsey, Kevin M. Connor and Mark A. McDonald see "Compensation Discussion and Analysis—Compensation of Named Executive Officers."

Governance Agreements

        In connection with the creation of Parent by the Sponsors and the related borrowing under the Parent's term loan facility, Parent, the Sponsors and the other former stockholders of Holdings, as applicable, entered into various agreements defining the rights of our stockholders with respect to voting, governance and ownership and transfer of our stock, all of which will be replaced with the exception of the Stockholders Agreement, which will be amended upon completion of this offering. In connection with this offering, the Sponsors and certain of our pre-existing stockholders will enter into an Amended and Restated Stockholders Agreement, which, together with our Second Amended and Restated Certificate of Incorporation and the Management Stockholders Registration Rights Agreement, will define the rights of such stockholders post-initial public offering with respect to voting, governance, ownership and transfer of our stock (collectively, the "Governance Agreements").

        The Governance Agreements will provide that our Board of Directors will initially consist of up to 12 directors, two of whom shall be designated by JPMP, two of whom shall be designated by Apollo, one of whom shall be our Chief Executive Officer, one of whom shall be designated by Carlyle, one of whom shall be designated by Bain, one of whom shall be designated by Spectrum, one of whom shall be designated by Bain, Carlyle and Spectrum, voting together, so long as such designee is consented to by each of Bain and Carlyle and three of whom will be independent directors initially designated by the Sponsors. Each of the directors will have one vote on all matters placed before our Board of Directors. Each of JPMP's and Apollo's right to appoint two directors shall be reduced to the right to appoint one director if at any time such Sponsor ceases to own at least 10% of our outstanding common stock or if the Sponsors together with certain of our pre-existing stockholders cease to collectively own more than 50% of our outstanding common stock. The right of Bain, Carlyle and Spectrum to designate a director as a group will terminate if such Sponsors cease to collectively own at least 15% of our outstanding common stock or if the Sponsors together with certain of our pre-existing stockholders cease to collectively own more than 50% of our outstanding common stock. A Sponsor will lose all of its director designation rights if at any time it ceases to own at least 5% of our outstanding common stock.

        The Amended and Restated Stockholders Agreement will provide that, until the date neither of Apollo or JPMP has a right to designate directors to the board (the "Blockout Period"), certain continuing stockholders party thereto (other than the Sponsors) will generally vote their shares of capital stock in favor of any matter in proportion to the shares of capital stock of Apollo and JPMP voted in favor of such matter, except in certain specified instances. The Amended and Restated Stockholders Agreement will also provide that, until the date on which any one of Bain, Carlyle and Spectrum ceases to own at least 25% of the shares of our common stock that they will own immediately following this offering, Bain, Carlyle and Spectrum will generally vote their shares of

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capital stock in favor of any matter in which any two out of Bain, Carlyle and Spectrum agree, except in certain specified instances.

        The Amended and Restated Stockholders Agreement will set forth a number of transfer provisions for the Sponsors and our other pre-existing stockholders with respect to their interests in us, including the following:

        Drag-along rights.    If, during the five-year period following this offering and for so long as the Sponsors and our other pre-existing stockholders hold in the aggregate at least 50.1% of the outstanding shares of common stock, Sponsors constituting at least three of any of Apollo, JPMP, Bain or Carlyle propose to transfer shares of Parent to an independent third party in a bona fide arm's-length transaction or series of transactions (other than an open market public sale) that results in a sale of at least 50.1% of our shares, such Sponsors may elect to require each of the other stockholders party to the Amended and Restated Stockholders Agreement to transfer to such third party all of its shares at the purchase price and upon the other terms and subject to the conditions of the sale.

        Tag-along rights.    If, during the five-year period following the offering, any Sponsor proposes to transfer shares held by it (other than an open market public sale), then such stockholder shall give notice to each other stockholder party to the Amended and Restated Stockholders Agreement and the Management Stockholders Registration Rights Agreement, who shall each have the right to participate on a pro rata basis in the proposed transfer on the terms and conditions offered by the proposed purchaser.

        Demand rights.    Subject to the consent of at least two of any of JPMP, Apollo, Carlyle and Bain during the first two years following the offering, each Sponsor has the right at any time following the offering to make a written request for registration under the Securities Act of part or all of the registrable equity interests held by such stockholders at our expense, subject to certain limitations. Subject to the same consent requirement, the other pre-existing stockholders of Parent as a group shall have the right at any time following the offering to make one written request to Parent for registration under the Securities Act of part or all of the registrable equity interests held by such stockholders with an aggregate offering price to the public of at least $200 million.

        Piggyback rights.    If we at any time propose to register under the Securities Act any equity interests on a form and in a manner which would permit registration of the registrable equity interests held by our stockholders for sale to the public under the Securities Act, we will give written notice of the proposed registration to each stockholder party to the Amended and Restated Stockholders Agreement and the Management Stockholders Registration Rights Agreement, who shall then have the right to request that any part of its registrable equity interests be included in such registration, subject to certain limitations.

        Holdback agreements.    Each stockholder will agree that it will not offer for public sale any equity interests during the 30 days before and a period not to exceed 90 days (180 days in the case of the offering) after the effective date of any registration statement filed by us in connection with an underwritten public offering (except as part of such underwritten registration or as otherwise permitted by such underwriters), subject to certain limitations.

        The Management Stockholders Registration Rights Agreement provides our pre-existing stockholders who are employees of AMCE with piggyback registration rights and holdback agreements similar to those set forth in the Amended and Restated Stockholders Agreement.

Amended and Restated Fee Agreement

        In connection with the merger with LCE Holdings, we entered into an Amended and Restated Fee Agreement with the Sponsors, which provides for an annual management fee of $5 million, payable

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quarterly and in advance to each Sponsor, on a pro rata basis, until the 12th anniversary from December 23, 2004, and such time as the Sponsors own less than 20% in the aggregate of our company. In addition, the fee agreement provides for reimbursements by us to the Sponsors for their out-of-pocket expenses. The Amended and Restated Agreement terminated on June 11, 2007, the date of the holdco merger, and was superseded by a substantially identical agreement entered into by us, the Sponsors and our other stockholders.

        Upon the consummation of a change in control transaction or an initial public offering, each of the Sponsors will receive, in lieu of quarterly payments of the annual management fee, a fee equal to the net present value of the aggregate annual management fee that would have been payable to the Sponsors during the remainder of the term of the fee agreement (assuming a twelve year term from the date of the original fee agreement), calculated using the treasury rate having a final maturity date that is closest to the twelfth anniversary of the date of the original fee agreement date. We estimate that our payment to the Sponsors would be $26.1 million had the offering occurred on December 30, 2010. See note 16 to the consolidated financial information included elsewhere in this prospectus.

        The fee agreement also provides that we will indemnify the Sponsors against all losses, claims, damages and liabilities arising in connection with the management services provided by the Sponsors under the fee agreement.

DCIP

        In February 2007, Mr. Travis Reid was hired as the chief executive officer of DCIP, a joint venture among AMCE, Cinemark USA and Regal formed to implement digital cinema in our theatres and to create a financing model and establish agreements with major motion picture studios for the implementation of digital cinema. Mr. Reid is a member of the Company's Board of Directors.

        On March 10, 2010 DCIP completed its financing transactions for the deployment of digital projection systems to nearly 14,000 movie theatre screens across North America, including screens operated or managed by AMCE, Regal and Cinemark. At closing the Company contributed 342 projection systems that it owned to DCIP which were recorded at estimated fair value as part of an additional investment in DCIP of $21.8 million. The Company also made cash investments in DCIP of $840,000 at closing, and DCIP made a distribution of excess cash to us after the closing date and prior to year-end of $1.3 million. The Company recorded a loss on contribution of the 342 projection systems of $563,000, based on the difference between estimated fair value and its carrying value on the date of contribution. On March 26, 2010 the Company acquired 117 digital projectors from third party lessors for $6.8 million and sold them together with seven digital projectors that it owned to DCIP for $6.6 million. The Company recorded a loss on the sale of these 124 systems to DCIP of $697,000. As of December 30, 2010, the Company operated 1,660 digital projection systems leased from DCIP pursuant to operating leases and anticipates that it will have deployed 4,000 of these systems in its existing theatres over the next three to four years. The additional digital projection systems will allow the Company to add additional 3D screens to its circuit where the Company is generally able to charge a higher admission price than 2D.

Market Making Transactions

        On August 18, 2004, Holdings sold $304.0 million in aggregate principal amount at maturity of its Discount Notes due 2014. On June 9, 2009, AMCE sold $600.0 million in aggregate principal amount of its Notes due 2019. On January 26, 2006, AMCE sold $325.0 million in aggregate principal amount of its Notes due 2016. JP Morgan Securities Inc., an affiliate of J.P. Morgan Partners, LLC which owns approximately 20.8% of our company, was an initial purchaser of these notes. Credit Suisse Securities (USA) LLC, whose affiliates own approximately 1.6% of our company, was also an initial purchaser of these notes.

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        On December 15, 2010, AMCE sold $600.0 million in aggregate principal amount of our 9.75% Senior Subordinated Notes due 2020. J.P. Morgan Securities LLC, an affiliate of J.P. Morgan Partners, LLC which owned approximately 20.8% of Holdings prior to the Holdings Merger, was an initial purchaser of these notes.

Director Independence

        As of February 25, 2011, our Board of Directors was comprised of Dana B. Ardi, Gerardo I. Lopez, Phillip H. Loughlin, Kevin Maroni, Eliot P. S. Merrill, Stephen P. Murray, Stan Parker and Aaron J. Stone. We have no securities listed for trading on a national securities exchange or in an automated inter-dealer quotation system of a national securities association which has requirements that a majority of our board of directors be independent. For purposes of complying with the disclosure requirements of the Securities and Exchange Commission, we have adopted the definition of independence used by the New York Stock Exchange. Under this definition of independence, none of our directors are independent.

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DESCRIPTION OF CAPITAL STOCK

Authorized Capital

        The following description of material terms of our capital stock and certain provisions of our certificate of incorporation and bylaws, each of which will be in effect on the closing of this offering, are summaries and are qualified by reference to the certificate of incorporation and the bylaws, copies of which have been filed as exhibits to the registration statement, of which this prospectus forms a part.

        Our authorized capital stock consists of:

Common Stock

        At the completion of this offering, there will be                    shares of common stock issued and outstanding.

Voting Rights

        Each holder of common stock will be entitled to one vote per share.

        Our directors will be elected by all of our common stockholders voting together as a single class.

        Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of our outstanding voting power. Except as otherwise required by the DGCL, the Amended and Restated Stockholders Agreement, as amended upon completion of this offering, our certificate of incorporation or the voting rights granted to any preferred stock we subsequently issue, the holders of outstanding shares of common stock and preferred stock entitled to vote thereon, if any, will vote as one class with respect to all matters to be voted on by our stockholders. Except as otherwise provided by law, and subject to any voting rights granted to any preferred stock we subsequently issue, amendments to our certificate of incorporation must be approved by the holders of at least a majority of the outstanding common stock. Under the DGCL, amendments to our certificate of incorporation that would alter or change the powers, preferences or special rights of the common stock so as to affect them adversely also must be approved by a majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class.

Dividends

        Holders of common stock will share ratably (based on the number of shares of common stock held) in any dividend declared by our board of directors, subject to any preferential rights of any outstanding preferred stock.

Other Rights

        Upon our liquidation, dissolution or winding up, after payment in full of the amounts required to be paid to holders of preferred stock, if any, all holders of common stock, regardless of class, will be entitled to share ratably in any assets available for distribution to holders of shares of common stock. No shares of any class of common stock are subject to redemption or have preemptive rights to purchase additional shares of common stock.

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Preferred Stock

        Upon the closing of this offering, our board of directors will be authorized, without further stockholder approval, to issue from time to time up to an aggregate of                    shares of preferred stock in one or more series and to fix or alter the designations, preferences, rights and any qualifications, limitations or restrictions of the shares of each such series thereof, including the dividend rights, dividend rates, conversion rights, voting rights, terms of redemption (including sinking fund provisions), redemption price or prices, liquidation preferences and the number of shares constituting any series or designations of such series. Upon the closing of this offering, there will be no shares of preferred stock outstanding. We have no present plans to issue any shares of preferred stock. See "—Anti-Takeover Effects of Certain Provisions of Delaware Law, the Certificate of Incorporation and the Bylaws."

Options

        As of the completion of this offering, options to purchase a total of                    shares of common stock will be outstanding, of which                    will be eligible for exercise or sale immediately following the completion of this offering. Options issued concurrently with completion of the offering, if any, will be exercisable at the same price as the offering price. Common stock may be subject to the granting of options under the equity incentive plan. See "Compensation Discussion and Analysis—Equity Incentive Plan" and "Shares Eligible for Future Sale."

Anti-Takeover Effects of Certain Provisions of Delaware Law, the Certificate of Incorporation and the Bylaws

        We plan to elect in our amended and restated certificate of incorporation to be subject to Section 203 of the DGCL, an anti-takeover law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a business combination, such as a merger, with a person or group owning 15% or more of the corporation's voting stock for a period of three years following the date the person became an interested stockholder, unless (with certain exceptions) the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner.

        Certain other provisions of the amended and restated certificate of incorporation and bylaws may be considered to have an anti-takeover effect and may delay or prevent a tender offer or other corporate transaction that a stockholder might consider to be in its best interest, including those transactions that might result in payment of a premium over the market price for our shares. These provisions are designed to discourage certain types of transactions that may involve an actual or threatened change of control of us without prior approval of our board of directors. These provisions are meant to encourage persons interested in acquiring control of us to first consult with our board of directors to negotiate terms of a potential business combination or offer. We believe that these provisions protect against an unsolicited proposal for a takeover of us that might affect the long term value of our stock or that may be otherwise unfair to our stockholders. For example, our amended and restated certificate of incorporation and bylaws:

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Special Meeting of Stockholders

        Special meetings of our stockholders may be called only by a majority of our directors.

Actions by Written Consent

        Stockholder action by written consent in lieu of a meeting may only be taken so long as the Sponsors own a majority of our outstanding common stock. Thereafter, stockholder action can be taken only at an annual or special meeting of stockholders.

Advance Notice Requirements for Stockholder Proposals and Director Nominations

        Our bylaws provide that stockholders seeking to bring business before an annual meeting of stockholders, or to nominate candidates for election as directors at an annual meeting of stockholders, must provide timely notice thereof in writing. To be timely, a stockholder's notice generally must be delivered to and received at our principal executive offices, not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year's annual meeting; provided, that in the event that the date of such meeting is advanced more than 30 days prior to, or delayed by more than 30 days after, the anniversary of the preceding year's annual meeting of our stockholders, a stockholder's notice to be timely must be so delivered not earlier than the close of business on the 120th day prior to such meeting and not later than the close of business on the later of the 90th day prior to such meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. Our bylaws also specify certain requirements as to the form and content of a stockholder's notice. These provisions may preclude stockholders from bringing matters before an annual meeting of stockholders or from making nominations for directors at an annual meeting of stockholders.

Authorized But Unissued Shares

        The authorized but unissued shares of common stock and preferred stock are available for future issuance without stockholder approval. These additional shares may be used for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and

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employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.

Amendments to Certificate of Incorporation or Bylaws

        Our certificate of incorporation provides that the affirmative vote of a majority of the shares entitled to vote on any matter is required to amend our certificate of incorporation or bylaws. In addition, under the DGCL, an amendment to our certificate of incorporation that would alter or change the powers, preferences or special rights of the common stock so as to affect them adversely also must be approved by a majority of the votes entitled to be cast by the holders of the shares affected by the amendment, voting as a separate class. Subject to our bylaws, our board of directors may from time to time make, amend, supplement or repeal our bylaws by vote of a majority of our board of directors.

Registration Rights

        Our governance agreements provide for registration rights for the Sponsors, their co-investors and certain members of management. Under the governance agreements, we are required to file at our expense, at any time after the expiration of any underwriter lock-up period applicable to the Sponsors in connection with this offering, a registration statement under the Securities Act covering the resale by the Sponsors and any of their permitted transferees of all shares of common stock held by such Sponsor. The Sponsors, the co-investors and management and any of their respective permitted transferees also will have "piggyback" registration rights entitling them to participate in any future offering of the common stock by us, subject to certain exceptions and limitations. See "Certain Relationships and Related Party Transactions—Governance Agreements."

Limitation of Liability and Indemnification of Directors and Officers

        As permitted by the Delaware General Corporation Law, or DGCL, we have adopted provisions in our certificate of incorporation that limit or eliminate the personal liability of our directors and officers for monetary damages for a breach of their fiduciary duty of care as a director or officer. The duty of care generally requires that, when acting on behalf of the corporation, directors and officers exercise an informed business judgment based on all material information reasonably available to them. Consequently, a director or officer will not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director or officer, except for liability for:

These limitations of liability do not generally affect the availability of equitable remedies such as injunctive relief or rescission.

        As permitted by the DGCL, our certificate of incorporation and bylaws provide that:

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        We currently maintain liability insurance for our directors and officers.

        Our certificate of incorporation requires us to advance expenses to our directors and officers in connection with a legal proceeding, subject to receiving an undertaking from such director or officer to repay advanced amounts if it is determined he or she is not entitled to indemnification. Our bylaws provide that we may advance expenses to our employees and other agents, upon such terms and conditions, if any, as we deem appropriate.

        We intend to enter into separate indemnification agreements with each of our directors and officers, which may be broader than the specific indemnification provisions contained in the DGCL. These indemnification agreements may require us, among other things, to indemnify our directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct. These indemnification agreements may also require us to advance any expenses incurred by the directors or officers as a result of any proceeding against them as to which they could be indemnified and to obtain directors' and officers' insurance, if available on reasonable terms.

        Currently, to our knowledge, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification by us is sought, nor are we aware of any threatened litigation or proceeding that may result in a claim for indemnification.

        Insofar as indemnification for liabilities arising under the Securities Act may be permitted for our directors, officers and controlling persons under the foregoing provisions or otherwise, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Transfer Agent and Registrar

        The transfer agent and registrar for the common stock is expected to be                  .

Listing

        We have applied to list the common stock on a national securities exchange under the symbol "AMC".

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SHARES ELIGIBLE FOR FUTURE SALE

        Prior to this offering, there has been no public market for our common stock, and no predictions can be made about the effect, if any, that market sales of shares of our common stock or the availability of such shares for sale will have on the market price prevailing from time to time. Nevertheless, the actual sale of, or the perceived potential for the sale of, our common stock in the public market may have an adverse effect on the market price for the common stock and could impair our ability to raise capital through future sales of our securities. See "Risk Factors—Risks Related to this Offering—Future sales or the possibility of future sales of a substantial amount of our common stock may depress the price of shares of our common stock."

Sale of Restricted Shares and Lock-Up Agreements

        Upon completion of this offering, we will have an aggregate of            shares of our common stock outstanding, excluding shares reserved at            , 2011 for issuance upon exercise of options that have been granted under our stock option plans (            of which were exercisable at such date).

        Of these shares, the            shares of our common stock to be sold in this offering, or                    shares if the underwriters' option to purchase additional shares is exercised in full, will be freely tradable without restriction or further registration under the Securities Act, except for any shares which may be acquired by any of our "affiliates" as that term is defined in Rule 144 under the Securities Act, which will be subject to the resale limitations of Rule 144.

        The remaining            shares of our common stock and non-voting common stock outstanding will be restricted securities, as that term is defined in Rule 144, and may in the future be sold without restriction under the Securities Act to the extent permitted by Rule 144 or any applicable exemption under the Securities Act, subject to the contractual provisions of our agreements with our Sponsors. See "Certain Relationships and Related Party Transactions—Governance Agreements."

        Our Sponsors and our directors and officers who would hold in the aggregate                    shares of our common stock (after giving effect to the exercise of stock options), are subject to various lock-up agreements that prohibit the holders from offering, selling, contracting to sell, granting an option to purchase, making a short sale or otherwise disposing of any shares of our common stock or any option to purchase shares of our common stock or any securities exchangeable for or convertible into shares of common stock for a period of 180 days after the date of this prospectus.

        In the event that either (1) during the last 17 days of the "lock-up" period, we release earnings results or material news or a material event relating to us occurs or (2) prior to the expiration of the "lock-up" period, we announce that we will release earnings results during the 16-day period beginning on the last day of the "lock-up" period, then in either case the expiration of the "lock-up" will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless                    waives, in writing, such an extension.

Rule 144

        In general, under Rule 144 under the Securities Act, a person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of ours at any time during the three months preceding a sale, and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months (including any period of consecutive ownership of preceding non-affiliated holders) would be entitled to sell those shares, subject only to the availability of current public information about us. A non-affiliated person who has beneficially owned restricted securities within the meaning of Rule 144 for at least one year would be entitled to sell those shares without regard to the provisions of Rule 144.

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        A person (or persons whose shares are aggregated) who is deemed to be an affiliate of ours and who has beneficially owned restricted securities within the meaning of Rule 144 for at least six months would be entitled to sell within any three-month period a number of shares that does not exceed the greater of one percent of the then outstanding shares of our common stock or the average weekly trading volume of our common stock during the four calendar weeks preceding such sale. Such sales are also subject to certain manner of sale provisions, notice requirements and the availability of current public information about us.

Registration Rights

        Upon completion of this offering, the Sponsors and their co-investors will hold in the aggregate approximately                     shares of our common stock. Pursuant to the Governance Agreements described above in "Certain Relationships and Related Party Transactions—Governance Agreements," the Sponsors and their co-investors will have the right, subject to various conditions and limitations, to demand the filing of, and include such shares of our common stock in, future registration statements relating to our common stock. Further, certain members of management who will hold in the aggregate approximately                    shares of our common stock (after giving effect to the exercise of stock options), will have the right subject to various conditions and limitations, to include such shares of our common stock in future registration statements relating to our common stock. These registration rights of our stockholders could impair the prevailing market price and impair our ability to raise capital by depressing the price at which we could sell our common stock.

Options

        In addition to the                    shares of common stock outstanding immediately after this offering, as of the date of this prospectus, there will be outstanding options to purchase                    shares of our common stock, of which                    options are currently exercisable.

        As soon as practicable after the completion of this offering, we intend to file a registration statement on Form S-8 under the Securities Act covering shares of our common stock reserved for issuance under our equity incentive plan. Accordingly, shares of our common stock registered under such registration statement will be available for sale in the open market upon exercise by the holders, subject to vesting restrictions, Rule 144 limitations applicable to our affiliates and the contractual lock-up provisions described above.

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

        The following discussion is a summary of the material U.S. federal income tax considerations generally applicable to beneficial owners of our common stock ("Holders") that acquire shares of our common stock pursuant to this offering and that hold such shares as capital assets (generally, for investment). This summary is based upon the Internal Revenue Code of 1986, as amended (the "Code"), existing, temporary and proposed Treasury regulations, Internal Revenue Service ("IRS") rulings and pronouncements and judicial decisions now in effect, all of which are subject to change, possibly on a retroactive basis, and to differing interpretations. This summary does not consider specific facts and circumstances that may be relevant to a particular Holder's tax position and does not consider any tax laws other than U.S. federal income tax laws (for example, this summary does not consider any state, local, estate or gift, or non-U.S. tax consequences of an investment in our common stock). It also does not apply to Holders subject to special tax treatment under the U.S. federal income tax laws (including partnerships or other pass-through entities, banks or other financial institutions, insurance companies, dealers in securities, persons who hold common stock as part of a "straddle," "hedge," "conversion transaction" or other risk-reduction or integrated transaction, controlled foreign corporations, passive foreign investment companies, foreign personal holding companies, companies that accumulate earnings to avoid U.S. federal income tax, U.S. Holders (as defined below) who do not have the U.S. dollar as their functional currency, tax-exempt organizations, former U.S. citizens or residents, those who are subject to Medicare contribution tax and persons who hold or receive common stock as compensation).

        For purposes of this summary, the term "U.S. Holder" means a Holder of shares of our common stock that, for U.S. federal income tax purposes, is:

        The term "Non-U.S. Holder" means any Holder of shares of our common stock that is neither a U.S. Holder nor a partnership (including an entity that is treated as a partnership for U.S. federal income tax purposes).

        If a partnership (or other entity treated as a partnership for U.S. federal income tax purposes) holds shares of our common stock, the U.S. federal income tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. Partners of partnerships that hold shares of our common stock should consult their tax advisors.

        This summary is not a comprehensive discussion of all of the U.S. federal income tax considerations applicable to us or that may be relevant to a particular Holder in view of such Holder's particular circumstances. Accordingly, each prospective Holder is urged to consult its tax advisor with respect to the U.S. federal, state, local and non-U.S. income and other tax consequences of holding and disposing of our common stock.

U.S. Holders

        The following discussion summarizes the material U.S. federal income tax consequences of the ownership and disposition of our common stock applicable to "U.S. Holders," subject to the limitations described above.

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Distributions

        Distributions of cash or property that we pay in respect of our common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits (as determined under U.S. federal income tax principles) and will be includible in gross income by a U.S. Holder upon receipt. Any such dividend will be eligible for the dividends received deduction if received by an otherwise qualifying corporate U.S. Holder that meets the holding period and other requirements for the dividends received deduction. Dividends paid by us to certain non-corporate U.S. Holders (including individuals), with respect to taxable years beginning on or before December 31, 2012, are eligible for U.S. federal income taxation at the rates generally applicable to long-term capital gains for individuals, provided that the U.S. Holder receiving the dividend satisfies applicable holding period and other requirements. If the amount of a distribution exceeds our current and accumulated earnings and profits, such excess first will be treated as a tax-free return of capital to the extent of the U.S. Holder's tax basis in our common stock, and thereafter will be treated as capital gain.

Dispositions

        Upon a sale, exchange or other taxable disposition of shares of our common stock, a U.S. Holder generally will recognize capital gain or loss equal to the difference between the amount realized on the sale, exchange or other taxable disposition and the U.S. Holder's adjusted tax basis in the shares of our common stock. Such capital gain or loss will be long-term capital gain or loss if the U.S. Holder has held the shares of the common stock for more than one year at the time of disposition. The deductibility of capital losses is subject to limitations under the Code.

Information Reporting and Backup Withholding Requirements

        In general, dividends on our common shares, and payments of the proceeds of a sale, exchange or other disposition of our common shares paid to a U.S. Holder are subject to information reporting and may be subject to backup withholding at a current maximum rate of 28% unless the U.S. Holder (i) is a corporation or other exempt recipient or (ii) provides an accurate taxpayer identification number and certifies that it is not subject to backup withholding.

        Backup withholding is not an additional tax. Any amounts withheld by operation of the backup withholding rules from a payment to a U.S. Holder will be refunded or allowed as a credit against the U.S. Holder's U.S. federal income tax liability, if any, provided that any required information is furnished to the IRS in a timely manner.

Non-U.S. Holders

        The following discussion summarizes the material U.S. federal income tax consequences of the ownership and disposition of our common stock applicable to "Non-U.S. Holders," subject to the limitations described above.

U.S. Trade or Business Income

        For purposes of this discussion, dividend income and gain on the sale, exchange or other taxable disposition of our common stock will be considered to be "U.S. trade or business income" if such income or gain is (i) effectively connected with the conduct by a Non-U.S. Holder of a trade or business within the United States and (ii) in the case of a Non-U.S. Holder that is eligible for the benefits of an income tax treaty with the United States, attributable to a permanent establishment (or, for an individual, a fixed base) maintained by the Non-U.S. Holder in the United States. Generally, U.S. trade or business income is not subject to U.S. federal withholding tax (provided the Non-U.S. Holder complies with all applicable certification and disclosure requirements); instead, a Non-U.S. Holder is subject to U.S. federal income tax on a net income basis at regular U.S. federal income tax rates (in the same manner as a U.S. person) on its U.S. trade or business income. Any U.S. trade or business income received by a Non-U.S. Holder that is a corporation also may be subject to a "branch

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profits tax" at a 30% rate, or at a lower rate prescribed by an applicable income tax treaty, under specific circumstances.

Distributions

        Distributions of cash or property that we pay in respect of our common stock will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). A Non-U.S. Holder generally will be subject to U.S. federal withholding tax at a 30% rate, or at a reduced rate prescribed by an applicable income tax treaty, on any dividends received in respect of our common stock. If the amount of a distribution exceeds our current and accumulated earnings and profits, such excess first will be treated as a return of capital to the extent of the Non-U.S. Holder's tax basis in our common stock, and thereafter will be treated as capital gain. In order to obtain a reduced rate of U.S. federal withholding tax under an applicable income tax treaty, a Non-U.S. Holder will be required to (a) provide a properly executed IRS Form W-8BEN (or other applicable form) certifying its entitlement to benefits under the treaty, or (b) if our common stock is held through certain foreign intermediaries, satisfy the relevant certification requirements of applicable U.S. Treasury Regulations. A Non-U.S. Holder of our common stock that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim for a refund with the IRS. A Non-U.S. Holder should consult its own tax advisor regarding its possible entitlement to benefits under an income tax treaty.

        The U.S. federal withholding tax described in the preceding paragraph does not apply to dividends that represent U.S. trade or business income of a Non-U.S. Holder who provides a properly executed IRS Form W-8ECI, certifying that such dividends are effectively connected with such Non-U.S. Holder's conduct of a trade or business within the United States.

Dispositions

        A Non-U.S. Holder generally will not be subject to U.S. federal income or withholding tax in respect of any gain on a sale, exchange or other taxable disposition of common stock unless:

        In general, a corporation is a USRPHC if the fair market value of its "U.S. real property interests" equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. If we are determined to be a USRPHC, the U.S. federal income and withholding taxes relating to interests in USRPHCs

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nevertheless will not apply to gains derived from the sale or other disposition of our common stock by a Non-U.S. Holder whose shareholdings, actual and constructive, at all times during the applicable period, amount to 5% or less of the common stock, provided that the common stock is regularly traded on an established securities market. No assurance can be given that we will not be a USRPHC, or that our common stock will be considered regularly traded, when a Non-U.S. Holder sells its shares of our common stock.

Information Reporting and Backup Withholding Requirements

        We must annually report to the IRS and to each Non-U.S. Holder any dividend income that is subject to U.S. federal withholding tax, or that is exempt from such withholding tax pursuant to an income tax treaty. Copies of these information returns also may be made available under the provisions of a specific treaty or agreement to the tax authorities of the country in which the Non-U.S. Holder resides. Under certain circumstances, the Code imposes a backup withholding obligation (currently at a rate of 28%) on certain reportable payments. Dividends paid to a Non-U.S. Holder of common stock generally will be exempt from backup withholding if the Non-U.S. Holder provides a properly executed IRS Form W-8BEN or otherwise establishes an exemption and the payor does not have actual knowledge or reason to know that the Holder is a U.S. person.

        The payment of the proceeds from the disposition of our common stock to or through the U.S. office of any broker, U.S. or foreign, will be subject to information reporting and possible backup withholding unless the owner certifies its non-U.S. status under penalties of perjury or otherwise establishes an exemption, provided that the broker does not have actual knowledge or reason to know that the Holder is a U.S. person or that the conditions of any other exemption are not, in fact, satisfied. The payment of the proceeds from the disposition of our common stock to or through a non-U.S. office of a non-U.S. broker generally will not be subject to information reporting or backup withholding unless the non-U.S. broker has certain types of relationships with the United States (a "U.S. related person"). In the case of the payment of the proceeds from the disposition of our common stock to or through a non-U.S. office of a broker that is either a U.S. person or a U.S. related person, the Treasury regulations require information reporting (but not the backup withholding) on the payment unless the broker has documentary evidence in its files that the owner is a Non-U.S. Holder and the broker has no knowledge to the contrary. Non-U.S. Holders should consult their own tax advisors on the application of information reporting and backup withholding to them in their particular circumstances (including upon their disposition of common stock).

        Backup withholding is not an additional tax. Any amounts withheld by operation of the backup withholding rules from a payment to a Non-U.S. Holder will be refunded or allowed as a credit against the Non-U.S. Holder's U.S. federal income tax liability, if any, provided that any required information is furnished to the IRS in a timely manner.

Recent Legislation

        Recent legislation passed by the United States Congress generally imposes a withholding tax at a rate of 30% on payments to certain non-U.S. entities (including financial intermediaries), after December 31, 2012, of dividends on, and the gross proceeds of dispositions of, U.S. common stock, unless various U.S. information reporting and due diligence requirements that are different from, and in addition to, the beneficial owner certification requirements described above have been satisfied (generally relating to ownership by U.S. persons of interests in or accounts with such entities). Non-U.S. Holders should consult their tax advisors regarding the possible implications of this legislation on their investment in our common stock.

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UNDERWRITING

        Under the terms and subject to the conditions contained in an underwriting agreement dated                            2011, we have agreed to sell to the underwriters named below, for whom J.P. Morgan and Goldman, Sachs are acting as representatives. Subject to certain conditions, each underwriter has severally agreed to purchase the respective numbers of shares of common stock indicated in the following table:

Underwriter
  Number
of Shares

J.P. Morgan Securities LLC

   

Goldman, Sachs & Co. 

   

Barclays Capital Inc. 

   

Citigroup Global Markets Inc. 

   

Credit Suisse Securities (USA) LLC

   

Deutsche Bank Securities Inc. 

   
     
 

Total

   
     

        The underwriting agreement provides that the underwriters are obligated to purchase all the shares of common stock in the offering if any are purchased, other than the shares covered by the option described below unless and until this option is exercised. The underwriting agreement also provides that if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated.

        We have granted to the underwriters a 30-day option to purchase on a pro rata basis up to              additional shares from us at the initial public offering price less the underwriting discounts and commissions. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

        The following table summarizes the compensation and estimated expenses we will pay. Such amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase      additional shares.

 
  Per Share   Total  
 
  Without
Option
  With
Option
  Without
Option
  With
Option
 

Underwriting Discounts and Commissions paid

  $            $            $            $           

Expenses payable

                         

        Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $      per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters' right to reject any order in whole or in part.

        The representatives have informed us that they do not expect sales to accounts over which the underwriters have discretionary authority to exceed 5% of the shares of common stock being offered.

        We and our officers and directors have agreed not to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act of 1933 relating to, any shares of our common stock or securities convertible into or exchangeable or exercisable for any shares of our common stock, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing, without the prior

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written consent of the representatives for a period of 180 days after the date of this prospectus. However, in the event that either (1) during the last 17 days of the "lock-up" period, we release earnings results or material news or a material event relating to us occurs or (2) prior to the expiration of the "lock-up" period, we announce that we will release earnings results during the 16-day period beginning on the last day of the "lock-up" period, then in either case the expiration of the "lock-up" will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable, unless the representatives waive, in writing, such an extension.

        The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Some of the underwriters have performed in the past and may perform in the future investment banking, commercial banking, consent solicitation agency and advisory services for us for which they have received customary fees and expenses. In addition, from time to time, certain of the underwriters may hold de minimis amounts of our outstanding securities and/or indebtedness in the ordinary course of their business. Affiliates of certain of the underwriters are holders of our outstanding 8% senior subordinated notes due 2014 and will receive a portion of our net proceeds from this offering. In the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers, and such investment and securities activities may involve securities and/or instruments of the issuer. The underwriters and their respective affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

        We have agreed to indemnify the several underwriters and Goldman Sachs in its capacity as Qualified Independent Underwriter against liabilities under the Securities Act, or contribute to payments that the underwriters may be required to make in that respect.

        We have applied to list the shares of common stock on a national securities exchange under the symbol "AMC".

        In connection with the listing of the common stock on a national securities exchange, the underwriters will undertake to sell round lots of 100 shares or more to a minimum of 400 beneficial owners.

        Prior to this offering, there has been no public market for the common stock. The initial public offering price will be determined by negotiations among us and the underwriters. The principal factors to be considered in determining the initial public offering price will include the following:

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        The initial public offering price may not correspond to the price at which our common stock will trade in the public market subsequent to this offering, and an active trading market may not develop and continue after this offering.

        In connection with the offering the underwriters may engage in stabilizing transactions, transactions involving the option to purchase additional shares, syndicate covering transactions and penalty bids in accordance with Regulation M under the Exchange Act.

        These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of the common stock. As a result, the price of our common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the national securities exchange where our common stock will be listed and, if commenced, may be discontinued at any time.

        This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order") or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling with Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). The securities are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

        In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), from and including the date on which the European Union Prospectus Directive (the "EU Prospectus Directive") is implemented in that

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Relevant Member State (the "Relevant Implementation Date") an offer of securities described in this prospectus may not be made to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the EU Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:

        For the purposes of this provision, the expression an "offer of securities to the public" in relation to any securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the same may be varied in that Member State by any measure implementing the EU Prospectus Directive in that Member State and the expression EU Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

        The shares may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.

        This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares may not be circulated or distributed, nor may the shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the "SFA"), (ii) to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

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        Where the shares are subscribed or purchased under Section 275 by a relevant person which is: (a) a corporation (which is not an accredited investor) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or (b) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary is an accredited investor, shares, debentures and units of shares and debentures of that corporation or the beneficiaries' rights and interest in that trust shall not be transferable for 6 months after that corporation or that trust has acquired the shares under Section 275 except: (1) to an institutional investor under Section 274 of the SFA or to a relevant person, or any person pursuant to Section 275(1A), and in accordance with the conditions, specified in Section 275 of the SFA; (2) where no consideration is given for the transfer; or (3) by operation of law.

        The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (the Financial Instruments and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

        A prospectus in electronic format will be made available on the web sites maintained by one or more of the underwriters, or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representatives may agree to allocate a number of shares to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations.

CONFLICTS OF INTEREST

        Prior to the completion of this offering, JPMP, an affiliate of J.P. Morgan owned more than 10% of our outstanding common stock and therefore J.P. Morgan is presumed to have a "conflict of interest" with us under FINRA Rule 2720. Accordingly, J.P. Morgan's interest may go beyond receiving customary underwriting discounts and commissions. In particular, there may be a conflict of interest between J.P. Morgan's own interests as underwriter (including in negotiating the initial public offering price) and the interests of its affiliate JPMP (as a principal stockholder). Because of the conflict of interest under FINRA Rule 2720, this offering is being conducted in accordance with the applicable provisions of that rule. FINRA Rule 2720 requires that the "qualified independent underwriter" (as such term is defined by FINRA Rule 2720) participates in the preparation of the registration statement and prospectus and conducts due diligence. Accordingly, Goldman Sachs is assuming the responsibilities of acting as the qualified independent underwriter in this offering. Although the qualified independent underwriter has participated in the preparation of the registration statement and prospectus and conducted due diligence, we cannot assure you that this will adequately address any potential conflicts of interest related to J.P. Morgan and JPMP. We have agreed to indemnify Goldman Sachs for acting as qualified independent underwriter against certain liabilities, including liabilities under the Securities Act, and to contribute to payments that Goldman Sachs may be required to make for these liabilities. Pursuant to Rule 2720, no sale of the shares shall be made to an account over which J.P. Morgan exercises discretion without the prior specific written consent of the account holder. Affiliates of certain of the underwriters are holders of our outstanding 8% senior subordinated notes due 2014 and will receive a portion of our net proceeds from this offering.

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LEGAL MATTERS

        The validity of the shares of common stock offered hereby will be passed upon for us by O'Melveny & Myers LLP. Weil, Gotshal & Manges LLP advised the underwriters in connection with the offering of the common stock.


EXPERTS

        The consolidated financial statements of AMC Entertainment Holdings, Inc. as of April 1, 2010, and for the year then ended, have been included herein and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accounting firm, appearing elsewhere herein, and upon the authority of said firm as experts in accounting and auditing. The audit report covering the April 1, 2010, consolidated financial statements contains an explanatory paragraph that states that the Company changed its accounting treatment for business combinations due to the adoption of new accounting requirements issued by the FASB.

        The consolidated financial statements of AMC Entertainment Holdings, Inc. as of April 2, 2009 and for the fiscal years ended April 2, 2009 and April 3, 2008 included in this prospectus have been so included in reliance on the reports of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

        The financial statements of National CineMedia, LLC as of December 30, 2010 and December 31, 2009 and for the years ended December 30, 2010, December 31, 2009 and January 1, 2009 included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report appearing herein. Such financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

        The financial statements of the Kerasotes Showplace Theatres Sold to AMC Entertainment Inc. as of December 31, 2009 and 2008 and for the years ended December 31, 2009, 2008 and 2007, included in this Prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein (which report expresses an unqualified opinion and includes an explanatory paragraph that describes the allocation of certain account balances from the Theatres' parent company, Kerasotes Showplace Theatres, LLC, and explains that the financial statements may not necessarily be indicative of the conditions that would have existed or the results of operations if the Theatres had operated as an unaffiliated company), and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        On October 1, 2009, the Audit Committee of the Board of Directors (the "Audit Committee") of the Company dismissed PricewaterhouseCoopers LLP ("PwC") as its independent registered public accounting firm.

        With respect to PwC and its service as the Company's independent registered public accounting firm, during the fiscal years ended April 3, 2008 and April 2, 2009 ("Fiscal Years 2009 and 2008"), and through October 1, 2009:

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        We requested that PwC furnish us with a letter addressed to the SEC stating whether or not PwC agrees with the above statements. A copy of such letter, dated October 2, 2009, is filed as Exhibit 16.1 to AMCE's Form 8-K (File No. 1-8747, filed on October 2, 2009).

        The Audit Committee of the Company has conducted a competitive process to select a firm to serve as the Company's independent registered public accounting firm for the fiscal year ended April 1, 2010. On October 1, 2009, the Company approved the engagement of KPMG LLP ("KPMG") as its independent registered public accounting firm for the fiscal year ending April 1, 2010 subject to completion of normal client acceptance procedures. In deciding to engage KPMG, the Audit Committee reviewed auditor independence and existing commercial relationships with KPMG, and concluded that KPMG has no commercial relationship with the Company that would impair its independence. During Fiscal Years 2009 and 2008 and through October 1, 2009, neither the Company nor anyone acting on behalf of the Company, consulted KPMG regarding any of the matters or events set forth in Item 304(a)(2)(i) and Item 304(a)(2)(ii) of Regulation S-K.


WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-1 under the Securities Act with respect to the common stock offered by this prospectus. This prospectus is a part of the registration statement and, as permitted by the SEC's rules, does not contain all of the information presented in the registration statement. For further information with respect to us and our common stock offered hereby, reference is made to the registration statement and the exhibits and any schedules filed therewith. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance, if such contract or document is filed as an exhibit, reference is made to the copy of such contract or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by such reference. A copy of the registration statement, including the exhibits and schedules thereto, may be read and copied at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site at www.sec.gov, from which interested persons can electronically access the registration statement, including the exhibits and any schedules thereto.

        Because certain of our subsidiaries already have public debt and also due to this offering, they are subject to the informational requirements of the Exchange Act. They fulfill their obligations with respect to such requirements by filing periodic reports, proxy statements and other information with the SEC. We intend to furnish our stockholders with annual reports containing consolidated financial statements certified by an independent registered public accounting firm. We also maintain an Internet site at www.amcentertainment.com. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this prospectus or the registration statement of which this prospectus forms a part, and you should not rely on any such information in making your decision whether to purchase our securities.

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INDEX TO FINANCIAL STATEMENTS

 
  Page  

AMC ENTERTAINMENT HOLDINGS, INC. AND SUBSIDIARIES

       

UNAUDITED FINANCIAL STATEMENTS:

       
 

Consolidated Statements of Operations for the 39 weeks ended December 30, 2010 and December 31, 2009

   
F-2
 
 

Consolidated Balance Sheets as of December 30, 2010 and April 1, 2010

   
F-3
 
 

Consolidated Statements of Cash Flows for the 39 weeks ended December 30, 2010 and December 31, 2009

   
F-4
 
 

Notes to Consolidated Financial Statements

   
F-5
 

AUDITED FINANCIAL STATEMENTS:

       

Reports of Independent Registered Public Accounting Firms to the Board of Directors and Stockholders of AMC Entertainment Holdings, Inc.

   
F-30
 
 

Consolidated Statements of Operations for the periods ended April 1, 2010, April 2, 2009 and April 3, 2008

   
F-32
 
 

Consolidated Balance Sheets as of April 1, 2010 and April 2, 2009

   
F-33
 
 

Consolidated Statements of Cash Flows for the periods ended April 1, 2010, April 2, 2009 and April 3, 2008

   
F-34
 
 

Consolidated Statements of Stockholders' Equity

   
F-35
 
 

Notes to Consolidated Financial Statements

   
F-37
 

NATIONAL CINEMEDIA, LLC

       

Report of Independent Registered Public Accounting Firm

   
F-101
 

AUDITED FINANCIAL STATEMENTS:

       
 

Balance Sheets as of December 30, 2010 and December 31, 2009

   
F-102
 
 

Statements of Operations for the years ended December 30, 2010, December 31, 2009 and
January 1, 2009

   
F-103
 
 

Statements of Members' Equity/(Deficit) for the years ended December 30, 2010, December 31, 2009 and January 1, 2009

   
F-104
 
 

Statements of Cash Flows for the years ended December 30, 2010, December 31, 2009 and
January 1, 2009

   
F-105
 
 

Notes to Financial Statements

   
F-106
 

KERASOTES SHOWPLACE THEATRES, LLC

       

Report of Independent Registered Public Accounting Firm to the Member and Board of Directors of Kerasotes Showplace Theatres, LLC

   
F-126
 

AUDITED FINANCIAL STATEMENTS:

       
 

Statements of Assets and Liabilities as of December 31, 2009 and 2008

   
F-127
 
 

Statements of Income for the years ended December 31, 2009, 2008 and 2007

   
F-128
 
 

Statements of Cash Flows for the years ended December 31, 2009, 2008 and 2007

   
F-129
 
 

Notes to Financial Statements

   
F-130
 

UNAUDITED FINANCIAL STATEMENTS:

       
 

Unaudited Condensed Statements of Assets and Liabilities as of March 31, 2010 and December 31, 2009

   
F-140
 
 

Unaudited Condensed Statements of Income for the quarterly periods ended March 31, 2010 and 2009

   
F-141
 
 

Unaudited Condensed Statements of Cash Flows for the quarterly periods ended March 31, 2010 and 2009

   
F-142
 
 

Notes to Unaudited Condensed Financial Statements

   
F-143
 

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AMC ENTERTAINMENT HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

 
  Thirty-nine Weeks Ended  
 
  December 30,
2010
  December 31,
2009
 
 
  (unaudited)
 

Revenues

             
 

Admissions

  $ 1,334,527   $ 1,281,145  
 

Concessions

    515,709     487,908  
 

Other theatre

    47,208     44,493  
           
   

Total revenues

    1,897,444     1,813,546  
           

Operating Costs and Expenses

             
 

Film exhibition costs

    704,646     696,704  
 

Concession costs

    64,061     53,448  
 

Operating expense

    496,146     449,165  
 

Rent

    356,121     331,107  
 

General and administrative:

             
   

Merger, acquisition and transaction costs

    13,396     973  
   

Management fee

    3,750     3,750  
   

Other

    41,316     41,173  
 

Depreciation and amortization

    156,895     142,949  
           
   

Operating costs and expenses

    1,836,331     1,719,269  
           
   

Operating income

    61,113     94,277  

Other expense (income)

             
   

Other expense (income)

    9,876     (85,534 )
   

Interest expense

             
     

Corporate borrowings

    131,575     125,015  
     

Capital and financing lease obligations

    4,604     4,239  
   

Equity in earnings of non-consolidated entities

    (17,057 )   (18,127 )
   

Gain on NCM, Inc. stock sale

    (64,648 )    
   

Investment income

    (387 )   (213 )
           
     

Total other expense (income)

    63,963     25,380  
           

Earnings (loss) from continuing operations before income taxes

    (2,850 )   68,897  

Income tax provision

    2,125     32,100  
           

Earnings (loss) from continuing operations

    (4,975 )   36,797  

Earnings (loss) from discontinued operations, net of income taxes

    574     1,036  
           

Net earnings (loss)

  $ (4,401 ) $ 37,833  
           

Basic earnings (loss) per share of common stock:

             
 

Earnings (loss) from continuing operations

  $ (3.89 ) $ 28.77  
 

Earnings (loss) from discontinued operations

    0.45     0.81  
           
 

Net earnings (loss) per share

  $ (3.44 ) $ 29.58  
           
 

Average shares outstanding:

             
 

Basic

    1,278.85     1,278.82  
           

Diluted earnings (loss) per share of common stock:

             
 

Earnings (loss) from continuing operations

  $ (3.89 ) $ 28.77  
 

Earnings (loss) from discontinued operations

    0.45     0.81  
           
 

Net earnings (loss) per share

  $ (3.44 ) $ 29.58  
           
 

Average shares outstanding:

             
 

Diluted

    1,278.85     1,278.91  
           

Pro forma basic earnings per share (See Note 1)

  $          
             

Pro forma diluted earnings per share (See Note 1)

  $          
             

Pro forma average shares outstanding (See Note 1):

             
 

Basic

             
             
 

Diluted

             
             

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

 
  Unaudited
Pro Forma
Balance Sheet
December 30,
2010
(Note 1)
  December 30,
2010
  April 1,
2010
 
 
   
  (unaudited)
 

ASSETS

                   

Current assets:

                   
 

Cash and equivalents

  $ 802,392   $ 802,392   $ 611,593  
 

Receivables, net

    66,885     66,885     25,536  
 

Other current assets

    83,963     83,963     73,593  
               
   

Total current assets

    953,240     953,240     710,722  

Property, net

    985,893     985,893     863,532  

Intangible assets, net

    154,552     154,552     148,432  

Goodwill

    1,943,925     1,943,925     1,844,757  

Other long-term assets

    289,652     289,652     207,469  
               
   

Total assets

  $ 4,327,262   $ 4,327,262   $ 3,774,912  
               

LIABILITIES AND STOCKHOLDERS' EQUITY

                   

Current liabilities:

                   
 

Accounts payable

  $ 193,326   $ 193,326   $ 175,142  
 

Dividends payable

    26,127          
 

Accrued expenses and other liabilities

    136,937     136,937     143,273  
 

Deferred revenues and income

    165,553     165,553     125,842  
 

Current maturities of corporate borrowings and capital and financing lease obligations

    310,163     310,163     10,463  
               
   

Total current liabilities

    832,106     805,979     454,720  

Corporate borrowings

    2,305,693     2,305,693     2,265,414  

Capital and financing lease obligations

    63,086     63,086     53,323  

Deferred revenues—for exhibitor services agreement

    360,443     360,443     252,322  

Other long-term liabilities

    354,940     354,940     309,591  
               
   

Total liabilities

  $ 3,916,268   $ 3,890,141   $ 3,335,370  
               

Commitments and contingencies

                   

Stockholders' equity:

                   
 

Common Stock

    14          
 

Class A-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00000 shares issued and outstanding as of December 30, 2010 and April 1, 2010)

        4     4  
 

Class A-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00000 shares issued and outstanding as of December 30, 2010 and April 1, 2010)

        4     4  
 

Class N Common Stock nonvoting ($.01 par value, 375,000 shares authorized; 2,021.01696 shares issued and outstanding as of December 30, 2010 and 1,700.63696 outstanding as of April 1, 2010)

             
 

Class L-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61252 shares issued and outstanding as of December 30, 2010 and April 1, 2010)

        3     3  
 

Class L-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61252 shares issued and outstanding as of December 30, 2010 and April 1, 2010)

        3     3  
 

Additional paid-in capital

    644,730     670,857     669,837  
 

Treasury Stock, 4,314 shares at cost

    (2,596 )   (2,596 )   (2,596 )
 

Accumulated other comprehensive loss

    (2,216 )   (2,216 )   (3,176 )
 

Accumulated deficit

    (228,938 )   (228,938 )   (224,537 )
               
   

Total stockholders' equity

    410,994     437,121     439,542  
               
   

Total liabilities and stockholders' equity

  $ 4,327,262   $ 4,327,262   $ 3,774,912  
               

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 
  Thirty-nine Weeks Ended  
 
  December 30,
2010
  December 31,
2009
 
 
  (unaudited)
 

INCREASE (DECREASE) IN CASH AND EQUIVALENTS

             

Cash flows from operating activities:

             

Net earnings (loss)

  $ (4,401 ) $ 37,833  

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

             
 

Depreciation and amortization

    156,895     142,949  
 

Interest accrued to principal on corporate borrowings

    8,204     7,962  
 

Interest paid and discount on repurchase of Parent Term Loan

        (29,046 )
 

Discount on repurchase of Senior Discount Notes due 2014

    (50,240 )    
 

Deferred income taxes

        31,000  
 

Write-off of issuance costs related to early extinguishment of debt

        3,468  
 

Loss (gain) on extinguishment and modification of debt

    10,839     (85,451 )
 

Gain on NCM, Inc. stock sale

    (64,648 )    
 

Equity in earnings and losses from non-consolidated entities, net of distributions

    4,347     3,537  
 

Gain on dispositions

    (10,293 )   (1,086 )
 

Change in assets and liabilities, net of acquisition:

             
   

Receivables

    (36,399 )   (38,785 )
   

Other assets

    (1,242 )   922  
   

Accounts payable

    (7,578 )   53,245  
   

Accrued expenses and other liabilities

    27,224     78,731  
 

Other, net

    4,055     (3,383 )
           
 

Net cash provided by operating activities

    36,763     201,896  
           

Cash flows from investing activities:

             
 

Capital expenditures

    (84,085 )   (59,482 )
 

Acquisition of Kerasotes, net of cash acquired

    (280,606 )    
 

Proceeds from NCM, Inc. stock sale

    102,224      
 

Proceeds from disposition of Cinemex

    1,845     4,342  
 

Proceeds from the disposition of long-term assets

    58,391      
 

Other, net

    3,882     (4,542 )
           
 

Net cash used in investing activities

    (198,349 )   (59,682 )
           

Cash flows from financing activities:

             
 

Repayment under Revolving Credit Facility

        (185,000 )
 

Repurchase of Fixed Notes due 2012

        (250,000 )
 

Repurchase of Parent Term Loan

        (160,035 )
 

Repurchase of Senior Subordinated Notes due 2016

    (95,098 )    
 

Repurchase of Senior Discount Notes due 2014

    (120,444 )    
 

Payment of tender offer and consent solicitation consideration on Senior Subordinated Notes due 2016

    (5,801 )    
 

Proceeds from issuance of Senior Subordinated Notes due 2020

    600,000      
 

Proceeds from issuance of Senior Notes due 2019

        585,492  
 

Deferred financing costs

    (15,416 )   (16,462 )
 

Principal payments under capital and financing lease obligations

    (3,133 )   (2,567 )
 

Principal payments under Term Loan B

    (3,250 )   (4,875 )
 

Change in construction payables

    (4,037 )   722  
           
 

Net cash provided by (used in) financing activities

    352,851     (32,725 )
 

Effect of exchange rate changes on cash and equivalents

    (436 )   (2,226 )
           

Net increase in cash and equivalents

    190,799     107,263  

Cash and equivalents at beginning of period

    611,593     539,597  
           

Cash and equivalents at end of period

  $ 802,392   $ 646,860  
           

See Notes to Consolidated Financial Statements.

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 30, 2010

(Unaudited)

NOTE 1—BASIS OF PRESENTATION

        AMC Entertainment Holdings, Inc. (also referred to as "Parent" or the "Company"), through its direct and indirect subsidiaries, is principally involved in the theatrical exhibition business and owns, operates or has interests in theatres located in the United States and Canada, China (Hong Kong), France and the United Kingdom. The Company's principal wholly owned operating subsidiary is AMC Entertainment Inc. (AMCE). Marquee Holdings Inc. (Holdings) is a wholly owned subsidiary that was used to purchase AMCE in 2004.

        As discussed in Note 10—Corporate Borrowings, Holdings redeemed all remaining outstanding Discount Notes due 2014 on January 3, 2011. Holdings is expected to merge with Parent, with Parent continuing as the holding company for AMCE, subsequent to December 30, 2010.

        Use of Estimates:    The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are used for, but not limited to: (1) Impairment charges, (2) Film exhibition costs, (3) Income and operating taxes and (4) Gift card and packaged ticket revenues. Actual results could differ from those estimates.

        Other Expense (Income):    The following table sets forth the components of other expense (income):

 
  Thirty-nine Weeks Ended  
(In thousands)
  December 30,
2010
  December 31,
2009
 

Gain on extinguishment of Parent Term Loan Facility

  $   $ (85,234 )

Loss on redemption of 12% Senior Discount Notes due 2014

    10,727      

Loss on redemption of 85/8% Senior Notes due 2012

        11,276  

Loss on redemption of 11% Senior Subordinated Notes due 2016

    7,631      

Loss on modification of Senior Secured Credit Facility Term Loan due 2013

    3,046      

Loss on modification of Senior Secured Credit Facility Revolver

    367      

Gift card redemptions considered to be remote

    (11,754 )   (11,501 )

Other income

    (141 )   (75 )
           

Other expense (income)

  $ 9,876   $ (85,534 )
           

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 1—BASIS OF PRESENTATION (Continued)

        Earnings (loss) per share:    Basic earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share includes the effects of outstanding stock options and nonvested restricted stock, if dilutive.

(in thousands, except per share data)
  39 weeks
Ended
December 30,
2010
  39 weeks
Ended
December 31,
2009
 

Numerator:

             

Earnings (loss) from continuing operations

  $ (4,975 ) $ 36,797  
           

Denominator:

             

Shares for basic earnings (loss) per common share

    1,278.85     1,278.82  

Stock options and nonvested restricted stock

        0.09  
           

Shares for diluted earnings (loss) per common share

    1,278.85     1,278.91  
           

Basic Earnings (loss) from continuing operations per common share

  $ (3.89 ) $ 28.77  
           

Diluted earnings (loss) from continuing operations per common share

  $ (3.89 ) $ 28.77  
           

        Options to purchase 35,691.1680905 shares of common stock at a weighted average exercise price of $448.38 per share and 6,553 shares of nonvested restricted stock were outstanding during the 39 weeks ended December 30, 2010 and options to purchase 26,811.1680905 of common stock at a weighted average exercise price of $391.43 per share were outstanding during the 39 weeks ended December 31, 2009, but were not included in the computation of diluted earnings per share since the options were anti-dilutive.

        Pro forma Stockholders' equity and loss per share (Unaudited):    The pro forma effect of the conversion of various classes of common stock to common stock and expected payment of $26,127,000 pursuant to our Management Agreement have been reflected in the accompanying pro forma information as of and for the period ended December 30, 2010 as a dividend. Prior to consummating this offering, Parent intends to reclassify each share of its existing Class A common stock, Class N common stock and Class L common stock. Pursuant to the reclassification, which is being treated in a manner similar to a stock split, each holder of shares of Class A common stock, Class N common stock and Class L common stock will receive      shares of common stock for one share of Class A common stock, Class L common stock or Class N common stock. Pro forma per share data also gives effect to an increase of                  shares which, when multiplied by an assumed offering price of           per share (the mid-point of the estimated offering price range set forth on the cover page of this prospectus), would be sufficient to replace the expected payment of $26,127,000 pursuant to our Management Agreement.

        Presentation:    Effective April 1, 2010, preopening expense, theatre and other closure expense (income), and disposition of assets and other losses (gains) were reclassified to operating expense with a conforming reclassification made for the prior year presentation. Additionally, in the Consolidated Statements of Cash Flows, certain operating activities were reclassified to other, net and certain investing activities were reclassified to other, net, with conforming reclassifications made for the prior

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 1—BASIS OF PRESENTATION (Continued)


year presentation. These presentation reclassifications reflect how management evaluates information presented in the Consolidated Statement of Operations and Consolidated Statements of Cash Flows.

        Subsequent Events:    The Company has evaluated subsequent events through April 29, 2011.

NOTE 2—ACQUISITION

        On May 24, 2010, the Company completed the acquisition of substantially all of the assets (92 theatres and 928 screens) of Kerasotes Showplace Theatres, LLC ("Kerasotes"). Kerasotes operated 95 theatres and 972 screens in mid-sized, suburban and metropolitan markets, primarily in the Midwest. More than three quarters of the Kerasotes theatres feature stadium seating and almost 90 percent have been built since 1994. The Company acquired Kerasotes based on their highly complementary geographic presence in certain key markets. Additionally, the Company expects to realize synergies and cost savings related to the Kerasotes acquisition as a result of moving to the Company's operating practices, decreasing costs for newspaper advertising and concessions and general and administrative expense savings, particularly with respect to the consolidation of corporate related functions and elimination of redundancies. The purchase price for the Kerasotes theatres paid in cash at closing was $276,798,000, net of cash acquired, and was subject to working capital and other purchase price adjustments as described in the Unit Purchase Agreement. The Company paid working capital and other purchase price adjustments of $3,808,000 during the second quarter of fiscal 2011, based on the final closing date working capital and deferred revenue amounts, and has included this amount as part of the total estimated purchase price.

        The acquisition of Kerasotes is being treated as a purchase in accordance with Accounting Standards Codification, ("ASC") 805, Business Combinations, which requires allocation of the purchase price to the estimated fair values of assets and liabilities acquired in the transaction. The allocation of purchase price is based on management's judgment after evaluating several factors, including bid prices from potential buyers and a preliminary valuation assessment. The allocation of purchase price is subject to changes as an appraisal of both tangible and intangible assets and liabilities is finalized and

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 2—ACQUISITION (Continued)


additional information becomes available; however, we do not expect material changes. The following is a summary of the preliminary allocation of the purchase price:

(In thousands)
  Total  

Cash

  $ 809  

Receivables, net(1)

    3,832  

Other current assets

    12,905  

Property, net

    205,104  

Intangible assets, net(2)

    17,387  

Goodwill(3)

    109,839  

Other long-term assets

    5,920  

Accounts payable

    (13,538 )

Accrued expenses and other liabilities

    (12,439 )

Deferred revenues and income

    (1,806 )

Capital and financing lease obligations

    (12,583 )

Other long-term liabilities(4)

    (34,015 )
       

Total estimated purchase price

  $ 281,415  
       

(1)
Receivables consist of trade receivables recorded at fair value. The Company did not acquire any other class of receivables as a result of the acquisition of Kerasotes.

(2)
Intangible assets consist of certain Kerasotes' trade names, a non-compete agreement, and favorable leases. See Note 4—Goodwill and Intangible Assets for further information.

(3)
Goodwill arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations. Amounts recorded for goodwill are not subject to amortization and are expected to be deductible for tax purposes.

(4)
Other long-term liabilities consist of certain theatre and ground leases that have been identified as unfavorable.

        During the thirty-nine weeks ended December 30, 2010, the Company incurred acquisition-related costs for Kerasotes of approximately $12,100,000, which are included in general and administrative expense: merger, acquisition and transaction costs in the Consolidated Statements of Operations.

        In connection with the acquisition of Kerasotes, the Company divested of seven Kerasotes theatres with 85 screens as required by the Antitrust Division of the United States Department of Justice. The Company also sold the Kerasotes digital projector systems and one vacant theatre that had previously been closed by Kerasotes. Proceeds from the divested theatres and other property exceeded the carrying amount by approximately $10,671,000, which was recorded as a reduction to goodwill.

        The Company was also required by the Antitrust Division of the United States Department of Justice to divest of four legacy AMC theatres with 57 screens. The Company recorded a gain on disposition of assets of $10,056,000 for one divested legacy theatre with 14 screens during the thirty-nine weeks ended December 30, 2010, which reduced operating expenses by approximately $10,056,000. Additionally, the Company acquired two theatres with 26 screens that were received in exchange for three of the legacy AMC theatres with 43 screens.

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 2—ACQUISITION (Continued)

        The unaudited pro forma financial information presented below sets forth the Company's historical statements of operations for the periods indicated and gives effect to the acquisition as if the business combination and required divestitures had occurred as of the beginning of fiscal 2010. Such information is presented for comparative purposes to the Consolidated Statements of Operations only and does not purport to represent what the Company's results of operations would actually have been had these transactions occurred on the date indicated or to project its results of operations for any future period or date.

 
  Thirty-nine Weeks Ended  
 
  Pro forma
December 30,
2010
  Pro forma
December 31,
2009
 
 
  (unaudited)
 

Revenues

             
 

Admissions

  $ 1,353,095   $ 1,414,796  
 

Concessions

    524,362     549,409  
 

Other theatre

    47,996     50,463  
           
   

Total revenues

    1,925,453     2,014,668  
           

Operating Costs and Expenses

             
 

Film exhibition costs

    714,478     766,982  
 

Concession costs

    65,490     61,074  
 

Operating expense

    512,110     501,355  
 

Rent

    360,374     359,551  
 

General and administrative:

             
   

Merger, acquisition and transaction costs*

    13,396     973  
   

Management fee

    3,750     3,750  
   

Other

    42,967     53,924  
 

Depreciation and amortization

    160,623     162,227  
           
   

Operating costs and expenses

    1,873,188     1,909,836  
           
   

Operating income

    52,265     104,832  
 

Other expense (income)

             
   

Other expense (income)

    9,876     (85,534 )
   

Interest expense

             
     

Corporate borrowings

    131,575     125,015  
     

Capital and financing lease obligations

    4,820     4,887  
   

Equity in earnings of non-consolidated entities

    (17,057 )   (18,127 )
   

Gain on NCM, Inc. stock sale

    (64,648 )    
   

Investment (income) expense

    (387 )   235  
           
     

Total other expense

    64,179     26,476  
           

Earnings (loss) from continuing operations before income taxes

    (11,914 )   78,356  

Income tax provision (benefit)

    (1,275 )   35,400  
           

Earnings (loss) from continuing operations

    (10,639 )   42,956  

Earnings from discontinued operations, net of income taxes

    574     1,036  
           

Net earnings (loss)

  $ (10,065 ) $ 43,992  
           

*
Primarily represents non-recurring transaction costs for the acquisition and related transactions.

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 2—ACQUISITION (Continued)

 
  Thirty-nine Weeks Ended  
 
  Pro forma
December 30,
2010
  Pro forma
December 31,
2009
 

Average Screens—continuing operations(1)

    5,197     5,287  

(1)
Includes consolidated theatres only.

        The Company recorded revenues of approximately $168,300,000 from May 24, 2010 through December 30, 2010 resulting from the acquisition of Kerasotes, and recorded operating costs and expenses of approximately $174,900,000, including $20,500,000 of depreciation and amortization and $12,100,000 of merger, acquisition and transaction costs. The Company recorded $655,000 of other expense related to Kerasotes.

NOTE 3—COMPREHENSIVE EARNINGS (LOSS)

        The components of comprehensive earnings (loss) are as follows:

 
  Thirty-nine Weeks Ended  
(In thousands)
  December 30,
2010
  December 31,
2009
 

Net earnings (loss)

  $ (4,401 ) $ 37,833  

Foreign currency translation adjustment

    (2,607 )   (13,443 )

Pension and other benefit adjustments

    (502 )   (474 )

Change in fair value of cash flow hedges

        (6 )

Losses on interest rate swaps reclassified to interest expense: corporate borrowings

        558  

Increase in unrealized gain on marketable securities

    4,069     644  
           

Total comprehensive earnings (loss)

  $ (3,441 ) $ 25,112  
           

NOTE 4—GOODWILL AND INTANGIBLE ASSETS

        Activity of goodwill is presented below.

(In thousands)
  Total  

Balance as of April 1, 2010

  $ 1,844,757  
 

Acquisition of Kerasotes

    109,839  
 

Goodwill allocated to sales(1)

    (10,671 )
       

Balance as of December 30, 2010

  $ 1,943,925  
       

(1)
Reduction in goodwill for sales of eight Kerasotes theatres and other property. Subsequent to the acquisition, the Company was required to sell certain acquired theatres to comply with government requirements related to the sale. No gains or losses were recorded for these transactions.

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 4—GOODWILL AND INTANGIBLE ASSETS (Continued)

        Activity for intangible assets is presented below:

 
   
  December 30, 2010   April 1, 2010  
(In thousands)
  Remaining
Useful Life
  Gross
Carrying
Amount
  Accumulated
Amortization
  Gross
Carrying
Amount
  Accumulated
Amortization
 

Acquired Intangible Assets:

                             
 

Amortizable Intangible Assets:

                             
 

Favorable leases

  2 to 11 years   $ 110,231   $ (51,379 ) $ 104,646   $ (44,127 )
 

Loyalty program

  3 years     46,000     (41,147 )   46,000     (38,870 )
 

Loews' trade name

      2,300     (2,265 )   2,300     (1,920 )
 

Loews' management contracts

  12 to 21 years     35,400     (29,480 )   35,400     (29,209 )
 

Non-compete agreement

  5 years     6,406     (764 )        
 

Other intangible assets

  1 to 12 years     13,309     (13,115 )   13,309     (13,097 )
                       
 

Total, amortizable

      $ 213,646   $ (138,150 ) $ 201,655   $ (127,223 )
                       

Unamortizable Intangible Assets:

                             
 

AMC trademark

      $ 74,000         $ 74,000        
 

Kerasotes trade names

        5,056                  
                           
 

Total, unamortizable

      $ 79,056         $ 74,000        
                           

        Additional information for Kerasotes intangible assets acquired on May 24, 2010 is presented below:

(In thousands)
  Weighted Average
Amortization
Period
  Gross Carrying
Amount
 

Acquired Intangible Assets:

           
 

Amortizable Intangible Assets:

           
 

Favorable leases

  3.6 years   $ 5,585  
 

Non-compete agreement

  5 years     6,406  
 

Management agreement(1)

        340  
           
 

Total, amortizable

  4.3 years   $ 12,331  
           

Unamortizable Intangible Assets:

           
 

Kerasotes trade names

      $ 5,056  
           

(1)
The management agreement intangible asset was disposed of as required by the Department of Justice.

        Amortization expense associated with the Company's intangible assets is as follows:

 
  Thirty-nine Weeks Ended  
(In thousands)
  December 30,
2010
  December 31,
2009
 

Recorded amortization

  $ 10,927   $ 10,689  

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 4—GOODWILL AND INTANGIBLE ASSETS (Continued)

        Estimated amortization expense for the next five fiscal years for intangible assets owned as of December 30, 2010 is projected below:

(In thousands)
  2011   2012   2013   2014   2015  

Projected amortization expense

  $ 14,652   $ 14,014   $ 12,582   $ 9,516   $ 8,660  

NOTE 5—STOCKHOLDERS' EQUITY

Common Stock Rights and Privileges

        The Company's Class A-1 voting Common Stock, Class A-2 voting Common Stock, Class N nonvoting Common Stock, Class L-1 voting Common Stock and Class L-2 voting Common Stock entitle the holders thereof to the same rights and privileges, subject to the same qualifications, limitations and restrictions with respect to dividends. Additionally, each share of Class A Common Stock, Class L Common Stock and Class N Common Stock shall automatically convert into one share of Residual Common Stock on a one-for-one basis immediately prior to the consummation of an Initial Public Offering.

Stock-Based Compensation

        The Company has adopted a stock-based compensation plan that permits a maximum of 49,107.44681 options to be issued on its stock under the amended and restated 2004 Stock Option Plan. The stock options have a ten year term and generally step vest in equal amounts from one to three or five years from the date of the grant. Vesting may accelerate for a certain participant if there is a change of control (as defined in the plan). All outstanding options have been granted to employees and one director of the Company. The Company accounts for stock options using the fair value method of accounting and has elected to use the simplified method for estimating the expected term of "plain vanilla" share option grants, as it does not have enough historical experience to provide a reasonable estimate.

        On July 8, 2010, the Board approved a grant of 1,023 non-qualified stock options to a certain employee of the Company under the amended and restated 2004 Stock Option Plan. These options vest ratably over 5 years with an exercise price of $752 per share. Expense for this award will be recognized on a straight-line basis over the vesting period. See 2010 Equity Incentive Plan below for further information regarding assumptions used in determining fair value. On July 23, 2010, the Board determined that the Company would no longer grant any awards of shares of common stock of the Company under the amended and restated 2004 Stock Option Plan.

2010 Equity Incentive Plan

        On July 8, 2010, the Board of Directors (the "Board") and the stockholders of the Company approved the adoption of the AMC Entertainment Holdings, Inc. 2010 Equity Incentive Plan (the "Plan"). The Plan provides for grants of non-qualified stock options, incentive stock options, stock appreciation rights ("SARs"), restricted stock awards, other stock-based awards or performance-based compensation awards.

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 5—STOCKHOLDERS' EQUITY (Continued)

        Subject to adjustment as provided for in the Plan, (i) the aggregate number of shares of common stock available for delivery pursuant to awards granted under the Plan is 39,312 shares, (ii) the number of shares available for granting incentive stock options under the Plan will not exceed 19,652 shares and (iii) the maximum number of shares that may be granted to a participant each year is 7,862.

        On July 8, 2010, the Board approved the grants of non-qualified stock options, restricted stock (time vesting), and restricted stock (performance vesting) to certain of its employees. The estimated fair value of the stock at the grant date was approximately $752 per share and was based upon a contemporaneous valuation reflecting market conditions. The award agreements under the Plan generally have the following features, subject to discretionary approval by Parent's compensation committee:

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 5—STOCKHOLDERS' EQUITY (Continued)

        A summary of stock option activity under both the amended and restated 2004 Option Plan and the 2010 Equity Incentive Plan is as follows:

 
  Number of
Shares
  Weighted Average
Exercise Price
Per Share
 

Outstanding at April 1, 2010

    31,597.1680905   $ 383.58  

Granted

    6,377.0000000     752.00  

Forfeited

    (1,478.4000000 )   370.83  

Exercised

    (804.6000000 )   452.50  
           

Outstanding at December 30, 2010

    35,691.1680905   $ 448.38  
           

Exercisable at December 30, 2010

    14,179.4080901   $ 445.31  
           

        The following table represents the restricted stock activity for the thirty-nine weeks ended December 30, 2010:

 
  Shares of
Restricted
Stock
  Weighted
Average
Grant Date
Fair Value
 

Unvested at April 1, 2010

      $  

Granted

    6,693     752.00  

Forfeited

    (140 )   752.00  
           

Unvested at December 30, 2010

    6,553   $ 752.00  
           

        Compensation expense for stock options and restricted stock are recognized on a straight-line basis (net of estimated forfeitures) over the requisite service period, which is generally the vesting period of the award. The Company has recorded stock-based compensation expense of $1,020,000 and $1,248,000 within general and administrative: other during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. The Company's financial statements reflect an increase to additional paid-in capital related to stock-based compensation for awards and all outstanding options of $1,020,000 during fiscal 2011. As of December 30, 2010, there was approximately $6,729,000 of total estimated unrecognized compensation cost related to nonvested stock-based compensation arrangements under both the 2010 Equity Incentive Plan and the 2004 Stock Option Plan expected to be recognized over a weighted average 3.5 years.

        The following table reflects the weighted average fair value per option granted under the amended and restated 2004 Option Plan and the 2010 Equity Incentive Plan during the thirty-nine weeks ended December 30, 2010, as well as the significant assumptions used in determining weighted average fair value using the Black-Scholes option-pricing model:

 
  2010 Plan   2004 Plan  

Weighted average fair value of options on grant date

  $ 293.72   $ 300.91  

Risk-free interest rate

    2.50 %   2.58 %

Expected life (years)

    6.25     6.50  

Expected volatility(1)

    35.0 %   35.0 %

Expected dividend yield

         

(1)
The Company uses share values of its publicly traded competitor peer group for purposes of calculating volatility.

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 6—INVESTMENTS

        Investments in non-consolidated affiliates and certain other investments accounted for following the equity method generally include all entities in which the Company or its subsidiaries have significant influence, but not more than 50% voting control. Investments in non-consolidated affiliates as of December 30, 2010, include a 16.98% interest in National CineMedia, LLC ("NCM"), a 50% interest in three U.S. motion picture theatres, a 26% equity interest in Movietickets.com ("MTC"), a 50% interest in Midland Empire Partners, LLC ("MEP") and a 29% interest in Digital Cinema Implementation Partners, LLC ("DCIP"). Indebtedness held by equity method investees is non-recourse to the Company.

        Condensed financial information of our non-consolidated equity method investments is shown below. Amounts are presented under U.S. GAAP for the periods of ownership by the Company.

        Operating Results(1):

 
  Thirty-nine Weeks Ended  
December 30, 2010 (in thousands):
  NCM   DCIP   Other   Total  

Revenues

  $ 342,817   $ 31,791   $ 33,569   $ 408,177  

Operating costs & expenses

    215,964     50,676     34,927     301,567  
                   

Net earnings (loss)

  $ 126,853   $ (18,885 ) $ (1,358 ) $ 106,610  
                   

The Company's recorded equity in earnings (loss)

  $ 23,145   $ (5,355 ) $ (733 ) $ 17,057  

 

 
  Thirty-nine Weeks Ended  
December 31, 2009 (in thousands):
  NCM   DCIP   Other   Total  

Revenues

  $ 307,157   $   $ 37,562   $ 344,719  

Operating costs & expenses

    190,567     6,739     36,750     234,056  
                   

Net earnings (loss)

  $ 116,590   $ (6,739 ) $ 812   $ 110,663  
                   

The Company's recorded equity in earnings (loss)

  $ 20,706   $ (2,237 ) $ (342 ) $ 18,127  

(1)
Certain differences in the Company's recorded investment for one U.S. motion picture theatre where it has a 50% interest, and its proportional ownership share resulting from the acquisition of the asset in a business combination where the investment was initially recorded at fair value, are amortized to equity in (earnings) or losses over the estimated useful life of approximately 20 years for the underlying building. The recorded equity in earnings of NCM on common membership units owned immediately following the IPO of National CineMedia, Inc. ("NCM, Inc.") (Tranche 1 Investment) does not include undistributed equity in earnings. The Company considered the excess distribution received following NCM, Inc.'s IPO as an advance on NCM's future earnings. As a result, the Company will not recognize any undistributed equity in earnings of NCM on the original common membership units (Tranche 1 Investment) until NCM's future net earnings equal the amount of the excess distribution.

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 6—INVESTMENTS (Continued)

        The Company recorded equity in earnings from NCM of $23,145,000 and $20,706,000 during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. As of December 30, 2010, the Company owns 18,803,420 units, or a 16.98% interest, in NCM accounted for following the equity method of accounting. The estimated fair market value of the units in NCM was approximately $375,504,000, based on the price per share of NCM, Inc. on December 30, 2010 of $19.97 per share.

        As of December 30, 2010 and April 1, 2010, the Company has recorded $1,612,000 and $1,462,000 respectively, of amounts due from NCM related to on-screen advertising revenue. As of December 30, 2010 and April 1, 2010, the Company had recorded $1,207,000 and $1,502,000 respectively, of amounts due to NCM related to the Exhibitor Services Agreement. The Company recorded revenues for advertising from NCM of $17,068,000 and $15,336,000 during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively. The Company paid NCM advertising expenses related to beverage advertising of $9,685,000 and $9,068,000 during the thirty-nine weeks ended December 30, 2010 and December 31, 2009, respectively.

        The Company recorded the following changes in the carrying amount of its investment in NCM and equity in (earnings) losses of NCM during the thirty-nine weeks ended December 30, 2010:

(In thousands)
  Investment in
NCM(1)
  Deferred
Revenue(2)
  Cash Received
(Paid)
  Equity in
(Earnings)
Losses
  Advertising
(Revenue)
  (Gain) on
NCM, Inc.
Stock Sale
 

Beginning balance April 1, 2010

  $ 28,826   $ (252,322 ) $   $   $   $  

Receipt of Common Units(3)

    111,520     (111,520 )                

Exchange and sale of NCM stock(4)

    (37,576 )       102,224             (64,648 )

Receipt of excess cash distributions and amounts under Tax Receivable Agreement

    (5,941 )       21,404     (15,463 )        

Amortization of deferred revenue

        3,399             (3,399 )    

Equity in earnings(5)

    7,682             (7,682 )        
                           

Ending balance December 30, 2010

  $ 104,511   $ (360,443 ) $ 123,628   $ (23,145 ) $ (3,399 ) $ (64,648 )
                           

(1)
Represents AMC's investment in 694,164 common membership units originally valued at March 27, 2008 and 300,141 common membership units originally valued at March 17, 2009, 94,015 common membership units originally valued at March 17, 2010, and 4,808,360 common membership units originally valued at June 14, 2010 received under the Common Unit Adjustment Agreement dated as of February 13, 2007 (Tranche 2 Investments). AMC's investment in 12,906,740 common membership units (Tranche 1 Investment) is carried at zero cost.

(2)
Represents the unamortized portion of the Exhibitor Services Agreement (ESA) modifications payment received from NCM. Such amounts are being amortized to revenues over the remainder of the 30 year term of the ESA ending in 2036, using a units-of-revenue method, as described in ASC 470-10-35 (formerly EITF 88-18, Sales of Future Revenues).

(3)
Effective June 14, 2010 and with a settlement date of June 28, 2010, the Company received 6,510,209 common membership units of NCM as a result of an Extraordinary Common Unit Adjustment in connection with the Company's acquisition of Kerasotes. The Company recorded the additional units at a fair value of $111,520,000 based on a price per shares of NCM, Inc. on June 14, 2010, of $17.13 per share, with an offsetting adjustment to deferred revenue.

(4)
All of the Company's NCM membership units are redeemable for, at the option of NCM, cash or shares of common stock of NCM, Inc. on a share-for-share basis. On August 18, 2010, the Company sold 6,500,000 shares of common stock of NCM, Inc. in an underwritten public offering for $16.00 per share and reduced the Company's related investment in NCM by $36,709,000, the average carrying amount of the shares sold. Net proceeds received on this sale were $99,840,000 after

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Table of Contents


AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 6—INVESTMENTS (Continued)

(5)
Represents equity in earnings on the Tranche 2 Investments only.

Differences in Accounting for Tranche 1 and Tranche 2 Investments in NCM

        On February 13, 2007, NCM, Inc., the sole manager of NCM, closed its IPO and used the net proceeds from the IPO to purchase a 44.8% interest in NCM, paying NCM $746,100,000 and paying the Founding Members $78,500,000 for a portion of the NCM units owned by them. NCM then paid $686,300,000 of the funds received from NCM, Inc. to the Founding Members as consideration for their agreement to modify the then-existing ESA. Also in connection with the IPO, NCM used $59,800,000 of the proceeds it received from NCM, Inc. and $709,700,000 of net proceeds from its new senior secured credit facility entered into concurrently with the completion of the IPO to redeem $769,500,000 in NCM preferred units held by the Founding Members. The redemption distribution to the Founding Members described above related to the IPO resulted in large Members' Deficit amounts for the Founding Members.

        The Company received approximately $259,300,000 for the redemption of all of its preferred units in NCM and approximately $26,500,000 from selling common units in NCM to NCM, Inc. In addition, the Company received $231,300,000 as consideration for modifying the ESA.

        Following the IPO, the Company determined it would not recognize undistributed equity in the earnings on the original 17,474,890 NCM membership units (Tranche 1 Investment) until NCM's future net earnings, less distributions received, surpass the amount of the excess distribution which created the Members' deficit in NCM. The Company considers the excess distribution described above as an advance on NCM's future earnings and, accordingly, future earnings of NCM should not be recognized through the application of equity method accounting until such time as its share of NCM's future earnings, net of distributions received, exceeds the excess distribution. The Company believes that the accounting model provided by ASC 323-10-35-22 for recognition of equity investee losses in excess of an investor's basis is analogous to the accounting for equity income subsequent to recognizing an excess distribution. The Company's Tranche 1 Investment recorded at $0 corresponds with a NCM Members' Deficit amount in its capital account.

        The Company has received 7,983,723 additional units in NCM subsequent to the IPO as a result of Common Unit Adjustments received from March 27, 2008 through June 14, 2010 (Tranche 2 Investments). The Company follows the guidance in ASC 323-10-35-29 (formerly EITF 02-18, Accounting for Subsequent Investments in an Investee after Suspension of Equity Loss Recognition) by analogy, which also refers to AICPA Technical Practice Aid 2220.14. Both sets of literature indicate that if a subsequent investment is made in an equity method investee that has experienced significant losses, the investor must determine if the subsequent investment constitutes funding of prior losses. The Company concluded that the construction or acquisition of new theatres that has led to the Common Unit adjustments included in its Tranche 2 Investments equates to making additional investments in

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 6—INVESTMENTS (Continued)


NCM. The Company has evaluated the receipt of the additional common units in NCM and the assets exchanged for these additional units and has determined that the right to use its incremental new screens would not be considered funding of prior losses. This determination was formed by considering that (i) NCM does not receive any additional funds from the Tranche 2 Investments, (ii) both NCM and AMC record their respective increases to Members' Equity and Investment at the same amount (fair value of the units issued), (iii) the additional investments result in additional ownership in NCM and (iv) the investments in additional common units are not subordinate to the other equity of NCM. As such, the additional common units received would be accounted for as a Tranche 2 Investment separate from the Company's initial investment following the equity method. The Company's Tranche 2 Investments correspond with the NCM Members' equity amounts in its capital account.

NOTE 7—FAIR VALUE MEASUREMENTS

        Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. The inputs used to develop these fair value measurements are established in a hierarchy, which ranks the quality and reliability of the information used to determine the fair values. The fair value classification is based on levels of inputs. Assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:

  Level 1:   Quoted market prices in active markets for identical assets or liabilities.

 

Level 2:

 

Observable market based inputs or unobservable inputs that are corroborated by market data.

 

Level 3:

 

Unobservable inputs that are not corroborated by market data.

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 7—FAIR VALUE MEASUREMENTS (Continued)

        The following table summarizes the fair value hierarchy of the Company's financial assets and liabilities carried at fair value on a recurring basis as of December 30, 2010:

 
   
  Fair Value Measurements at December 30, 2010 Using  
(In thousands)
  Total Carrying
Value at
December 30, 2010
  Quoted prices in
active market
(Level 1)
  Significant other
observable inputs
(Level 2)
  Significant
unobservable inputs
(Level 3)
 

Cash and Equivalents:

                         
 

Money Market Mutual Funds

  $ 368,126   $ 368,126   $   $  
 

Restricted short-term investments

    12,715     12,715          

Other long-term assets:

                         
 

Equity securities, available-for-sale:

                         
   

RealD Inc. Common Stock

    10,618         10,618      
   

Mutual Fund Large U.S. Equity

    2,489     2,489          
   

Mutual Fund Small/Mid U.S. Equity

    271     271          
   

Mutual Fund International

    114     114          
   

Mutual Fund Broad U.S. Equity

    27     27          
   

Mutual Fund Balance

    56     56          
   

Mutual Fund Fixed Income

    312     312          
                   

Total assets at fair value

  $ 394,728   $ 384,110   $ 10,618   $  
                   

Liabilities:

                         
                   

Total liabilities at fair value

  $   $   $   $  
                   

        Valuation Techniques.    The Company's money market mutual funds are invested in funds that seek to preserve principal, are highly liquid, and therefore are recorded on the balance sheet at the principal amounts deposited, which equals fair value. The restricted short-term investments are liquid, overnight deposits which are held as collateral for the Company's letters of credits, and are measured at fair value using principal amounts deposited plus any interest paid. The equity securities, available-for-sale, primarily consist of common stock and mutual funds invested in equity, fixed income, and international funds and are measured at fair value using quoted market prices. The Company is restricted from selling its shares of RealD Inc. until January 2011 when the related lock-up period expires and will classify their fair value as (Level 2) until the lock-up period expires. The RealD Inc. shares are valued using quoted market prices as of December 30, 2010. The unrecognized gain of the equity securities recorded in accumulated other comprehensive loss as of December 30, 2010 is $4,533,000.

        Investment in RealD Inc. Common Stock.    Under its RealD Inc. motion picture license agreement, the Company received a ten-year option to purchase 1,222,782 shares of RealD Inc. common stock at approximately $0.00667 per share. The stock options vest in 3 tranches upon the achievement of screen installation targets. During the first quarter of fiscal 2011, the Company vested in the first tranche and received 407,594 shares of RealD Inc. common stock. The stock is accounted for as an equity security, available for sale, and is recorded in the consolidated balance sheet in other

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 7—FAIR VALUE MEASUREMENTS (Continued)


long-term assets with an offsetting entry recorded to other long-term liabilities. The deferred lease incentive recorded in other long-term liabilities of $6,519,000 will be amortized on a straight-line basis over the remaining term of the license agreement, which is approximately 8.6 years, to reduce RealD license expense recorded in the statement of operations under operating expense. Any fair value adjustments of RealD Inc. common stock will be recorded to other long-term assets with an offsetting entry to accumulated other comprehensive loss.

        The Company vested in an additional 407,594 shares of RealD Inc. options, which will be recorded in the fourth quarter of fiscal 2011, after achieving its second tranche of screen installation targets. During January 2011, the Company recorded an increase in other long-term assets of $11,361,000, based on the fair value of RealD Inc. common stock at the date of vesting, with an offsetting entry recorded to other long-term liabilities. The deferred lease incentive of $11,361,000 recorded in other long-term liabilities will be amortized on a straight-line basis over the remaining term of the license agreement, which is approximately 9.7 years, to reduce RealD license expense recorded in the statement of operations under operating expense.

        Other Fair Value Measurement Disclosures.    The Company is required to disclose the fair value of financial instruments that are not recognized in the statement of financial position for which it is practicable to estimate that value. At December 30, 2010, the carrying amount of the Company's liabilities for corporate borrowings was approximately $2,612,206,000 and the fair value was approximately $2,698,030,000. At April 1, 2010, the carrying amount of the corporate borrowings was approximately $2,271,914,000 and the fair value was approximately $2,334,395,000. Quoted market prices were used to value publicly held corporate borrowings, as well as indicative trading levels for term loans as compiled by a firm that makes a market in the security. The carrying value of cash and equivalents approximates fair value because of the short duration of those instruments.

NOTE 8—INCOME TAXES

        The difference between the effective tax rate on earnings from continuing operations before income taxes and the U.S. federal income tax statutory rate is as follows:

 
  Thirty-nine Weeks Ended  
 
  December 30, 2010   December 31, 2009  

Income tax expense (benefit) at the federal statutory rate

  $ (1,000 ) $ 24,100  

Effect of:

             

State income taxes

    2,125     2,725  

Permanent items

    (200 )   (500 )

Valuation allowance

    1,200     5,775  
           

Income tax expense

  $ 2,125   $ 32,100  
           

Effective income tax rate

    (74.6 )%   46.6 %

        The accounting for income taxes requires that deferred tax assets and liabilities be recognized, using enacted tax rates, for the tax effect of temporary differences between the financial reporting and

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 8—INCOME TAXES (Continued)


tax bases of recorded assets and liabilities. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized.

        The effective rate for the period ending December 30, 2010 was substantially different than the expected rate primarily due to the federal tax expense being fully offset by various federal tax credits. All of the income tax benefit as shown on the rate reconciliation is being fully offset by valuation allowance. The state tax provision was for the states that impose their income based taxes on a gross sales method or impose a margin tax or that have suspended the use of net operating loss carryforwards into the current tax year.

NOTE 9—EMPLOYEE BENEFIT PLANS

        The Company sponsors frozen non-contributory qualified and non-qualified defined benefit pension plans generally covering all employees who, prior to the freeze, were age 21 or older and had completed at least 1,000 hours of service in their first twelve months of employment, or in a calendar year ending thereafter, and who were not covered by a collective bargaining agreement. The Company also offers eligible retirees the opportunity to participate in a health plan (medical and dental). Certain employees are eligible for subsidized postretirement medical benefits. The eligibility for these benefits is based upon a participant's age and service as of January 1, 2009.

        The Company expects to make pension contributions of approximately $390,000 per quarter for a total of approximately $1,560,000 during fiscal 2011.

        Net periodic benefit cost recognized for the plans during the thirty-nine weeks ended December 30, 2010 and December 31, 2009 consists of the following:

 
  Pension Benefits   Other Benefits  
(In thousands)
  December 30,
2010
  December 31,
2009
  December 30,
2010
  December 31,
2009
 

Components of net periodic benefit cost:

                         
 

Service cost

  $ 136   $ 135   $ 115   $ 157  
 

Interest cost

    3,456     3,303     957     972  
 

Expected return on plan assets

    (2,988 )   (2,243 )        
 

Amortization of (gain) loss

    148     141         (208 )
 

Amortization of prior service credit

            (649 )   (407 )
                   

Net periodic benefit cost

  $ 752   $ 1,336   $ 423   $ 514  
                   

        Effective July 29, 2010, the Company was able to determine it will no longer be obligated to contribute to one of its union sponsored pension plans under a new union contract, triggering a complete withdrawal from the plan. The Company recorded a liability and expense related to the complete withdrawal of approximately $2,661,000 in the second quarter of fiscal 2011.

        The Company sponsors a voluntary 401(k) savings plan covering certain employees age 21 or older and who are not covered by a collective bargaining agreement. The company currently matches 50% of each eligible employee's elective contributions up to 6% of the employee's eligible compensation.

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 9—EMPLOYEE BENEFIT PLANS (Continued)


Effective January 1, 2011, the Company will match 100% of each eligible employee's elective contributions up to 3% and 50% of contributions up to 5% of the employee's eligible compensation.

NOTE 10—CORPORATE BORROWINGS

        A summary of the carrying value of corporate borrowings and capital and financing lease obligations is as follows:

(In thousands)
  December 30,
2010
  April 1,
2010
 

Parent Term Loan due 2012

  $ 206,711   $ 198,265  

12% Senior Discount Notes due 2014

    70,111     240,795  

Senior Secured Credit Facility-Term Loan due 2013 (1.75% as of December 30, 2010)

    142,528     622,375  

Senior Secured Credit Facility-Term Loan due 2016 (3.50% as of December 30, 2010)

    476,597      

Senior Secured Credit Facility-Revolver

         

8% Senior Subordinated Notes due 2014

    299,357     299,227  

11% Senior Subordinated Notes due 2016

    229,902     325,000  

8.75% Senior Fixed Rate Notes due 2019

    587,000     586,252  

9.75% Senior Subordinated Notes due 2020

    600,000      

Capital and financing lease obligations, 9%-11.5%

    66,736     57,286  
           

    2,678,942     2,329,200  

Less: current maturities

    (310,163 )   (10,463 )
           

  $ 2,368,779   $ 2,318,737  
           

Notes Due 2020

        On December 15, 2010, AMCE completed the offering of $600,000,000 aggregate principal amount of its 9.75% Senior Subordinated Notes due 2020 (the "Notes due 2020"). The Notes due 2020 mature on December 1, 2020, pursuant to an indenture dated as of December 15, 2010, among the Company, the Guarantors named therein and U.S. Bank National Association, as trustee (the "Indenture"). The Indenture provides that the Notes due 2020 are general unsecured senior subordinated obligations of AMCE and are fully and unconditionally guaranteed on a joint and several senior subordinated unsecured basis by all of AMCE's existing and future domestic restricted subsidiaries that guarantee AMCE's other indebtedness. The Company will pay interest on the Notes due 2020 at 9.75% per annum, semi-annually in arrears on June 1 and December 1, commencing on June 1, 2011. The Company may redeem some or all of the Notes due 2020 at any time on or after December 1, 2015, at the redemption prices set forth in the Indenture. The Company may redeem the Notes due 2020 on or after December 1, 2018 at a price equal to 100% of the principal amount of the Notes due 2020 redeemed plus accrued and unpaid interest to the redemption date. In addition, the Company may

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 10—CORPORATE BORROWINGS (Continued)


redeem up to 35% of the aggregate principal amount of the Notes due 2020 using net proceeds from certain equity offerings completed prior to December 1, 2013.

Notes Due 2016

        Concurrently with the Notes due 2020 offering, the Company launched a cash tender offer and consent solicitation for any and all of its then outstanding $325,000,000 aggregate principal amount 11% Senior Subordinated Notes due 2016 (the "Notes due 2016") at a purchase price of $1,031 plus a $30 consent fee for each $1,000 of principal amount of currently outstanding Notes due 2016 validly tendered and accepted by the Company on or before the early tender date (the "Cash Tender Offer"). The Company used the net proceeds from the issuance of the Notes due 2020 to pay the consideration for the Cash Tender Offer plus accrued and unpaid interest on $95,098,000 principal amount of Notes due 2016 validly tendered. The Company recorded a loss on extinguishment related to the Cash Tender Offer of $7,631,000 in Other expense during the thirteen and thirty-nine weeks ended December 30, 2010, which included previously capitalized deferred financing fees of $1,681,000, a tender offer and consent fee paid to the holders of $5,801,000 and other expenses of $149,000. As of December 30, 2010, the Company has classified the Notes due 2016 as current maturities of corporate borrowings. The Company redeemed the remaining $229,902,000 aggregate principal amount outstanding Notes due 2016 at a price of $1,055 per $1,000 principal amount on February 1, 2011 in accordance with the terms of the indenture and will record an additional loss on extinguishment of approximately $16,664,000 in other expense during the fourth quarter of fiscal 2011.

Discount Notes Due 2014

        Concurrently with the Notes due 2020 offering on December 15, 2010, the Company launched a cash tender offer and consent solicitation for any and all of its outstanding $240,795,000 aggregate principal amount (accreted value) of its 12% Senior Discount Notes due 2014 (the "Discount Notes due 2014") at a purchase price of $797 plus a $30 consent fee for each $1,000 face amount (or $792.09 accreted value) of currently outstanding Discount Notes due 2014 validly tendered and accepted. The Company used the net proceeds from the issuance of the Notes due 2020 to pay the consideration for the Discount Notes due 2014 cash tender offer plus accrued and unpaid interest on $170,684,000 principal amount (accreted value) of the Discount Notes due 2014 validly tendered. The Company recorded a loss on extinguishment of $10,727,000 in Other expense during the thirteen and thirty-nine weeks ended December 30, 2010, which included previously capitalized deferred financing fees of $2,991,000, a tender offer and consent fee paid to the holders of $7,523,000 and other expenses of $213,000. The Company redeemed the remaining $70,111,000 (accreted value) outstanding Discount Notes due 2014 at a price of $823.77 per $1,000 face amount (or $792.09 accreted value) on January 3, 2011, using funds from the proceeds from the issuance of the Notes due 2020 and will record an additional loss on extinguishment of approximately $4,082,000 in other expense during the fourth quarter of fiscal 2011. At December 30, 2010, the Company has classified the Discount Notes due 2014 as current maturities of corporate borrowings.

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 10—CORPORATE BORROWINGS (Continued)

Senior Secured Credit Facility

        On December 15, 2010, the Company entered into a third amendment to its Senior Secured Credit Agreement dated as of January 26, 2006 to, among other things: (i) extend the maturity of the term loans held by accepting lenders and to increase the interest rate with respect to such term loans, (ii) replace the Company's existing revolving credit facility (with higher interest rates and a longer maturity than the existing revolving credit facility), and (iii) amend certain of the existing covenants therein. The following are key terms of the amendment:

        The Company recorded a loss on the modification of the Senior Secured Credit Agreement of $3,413,000 in Other expense during the thirteen and thirty-nine weeks ended December 30, 2010, which included third party modification fees of $2,885,000, previously capitalized financing fees related to the revolving credit facility of $367,000, and other expenses of $161,000.

        As of December 30, 2010, the Company was in compliance with all financial covenants relating to the Parent Term Loan Facility, the Senior Secured Credit Facility, the Notes due 2019, the Discount Notes due 2014, the Notes due 2014, the Notes due 2016, and the Notes due 2020.

NOTE 11—COMMITMENTS AND CONTINGENCIES

        The Company, in the normal course of business, is party to various legal actions. Except as described below, management believes that the potential exposure, if any, from such matters would not have a material adverse effect on the financial condition, cash flows or results of operations of the Company.

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 11—COMMITMENTS AND CONTINGENCIES (Continued)

        United States of America v. AMC Entertainment Inc. and American Multi-Cinema, Inc. (No. 99 01034 FMC (SHx), filed in the U.S. District Court for the Central District of California). On January 29, 1999, the Department of Justice (the "Department") filed suit alleging that the Company's stadium style theatres violated the ADA and related regulations. The Department alleged the Company had failed to provide persons in wheelchairs seating arrangements with lines-of-sight comparable to the general public. The Department alleged various non-line-of-sight violations as well. The Department sought declaratory and injunctive relief regarding existing and future theatres with stadium-style seating, compensatory damages in the approximate amount of $75,000 and a civil penalty of $110,000.

        As to line-of-sight matters, the trial court entered summary judgment in favor of the Department as to both liability and as to the appropriate remedy. On December 5, 2008, the Ninth Circuit Court of Appeals reversed the trial court as to the appropriate remedy and remanded the case back to the trial court for findings consistent with its decision. The Company and the Department reached a settlement regarding the extent of betterments and remedies required for line-of-sight violations which the parties believe are consistent with the Ninth Circuit's decision. The trial court approved the settlement on November 29, 2010. The betterments will be made over a 5 year term and the Company estimates the unpaid cost of such betterments to be approximately $5,000,000. The Company has recorded a liability of $75,000 for compensation to claimants and fines related to this matter.

        As to the non-line-of-sight aspects of the case, on January 21, 2003, the trial court entered summary judgment in favor of the Department on matters such as parking areas, signage, ramps, location of toilets, counter heights, ramp slopes, companion seating and the location and size of handrails. On December 5, 2003, the trial court entered a consent order and final judgment on non-line-of-sight issues under which the Company agreed to remedy certain violations at its stadium-style theatres and at certain theatres it may open in the future. Currently the Company estimates that remaining betterments are required at approximately 45 stadium-style theatres. The Company estimates that the unpaid costs of these betterments will be approximately $16,700,000. The estimate is based on actual costs incurred on remediation work completed to date. The actual costs of betterments may vary based on the results of surveys of the remaining theatres.

        Michael Bateman v. American Multi-Cinema, Inc.    (No. CV07-00171). In January 2007, a class action complaint was filed against the Company in the Central District of the United States District Court of California (the "District Court") alleging violations of the Fair and Accurate Credit Transactions Act ("FACTA"). FACTA provides in part that neither expiration dates nor more than the last 5 numbers of a credit or debit card may be printed on receipts given to customers. FACTA imposes significant penalties upon violators where the violation is deemed to have been willful. Otherwise damages are limited to actual losses incurred by the card holder. On October 24, 2008, the District Court denied plaintiff's renewed motion for class certification. On September 27, 2010, the Ninth Circuit Court of Appeals vacated the District Court's order and remanded the proceedings for a new determination consistent with their opinion. The Company filed its Petition for En Banc and/or Panel Rehearing on October 8, 2010. The parties have reached a tentative settlement, subject to court approval, which is not expected to have a material adverse impact to the Company's financial condition.

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 11—COMMITMENTS AND CONTINGENCIES (Continued)

        On May 14, 2009, Harout Jarchafjian filed a similar lawsuit alleging that the Company willfully violated FACTA and seeking statutory damages, but without alleging any actual injury (Jarchafjian v. American Multi-Cinema, Inc. (C.D. Cal. Case No. CV09-03434). The Jarchafjian case has been deemed related to the Bateman case and was stayed pending a Ninth Circuit decision in the Bateman case, which has now been issued. The parties have reached a tentative settlement, subject to court approval, which is not expected to have a material adverse impact to the Company's financial condition.

        In addition to the cases noted above, the Company is also currently a party to various ordinary course claims from vendors (including concession suppliers and motion picture distributors), landlords and other legal proceedings. If management believes that a loss arising from these actions is probable and can reasonably be estimated, the Company records the amount of the loss, or the minimum estimated liability when the loss is estimated using a range and no point is more probable than another. As additional information becomes available, any potential liability related to these actions is assessed and the estimates are revised, if necessary. Except as described above, management believes that the ultimate outcome of such other matters, individually and in the aggregate, will not have a material adverse effect on the Company's financial position or overall trends in results of operations. However, litigation and claims are subject to inherent uncertainties and unfavorable outcomes could occur. An unfavorable outcome could include monetary damages. If an unfavorable outcome were to occur, there exists the possibility of a material adverse impact on the results of operations in the period in which the outcome occurs or in future periods.

NOTE 12—RELATED PARTY TRANSACTIONS

Amended and Restated Fee Agreement

        In connection with the merger with LCE Holdings Inc., Holdings, AMCE and the Sponsors entered into an Amended and Restated Fee Agreement, which provides for an annual management fee of $5,000,000, payable quarterly and in advance to each Sponsor, on a pro rata basis, until the earliest of (i) the twelfth anniversary from December 23, 2004; (ii) such time as the sponsors own less than 20% in the aggregate of Parent; and (iii) such earlier time as Holdings, AMCE and the Requisite Stockholder Majority agree. In addition, the fee agreement provided for reimbursements by AMCE to the Sponsors for their out-of-pocket expenses and to Holdings of up to $3,500,000 for fees payable by Holdings in any single fiscal year in order to maintain AMCE's and its corporate existence, corporate overhead expenses and salaries or other compensation of certain employees. The Amended and Restated Fee Agreement terminated on June 11, 2007, the date of the holdco merger, and was superseded by a substantially identical agreement entered into by AMC Entertainment Holdings, Inc., Holdings, AMCE, the Sponsors and Holdings' other stockholders.

        Upon the consummation of a change in control transaction or an initial public offering, each of the Sponsors will receive, in lieu of quarterly payments of the annual management fee, a fee equal to the net present value of the aggregate annual management fee that would have been payable to the Sponsors during the remainder of the term of the fee agreement (assuming a twelve year term from the date of the original fee agreement), calculated using the treasury rate having a final maturity date that is closest to the twelfth anniversary of the date of the original fee agreement date. As of December 30,

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 12—RELATED PARTY TRANSACTIONS (Continued)


2010, the Company estimates that this amount would be $26,127,000. The Company expects to record any lump sum payment to the Sponsors as a dividend.

        The fee agreement also provides that the Company will indemnify the Sponsors against all losses, claims, damages and liabilities arising in connection with the management services provided by the Sponsors under the fee agreement.

NOTE 13—THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS

        The Company has provided reserves for estimated losses from theatres which have been closed and vacant space with no right to future use. As of December 30, 2010, the Company has reserved $12,414,000 for lease terminations which have either not been consummated or paid, related primarily to 6 theatres and vacant restaurant space. The Company is obligated under long-term lease commitments with remaining terms of up to 17 years for theatres which have been closed. As of December 30, 2010, base rents aggregated approximately $2,703,000 annually and $13,157,000 over the remaining terms of the leases.

        A roll forward of estimated liabilities recorded for theatre and other closure is as follows (in thousands):

 
  Theatre and Other  
 
  Thirty-nine Weeks
Ended
December 30, 2010
  Thirty-nine Weeks
Ended
December 31, 2009
 

Beginning balance

  $ 6,694   $ 7,386  
 

Theatre and other closure expense

    5,381     2,183  
 

Transfer of property tax liability

    173     715  
 

Transfer of deferred rent liability

    1,889     2,112  
 

Cash payments

    (1,723 )   (5,354 )
           

Ending balance

  $ 12,414   $ 7,042  
           

        The short-term portion of the ending balance is included with accrued expenses and other liabilities and the long-term portion of the ending balance is included with other long-term liabilities in the accompanying consolidated balance sheets.

        During the thirty-nine weeks ended December 30, 2010, the Company recognized $5,381,000 of theatre and other closure expense due primarily to closure of five theatres with remaining lease terms and accretion of the closure liability related to theatres closed during prior periods. During the thirty-nine weeks ended December 31, 2009, the Company recognized $2,183,000 of theatre and other closure expense due primarily to closure of one theatre and accretion of the closure liability related to theatres closed during prior periods.

        Theatre and other closure reserves for leases that have not been terminated are recorded at the present value of the future contractual commitments for the base rents, taxes and maintenance. As of

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 13—THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS (Continued)


December 30, 2010, the future lease obligations are discounted at annual rates ranging from 7.55% to 9.0%.

NOTE 14—SUBSEQUENT EVENTS

Holdings Merger

        On March 31, 2011, Holdings, a direct, wholly-owned subsidiary of Parent and a holding company, the sole assets of which consisted of the capital stock of AMCE, was merged with and into Parent, with Parent continuing as the surviving entity. As a result of the merger, AMCE became a direct subsidiary of Parent.

Theatre and Other Closures

        During the fourth quarter of the fiscal year ending March 31, 2011, the Company evaluated excess capacity and vacant and under-utilized retail space throughout its theatre circuit. On March 28, 2011, management decided to permanently close 73 underperforming screens and auditoriums in six theatre locations in the United States and Canada while continuing to operate 89 screens at these locations. The permanently closed screens are physically segregated from the screens that will remain in operation and access to the closed space is restricted. Additionally, management decided to discontinue development of and cease use of (including for storage) certain vacant and under-utilized retail space at four other theatres in the United States and the United Kingdom. As a result of closing the screens and auditoriums and discontinuing the development and use of the other spaces, the Company anticipates recording a charge of $55 million to $60 million for theatre and other closure expense most of which is expected to be incurred during the fiscal year ending March 31, 2011. The charge to theatre and other closure expense reflects the discounted contractual amounts of the existing lease obligations for the remaining 7 to 13 year terms of the leases ($54 million to $58 million) as well as expected incremental cash outlays for related asset removal and shutdown costs ($1 million to $2 million). A significant portion of each of the affected properties will be closed and no longer used. The charges to theatre and other closure expense do not result in any new, increased or accelerated obligations for cash payments related to the underlying long-term operating lease agreements.

NCM 2010 Common Unit Adjustment

        On March 17, 2011, NCM, Inc., as sole manager of NCM, disclosed the changes in ownership interest in NCM LLC pursuant to the Common Unit Adjustment Agreement dated as of February 13, 2007 by and among NCM, Inc., NCM, Regal CineMedia Holdings, LLC, American Multi-Cinema, Inc., Cinemark Media, Inc., Regal Cinemas, Inc. and Cinemark USA, Inc. (the "2010 Common Unit Adjustment"). This agreement provides for a mechanism for adjusting membership units based on increases or decreases in attendance associated with theatre additions and dispositions. Prior to the 2010 Common Unit Adjustment, the Company held 18,803,420 units, or a 16.98% ownership interest, in NCM as of December 30, 2010. As a result of theatre dispositions in fiscal 2010 and 2011, the Company surrendered 1,479,638 ownership units, leaving it with 17,323,782 units, or a 15.69% ownership interest, in NCM as of December 30, 2010, as adjusted for the 2010 Common Unit

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AMC ENTERTAINMENT HOLDINGS INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

December 30, 2010

(Unaudited)

NOTE 14—SUBSEQUENT EVENTS (Continued)


Adjustment. The Company recorded a reduction to deferred revenues—for exhibitor services agreement for the fair value of the shares surrendered of $25.4 million and reduced its investment in NCM by $8 million, the average carrying amount of the shares surrendered, resulting in a gain on the surrender of the shares of $17.4 million.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
AMC Entertainment Holdings, Inc.:

        We have audited the accompanying consolidated balance sheet of AMC Entertainment Holdings, Inc. (and subsidiaries) as of April 1, 2010, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of AMC Entertainment Holdings, Inc. (and subsidiaries) as of April 1, 2010, and the results of their operations and their cash flows for the year then ended in conformity with U.S. generally accepted accounting principles.

        As discussed in Note 1 to the consolidated financial statements, the Company changed its accounting treatment for business combinations due to the adoption of new accounting requirements issued by the FASB, as of April 3, 2009.

/s/ KPMG LLP

Kansas City, Missouri
June 29, 2010

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF AMC ENTERTAINMENT HOLDINGS, INC.:

        In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of operations, of stockholders' equity and of cash flows present fairly, in all material respects, the financial position of AMC Entertainment Holdings, Inc. and its subsidiaries (the "Company") at April 2, 2009, and the results of their operations and their cash flows for the 52 week period ended April 2, 2009 and the 53 week period ended April 3, 2008, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        As discussed in Note 9, the Company changed the manner in which it accounts for uncertain tax positions in fiscal 2008.

/s/ PricewaterhouseCoopers LLP

Kansas City, Missouri
May 26, 2009, except for the earnings (loss) per share discussed in Note 1 to the Consolidated Financial Statements, as to which the date is July 9, 2010

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AMC Entertainment Holdings, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)
  52 Weeks Ended
April 1, 2010
  52 Weeks Ended
April 2, 2009
  53 Weeks Ended
April 3, 2008
 

Revenues

                   
 

Admissions

  $ 1,711,853   $ 1,580,328   $ 1,615,606  
 

Concessions

    646,716     626,251     648,330  
 

Other theatre

    59,170     58,908     69,108  
               
   

Total revenues

    2,417,739     2,265,487     2,333,044  
               

Operating Costs and Expenses

                   
 

Film exhibition costs

    928,632     842,656     860,241  
 

Concession costs

    72,854     67,779     69,597  
 

Operating expense

    610,774     576,022     572,740  
 

Rent

    440,664     448,803     439,389  
 

General and administrative:

                   
   

Merger, acquisition and transaction costs

    2,578     1,481     7,310  
   

Management fee

    5,000     5,000     5,000  
   

Other

    58,274     53,800     39,084  
 

Depreciation and amortization

    188,342     201,413     222,111  
 

Impairment of long-lived assets

    3,765     73,547     8,933  
               
   

Operating costs and expenses

    2,310,883     2,270,501     2,224,405  
               

Operating income (loss)

    106,856     (5,014 )   108,639  

Other expense (income)

                   
 

Other income

    (87,793 )   (14,139 )   (12,932 )
 

Interest expense

                   
   

Corporate borrowings

    168,439     182,691     197,721  
   

Capital and financing lease obligations

    5,652     5,990     6,505  
 

Equity in earnings of non-consolidated entities

    (30,300 )   (24,823 )   (43,019 )
 

Investment income

    (287 )   (1,759 )   (24,013 )
               

Total other expense

    55,711     147,960     124,262  
               

Earnings (loss) from continuing operations before income taxes

    51,145     (152,974 )   (15,623 )

Income tax provision (benefit)

    (36,300 )   5,800     (7,580 )
               

Earnings (loss) from continuing operations

    87,445     (158,774 )   (8,043 )

Earnings (loss) from discontinued operations, net of income taxes

    (7,534 )   9,728     1,802  
               

Net earnings (loss)

  $ 79,911   $ (149,046 ) $ (6,241 )
               

Basic earnings (loss) per share of common stock:

                   
 

Earnings (loss) from continuing operations

  $ 68.38   $ (123.93 ) $ (6.27 )
 

Earnings (loss) from discontinued operations

    (5.89 )   7.60     1.40  
               
 

Net earnings (loss) per share

  $ 62.49   $ (116.33 ) $ (4.87 )
               
 

Average shares outstanding:

                   
 

Basic

    1,278.82     1,281.20     1,282.65  
               

Diluted earnings (loss) per share of common stock:

                   
 

Earnings (loss) from continuing operations

  $ 68.24   $ (123.93 ) $ (6.27 )
 

Earnings (loss) from discontinued operations

    (5.88 )   7.60     1.40  
               
 

Net earnings (loss) per share

  $ 62.36   $ (116.33 ) $ (4.87 )
               
 

Average shares outstanding:

                   
 

Diluted

    1,281.42     1,281.20     1,282.65  
               

Pro forma basic earnings per share (See Note 1)

  $                
                   

Pro forma diluted earnings per share (See Note 1)

  $                
                   

Pro forma average shares outstanding (See Note 1):

                   
 

Basic

                   
                   
 

Diluted

                   
                   

See Notes to Consolidated Financial Statements.

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AMC Entertainment Holdings, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)
  April 1,
2010
  April 2,
2009
 

Assets

             

Current assets:

             

Cash and equivalents

  $ 611,593   $ 539,597  

Receivables, net of allowance for doubtful accounts of $2,103 and $1,564

    25,536     29,435  

Other current assets

    73,593     80,800  
           
   

Total current assets

    710,722     649,832  

Property, net

    863,532     964,668  

Intangible assets, net

    148,432     162,366  

Goodwill

    1,844,757     1,844,757  

Other long-term assets

    207,469     153,271  
           
   

Total assets

  $ 3,774,912   $ 3,774,894  
           

Liabilities and Stockholders' Equity

             

Current liabilities:

             
 

Accounts payable

  $ 175,142   $ 155,553  
 

Accrued expenses and other liabilities

    143,273     102,068  
 

Deferred revenues and income

    125,842     121,628  
 

Current maturities of corporate borrowings and capital and financing lease obligations

    10,463     9,923  
           
   

Total current liabilities

    454,720     389,172  

Corporate borrowings

    2,265,414     2,388,086  

Capital and financing lease obligations

    53,323     57,286  

Deferred revenues for exhibitor services agreement

    252,322     253,164  

Other long-term liabilities

    309,591     308,702  
           
   

Total liabilities

    3,335,370     3,396,410  
           

Commitments and contingencies

             

Stockholders' equity:

             
 

Class A-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00000 shares issued and outstanding as of April 1, 2010 and April 2, 2009)

    4     4  
 

Class A-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00000 shares issued and outstanding as of April 1, 2010 and April 2, 2009)

    4     4  
 

Class N Common Stock nonvoting ($.01 par value, 375,000 shares authorized; 1,700.63696 shares issued and outstanding as of April 1, 2010 and April 2, 2009)

         
 

Class L-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61252 shares issued and outstanding as of April 1, 2010 and April 2, 2009)

    3     3  
 

Class L-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61252 shares issued and outstanding as of April 1, 2010 and April 2, 2009)

    3     3  
 

Additional paid-in capital

    669,837     668,453  
 

Treasury Stock, 4,314 shares at cost

    (2,596 )   (2,596 )
 

Accumulated other comprehensive income (loss)

    (3,176 )   17,061  
 

Accumulated deficit

    (224,537 )   (304,448 )
           
   

Total stockholders' equity

    439,542     378,484  
           
   

Total liabilities and stockholders' equity

  $ 3,774,912   $ 3,774,894  
           

See Notes to Consolidated Financial Statements.

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AMC Entertainment Holdings, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)
  52 Weeks Ended
April 1, 2010
  52 Weeks Ended
April 2, 2009
  53 Weeks Ended
April 3, 2008
 

Cash flows from operating activities:

                   
 

Net earnings (loss)

  $ 79,911   $ (149,046 ) $ (6,241 )
 

Adjustments to reconcile net earnings (loss) to cash provided by operating activities:

                   
 

Depreciation and amortization

    188,342     222,483     251,194  
 

Interest accrued to principal on corporate borrowings

    10,570     34,001     34,411  
 

Interest paid and discount on repurchase of Parent Term Loan

    (29,046 )        
 

Impairment of long-lived assets

    3,765     73,547     8,933  
 

Deferred income taxes

    (34,000 )   400     (10,900 )
 

Write-off of issuance costs related to early extinguishment of debt

    3,468          
 

Gain on extinguishment of debt

    (85,451 )        
 

Loss (gain) on disposition of Cinemex

    7,534     (14,772 )    
 

Excess distributions/(Equity in earnings losses from investments, net of distributions)

    5,862     6,600     (18,354 )
 

Change in assets and liabilities:

                   
   

Receivables

    (2,474 )   9,354     10,417  
   

Other assets

    2,323     (2,861 )   (40,953 )
   

Accounts payable

    13,383     20,423     5,906  
   

Accrued expenses and other liabilities

    40,525     (24,132 )   (23,161 )
 

Other, net

    (5,776 )   (8,748 )   (10,043 )
               
 

Net cash provided by operating activities

    198,936     167,249     201,209  
               

Cash flows from investing activities:

                   
 

Capital expenditures

    (97,011 )   (121,456 )   (171,100 )
 

Purchase of digital projection equipment for sale/leaseback

    (6,784 )        
 

Proceeds from sale/leaseback of digital projection equipment

    6,570          
 

Proceeds on disposition of Fandango

        2,383     17,977  
 

Proceeds on disposition of HGCSA

            28,682  
 

Proceeds on disposition of Cinemex, net of cash disposed

    4,315     224,378      
 

LCE screen integration

    (81 )   (4,700 )   (11,201 )
 

Other, net

    (3,346 )   320     (3,763 )
               
 

Net cash provided by (used in) investing activities

    (96,337 )   100,925     (139,405 )
               

Cash flows from financing activities:

                   
 

Proceeds from issuance of Parent Term Loan Facility

            396,000  
 

Repurchase of Parent Term Loan

    (160,035 )        
 

Proceeds from issuance of senior notes due 2019

    585,492          
 

Repurchase of senior notes due 2012

    (250,000 )        
 

Payments on Term Loan B

    (6,500 )   (6,500 )   (8,125 )
 

Principal payments under mortgages and capital and financing lease obligations

    (3,423 )   (3,452 )   (6,070 )
 

Deferred financing costs

    (16,639 )   (642 )   (14,983 )
 

Change in construction payables

    6,714     (9,331 )   13,586  
 

Borrowing (repayment) under Revolving credit facility

    (185,000 )   185,000      
 

(Repayment of) borrowing under Cinemex credit facility

            (12,100 )
 

Dividends paid to Stockholders

            (652,800 )
 

Proceeds from issuance of Common Stock and exercise of stock options

        125     500  
 

Treasury Stock purchases

        (2,596 )    
 

Proceeds from financing lease obligations

            16,872  
               
 

Net cash provided by (used in) financing activities

    (29,391 )   162,604     (267,120 )
 

Effect of exchange rate changes on cash and equivalents

    (1,212 )   (3,001 )   (2,397 )
               

Net increase (decrease) in cash and equivalents

    71,996     427,777     (207,713 )

Cash and equivalents at beginning of year

    539,597     111,820     319,533  
               

Cash and equivalents at end of year

  $ 611,593   $ 539,597   $ 111,820  
               

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

                   

Cash paid (refunded) during the period for:

                   
 

Interest (including amounts capitalized of $14, $415, and $1,114)

  $ 177,066   $ 154,830   $ 161,303  
 

Income taxes, net

    (2,033 )   16,731     17,064  

Schedule of non-cash investing and financing activities:

                   
 

Assets capitalized under ASC 840-40-05-5

  $   $   $ 4,600  
 

Investment in NCM (See Note 5—Investments)

    2,290     5,453     21,598  
 

Investment in DCIP (See Note 5—Investments)

    21,768          

See Notes to Consolidated Financial Statements.

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AMC Entertainment Holdings, Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

 
  Class A-1
Voting
Common Stock
  Class A-2
Voting
Common Stock
  Class N
Nonvoting
Common Stock
 
(In thousands, except
share and per share data)
  Shares   Amount   Shares   Amount   Shares   Amount  

March 29, 2007 through April 1, 2010

                                     

Balance March 29, 2007

    382,475.00000   $ 4     382,475.00000   $ 4     5,128.77496   $  

Comprehensive loss

                                     
 

Net loss

                         
 

ASC 740 (formerly FIN 48) adoption adjustment

                         
 

Foreign currency translation adjustment

                         
 

Change in fair value of cash flow hedges

                         
 

Losses on interest rate swaps reclassified to interest expense corporate borrowings

                         
 

Pension and other benefit adjustments

                         
 

Unrealized loss on marketable securities

                         
 

Comprehensive loss

                         

Stock-based compensation—options

                         

Dividends paid to stockholders

                         

Exercise of stock options

                    500      
                           

Balance April 3, 2008

    382,475.00000     4     382,475.00000     4     5,628.77496      

Comprehensive earnings (loss):

                                     
 

Net loss

                         
 

Foreign currency translation adjustment

                         
 

Change in fair value of cash flow hedges

                         
 

Losses on interest rate swaps reclassified to interest expense corporate borrowings

                         
 

Pension and other benefit adjustments

                         
 

Unrealized loss on marketable securities

                         
 

Comprehensive loss

                         

ASC 715 (formerly SFAS 158) adoption adjustment

                         

Stock-based compensation—options

                         

Treasury Stock purchased

                    (4,314 )    

Issuance of Class N Common Stock

                    385.862      
                           

Balance April 2, 2009

    382,475.00000     4     382,475.00000     4     1,700.63696      

Comprehensive earnings:

                                     
 

Net earnings

                         
 

Foreign currency translation adjustment

                         
 

Change in fair value of cash flow hedges

                         
 

Losses on interest rate swaps reclassified to interest expense corporate borrowings

                         
 

Pension and other benefit adjustments

                         
 

Unrealized gain on marketable securities

                         
 

Comprehensive earnings

                         

Stock-based compensation—options

                         
                           

Balance April 1, 2010

    382,475.00000   $ 4     382,475.00000   $ 4     1,700.63696   $  
                           

See Notes to Consolidated Financial Statements

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AMC Entertainment Holdings, Inc.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)

 
  Class L-1
Voting
Common Stock
  Class L-2
Voting
Common Stock
   
   
   
   
   
 
 
   
   
  Accumulated
Other
Comprehensive
Income (Loss)
   
   
 
 
  Additional
Paid-in
Capital
  Treasury
Stock
  Accumulated
Deficit
  Total
Stockholders'
Equity
 
 
  Shares   Amount   Shares   Amount  

                                                       

    256,085.61252   $ 3     256,085.61252   $ 3   $ 1,314,579   $   $ (3,834 ) $ (143,706 ) $ 1,167,053  

                                                       
 

                                (6,241 )   (6,241 )
 

                                (5,373 )   (5,373 )
 

                            (1,708 )       (1,708 )
 

                            (5,507 )       (5,507 )

                                                       
 

                            1,523         1,523  
 

                            6,532         6,532  
 

                            (674 )       (674 )
                                                       
 

                                          (11,448 )

                    3,426                 3,426  

                    (652,800 )               (652,800 )

                    500                 500  
                                       

    256,085.61252     3     256,085.61252     3     665,705         (3,668 )   (155,320 )   506,731  

                                                       
 

                                (149,046 )   (149,046 )
 

                            25,558         25,558  
 

                            (1,833 )       (1,833 )

                                                       
 

                            5,230         5,230  
 

                            (8,117 )       (8,117 )
 

                            (109 )       (109 )
                                                       
 

                                    (128,317 )

                                (82 )   (82 )

                    2,623                 2,623  

                        (2,596 )           (2,596 )

                    125                 125  
                                       

    256,085.61252     3     256,085.61252     3     668,453     (2,596 )   17,061     (304,448 )   378,484  

                                                       
 

                                79,911     79,911  
 

                            (13,021 )       (13,021 )
 

                            (6 )       (6 )

                                                       
 

                            558         558  
 

                            (8,499 )       (8,499 )
 

                            731         731  
                                                       
 

                                    59,674  

                    1,384                 1,384  
                                       

    256,085.61252   $ 3     256,085.61252   $ 3   $ 669,837   $ (2,596 ) $ (3,176 ) $ (224,537 ) $ 439,542  
                                       

See Notes to Consolidated Financial Statements

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 1—THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

        AMC Entertainment Holdings, Inc. (also referred to as "Parent" or the "Company"), through its direct and indirect subsidiaries, is principally involved in the theatrical exhibition business and owns, operates or has interests in theatres located in the United States and Canada, China (Hong Kong), France and the United Kingdom. The Company's principal wholly owned operating subsidiary is AMC Entertainment Inc. (AMCE). Marquee Holdings Inc. (Holdings) is a wholly owned subsidiary that was used to purchase AMCE in 2004. The Company discontinued its operations in Spain and Portugal during the third quarter of fiscal 2007 and discontinued its operations in Mexico during the third quarter of fiscal 2009.

        Use of Estimates:    The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates and assumptions are used for, but not limited to: (1) Impairments, (2) Goodwill, (3) Income Taxes, (4) Pension and Postretirement Assumptions and (5) Film Exhibition Costs. Actual results could differ from those estimates.

        Principles of Consolidation:    The consolidated financial statements include the accounts of the Company and all subsidiaries, as discussed above. All significant intercompany balances and transactions have been eliminated in consolidation. There are no noncontrolling (minority) interests in the Company's consolidated subsidiaries; consequently, all of its stockholders' equity, net earnings (loss) and comprehensive earnings (loss) for the periods presented are attributable to controlling interests.

        Fiscal Year:    The Company has a 52/53 week fiscal year ending on the Thursday closest to the last day of March. Both fiscal 2010 and fiscal 2009 reflect 52 week periods, while fiscal 2008 reflects a 53 week period.

        Revenues:    Revenues are recognized when admissions and concessions sales are received at the theatres. The Company defers 100% of the revenue associated with the sales of gift cards and packaged tickets until such time as the items are redeemed or management believes future redemption to be remote based upon applicable laws and regulations. During fiscal 2008, management changed its estimate of when it believes future redemption to be remote for packaged tickets from 24 months from the date of sale to 18 months from the date of sale. During fiscal 2009, management changed its estimate of redemption rates for packaged tickets. Management believes the 18 month estimate and revised redemption rates are supported by its continued development of specific historical redemption patterns for gift cards and that they are reflective of management's current best estimate. These changes in estimate had the effect of increasing other theatre revenues by approximately $4,200,000 in fiscal 2008 and by approximately $2,600,000 during fiscal 2009. The impact on loss from continuing operations and net loss for the change in estimate was a decrease to those losses of approximately $2,600,000 during fiscal 2008 and the related impact on loss per share from continuing operations and net loss per share was a decrease to those losses per share of $2.03 per share for basic and diluted loss per share. The impact on earnings from continuing operations and net earnings for the change in estimate was an increase to those earnings of approximately $1,600,000 during fiscal 2009 and the related impact on earnings per share from continuing operations and earnings per share was an increase to those earnings of $1.25 per share for basic and diluted earnings per share. During the

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 1—THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)


periods ended April 1, 2010, April 2, 2009, and April 3, 2008, the Company recognized $13,591,000, $14,139,000, and $11,289,000 of income, respectively, related to the derecognition of gift card liabilities where management believes future redemption to be remote which was recorded in other expense (income) in the Consolidated Statements of Operations.

        Film Exhibition Costs:    Film exhibition costs are accrued based on the applicable box office receipts and estimates of the final settlement to the film licenses. Film exhibition costs include certain advertising costs. As of April 1, 2010 and April 2, 2009, the Company recorded film payables of $78,499,000 and $60,286,000, respectively, which is included in accounts payable in the accompanying consolidated balance sheets.

        Concession Costs:    The Company records payments from vendors as a reduction of concession costs when earned unless it is determined that the payment was for the fair value of services provided to the vendor where the benefit to the vendor is sufficiently separable from the Company's purchase of the vendor's products. In the latter instance, revenue is recorded when and if the consideration received is in excess of fair value, then the excess is recorded as a reduction of concession costs. In addition, if the payment from the vendor is for a reimbursement of expenses, then those expenses are offset.

        Screen Advertising:    On March 29, 2005, the Company and Regal Entertainment Group combined their respective cinema screen advertising businesses into a new joint venture company called National CineMedia, LLC ("NCM") and on July 15, 2005, Cinemark Holdings, Inc., ("Cinemark") joined NCM, as one of the founding members. NCM engages in the marketing and sale of cinema advertising and promotions products; business communications and training services; and the distribution of digital alternative content. The Company records its share of on-screen advertising revenues generated by NCM in other theatre revenues.

        Loyalty Program:    The Company records the estimated incremental cost of providing free concession items for awards under its Moviewatcher loyalty program when the awards are earned. Historically, the costs of these awards have not been significant.

        Advertising Costs:    The Company expenses advertising costs as incurred and does not have any direct-response advertising recorded as assets. Advertising costs were $9,103,000, $18,121,000 and $20,677,000 for the periods ended April 1, 2010, April 2, 2009 and April 3, 2008, respectively.

        Cash and Equivalents:    Under the Company's cash management system, checks issued but not presented to banks frequently result in book overdraft balances for accounting purposes and are classified within accounts payable in the balance sheet. The change in book overdrafts are reported as a component of operating cash flows for accounts payable as they do not represent bank overdrafts. The amount of these checks included in accounts payable as of April 1, 2010 and April 2, 2009 was $60,943,000 and $55,302,000, respectively. All highly liquid debt instruments and investments purchased with an original maturity of three months or less are classified as cash equivalents.

        Intangible Assets:    Intangible assets are recorded at cost or fair value, in the case of intangible assets resulting from acquisitions, and are comprised of lease rights, amounts assigned to theatre leases acquired under favorable terms, customer relationship intangible assets, management contracts and

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 1—THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)


trademarks, each of which are being amortized on a straight-line basis over the estimated remaining useful lives of the assets except for a customer relationship intangible asset and the AMC Trademark intangible asset. The customer relationship intangible asset is amortized over eight years based upon the pattern in which the economic benefits of the intangible asset are expected to be consumed or otherwise used up. This pattern indicates that over 2/3rds of the cash flow generated from the asset is derived during the first five years. The AMC Trademark intangible asset is considered an indefinite lived intangible asset, and therefore is not amortized but rather evaluated for impairment annually. In fiscal 2009, the Company impaired a favorable lease intangible asset in the amount of $1,364,000.

        Investments:    The Company accounts for its investments in non-consolidated entities using either the cost or equity methods of accounting as appropriate, and has recorded the investments within other long-term assets in its consolidated balance sheets and records equity in earnings and losses of those entities accounted for following the equity method of accounting within equity in (earnings) losses of non-consolidated entities in its consolidated statements of operations. The Company follows the guidance in ASC 323-30-35-3, which prescribes the use of the equity method for investments that are not considered to be minor in limited liability companies that maintain specific ownership accounts. The Company classifies gains and losses on sales of and changes of interest in equity method investments within equity in (earnings) losses of non-consolidated entities, and classifies gains and losses on sales of investments accounted for using the cost method in investment income. As of April 1, 2010, the Company holds an 18.23% interest in NCM, a joint venture that markets and sells cinema advertising and promotions; a 26% interest in Movietickets.com, a joint venture that provides moviegoers with a way to buy movie tickets online, access local showtime information, view trailers and read reviews; a 29.0% interest in Digital Cinema Implementation Partners LLC, a joint venture charged with implementing digital cinema in the Company's theatres; a 50% interest in three theatres that are accounted for following the equity method of accounting; and a 50% interest in Midland Empire Partners, LLC, a joint venture developing live and film entertainment venues in the Power & Light District of Kansas City, Missouri. In February 2007, the Company recorded a change of interest gain of $132,622,000 and received distributions in excess of its investment in NCM related to the redemption of preferred and common units of $106,188,000. Future equity in earnings from NCM on the Company's original NCM membership units (Tranche 1 Investment) will not be recognized until cumulative earnings exceed the redemption gain or cash distributions of earnings are received following the guidance in ASC 323-10-35-22. Additional NCM membership units received pursuant to the Common Unit Adjustment Agreement dated as of February 13, 2007 represent separate investments (Tranche 2 Investments) and any undistributed equity in the earnings of NCM are recognized under the equity method of accounting following the guidance in ASC 323-10-35-29. See Note 5—Investments for additional discussion of the Tranche 1 Investment and Tranche 2 Investments. At April 1, 2010, the Company's recorded investments are less than its proportional ownership of the underlying equity in these entities by approximately $2,868,000, excluding NCM. These differences will be amortized to equity in earnings or losses over the estimated useful lives of the related assets or evaluated for impairment. Included in equity in earnings of non-consolidated entities for the 52 weeks ended April 2, 2009 is an impairment charge of $2,742,000 related to a theatre joint venture investment. The decline in the fair market value of the investment was considered other than temporary due to competitive theatre builds.

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 1—THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Goodwill:    Goodwill represents the excess of cost over fair value of net tangible and identifiable intangible assets related to acquisitions. The Company is not required to amortize goodwill as a charge to earnings; however, the Company is required to conduct an annual review of goodwill for impairment.

        The Company's recorded goodwill was $1,844,757,000 as of both April 1, 2010 and April 2, 2009. The Company evaluates goodwill and its trademark for impairment annually as of the beginning of the fourth fiscal quarter or more frequently as specific events or circumstances dictate. The Company's goodwill is recorded in its Theatrical Exhibition operating segment which is also the reporting unit for purposes of evaluating recorded goodwill for impairment. If the carrying value of the reporting unit exceeds its fair value the Company is required to reallocate the fair value of the reporting unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. The Company determines fair value by using an enterprise valuation methodology determined by applying multiples to cash flow estimates less net indebtedness, which the Company believes is an appropriate method to determine fair value. There is considerable management judgment with respect to cash flow estimates and appropriate multiples and discount rates to be used in determining fair value and such management estimates fall under Level 3 within the fair value measurement hierarchy, see Note 14—Fair Value Measurements.

        The Company performed its annual impairment analysis during the fourth quarter of fiscal 2010. The fair value of the Company's Theatrical Exhibition operations exceed the carrying value by more than 10% and management does not believe that impairment is probable.

        Other Long-term Assets:    Other long-term assets are comprised principally of investments in partnerships and joint ventures, costs incurred in connection with the issuance of debt securities, which are being amortized to interest expense over the respective lives of the issuances, and capitalized computer software, which is amortized over the estimated useful life of the software.

        Leases:    The majority of the Company's operations are conducted in premises occupied under lease agreements with initial base terms ranging generally from 15 to 20 years, with certain leases containing options to extend the leases for up to an additional 20 years. The Company does not believe that exercise of the renewal options are reasonably assured at the inception of the lease agreements and, therefore, considers the initial base term as the lease term. Lease terms vary but generally the leases provide for fixed and escalating rentals, contingent escalating rentals based on the Consumer Price Index not to exceed certain specified amounts and contingent rentals based on revenues with a guaranteed minimum.

        The Company's lease terms commence at the time it obtains "control and access" to the leased premises which is generally a date prior to the "lease commencement date" contained in the lease agreements.

        The Company records rent expense for its operating leases on a straight-line basis over the base term of the lease agreements commencing with the date the Company has "control and access" to the leased premises, which is generally a date prior to the "lease commencement date" in the lease agreement. Rent expense related to any "rent holiday" is recorded as operating expense, until construction of the leased premises is complete and the premises are ready for their intended use. Rent

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 1—THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)


charges upon completion of the leased premises subsequent to the theatre opening date are expensed as a component of rent expense.

        Occasionally, the Company will receive amounts from developers in excess of the costs incurred related to the construction of the leased premises. The Company records the excess amounts received from developers as deferred rent and amortizes the balance as a reduction to rent expense over the base term of the lease agreement.

        The Company evaluates the classification of its leases following the guidance in ASC 540-10-25. Leases that qualify as capital leases are recorded at the present value of the future minimum rentals over the base term of the lease using the Company's incremental borrowing rate. Capital lease assets are assigned an estimated useful life at the inception of the lease that generally correspond with the base term of the lease.

        Occasionally, the Company is responsible for the construction of leased theatres and for paying project costs that are in excess of an agreed upon amount to be reimbursed from the developer. ASC 840-40-05-5 requires the Company to be considered the owner (for accounting purposes) of these types of projects during the construction period and therefore is required to account for these projects as sale and leaseback transactions. As a result, the Company has recorded $30,956,000 and $31,970,000 as financing lease obligations for failed sale leaseback transactions on its Consolidated Balance Sheets related to these types of projects as of April 1, 2010 and April 2, 2009, respectively.

        Sale and Leaseback Transactions:    The Company accounts for the sale and leaseback of real estate assets in accordance with ASC 840-40. Losses on sale leaseback transactions are recognized at the time of sale if the fair value of the property sold is less than the undepreciated cost of the property. Gains on sale and leaseback transactions are deferred and amortized over the remaining base term of the lease.

        Impairment of Long-lived Assets:    The Company reviews long-lived assets, including definite-lived intangibles, investments in non-consolidated subsidiaries accounted for under the equity method, marketable equity securities and internal use software for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company identifies impairments related to internal use software when management determines that the remaining carrying value of the software will not be realized through future use. The Company reviews internal management reports on a quarterly basis as well as monitors current and potential future competition in the markets where it operates for indicators of triggering events or circumstances that indicate potential impairment of individual theatre assets. The Company evaluates theatres using historical and projected data of theatre level cash flow as its primary indicator of potential impairment and considers the seasonality of its business when making these evaluations. The Company performs its annual impairment analysis during the fourth quarter because Christmas and New Year's holiday results comprise a significant portion of the Company's operating cash flow, and the actual results from this period, which are available during the fourth quarter of each fiscal year, are an integral part of the impairment analysis. Under these analyses, if the sum of the estimated future cash flows, undiscounted and without interest charges, are less than the carrying amount of the asset, an impairment loss is recognized in the amount by which the carrying value of the asset exceeds its estimated fair value. Assets are evaluated for impairment on an individual theatre basis, which management believes is the

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 1—THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)


lowest level for which there are identifiable cash flows. The impairment evaluation is based on the estimated cash flows from continuing use until the expected disposal date or the fair value of furniture, fixtures and equipment. The expected disposal date does not exceed the remaining lease period unless it is probable the lease period will be extended and may be less than the remaining lease period when the Company does not expect to operate the theatre to the end of its lease term. The fair value of assets is determined as either the expected selling price less selling costs (where appropriate) or the present value of the estimated future cash flows. The fair value of furniture, fixtures and equipment has been determined using similar asset sales and in some instances with the assistance of third party valuation studies. The discount rate used in determining the present value of the estimated future cash flows was based on management's expected return on assets during fiscal 2010.

        There is considerable management judgment necessary to determine the estimated future cash flows and fair values of our theatres and other long-lived assets, and, accordingly, actual results could vary significantly from such estimates which fall under Level 3 within the fair value measurement hierarchy, see Note 14—Fair Value Measurements. During fiscal 2010, the Company recognized non-cash impairment losses of $3,765,000 related to theatre fixed assets. The Company recognized an impairment loss of $2,330,000 on five theatres with 41 screens (in California, Florida, Maryland, New York and Utah), which was related to property, net. The Company also adjusted the carrying value of undeveloped real estate assets located in Illinois based on a recent appraisal which resulted in an impairment charge of $1,435,000.

        Impairment losses in the Consolidated Statements of Operations are included in the following captions:

(In thousands)
  52 weeks
Ended
April 1, 2010
  52 weeks
Ended
April 2, 2009
  53 weeks
Ended
April 3, 2008
 

Impairment of long-lived assets

  $ 3,765   $ 73,547   $ 8,933  

Equity in (earnings) losses of non-consolidated entities

        2,742      

Investment income

        1,512      
               

Total impairment losses

  $ 3,765   $ 77,801   $ 8,933  
               

        Foreign Currency Translation:    Operations outside the United States are generally measured using the local currency as the functional currency. Assets and liabilities are translated at the rates of exchange at the balance sheet date. Income and expense items are translated at average rates of exchange. The resultant translation adjustments are included in foreign currency translation adjustment, a separate component of accumulated other comprehensive income (loss). Gains and losses from foreign currency transactions, except those intercompany transactions of a long-term investment nature, are included in net earnings (loss).

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 1—THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Other income:    The following table sets forth the components of other income:

(In thousands)
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
  53 Weeks
Ended
April 3, 2008
 

Gain on extinguishment of Parent term loan facility

  $ 85,234   $   $  

Loss on redemption of 85/8% Senior Notes due 2012

    (11,276 )        

Casualty insurance recoveries

            1,246  

Business interruption insurance recoveries

    244         397  

Gift card redemptions considered to be remote

    13,591     14,139     11,289  
               

Other income

  $ 87,793   $ 14,139   $ 12,932  
               

        Earnings (loss) per Share:    Basic earnings (loss) per share is computed by dividing net earnings (loss) by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share includes the effects of outstanding stock options, if dilutive.

        The following table sets forth the computation of basic and diluted earnings (loss) from continuing operations per common share:

(In thousands, except per share data)
  52 weeks
Ended
April 1, 2010
  52 weeks
Ended
April 2, 2009
  53 weeks
Ended
April 3, 2008
 

Numerator:

                   

Earnings (loss) from continuing operations

  $ 87,445   $ (158,774 ) $ (8,043 )
               

Denominator:

                   

Shares for basic earnings (loss) per common share

    1,278.82     1,281.20     1,282.65  

Stock options

    2.60          
               

Shares for diluted earnings per common share

    1,281.42     1,281.20     1,282.65  
               

Basic earnings (loss) from continuing operations per common share

  $ 68.38   $ (123.93 ) $ (6.27 )
               

Diluted earnings (loss) from continuing operations per common share

  $ 68.24   $ (123.93 ) $ (6.27 )
               

        Options to purchase 10,830.71809 shares of common stock at a weighted average exercise price of $491 per share were outstanding during the year ended April 1, 2010, but were not included in the computations of diluted earnings per share since they were anti-dilutive. Options to purchase 26,811.1680905 shares of common stock at a weighted average exercise price of $391.43 were outstanding during the year ended April 2, 2009, but were not included in the computations of diluted loss per share since they were anti-dilutive. Options to purchase 36,521.356392 shares of common stock

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 1—THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)


at $491 per share were outstanding during the year ended April 3, 2008, but were not included in the computations of diluted loss per share since they were anti-dilutive.

        Pro forma earnings per share (Unaudited):    The pro forma effect of the conversion of various classes of common stock to common stock and expected payment of $28,177,000 pursuant to our Management Agreement have been reflected in the accompanying pro forma information for the period ended April 1, 2010. Prior to consummating this offering, Parent intends to reclassify each share of its existing Class A common stock, Class N common stock and Class L common stock. Pursuant to the reclassification, which is being treated in a manner similar to a stock split, each holder of shares of Class A common stock, Class N common stock and Class L common stock will receive      shares of common stock for one share of Class A common stock, Class L common stock or Class N common stock. Pro forma per share data also gives effect to an increase of                   shares which, when multiplied by an assumed offering price of           per share (the mid-point of the estimated offering price range set forth on the cover page of this prospectus), would be sufficient to replace the expected payment of $28,177,000 pursuant to our Management Agreement.

        Stock-based Compensation:    The Company granted options on 60,243.17873 shares to certain employees during the periods ended March 31, 2005, March 30, 2006, April 2, 2009 and April 1, 2010. The options have a ten year term and the options granted during fiscal 2005 step-vest in equal amounts over five years with the final vesting having occurred on December 23, 2009. The options granted during fiscal 2006 step-vest in equal amounts over three years with final vesting having occurred on December 23, 2008. The options granted during fiscal 2009 step-vest in equal amounts over five years with final vesting occurring on March 6, 2014, but vesting may accelerate for certain participants if there is a change of control (as defined in the plan). The options granted during fiscal 2010 step-vest in equal amounts over five years with final vesting occurring on May 28, 2014. Parent has recorded $1,384,000, $2,622,000 and $207,000 of stock-based compensation expense related to these options within general and administrative: other for fiscal 2010, 2009 and 2008, respectively.

        The options have been accounted for using the fair value method of accounting for stock-based compensation arrangements, and the Company has valued the options using the Black-Scholes formula and has elected to use the simplified method for estimating the expected term of "plain vanilla" share option grants as it does not have enough historical experience to provide a reasonable estimate.

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 1—THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)

        The following table reflects the weighted average fair value per option granted during each year, as well as the significant weighted average assumptions used in determining fair value using the Black-Scholes option-pricing model:

 
  April 1, 2010   April 2, 2009  

Weighted average fair value on grant date

  $ 135.71   $ 129.46  

Risk-free interest rate

    2.6 %   2.6 %

Expected life (years)

    6.5     6.5  

Expected volatility(1)

    35.0 %   35.0 %

Expected dividend yield

         

(1)
The Company uses share values of its publicly traded competitor peer group for purposes of calculating volatility.

        Income Taxes:    The Company accounts for income taxes in accordance with ASC 740-10. Under ASC 740-10, deferred income tax effects of transactions reported in different periods for financial reporting and income tax return purposes are recorded by the liability method. This method gives consideration to the future tax consequences of deferred income or expense items and recognizes changes in income tax laws in the period of enactment. The income statement effect is generally derived from changes in deferred income taxes on the balance sheet.

        Casualty Insurance:    The Company is self-insured for general liability up to $500,000 per occurrence and carries a $400,000 deductible limit per occurrence for workers compensation claims. The Company utilizes actuarial projections of its ultimate losses to calculate its reserves and expense. The actuarial method includes an allowance for adverse developments on known claims and an allowance for claims which have been incurred but which have not yet been reported. As of April 1, 2010 and April 2, 2009, the Company had recorded casualty insurance reserves of $16,253,000 and $19,179,000, respectively, net of estimated insurance recoveries. The Company recorded expenses related to general liability and workers compensation claims of $11,363,000, $10,537,000 and $14,836,000 for the periods ended April 1, 2010, April 2, 2009 and April 3, 2008, respectively.

        New Accounting Pronouncements:    In January 2010, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2010-06, Fair Value Measurements and Disclosures (Topic 820)—Improving Disclosures about Fair Value Measurements, ("ASU 2010-06"). This Update provides a greater level of disaggregated information and enhanced disclosures about valuation techniques and inputs to fair value measurements. ASU 2010-06 is effective for interim and annual reporting periods beginning after December 15, 2009 and is effective for the Company as of the end of fiscal 2010 except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years and is effective for the Company as of the beginning of fiscal 2011. See Note 11—Employee Benefit Plans and Note 14—Fair Value Measurements for required disclosures.

        In October 2009, the FASB issued ASU No. 2009-13, Revenue Recognition (Topic 605)—Multiple-Deliverable Revenue Arrangements—A Consensus of the FASB Emerging Issues Task Force,

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 1—THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)


("ASU 2009-13"). This Update provides amendments to the criteria in Subtopic 605-25 that addresses how to separate multiple-deliverable arrangements and how to measure and allocate arrangement consideration to one or more units of accounting. In addition, this amendment significantly expands the disclosure requirements related to multiple-deliverable revenue arrangements. ASU 2009-13 will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 and is effective for the Company as of the beginning of fiscal 2012. Early adoption is permitted. The Company is in the process of evaluating the impact ASU 2009-13 will have on its financial statements.

        In June 2009, the FASB amended guidance for determining whether an entity is a variable interest entity and requires an analysis to determine whether the variable interest gives a company a controlling financial interest in the variable interest entity. This guidance is included in ASC 810, Consolidation, which will require an ongoing reassessment and eliminates the quantitative approach previously required for determining whether a company is the primary beneficiary. This guidance is effective as of the beginning of the first fiscal year beginning after November 15, 2009 and is effective for the Company in the first quarter of fiscal 2011. The Company is in the process of determining what effects the application of this guidance may have on its consolidated financial position, but does not believe the guidance will have a material impact.

        In December 2008, the FASB issued ASC 715-20-65, guidance for employers' disclosures about postretirement benefit plan assets, which requires additional fair value disclosures about employers' defined benefit pension or other postretirement plan assets. Specifically, employers are required to disclose information about how investment allocation decisions are made, the fair value of each major category of plan assets and information about the inputs and valuation techniques used to develop the fair value measurements of plan assets. This guidance is effective for financial statements issued for fiscal years ending after December 15, 2009 and is effective for the Company in fiscal 2010. See Note 11—Employee Benefit Plans for required disclosures.

        In December 2007, the FASB revised ASC 805, Business Combinations, which addresses the accounting and disclosure for identifiable assets acquired, liabilities assumed, and noncontrolling interests in a business combination. This statement requires all business combinations completed after the effective date to be accounted for by applying the acquisition method (previously referred to as the purchase method); expands the definition of transactions and events that qualify as business combinations; requires that the acquired assets and liabilities, including contingencies, be recorded at the fair value determined on the acquisition date and changes thereafter reflected in income, not goodwill; changes the recognition timing for restructuring costs; and requires acquisition costs to be expensed as incurred rather than being capitalized as part of the cost of acquisition. This standard became effective in the first quarter of fiscal 2010. The Company changed its accounting treatment for business combinations on a prospective basis. In addition, the reversal of valuation allowance for deferred tax assets related to business combinations will flow through the Company's income tax provision, on a prospective basis, as opposed to goodwill.

        Presentation:    Effective April 3, 2009, certain advertising costs related to film exhibition were reclassified from operating expense to film exhibition costs with a conforming reclassification made for the prior year presentation. Effective April 1, 2010, preopening expense, theatre and other closure expense (income), and disposition of assets and other losses (gains) were reclassified to operating

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 1—THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES (Continued)


expense with a conforming reclassification made for the prior year presentation. Additionally, in the consolidated statements of cash flows, certain operating activities were reclassified to other, net and certain investing activities were reclassified to other, net, with conforming reclassifications made for the prior year presentation. These presentation reclassifications reflect how management evaluates information presented in the statement of operations and consolidated statements of cash flows.

        Subsequent Events:    The Company has evaluated subsequent events through June 29, 2010.

NOTE 2—DISCONTINUED OPERATIONS

        On December 29, 2008, the Company sold all of its interests in Cinemex, which then operated 44 theatres with 493 screens primarily in the Mexico City Metropolitan Area, to Entretenimiento GM de Mexico S.A. de C.V. The operations and cash flows of the Cinemex theatres have been eliminated from the Company's ongoing operations as a result of the disposal transaction. The purchase price received at the date of the sale and in accordance with the Stock Purchase Agreement was $248,141,000. During the year ended April 1, 2010, the Company received payments of $4,315,000 for purchase price related to tax payments and refunds, and a working capital calculation and post closing adjustments. Additionally, the Company estimates that it is contractually entitled to receive an additional $8,752,000 of the purchase price related to other tax payments and refunds. While the Company believes it is entitled to these amounts from Cinemex, the resolution and collection will require litigation which was initiated by the Company on April 30, 2010. Resolution could take place over a prolonged period. As a result of the litigation, the Company has established an allowance for doubtful accounts related to this receivable in the amount of $7,480,000 and further directly charged off $1,381,000 of certain amounts as uncollectible with an offsetting charge of $8,861,000 recorded to loss on disposal included as a component of discontinued operations. The Company does not have any significant continuing involvement in the operations of the Cinemex theatres after the disposition. The results of operations of the Cinemex theatres have been classified as discontinued operations for all periods presented.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 2—DISCONTINUED OPERATIONS (Continued)

        Components of amounts reflected as earnings (loss) from discontinued operations in the Company's Consolidated Statements of Operations are presented in the following table:

Statements of operations data:

(In thousands)
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
  53 Weeks
Ended
April 3, 2008
 

Revenues

                   
 

Admissions

  $   $ 62,009   $ 87,469  
 

Concessions

        44,744     60,456  
 

Other theatre

        21,755     23,358  
               
   

Total revenues

        128,508     171,283  
               

Operating Costs and Expenses

                   
 

Film exhibition costs

        27,338     37,435  
 

Concession costs

        10,158     13,949  
 

Operating expense

        32,699     42,302  
 

Rent

        14,934     18,540  
 

General and administrative—other

        8,880     10,720  
 

Depreciation and amortization

        21,070     29,083  
 

Loss (gain) on disposal

    7,534     (14,772 )    
               
   

Operating costs and expenses

    7,534     100,307     152,029  
               

Operating income (loss)

    (7,534 )   28,201     19,254  

Other Expense (Income)

                   
 

Other expense

        416     501  
 

Interest expense

                   
   

Corporate borrowings

        7,299     11,282  
   

Capital and financing lease obligations

        582     645  
 

Investment income

        (1,124 )   (1,756 )
               
   

Total other expense

        7,173     10,672  
               

Earnings (loss) before income taxes

    (7,534 )   21,028     8,582  

Income tax provision

        11,300     6,780  
               

Net earnings (loss) from discontinued operations

  $ (7,534 ) $ 9,728   $ 1,802  
               

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 3—PROPERTY

        A summary of property is as follows:

(In thousands)
  April 1, 2010   April 2, 2009  

Property owned:

             
 

Land

  $ 43,384   $ 43,384  
 

Buildings and improvements

    157,142     156,665  
 

Leasehold improvements

    824,461     812,972  
 

Furniture, fixtures and equipment

    1,243,323     1,253,050  
           

    2,268,310     2,266,071  
 

Less-accumulated depreciation and amortization

    1,421,367     1,319,353  
           

    846,943     946,718  
           

Property leased under capital leases:

             
 

Buildings and improvements

    33,864     33,864  
 

Less-accumulated amortization

    17,275     15,914  
           

    16,589     17,950  
           

  $ 863,532   $ 964,668  
           

        Property is recorded at cost or fair value, in the case of property resulting from acquisitions. The Company uses the straight-line method in computing depreciation and amortization for financial reporting purposes. The estimated useful lives for leasehold improvements reflect the shorter of the base terms of the corresponding lease agreements or the expected useful lives of the assets. The estimated useful lives are as follows:

Buildings and improvements

  5 to 40 years

Leasehold improvements

  1 to 20 years

Furniture, fixtures and equipment

  1 to 10 years

        Expenditures for additions (including interest during construction) and betterments are capitalized, and expenditures for maintenance and repairs are charged to expense as incurred. The cost of assets retired or otherwise disposed of and the related accumulated depreciation and amortization are eliminated from the accounts in the year of disposal. Gains or losses resulting from property disposals are included in operating expense in the accompanying consolidated statements of operations.

        Depreciation expense was $163,506,000, $174,851,000, and $190,194,000 for the periods ended April 1, 2010, April 2, 2009, and April 3, 2008, respectively.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 4—GOODWILL AND OTHER INTANGIBLE ASSETS

        Activity of goodwill is presented below.

(In thousands)
   
 

Balance as of April 3, 2008

  $ 2,078,884  

Currency translation adjustment

    (45,977 )

Fair value deferred tax asset adjustments LCE(1)

    (31,515 )

Disposition of Cinemex

    (156,635 )
       

Balance as of April 1, 2010 and April 2, 2009

  $ 1,844,757  
       

(1)
Adjustments to fair value relate to the release of a valuation allowance initially recorded in purchase accounting for deferred tax assets related to net operating loss carryforwards expected to be utilized in the future for a deferred taxable gain related to the purchase of term loans.

        Activity of other intangible assets is presented below:

 
   
  April 1, 2010   April 2, 2009  
(In thousands)
  Remaining
Useful Life
  Gross
Carrying
Amount
  Accumulated
Amortization
  Gross
Carrying
Amount
  Accumulated
Amortization
 

Amortizable Intangible Assets:

                             
 

Favorable leases

  3 to 11 years   $ 104,301   $ (43,782 ) $ 104,646   $ (35,949 )
 

Loyalty program

  3 years     46,000     (38,870 )   46,000     (34,914 )
 

LCE trade name

  1 year     2,300     (1,920 )   2,300     (1,460 )
 

LCE management contracts

  13 to 21 years     35,400     (29,209 )   35,400     (27,893 )
 

Other intangible assets

  1 to 12 years     13,654     (13,442 )   13,654     (13,418 )
                       
 

Total, amortizable

      $ 201,655   $ (127,223 ) $ 202,000   $ (113,634 )
                       

Unamortized Intangible Assets:

                             
 

AMC trademark

      $ 74,000         $ 74,000        
                           

        Amortization expense associated with the intangible assets noted above is as follows:

(In thousands)
  52 Weeks Ended
April 1, 2010
  52 Weeks Ended
April 2, 2009
  53 Weeks Ended
April 3, 2008
 

Recorded amortization

  $ 13,934   $ 21,481   $ 28,387  

        Estimated amortization expense for the next five fiscal years for intangible assets is projected below:

(In thousands)
  2011   2012   2013   2014   2015  

Projected amortization expense

  $ 11,980   $ 10,856   $ 10,147   $ 7,769   $ 7,120  

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 5—INVESTMENTS

        Investments in non-consolidated affiliates and certain other investments accounted for under the equity method generally include all entities in which the Company or its subsidiaries have significant influence, but not more than 50% voting control. Investments in non-consolidated affiliates as of April 1, 2010, include an 18.23% interest in National CineMedia, LLC ("NCM"), a 50% interest in three U.S. motion picture theatres and one IMAX screen, a 26% equity interest in Movietickets.com, Inc. ("MTC"), a 50% interest in Midland Empire Partners, LLC and a 29% interest in Digital Cinema Implementation Partners, LLC ("DCIP"). Financial results for the 53 weeks ended April 3, 2008 include a 50% interest in Hoyts General Cinemas South America ("HGCSA"), an entity that operated 17 theatres in South America, which was disposed of in July 2007.

        In May 2007, the Company disposed of its investment in Fandango, Inc. ("Fandango"), accounted for using the cost method, for total proceeds of approximately $20,360,000, of which $17,977,000 was received in May and September 2007 and $2,383,000 was received in November 2008. The Company recorded a gain on the sale recorded in investment income of approximately $15,977,000 during fiscal 2008 and $2,383,000 during fiscal 2009. In July 2007, the Company disposed of its investment in HGCSA for total proceeds of approximately $28,682,000 and recorded a gain on the sale included in equity earnings of non-consolidated entities of approximately $18,751,000.

DCIP Transactions

        On March 10, 2010, DCIP completed its financing transactions for the deployment of digital projection systems to nearly 14,000 movie theatre screens across North America, including screens operated or managed by the Company, Cinemark Holdings, Inc. ("Cinemark") and Regal Entertainment Group ("Regal"). At closing the Company contributed 342 projection systems that it owned to DCIP which were recorded at estimated fair value as part of an additional investment in DCIP of $21,768,000. The Company also made cash investments in DCIP of $840,000 at closing and DCIP made a distribution of excess cash to us after the closing date and prior to year-end of $1,262,000. The Company recorded a loss on contribution of the 342 projection systems of $563,000, based on the difference between estimated fair value and its carrying value on the date of contribution. On March 26, 2010, the Company acquired 117 digital projectors from third party lessors for $6,784,000 and sold them together with 7 digital projectors that it owned to DCIP for $6,570,000. The Company recorded a loss on the sale of these 124 systems to DCIP of $697,000. As of April 1, 2010, the Company operated 568 digital projection systems leased from DCIP pursuant to operating leases and anticipates that it will have deployed 4,000 of these systems in its existing theatres over the next three to four years.

        The digital projection systems leased from DCIP and its affiliates will replace most of the Company's existing 35 millimeter projection systems in its U.S. theatres. The Company is examining its estimated depreciable lives for its existing equipment, with a net book value of approximately $14,224,000 that will be replaced and expects to accelerate the depreciation of these existing 35 millimeter projection systems, based on the estimated digital projection system deployment timeframe.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 5—INVESTMENTS (Continued)

NCM Transactions

        On March 29, 2005, the Company along with Regal combined their screen advertising operations to form NCM. On July 15, 2005, Cinemark joined the NCM joint venture by contributing its screen advertising business. On February 13, 2007, National CineMedia, Inc. ("NCM, Inc."), a newly formed entity that now serves as the sole manager of NCM, closed its initial public offering, or IPO, of 42,000,000 shares of its common stock at a price of $21.00 per share.

        In connection with the completion of NCM, Inc.'s IPO, on February 13, 2007, the Company entered into the Third Amended and Restated Limited Liability Company Operating Agreement (the "NCM Operating Agreement") among the Company, Regal and Cinemark (the "Founding Members"). Pursuant to the NCM Operating Agreement, the members are granted a redemption right to exchange common units of NCM for, at the option of NCM, Inc., NCM, Inc. shares of common stock on a one-for-one basis or a cash payment equal to the market price of one share of NCM, Inc.'s common stock. Upon execution of the NCM Operating Agreement, each existing preferred unit of NCM held by the Founding Members was redeemed in exchange for $13.7782 per unit, resulting in the cancellation of each preferred unit. NCM used the proceeds of a new $725,000,000 term loan facility and $59,800,000 of net proceeds from the NCM, Inc. IPO to redeem the outstanding preferred units. The Company received approximately $259,347,000 in the aggregate for the redemption of all its preferred units in NCM. The Company received approximately $26,467,000 from selling common units in NCM to NCM, Inc. in connection with the exercise of the underwriters' over-allotment option in the NCM, Inc. IPO.

        Also in connection with the completion of NCM, Inc.'s IPO, the Company agreed to modify NCM's payment obligations under the prior Exhibitor Services Agreement ("ESA") in exchange for approximately $231,308,000. The ESA provides a term of 30 years for advertising and approximately five year terms (with automatic renewal provisions) for meeting event and digital programming services, and provides NCM with a five year right of first refusal for the services beginning one year prior to the end of the term. The ESA also changed the basis upon which the Company is paid by NCM from a percentage of revenues associated with advertising contracts entered into by NCM to a monthly theatre access fee. The theatre access fee is now composed of a fixed payment per patron and a fixed payment per digital screen, which increases by 8% every five years starting at the end of fiscal 2011 for payments per patron and by 5% annually starting at the end of fiscal 2007 for payments per digital screen. The theatre access fee paid in the aggregate to the Founding Members will not be less than 12% of NCM's aggregate advertising revenue, or it will be adjusted upward to meet this minimum payment. Additionally, the Company entered into the First Amended and Restated Loews Screen Integration Agreement with NCM on February 13, 2007, pursuant to which the Company paid NCM an amount that approximated the EBITDA that NCM would have generated if it had been able to sell advertising in the Loews Cineplex Entertainment Corporation ("Loews") theatre chain on an exclusive basis commencing upon the completion of NCM, Inc.'s IPO, and NCM issued common membership units in NCM, increasing the Company's ownership interest to approximately 33.7%; such Loews payments were made quarterly until the former screen advertising agreements expired in fiscal 2009. The Loews Screen Integration payments totaling $15,982,000 have been paid in full in fiscal 2010. The Company is also required to purchase from NCM any on-screen advertising time provided to the Company's beverage concessionaire at a negotiated rate. In addition, the Company expects to receive mandatory quarterly distributions of excess cash from NCM. Immediately following the NCM, Inc. IPO, the Company held an 18.6% interest in NCM.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 5—INVESTMENTS (Continued)

        Annual adjustments to the common membership units are made pursuant to the Common Unit Adjustment Agreement dated as of February 13, 2007 between NCM, Inc. and the Founding Members. The Common Unit Adjustment Agreement was created to account for changes in the number of theatre screens operated by each of the Founding Members. Historically, each of the Founding Members has increased the number of screens it operates through acquisitions and newly built theatres. Since these incremental screens and increased attendance in turn provide for additional advertising revenues to NCM, NCM agreed to compensate the Founding Members by issuing additional common membership units to the Founding Members in consideration for their increased attendance and overall contribution to the joint venture. The Common Unit Adjustment Agreement also provides protection to NCM in that the Founding Members may be required to transfer or surrender common units to NCM based on certain limited events, including declines in attendance and the number of screens operated. As a result, each Founding Member's equity ownership interests are proportionately adjusted to reflect the risks and rewards relative to their contributions to the joint venture.

        The Common Unit Adjustment Agreement provides that transfers of common units are solely between the Founding Members and NCM. There are no transfers of units among the Founding Members. In addition, there are no circumstances under which common units would be surrendered by the Company to NCM in the event of an acquisition by one of the Founding Members. However, adjustments to the common units owned by one of the Founding Members will result in an adjustment to the Company's equity ownership interest percentage in NCM.

        Pursuant to our Common Unit Adjustment Agreement, from time to time, common units of NCM held by the Founding Members will be adjusted up or down through a formula ("Common Unit Adjustment") primarily based on increases or decreases in the number of theatre screens operated and theatre attendance generated by each Founding Member. The common unit adjustment is computed annually, except that an earlier common unit adjustment will occur for a Founding Member if its acquisition or disposition of theatres, in a single transaction or cumulatively since the most recent common unit adjustment, will cause a change of 2% or more in the total annual attendance of all of the Founding Members. In the event that a common unit adjustment is determined to be a negative number, the Founding Member shall cause, at its election, either (a) the transfer and surrender to NCM of a number of common units equal to all or part of such Founding Member's common unit adjustment or (b) pay to NCM, an amount equal to such Founding Member's common unit adjustment calculated in accordance with the Common Unit Adjustment Agreement.

        Effective March 27, 2008, the Company received 939,853 common membership units of NCM as a result of the Common Unit Adjustment, increasing the Company's interest in NCM to 19.1%. The Company recorded the additional units received as a result of the Common Unit Adjustment at a fair value of $21.6 million, based on a price for shares of NCM, Inc. on March 26, 2008, of $22.98 per share, and as a new investment (Tranche 2 Investment) with an offsetting adjustment to deferred revenue. Effective May 29, 2008, NCM issued 2,913,754 common membership units to another Founding Member due to an acquisition, which caused a decrease in the Company's ownership share from 19.1% to 18.52%. Effective March 17, 2009, the Company received 406,371 common membership units of NCM as a result of the Common Unit Adjustment, increasing the Company's interest in NCM to 18.53%. The Company recorded these additional units at a fair value of $5.5 million, based on a price for shares of NCM, Inc. on March 17, 2009, of $13.42 per share, with an offsetting adjustment to deferred revenue. Effective March 17, 2010, the Company received 127,290 common membership units of NCM. As a result of the Common Unit Adjustment among the Founding Members, the Company's

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 5—INVESTMENTS (Continued)

interest in NCM decreased to 18.23% as of April 1, 2010. The Company recorded the additional units received at a fair value of $2.3 million, based on a price for shares of NCM, Inc. on March 17, 2010, of $17.99 per share, with an offsetting adjustment to deferred revenue. Effective June 14, 2010 and with a settlement date of June 28, 2010, the Company received 6,510,209 common membership units in NCM as a result of an Extraordinary Common Unit Adjustment in connection with the Company's acquisition of Kerasotes. The Company recorded the additional units at a fair value of $111.5 million, based on a price for shares of NCM, Inc. on June 14, 2010, of $17.13 per share, with an offsetting adjustment to deferred revenue. As a result of the Extraordinary Common Unit Adjustment, the Company's interest in NCM increases to 23.05%.

        As a result of NCM, Inc.'s IPO and debt financing, the Company recorded a change of interest gain of $132,622,000 and received distributions in excess of its investment in NCM related to the redemption of preferred and common units of $106,188,000. The Company reduced its investment in NCM to zero and recognized the change of interest gain and the excess distribution as a gain in equity in earnings of non-consolidated entities, as it has not guaranteed any obligations of NCM and is not otherwise committed to provide further financial support for NCM.

        The NCM, Inc. IPO 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's tangible and intangible assets. On the IPO date, NCM , Inc. and the Founding Members entered into a tax receivable agreement. Under the terms of this agreement, NCM, Inc. will make cash payments to the Founding Members in amounts equal to 90% of NCM, Inc.'s actual tax benefit realized from the tax amortization of the intangible assets described above. For purposes of the tax receivable agreement, cash savings in income and franchise tax will be computed by comparing NCM, Inc.'s actual income and franchise tax liability to the amount of such taxes that NCM, Inc. would have been required to pay had there been no increase in NCM Inc.'s proportionate share of tax basis in NCM's tangible and intangible assets and had the tax receivable agreement not been entered into. The tax receivable agreement shall generally apply to NCM, Inc.'s taxable years up to and including the 30th anniversary date of the NCM, Inc. IPO and related transactions. Pursuant to the terms of the tax receivable agreement, the Company received payments of $3,796,000 from NCM, Inc. in fiscal year 2009 with respect to NCM, Inc.'s 2007 taxable year, and in fiscal year 2010, the Company received payments of $8,788,000 with respect to NCM, Inc.'s 2008 and 2009 taxable year. The Company has recorded the distributions received under the tax receivable agreement from NCM, Inc. as additional proceeds received related to its (Tranche 1 Investment) and has recorded the amounts in earnings in a similar fashion to the proceeds received from the NCM, Inc. IPO.

        As of April 1, 2010, the Company owns 18,948,404 units or an 18.23% interest in NCM. As a founding member, the Company has the ability to exercise significant control over the governance of NCM, and, accordingly accounts for its investment following the equity method. The fair market value of the units in National CineMedia, LLC was approximately $334,629,000, based on a price for shares of NCM on April 1, 2010 of $17.66 per share.

Related Party Transactions

        As of April 1, 2010 and April 2, 2009, the Company has recorded $1,462,000 and $1,342,000, respectively, of amounts due from NCM related to on-screen advertising revenue. As of April 1, 2010

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 5—INVESTMENTS (Continued)


and April 2, 2009, the Company had recorded $1,502,000 and $1,657,000, respectively, of amounts due to NCM related to the ESA and the Loews Screen Integration Agreement. The Company recorded revenues for advertising from NCM of $20,352,000, $19,116,000 and $14,531,000 during the 52 weeks ended April 1, 2010, April 2, 2009, and the 53 weeks ended April 3, 2008, respectively. The Company recorded expenses related to its beverage advertising agreement with NCM of $12,107,000, $15,118,000 and $16,314,000 during fiscal years 2010, 2009, and 2008, respectively.

Summary Financial Information

        Investments in non-consolidated affiliates as of April 1, 2010, include an 18.23% interest in National CineMedia, LLC ("NCM"), a 50% interest in three U.S. motion picture theatres and one IMAX screen, a 26% equity interest in Movietickets.com, Inc. ("MTC"), a 50% interest in Midland Empire Partners, LLC and a 29% interest in Digital Cinema Implementation Partners, LLC ("DCIP"). Financial results for the 53 weeks ended April 3, 2008 include a 50% interest in Hoyts General Cinemas South America ("HGCSA"), an entity that operated 17 theatres in South America, which was disposed of in July 2007.

        Condensed financial information of the Company's non-consolidated equity method investments is shown below. Amounts are presented under U.S. GAAP for the periods of ownership by the Company.

Financial Condition:

 
  April 1, 2010  
(In thousands)
  NCM   Other   Total  

Current assets

  $ 88,906   $ 56,113   $ 145,019  

Noncurrent assets

    212,398     174,432     386,830  

Total assets

    301,304     230,545     531,849  

Current liabilities

    32,094     6,427     38,521  

Noncurrent liabilities

    869,335     91,330     960,665  

Total liabilities

    901,429     97,757     999,186  

Stockholders' deficit

    (600,125 )   132,788     (467,337 )

Liabilities and stockholders' deficit

    301,304     230,545     531,849  

The Company's recorded investment (1)

  $ 28,826   $ 41,096   $ 69,922  

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 5—INVESTMENTS (Continued)

 

 
  April 2, 2009  
(In thousands)
  NCM   Other   Total  

Current assets

  $ 89,786   $ 20,398   $ 110,184  

Noncurrent assets

    181,169     70,994     252,163  

Total assets

    270,955     91,392     362,347  

Current liabilities

    38,723     32,725     71,448  

Noncurrent liabilities

    884,860     7,516     892,376  

Total liabilities

    923,583     40,241     963,824  

Stockholders' deficit

    (652,628 )   51,151     (601,477 )

Liabilities and stockholders' deficit

    270,955     91,392     362,347  

The Company's recorded investment(1)

  $ 26,733   $ 20,706   $ 47,439  

(1)
Certain differences in the Company's recorded investment, for one U.S. motion picture theatre where it has a 50% interest, and its proportional ownership share resulting from the acquisition of the asset in a business combination where the investment was initially recorded at fair value, are amortized to equity in (earnings) or losses over the estimated useful life of approximately 20 years for the underlying building. The recorded equity in earnings of NCM on common membership units owned immediately following the IPO of NCM, Inc. (Tranche 1 Investment) does not include undistributed equity in earnings. The Company considered the excess distribution received following NCM, Inc.'s IPO as an advance on NCM's future earnings. As a result, the Company will not recognize any undistributed equity in earnings of NCM on the original common membership units (Tranche 1 Investment) until NCM's future net earnings equal the amount of the excess distribution.

        The Company reviews investments in non-consolidated subsidiaries accounted for under the equity method for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be fully recoverable. The Company reviews unaudited financial statements on a quarterly basis and audited financial statements on an annual basis for indicators of triggering events or circumstances that indicate the potential impairment of these investments as well as current equity prices for its investment in NCM LLC and discounted projections of cash flows for certain of its other investees. Additionally, the Company has quarterly discussions with the management of significant investees to assist in the identification of any factors that might indicate the potential for impairment. In order to determine whether the carrying value of investments may have experienced an "other-than-temporary" decline in value necessitating the write-down of the recorded investment, the Company considers the period of time during which the fair value of the investment remains substantially below the recorded amounts, the investees financial condition and quality of assets, the length of time the investee has been operating, the severity and nature of losses sustained in current and prior years, a reduction or cessation in the investees dividend payments, suspension of trading in the security, qualifications in accountant's reports due to liquidity or going concern issues, investee announcement of adverse changes, downgrading of investee debt, regulatory actions, changes in reserves for product liability, loss of a principal customer, negative operating cash flows or working capital deficiencies and the recording of an impairment charge by the investee for goodwill, intangible or long-lived assets. Once a determination is made that an other-than-temporary impairment exists, the Company writes down its investment to fair value.

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 5—INVESTMENTS (Continued)

        Included in impairment of long-lived assets for the 52 weeks ended April 2, 2009 is an impairment charge of $2,742,000 related to a theatre joint venture investment. The decline in the fair market value of the investment was considered other than temporary due to competitive theatre builds.

Operating Results:

 
  52 Weeks Ended  
(In thousands)
April 1, 2010
  NCM   Other   Total  

Revenues

  $ 391,815   $ 40,736   $ 432,551  

Operating costs & expenses

    262,578     48,241     310,819  

Net earnings

    129,237     (7,505 )   121,732  

The Company's recorded equity in earnings (loss)

    34,436     (4,136 )   30,300  

 

 
  52 Weeks Ended  
(In thousands)
April 2, 2009
  NCM   Other   Total  

Revenues

  $ 380,382   $ 39,019   $ 419,401  

Operating costs & expenses

    277,359     41,415     318,774  

Net earnings

    103,023     (2,396 )   100,627  

The Company's recorded equity in earnings (loss)

    27,654     (2,831 )   24,823  

 

 
  53 Weeks Ended  
(In thousands)
April 3, 2008
  NCM   Other   Total  

Revenues

  $ 275,839   $ 46,697   $ 322,536  

Operating costs & expenses

    168,605     45,539     214,144  

Net earnings

    107,234     1,158     108,392  

The Company's recorded equity in earnings (loss)

    22,175     20,844     43,019  

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 5—INVESTMENTS (Continued)

        The Company recorded the following changes in the carrying amount of its investment in NCM and equity in (earnings) losses of NCM during the 53 weeks ended April 3, 2008, and the 52 weeks ended April 2, 2009 and April 1, 2010.

(In thousands)
  Investment in
NCM(1)
  Deferred
Revenue(2)
  Due to
NCM(3)
  Cash
Received
(Paid)
  Equity in
(Earnings)
Losses
  Advertising
(Revenue)
 

Ending balance March 29, 2007

  $   $ (231,045 ) $ (15,850 ) $   $   $  

Receipt of excess cash distributions

                22,175     (22,175 )    

Payments on Loews' Screen Integration Agreement

            11,201     (11,201 )        

Receipt of Common Units

    21,598     (21,598 )                

Amortization of deferred revenue

        2,331                 (2,331 )
                           

Ending balance April 3, 2008

  $ 21,598   $ (250,312 ) $ (4,649 ) $ 10,974   $ (22,175 ) $ (2,331 )
                           

Receipt under Tax Receivable Agreement

  $   $   $   $ 3,796   $ (3,796 ) $  

Receipt of Common Units

    5,453     (5,453 )                

Receipt of excess cash distributions

    (1,241 )           24,308     (23,067 )    

Payments on Loews' Screen Integration Agreement

            4,700     (4,700 )        

Increase Loews' Screen Integration Liability

            (132 )       132      

Change in interest loss(4)

    (83 )               83      

Amortization of deferred revenue

        2,601                 (2,601 )

Equity in earnings(5)

    1,006                 (1,006 )    
                           

Ending balance April 2, 2009

  $ 26,733   $ (253,164 ) $ (81 ) $ 23,404   $ (27,654 ) $ (2,601 )
                           

Receipt under Tax Receivable Agreement

  $   $   $   $ 8,788   $ (8,788 ) $  

Receipt of Common Units

    2,290     (2,290 )                

Receipt of excess cash distributions

    (1,847 )           25,827     (23,980 )    

Payment on Loews' Screen Integration Agreement

            81     (81 )        

Receipt of tax credits

    (1 )           18     (17 )    

Change in interest loss(4)

    (57 )               57      

Amortization of deferred revenue

        3,132                 (3,132 )

Equity in earnings(5)

    1,708                 (1,708 )    
                           

Ending balance April 1, 2010

  $ 28,826   $ (252,322 ) $   $ 34,552   $ (34,436 ) $ (3,132 )
                           

(1)
The NCM common membership units held by the Company immediately following the NCM, Inc. IPO are carried at zero cost (Tranche 1 Investment). As provided under the Common Unit Adjustment Agreement dated as of February 13, 2007, the Company received additional NCM common membership units in fiscal 2008, 2009 and 2010, valued at $21,598,000, $5,453,000 and $2,290,000, respectively (Tranche 2 Investments).

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 5—INVESTMENTS (Continued)

(2)
Represents the unamortized portion of the Exhibitors Services Agreement (ESA) modifications payment received from NCM. Such amounts are being amortized to "Other theatre revenues" over a 30 year period ending in 2036, using a units-of-revenue method, as described in ASC 470-10-35 (formerly EITF 88-18, Sales of Future Revenues).

(3)
Represents the amount due to NCM under the Loews Screen Integration Agreement that was fully paid in April 2009.

(4)
The Company's ownership share decreased from 19.1% to 18.52% effective May 29, 2008 due to NCM's issuance of 2,913,754 common membership units to another founding member due to an acquisition. In fiscal 2010, the Company's ownership share decreased to 18.23% due to the allocation of the annual Common Unit Adjustment.

(5)
Represents equity in earnings on the Tranche 2 Investments only.

Differences in Accounting for Tranche 1 and Tranche 2 Investments in NCM

        On February 13, 2007, NCM, Inc., the sole manager of NCM, closed its IPO and used the net proceeds from the IPO to purchase a 44.8% interest in NCM, paying NCM $746,100,000 and paying the Founding Members $78,500,000 for a portion of the NCM units owned by them. NCM then paid $686,300,000 of the funds received from NCM, Inc. to the Founding Members as consideration for their agreement to modify the then-existing ESA. Also in connection with the IPO, NCM used $59,800,000 of the proceeds it received from the IPO and $709,700,000 of net proceeds from its new senior secured credit facility entered into concurrently with the completion of the IPO to redeem $769,500,000 in NCM preferred units held by the Founding Members. The distributions to the Founding Members described above related to the IPO resulted in large Members' Deficit amounts for the Founding Members.

        The Company received approximately $259,300,000 for the redemption of all of its preferred units in NCM and approximately $26,500,000 from selling common units in NCM to NCM, Inc. In addition, the Company received $231,300,000 as consideration for modifying the ESA.

        Following the IPO, the Company determined it would not recognize undistributed equity in the earnings on the original 17,474,890 NCM membership units (Tranche 1 Investment) until NCM's future net earnings, less distributions received, surpass the amount of the excess distribution which created the Members' Deficit in NCM. The Company considers the excess distributions described above as an advance on NCM's future earnings and, accordingly, future earnings of NCM should not be recognized through the application of equity method accounting until such time as its share of NCM's future earnings, net of distributions received, exceeds the excess distribution. The Company believes that the accounting model provided by ASC 323-10-35-22 for recognition of equity investee losses in excess of an investor's basis is analogous to the accounting for equity income subsequent to recognizing an excess distribution. The Company's Tranche 1 Investment recorded at $0 corresponds with a NCM Members' Deficit amount in its capital account.

        The Company has received 7,983,723 additional units in NCM subsequent to the IPO as a result of Common Unit Adjustments received from March 27, 2008 through June 14, 2010 (Tranche 2 Investments). The Company follows the guidance in ASC 323-10-35-29 (formerly EITF 02-18 "Accounting for Subsequent Investments in an Investee after Suspension of Equity Loss Recognition") by analogy, which also refers to AICPA Technical Practice Aid 2220.14. Both sets of literature indicate that

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 5—INVESTMENTS (Continued)


if a subsequent investment is made in an equity method investee that has experienced significant losses, the investor must determine if the subsequent investment constitutes funding of prior losses. The Company concluded that the construction or acquisition of new theatres that has led to the Common Unit Adjustments included in its Tranche 2 Investments equates to making additional investments in NCM. The Company has evaluated the receipt of the additional common units in NCM and the assets exchanged for these additional units and has determined that the right to use its incremental new screens would not be considered funding of prior losses. This determination was formed by considering that (i) NCM does not receive any additional funds from the Tranche 2 Investments, (ii) both NCM and AMC record their respective increases to Members' Equity and Investment at the same amount (fair value of the units issued), (iii) the additional investments result in additional ownership in NCM and (iv) the investments in additional common units are not subordinate to the other equity of NCM. As such, the additional common units received would be accounted for as a Tranche 2 Investment separate from the Company's initial investment following the equity method. The Company's Tranche 2 Investments correspond with the NCM Members' equity amounts in its capital account.

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 6—SUPPLEMENTAL BALANCE SHEET INFORMATION

        Other assets and liabilities consist of the following:

(In thousands)
  April 1, 2010   April 2, 2009  

Other current assets:

             
 

Prepaid rent

  $ 34,442   $ 34,135  
 

Income taxes receivable

    2,718     8,757  
 

Prepaid insurance and other

    12,127     16,854  
 

Merchandise inventory

    8,222     6,745  
 

Deferred tax asset

    9,300     7,600  
 

Other

    6,784     6,709  
           

  $ 73,593   $ 80,800  
           

Other long-term assets:

             
 

Investments in real estate

  $ 5,126   $ 6,561  
 

Deferred financing costs

    34,678     32,870  
 

Investments in joint ventures

    69,922     47,439  
 

Computer software

    28,817     31,249  
 

Deferred tax asset

    62,700     30,400  
 

Other

    6,226     4,752  
           

  $ 207,469   $ 153,271  
           

Accrued expenses and other liabilities:

             
 

Taxes other than income

  $ 39,470   $ 40,175  
 

Interest

    29,690     15,596  
 

Payroll and vacation

    8,327     7,855  
 

Current portion of casualty claims and premiums

    6,005     7,923  
 

Accrued bonus

    15,964     1,183  
 

Theatre and other closure

    6,694     7,386  
 

Accrued licensing and percentage rent

    17,926     7,280  
 

Current portion of pension and other benefits liabilities

    1,423     1,549  
 

Other

    17,774     13,121  
           

  $ 143,273   $ 102,068  
           

Other long-term liabilities:

             
 

Unfavorable lease obligations

  $ 128,027   $ 139,537  
 

Deferred rent

    98,034     86,420  
 

Pension and other benefits

    42,545     37,642  
 

Deferred gain

    17,454     15,899  
 

Tax liability

    7,000     7,000  
 

Casualty claims and premiums

    12,250     14,600  
 

Other

    4,281     7,604  
           

  $ 309,591   $ 308,702  
           

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 7—CORPORATE BORROWINGS AND CAPITAL AND FINANCING LEASE OBLIGATIONS

        A summary of the carrying value of corporate borrowings and capital and financing lease obligations is as follows:

(In thousands)
  April 1, 2010   April 2, 2009  

Senior Secured Credit Facility-Term Loan (2.00% as of April 1, 2010)

  $ 622,375   $ 628,875  

Senior Secured Credit Facility-Revolver

        185,000  

85/8% Senior Fixed Rate Notes due 2012

        250,000  

8% Senior Subordinated Notes due 2014

    299,227     299,066  

12% Senior Discount Notes due 2014

    240,795     240,795  

11% Senior Subordinated Notes due 2016

    325,000     325,000  

Parent Term Loan Facility (5.26% as of April 1, 2010)

    198,265     465,850  

8.75% Senior Fixed Rate Notes due 2019

    586,252      

Capital and financing lease obligations, 9% - 11.5%

    57,286     60,709  
           

    2,329,200     2,455,295  

Less: current maturities

    (10,463 )   (9,923 )
           

  $ 2,318,737   $ 2,445,372  
           

        Minimum annual payments required under existing capital and financing lease obligations (net present value thereof) and maturities of corporate borrowings as of April 1, 2010 are as follows:

 
  Capital and Financing Lease Obligations    
   
 
 
  Principal
Amount of
Corporate
Borrowings
   
 
(In thousands)
  Minimum Lease
Payments
  Less Interest   Principal   Total  

2011

  $ 9,225   $ 5,262   $ 3,963   $ 6,500   $ 10,463  

2012

    8,023     4,870     3,153     6,500     9,653  

2013

    7,055     4,578     2,477     808,348     810,825  

2014

    6,706     4,338     2,368     300,000     302,368  

2015

    6,728     4,083     2,645     240,795     243,440  

Thereafter

    61,900     19,220     42,680     925,000     967,680  
                       

Total

  $ 99,637   $ 42,351   $ 57,286   $ 2,287,143   $ 2,344,429  
                       

Senior Secured Credit Facility

        The senior secured credit facility is with a syndicate of banks and other financial institutions and provides the Company financing of up to $850,000,000, consisting of a $650,000,000 term loan facility with a maturity date of January 26, 2013 and a $200,000,000 revolving credit facility that matures in 2012. The revolving credit facility includes borrowing capacity available for letters of credit and for swingline borrowings on same-day notice. As of April 1, 2010, the Company had approximately $12,832,000 in outstanding letters of credit, leaving $187,168,000 available to borrow against the revolving credit facility.

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 7—CORPORATE BORROWINGS AND CAPITAL AND FINANCING LEASE OBLIGATIONS (Continued)

        Borrowings under the senior secured credit facility bear interest at a rate equal to an applicable margin plus, at the Company's option, either a base rate or LIBOR. On March 13, 2007, the Company amended the senior secured credit facility to, among other things, lower the interest rates related to its term loan, reduce its unused commitment fee and amend the change of control definition so that an initial public offering and related transactions would not constitute a change of control. The current applicable margin for borrowings under the revolving credit facility is 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR borrowings, and the current applicable margin for borrowings under the term loan facility is 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR borrowings. In addition to paying interest on outstanding principal under the senior secured credit facility, the Company is required to pay a commitment fee to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder at a rate equal to 0.25%. It will also pay customary letter of credit fees. The Company may voluntarily repay outstanding loans under the senior secured credit facility at any time without premium or penalty, other than customary "breakage" costs with respect to LIBOR loans. The Company is required to repay $1,625,000 of the term loan quarterly, beginning March 30, 2006 through September 30, 2012, with any remaining balance due on January 26, 2013.

        All obligations under the senior secured credit facility are guaranteed by each of AMCE's wholly-owned domestic subsidiaries. All obligations under the senior secured credit facility, and the guarantees of those obligations (as well as cash management obligations and any interest hedging or other swap agreements), are secured by substantially all of the Company's assets as well as those of each subsidiary guarantor.

        The senior secured credit facility contains a number of covenants that, among other things, restrict, subject to certain exceptions, AMCE's ability, and the ability of its subsidiaries, to sell assets; incur additional indebtedness; prepay other indebtedness (including the notes); pay dividends and distributions or repurchase their capital stock; create liens on assets; make investments; make certain acquisitions; engage in mergers or consolidations; engage in certain transactions with affiliates; amend certain charter documents and material agreements governing subordinated indebtedness, including the Existing Subordinated Notes; change the business conducted by it and its subsidiaries; and enter into agreements that restrict dividends from subsidiaries.

        In addition, the senior secured credit facility requires, commencing with the fiscal quarter ended September 28, 2006, that AMCE and its subsidiaries maintain a maximum net senior secured leverage ratio as long as the commitments under the revolving credit facility remain outstanding. The senior secured credit facility also contains certain customary affirmative covenants and events of default.

        AMCE is restricted, in certain circumstances, from paying dividends to the Company by the terms of the indentures governing its outstanding senior and subordinated notes and its senior secured credit facility. AMCE has not guaranteed the indebtedness issued by the Parent nor pledged any of its assets as collateral.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 7—CORPORATE BORROWINGS AND CAPITAL AND FINANCING LEASE OBLIGATIONS (Continued)

Fixed Notes due 2012

        On June 9, 2009, the Company completed the offering of $600,000,000 aggregate principal amount of its 8.75% Senior Notes due 2019 (the "Notes due 2019"). Concurrently with the initial notes offering, the Company launched a cash tender offer and consent solicitation for any and all of its then outstanding $250,000,000 aggregate principal amount of the Fixed Notes due 2012 at a purchase price of $1,000 plus a $30 consent fee for each $1,000 of principal amount of currently outstanding Fixed Notes due 2012 validly tendered and accepted by the Company on or before the early tender date (the "Cash Tender Offer"). The Company used the net proceeds from the issuance of the Notes due 2019 to pay the consideration for the Cash Tender Offer plus accrued and unpaid interest on $238,065,000 principal amount of the Fixed Notes due 2012. The Company recorded a loss on extinguishment related to the Cash Tender Offer of $10,826,000 in Other expense during the 52 weeks ended April 1, 2010, which included previously capitalized deferred financing fees of $3,312,000, a consent fee paid to the holders of $7,142,000 and other expenses of $372,000. On August 15, 2009, the Company redeemed the remaining $11,935,000 of Fixed Notes due 2012 at a price of $1,021.56 per $1,000 principal in accordance with the terms of the indenture. The Company recorded a loss of $450,000 in Other expense related to the extinguishment of the remaining Fixed Notes due 2012 during the 52 weeks ended April 1, 2010, which included previously capitalized deferred financing fees of $157,000, consent fee paid to the holders of $257,000 and other expenses of $36,000.

Notes Due 2014

        On February 24, 2004, the Company sold $300,000,000 aggregate principal amount of 8% Senior Subordinated Notes due 2014 (the "Notes due 2014"). The Company applied the net proceeds from the sale of Notes due 2014, plus cash on hand, to redeem all outstanding $200,000,000 aggregate principal amount of its 91/2% Senior Subordinated Notes due 2009 and $83,406,000 aggregate principal amount of its Notes due 2011. The Notes due 2014 bear interest at the rate of 8% per annum, payable in March and September. The Notes due 2014 are redeemable at the option of the Company, in whole or in part, at any time on or after March 1, 2009 at 104% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after March 1, 2012, plus in each case interest accrued to the redemption date. The Notes due 2014 are subordinated to all existing and future senior indebtedness of the Company. The Notes due 2014 are unsecured senior subordinated indebtedness of the Company ranking equally with the Company's Notes due 2016.

        The indenture governing the Notes due 2014 contains certain covenants that, among other things, may limit the ability of AMCE and its subsidiaries to incur additional indebtedness and pay dividends or make distributions in respect of their capital stock.

        In connection with the merger with Holdings, the carrying value of the Notes due 2014 was adjusted to fair value. As a result, a discount of $1,500,000 was recorded and will be amortized to interest expense over the remaining term of the notes.

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 7—CORPORATE BORROWINGS AND CAPITAL AND FINANCING LEASE OBLIGATIONS (Continued)

Notes Due 2016

        On January 26, 2006, the Company issued $325,000,000 aggregate principal amount of 11% Senior Subordinated Notes (the "Notes due 2016") issued under an indenture (the "Indenture"), with HSBC Bank USA, National Association, as trustee. The Notes due 2016 will bear interest at a rate of 11% per annum, payable on February 1 and August 1 of each year (commencing on August 1, 2006), and have a maturity date of February 1, 2016.

        The Notes due 2016 are general unsecured senior subordinated obligations of the Company, fully and unconditionally guaranteed, jointly and severally, on a senior subordinated basis by each of AMCE's existing and future domestic restricted subsidiaries that guarantee the Company's other indebtedness.

        The Company may redeem some or all of the Notes due 2016 at any time on or after February 1, 2011 at 105.5% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after February 1, 2014.

        The indenture governing the Notes due 2016 contains covenants limiting other indebtedness, dividends, purchases or redemptions of stock, transactions with affiliates and mergers and sales of assets. It also contains provisions subordinating the Company's obligations under the Notes due 2016 to the Company's obligations under its senior secured credit facility and other senior indebtedness.

Notes Due 2019

        On June 9, 2009, the Company issued $600,000,000 aggregate principal amount of 8.75% Senior Notes (the "Notes due 2019") issued under an indenture (the "Indenture"), with U.S. Bank, National Association, as trustee. The Notes due 2019 bear interest at a rate of 8.75% per annum, payable on June 1 and December 1 of each year (commencing on December 1, 2009), and have a maturity date of June 1, 2019.

        The Notes due 2019 are general unsecured senior obligations of the Company, fully and unconditionally guaranteed, jointly and severally, on a senior basis by each of AMCE's existing and future domestic restricted subsidiaries that guarantee the Company's other indebtedness.

        The Notes due 2019 are redeemable at the Company's option in whole or in part, at any time on or after June 1, 2014 at 104.375% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after June 1, 2017. In addition, the Company may redeem up to 35% of the aggregate principal amount of the notes using net proceeds from certain equity offerings completed on or prior to June 1, 2012 at a redemption price of 108.75%.

        The indenture governing the Notes due 2019 contains covenants limiting other indebtedness, dividends, purchases or redemptions of stock, transactions with affiliates and mergers and sales of assets. It also contains provisions subordinating the Company's obligations under the Notes due 2019 to the Company's obligations under its senior secured credit facility and other senior indebtedness. The Notes due 2019 were issued at a 2.418% discount which is amortized to interest expense following the interest method over the term of the notes.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 7—CORPORATE BORROWINGS AND CAPITAL AND FINANCING LEASE OBLIGATIONS (Continued)

        As of April 1, 2010, the Company was in compliance with all financial covenants relating to the senior secured credit facility, the Notes due 2016, Discount Notes due 2014, the Notes due 2014 and the Notes due 2019.

Change of Control

        Upon a change of control (as defined in the indentures), the Company would be required to make an offer to repurchase all of the outstanding Notes due 2019, Notes due 2016, and Notes due 2014 at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase. The Sponsors are considered Permitted Holders as defined in each of the indentures and as such could create certain voting arrangements that would not constitute a change of control under the indentures.

Holdings Discount Notes Due 2014

        To help finance the merger with Holdings, the Company issued $304,000,000 aggregate principal amount at maturity of its 12% Senior Discount Notes due 2014 ("Discount Notes due 2014") for gross proceeds of $169,917,760. The indenture governing the Discount Notes due 2014 contains certain covenants that, among other things, may limit the ability of the Company and its subsidiaries to incur additional indebtedness and pay dividends or make distributions in respect of their capital stock.

        The indentures relating to the Discount Notes due 2014 allow the Company to incur specified permitted indebtedness (as defined therein) without restriction. The indenture also allows the Company to incur any amount of additional debt, as long as the Company can satisfy the applicable coverage ratio of each indenture, after giving effect to the event on a pro forma basis under the indenture for the Discount Notes due 2014. Under the indenture relating to the Senior Discount Notes due 2014 (the Company's most restrictive indenture), the Company could borrow approximately $220,600,000 (assuming an interest rate of 8.25% per annum on the additional indebtedness) in addition to specified permitted indebtedness. If the Company cannot satisfy the applicable coverage ratios of the indentures, generally the Company can incur, in addition to amounts borrowed under the senior secured credit facility, no more than $100,000,000 of new "permitted indebtedness" under the terms of the indentures.

        Holdings is a holding company with no operations of its own and has no ability to service interest or principal on the Discount Notes due 2014 other than through any dividends it may receive from AMCE. AMCE will be restricted, in certain circumstances, from paying dividends to Holdings by the terms of the indentures governing the Notes due 2014, the Notes due 2016, the Notes due 2019 and the senior secured credit facility. Under the most restrictive of these provisions, set forth in the Indenture for the Notes due 2016, the amount of loans and dividends which AMCE could make to Holdings may not exceed approximately $309,752,000 in the aggregate as of April 1, 2010. AMCE has not guaranteed the Discount Notes due 2014 nor pledged any of its assets as collateral.

        On any interest payment date prior to August 15, 2009, the Company was permitted to commence paying cash interest (from and after such interest payment date) in which case (i) the Company would be obligated to pay cash interest on each subsequent interest payment date, (ii) the notes would cease to accrete after such interest payment date and (iii) the outstanding principal amount at the maturity of

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 7—CORPORATE BORROWINGS AND CAPITAL AND FINANCING LEASE OBLIGATIONS (Continued)


each note would be equal to the accreted value of such notes as of such interest payment date. The Company commenced paying cash interest on August 16, 2007 and made its first semi-annual interest payment on February 15, 2008 at which time the principal became fixed at $240,795,000.

        Upon a change of control (as defined in the indentures), the Company would be required to make an offer to repurchase all of the outstanding Discount Notes due 2014 at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest.

Parent Term Loan Facility

        To help finance the dividend paid by the Company to its stockholders discussed in Note 8—Stockholders' Equity, the Company entered into a $400,000,000 Credit Agreement dated as of June 13, 2007 ("Parent Term Loan Facility") for net proceeds of $396,000,000. Costs related to the issuance of the Parent Term Loan Facility were capitalized and are charged to interest expense, following the interest method, over the life of the Parent Term Loan Facility. During fiscal 2010, the Company made payments to purchase term loans and reduce the principal balance of its Parent Term Loan Facility from $466,936,000 to $193,290,000. As of April 1, 2010, the principal balance of the Parent Term Loan Facility, including unpaid interest, was $198,973,000 and the interest rate on borrowings thereunder was 5.26% per annum.

        The Company is a holding company with no operations of its own and has no ability to service interest or principal on the Parent Term Loan Facility other than through dividends it may receive from Holdings and AMCE. Holdings and AMCE are restricted, in certain circumstances, from paying dividends to Parent by the terms of the indentures governing their Notes due 2014, Notes due 2016, Discount Notes due 2014, Notes due 2019 and the senior secured credit facility. Holdings and AMCE have not guaranteed the Parent Term Loan Facility nor pledged any of their assets as collateral.

        Borrowings under the Parent Term Loan Facility bear interest at a rate equal to an applicable margin plus, at the Company's option, either a base rate or LIBOR. The initial applicable margin for borrowings under the Parent Term Loan Facility is 4.00% with respect to base rate borrowings and 5.00% with respect to LIBOR borrowings. Interest on borrowings under the Parent Term Loan Facility is payable on each March 15, June 15, September 15, and December 15, beginning September 15, 2007 by adding such interest for the applicable period to the principal amount of the outstanding loans. The Company is required to pay an administrative agent fee to the lenders under the Parent Term Loan Facility of $100,000 annually.

        The Company may voluntarily repay outstanding loans under the Parent Term Loan Facility, in whole or in part, together with accrued interest to the date of such prepayment on the principal amount prepaid at any time on or before June 13, 2010 at 101% of principal and at 100% of principal thereafter. Unpaid principal and interest on outstanding loans under the Parent Term Loan Facility are required to be repaid upon maturity on June 13, 2012.

        Upon a change of control (as defined in the Parent Term Loan Facility), Lenders have the right to require the Company to prepay the Parent Term Loan Facility at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest. The Sponsors are considered Permitted Holders as defined in the Parent Term Loan Facility and as such could create certain voting arrangements that

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 7—CORPORATE BORROWINGS AND CAPITAL AND FINANCING LEASE OBLIGATIONS (Continued)


would not constitute a change of control under the Parent Term Loan Facility. In the event of a qualified equity issuance offer as defined in the Parent Term Loan Facility, the Company will, to the extent lawful, prepay the maximum principal amount of loans properly tendered that may be purchased out of any qualified equity issuance net proceeds at a prepayment price in cash equal to 100% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of prepayment.

        The Parent Term Loan Facility contains certain covenants that, among other things, may limit the ability of the Company to incur additional indebtedness and pay dividends or make distributions in respect of its capital stocks. Under the Parent Term Loan Facility the amount of Restricted Payments as defined in the Parent Term Loan Facility may not exceed approximately $93,493,000 in the aggregate as of April 1, 2010.

Extinguishment of Parent Term Loan

        On April 17, 2009, the Company entered into the First Amendment to the Parent Term Loan Facility dated as of June 13, 2007, and the Company and a certain investor in the Parent Term Loan Facility entered into the Assignment and Acceptance Agreement with respect to $240,675,000 (51.54%) of $466,936,000 outstanding principal amount under the Parent Term Loan Facility. The Company paid the investor a purchase price of $152,832,000 (63.45% of outstanding principal) as Gross Assignment Consideration and the Company became a party to the Parent Term Loan Facility and the investor relinquished its rights and was released from its obligations under the Loan Documents in respect of interest and principal assigned to the Company on or after April 17, 2009 including accrued but unpaid interest payable in kind on any interest payment date occurring on or after April 17, 2009. The Company recorded a gain on extinguishment related to this transaction of $82,056,000 net of $5,787,000 for related fees and expenses and the write off of deferred charges and discount. In August 2009, the Company entered into a similar arrangement with additional investors in the Parent Term Loan Facility with respect to $39,335,000 outstanding principal amount under the Parent Term Loan Facility. The Company paid the investors a purchase price of $35,249,000 and the investors relinquished their rights and were released from their obligations in respect of principal assigned to the Company. The Company recorded a gain on extinguishment related to this transaction of $3,178,000 net of $908,000 for related fees and expenses and the write off of deferred charges and discount.

NOTE 8—STOCKHOLDERS' EQUITY

        The Company's common stock consists of 256,085.61252 voting shares of Class L-1 Common Stock, par value $0.01 per share ("Class L-1 Common Stock"), 256,085.61252 voting shares of Class L-2 Common Stock, par value $0.01 per share ("Class L-2 Common Stock" and, together with the Class L-1 Common Stock, the "Class L Common Stock"), 382,475 voting shares of Class A-1 Common Stock, par value $0.01 per share (the "Class A-1 Common Stock"), 382,475 voting shares of Class A-2 Common Stock, par value $0.01 per share (the "Class A-2 Common Stock" and, together with the Class A-1 Common Stock, the "Class A Common Stock"), and 1,700.63696 nonvoting shares of "Class N Common Stock, par value $0.01 per share (the "Class N Common Stock"). The former non-management stockholders of LCE Holdings, Inc. ("LCE Holdings"), the parent of Loews Cineplex Entertainment Corporation, including the Bain Investors, the Carlyle Investors and the Spectrum

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 8—STOCKHOLDERS' EQUITY (Continued)


Investors (collectively, the "Former LCE Sponsors"), hold all of the outstanding shares of Class L Common Stock. The pre-existing non-management stockholders of the Company, including the JPMP Investors and the Apollo Investors (collectively, the "Pre-Existing Holdings Sponsors" and, the Pre-Existing Holdings Sponsors together with the Former LCE Sponsors, the "Sponsors") and other co-investors (the "Coinvestors"), hold all of the outstanding shares of Class A Common Stock. Management stockholders of the Company (the "Management Stockholders" and, together with the Sponsors and Coinvestors, the "Stockholders") hold all of the non-voting Class N Common Stock.

        The Class L Common Stock, Class A Common Stock and Class N Common Stock will automatically convert on a one-for-one basis into shares of Residual Common Stock, par value $0.01 per share, upon (i) written consent of each of the Sponsors or (ii) the completion of an initial public offering of capital stock (an "IPO").

        The Company used cash and proceeds from the issuance of a $400,000,000 Credit Agreement issued by the Company (See Note 7) to pay a dividend to its stockholders of $652,800,000 during fiscal year 2008.

        As discussed in Note 9—Income Taxes, the Company adopted the accounting guidance for uncertainty in income taxes under ASC 740, Income Taxes, on March 30, 2007. The cumulative effect of the change on adoption charged to accumulated deficit was $5,373,000. As discussed in Note 11—Employee Benefit Plans, the Company adopted the amended provisions of ASC 715, Compensation-Retirement Benefits, and recorded an $82,000 loss to fiscal 2009 opening accumulated deficit.

Common Stock Rights and Privileges

        The Company's Class A-1 voting Common Stock, Class A-2 voting Common Stock, Class N nonvoting Common Stock, Class L-1 voting Common Stock and Class L-2 voting Common Stock entitle the holders thereof to the same rights and privileges, subject to the same qualifications, limitations and restrictions with respect to dividends. Additionally, each share of Class A Common Stock, Class L Common Stock and Class N Common Stock shall automatically convert into one share of Residual Common Stock on a one-for-one basis immediately prior to the consummation of an Initial Public Offering.

Stock-Based Compensation

        The Company, has adopted a stock-based compensation plan that permits grants of up to 49,107.44681 options on the Company's stock and has granted options on 4,786.0000, 15,980.45, 600.00000 and 38,876.72873 of its shares to certain employees during the periods ended April 1, 2010, April 2, 2009, March 30, 2006 and March 31, 2005, respectively. As of April 1, 2010, there was $2,166,000 of total estimated unrecognized compensation cost related to nonvested stock-based compensation arrangements expected to be recognized over 5 years.

        The options have a ten year term, the options granted during fiscal 2005 step-vest in equal amounts over five years with the final vesting having occurred on December 23, 2009, the options granted during fiscal 2006 step-vest in equal amounts over three years with final vesting occurring on December 23, 2008, the options granted in fiscal 2009 step-vest in equal amounts over 5 years with final vesting occurring on March 6, 2014 and the options granted in fiscal 2010 step-vest in equal

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 8—STOCKHOLDERS' EQUITY (Continued)

amounts over 5 years with final vesting occurring on May 28, 2014, but vesting may accelerate for one participant if there is a change of control (as defined in the plan). One of the holders of options fully vested during fiscal 2007 upon entry into his employment separation and general release agreement on March 20, 2007. The Company has recorded $1,384,000, $2,622,000 and $207,000 of stock-based compensation expense related to these options within general and administrative: other and has recognized an income tax benefit of $0 in its Consolidated Statements of Operations during each of the periods ended April 1, 2010, April 2, 2009 and April 3, 2008, respectively. One of the previous holders of stock options held put rights associated with his options deemed to be within his control whereby he could require the Company to repurchase his options and, as a result, the expense for these options was remeasured each reporting period as a liability based award. For the option awards classified as liabilities, the Company revalued the options at each period end following the grant date using the Black-Scholes model. In valuing this liability, the Company used a fair value of common stock of $1,000 per share, which was based on a contemporaneous valuation reflecting market conditions as of April 3, 2008. In May 2008, the Company was notified of the holder's intention to exercise the put option and the Company made cash payments to settle the accrued liability of $3,911,000 during fiscal 2009. As a result of the exercise of the put right, there was no additional stock compensation expense related to these options in fiscal 2009 and the related options were canceled upon exercise of the put right during fiscal 2009.

        The Company accounts for stock options using the fair value method of accounting and has valued the May 28, 2009 option grants using the Black-Scholes formula which included a valuation prepared by management on behalf of the Compensation Committee of the Board of Directors. This reflected market conditions as of May 28, 2009 which indicated a fair value price per share of the underlying shares of $339.59 per share, a purchase of 2,542 shares by the Company for $323.95 per share from the Company's former Chief Executive Officer pursuant to his Separation and General Release Agreement dated February 23, 2009 and a sale of 385.862 shares by the Company to the Company's current Chief Executive Officer pursuant to his Employment Agreement dated February 23, 2009 for $323.95 per share. See Note 1—The Company and Significant Accounting Policies, Stock-based Compensation for more information regarding the Company's stock option plan.

        On February 23, 2009, the Company entered into a Separation and General Release Agreement with Peter C. Brown (formerly Chairman of the Board, Chief Executive Officer and President of Parent, Holdings and AMCE), whereby all outstanding vested and unvested options were voluntarily forfeited. Stock compensation expense recorded in fiscal 2009 related only to awards that vested prior to February 23, 2009. Because all vested and unvested awards were forfeited, there is no additional compensation cost to recognize in future periods related to his awards.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 8—STOCKHOLDERS' EQUITY (Continued)

        A summary of stock option activity under all plans is as follows:

 
  April 1, 2010(4)   April 2, 2009   April 3, 2008  
 
  Number
of
Shares
  Weighted
Average
Exercise
Price Per
Share
  Number
of
Shares
  Weighted
Average
Exercise
Price Per
Share
  Number
of
Shares
  Weighted
Average
Exercise
Price Per
Share
 

Outstanding at beginning of year

    26,811.1680905   $ 391.43     36,521.356392   $ 491.00     39,476.72873   $ 491.00  

Granted(1)

    4,786.00000     339.59     15,980.45000     323.95          

Forfeited

            (25,690.6383015 )       (2,455.372338 )      

Exercised

                    (500.00000 )    
                           

Outstanding at end of year and expected to vest(1)(2)

    31,597.1680905   $ 383.58     26,811.1680905   $ 391.43     36,521.356392   $ 491.00  
                           

Exercisable at end of year(3)

    14,026.8080901   $ 452.94     8,784.574472   $ 491.00     25,681.40958   $ 491.00  
                           

Available for grant at end of year

    9,325.7042495           14,111.7042495           12,086.090418        
                                 

(1)
The weighted average remaining contractual life for outstanding options was 7.6 years, 8.3 years, and 5.1 years for fiscal 2010, 2009 and 2008, respectively.

(2)
The aggregate estimated intrinsic value for these options was $11,400,000 as of April 1, 2010.

(3)
The aggregate estimated intrinsic value for these options was $4,100,000 as of April 1, 2010.

(4)
During fiscal 2010, 4,786.00000 options were granted on May 28, 2009 at an exercise price of $339.59 based on an estimated fair value of $339.59 of the Common Stock on May 28, 2009 resulting in an intrinsic value for the options on the grant date of $0.

        For options exercised, intrinsic value is calculated as the difference between the market price on the date of exercise (determined using the most recent contemporaneous valuation prior to the exercise) and the exercise price of the options. The total intrinsic value of options exercised was $412,000 during fiscal 2008 and there were no options exercised during fiscal 2009 and 2010. The Company received cash from the exercise of stock options during fiscal 2008 of $500,000 and a related tax deduction of $164,800.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 9—INCOME TAXES

        Income tax provision reflected in the Consolidated Statements of Operations for the periods in the three years ended April 1, 2010 consists of the following components:

(In thousands)
  April 1, 2010   April 2, 2009   April 3, 2008  

Current:

                   
 

Federal

  $ (2,800 ) $   $ 300  
 

Foreign

        13,200     6,200  
 

State

    500     3,500     3,600  
               

Total current

    (2,300 )   16,700     10,100  
               

Deferred:

                   
 

Federal

    (34,000 )       (12,300 )
 

Foreign

        (1,900 )   2,500  
 

State

        2,300     (1,100 )
               

Total deferred

    (34,000 )   400     (10,900 )
               

Total provision (benefit)

    (36,300 )   17,100     (800 )

Tax benefit from discontinued operations

        (11,300 )   (6,780 )
               

Total provision (benefit) from continuing operations

  $ (36,300 ) $ 5,800   $ (7,580 )
               

        The Company has recorded no alternative minimum taxes as its consolidated tax group expects no alternative minimum tax liability.

        Pre-tax income (losses) consisted of the following:

(In thousands)
  April 1, 2010   April 2, 2009   April 3, 2008  

Domestic

  $ 51,361   $ (138,954 ) $ (15,483 )

Foreign

    (7,750 )   7,008     8,442  
               

Total

  $ 43,611   $ (131,946 ) $ (7,041 )
               

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 9—INCOME TAXES (Continued)

        The difference between the effective tax rate on earnings (loss) from continuing operations before income taxes and the U.S. federal income tax statutory rate is as follows:

(In thousands)
  April 1, 2010   April 2, 2009   April 3, 2008  

Income tax expense (benefit) at the federal statutory rate

  $ 17,901   $ (53,541 ) $ (5,468 )

Effect of:

                   

Foreign rate differential

            1,990  

State income taxes

    500     5,800     3,585  

Change in ASC 740 (formerly FIN 48) reserve

    1,000     (5,421 )   (5,373 )

Permanent items

    (540 )       1,100  

Change in ASC 740 (formerly APB 23) assertion

        401     (6,220 )

Valuation allowance

    (55,183 )   58,372     2,815  

Other, net

    22     189     (9 )
               

Income tax expense (benefit)

  $ (36,300 ) $ 5,800   $ (7,580 )
               

Effective income tax rate

    (71.0 )%   (3.8 )%   48.5 %
               

        The fiscal 2008 change in ASC 740 assertion relates to a resolution reached in fiscal 2008 on a pre-filing agreement with a taxing authority which resulted in additional basis which was deducted on the 2007 tax return. The deduction was the result of a 2007 change in ASC 740 assertion. As a result of the additional basis, the Company did not have to utilize certain net operating loss carryforwards.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 9—INCOME TAXES (Continued)

        The significant components of deferred income tax assets and liabilities as of April 1, 2010 and April 2, 2009 are as follows:

 
  April 1, 2010   April 2, 2009  
 
  Deferred Income Tax   Deferred Income Tax  
(In thousands)
  Assets   Liabilities   Assets   Liabilities  

Property

  $   $ (1,948 ) $ 32,130   $  

Investments in joint ventures

        (57,109 )       (50,709 )

Intangible assets

        (29,017 )       (24,234 )

Pension postretirement and deferred compensation

    19,150         17,260      

Accrued reserves and liabilities

    21,588         23,653      

Deferred interest

    25,660         25,660      

Deferred revenue

    77,818         116,882      

Deferred rents

    100,560         100,343      

Alternative minimum tax and other credit carryovers

    13,058         15,453      

Charitable contributions

    1,198              

Net operating loss carryforward

    206,937         116,534      
                   

Total

  $ 465,969   $ (88,074 ) $ 447,915   $ (74,943 )

Less: Valuation allowance

    (305,895 )       (334,972 )    
                   

Total deferred income taxes(1)

  $ 160,074   $ (88,074 ) $ 112,943   $ (74,943 )
                   

(1)
See Note 6—Supplemental Balance Sheet Information for additional disclosures about net current deferred tax assets and net non-current deferred tax liabilities.

        A rollforward of the Company's valuation allowance for deferred tax assets is as follows:

(In thousands)
  Balance at
Beginning of
Period
  Additions
Charged
(Credited) to
Revenues,
Costs and
Expenses
  Charged
(Credited) to
Goodwill
  Charged
(Credited) to
Other
Accounts
  Deductions
and
Write-offs
  Balance at
End of
Period
 

Fiscal Year 2010

                                     
 

Valuation Allowance-deferred income tax assets

  $ 334,972     (55,183 )       26,106 (2)     $ 305,895  

Fiscal Year 2009

                                     
 

Valuation Allowance-deferred income tax assets

  $ 392,262     58,372     (31,515) (1)   (32,007) (3)   (52,140) (5) $ 334,972  

Fiscal Year 2008

                                     
 

Valuation Allowance-deferred income tax assets

  $ 383,808     2,815         5,639 (4)     $ 392,262  

(1)
See Note 4—Goodwill and Other Intangible Assets.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 9—INCOME TAXES (Continued)

(2)
The fiscal 2010 activity primarily relates to an increase in the valuation allowance of $17,612,000, with a corresponding increase in the related deferred tax asset, to present previously unrecognized state net operating loss carryforwards and their corresponding valuation allowance. The additional activity in fiscal 2010 relates to adjustments to the valuation allowance, with a corresponding adjustment to accumulated other comprehensive income (loss), for certain changes in foreign currency translation and our pension and postretirement obligations.

(3)
The fiscal 2009 activity primarily relates to a $27,883,000 reduction in the valuation allowance, with a corresponding reduction in the related deferred tax asset, to present net operating loss carryforwards related to uncertain tax positions on a net basis. The additional activity in fiscal 2009 relates to adjustments to the valuation allowance, with a corresponding adjustment to accumulated other comprehensive income (loss), for certain changes in foreign currency translation and our pension and postretirement obligations.

(4)
The fiscal 2008 activity primarily relates to adjustments to the valuation allowance, with a corresponding adjustment to accumulated other comprehensive income (loss), for certain changes in foreign currency translation and our pension and postretirement obligations.

(5)
Elimination of Cinemex deferred tax asset and change in valuation allowance through discontinued operations.

        The Company's federal income tax loss carryforward of $457,872,000 will begin to expire in 2020 and will completely expire in 2030 and will be limited annually due to certain change in ownership provisions of the Internal Revenue Code. The Company also has state income tax loss carryforwards of $891,369,000 which may be used over various periods ranging from 1 to 20 years.

        The Company completed the repurchase of certain term loans under the Parent Term Loan Facility in fiscal 2010 resulting in taxable income, which should allow the Company to utilize certain net operating losses in future years. During fiscal 2010, the Company reversed $1,500,000 of its valuation allowance through the income statement and in fiscal 2009, the Company reversed $31,000,000 of its valuation allowance through Goodwill, related to the repurchase of these term loans.

        During fiscal 2010, management believed it was more likely than not that the Company had the ability to execute a feasible and prudent tax strategy that would provide for the realization of net operating losses that expire through 2022 by converting certain limited partnership units into common stock. Management has reduced its overall valuation allowance by $65,000,000 in fiscal 2010 for the estimated amount of net operating losses that would be realized as a result of this potential action.

        The Company has recorded a valuation allowance against its remaining net deferred tax asset in U.S. and foreign jurisdictions of $305,895,000 as of April 1, 2010.

        Effective March 30, 2007, the Company adopted accounting rules regarding uncertainty in income taxes. Relative to the implementation of this guidance, the Company's financial statements did not include any tax contingencies, after consideration of the partial/full valuation allowance recorded against net deferred tax assets. As a result of the adoption of this guidance, the Company recorded a $5,373,000 increase in current deferred tax assets, a $5,373,000 reduction of goodwill, a $5,373,000 current liability and a $5,373,000 charge to the beginning accumulated deficit that is reported as a cumulative effect adjustment for a change in accounting principle to the opening balance sheet position

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 9—INCOME TAXES (Continued)


of stockholders' accumulated deficit at March 30, 2007. A reconciliation of the change in the amount of unrecognized tax benefits during the year ended April 1, 2010 was as follows:

(In millions)
  April 1, 2010   April 2, 2009   April 3, 2008  

Balance at Beginning of Period

  $ 33.5   $ 38.7   $ 44.1  

Gross Increases—Current Period Tax Positions

    1.5     1.5      

Gross Decreases—Tax Position in Prior Periods

    (.5 )   (2.1 )    

Favorable Resolutions with Authorities

            (5.4 )

Expired Attributes

             

Lapse of Statute of Limitations

        (4.6 )    

Cash Settlements

             
               

Balance at End of Period

  $ 34.5   $ 33.5   $ 38.7  
               

        As of April 1, 2010, the Company recognized a $7,000,000 liability for uncertain tax positions and a $7,000,000 deferred tax asset for net operating losses on the balance sheet. These uncertain positions were taken in tax years where the Company generated positive taxable income and they were previously netted against deferred tax assets on the balance sheet.

        The Company's effective tax rate would not be significantly impacted by the ultimate resolution of the uncertain tax positions because of the retention of a valuation allowance against its net operating loss carryforwards.

        During December 2007, the IRS informed the Company of its acceptance of certain tax conclusions that the Company had taken on a transaction the Company entered into during the fiscal year ended March 29, 2007 that were presented to the IRS in a Request for a Pre-Filing Agreement. As a result of the IRS accepting the Company's tax conclusions, the $5,373,000 reserve established with the adoption of the income tax uncertainty guidance was resolved and the tax benefit was recorded during the fiscal year ended April 3, 2008.

        The Company recognizes income tax-related interest expense and penalties as income tax expense and general, and administrative expense, respectively. As of April 3, 2008, the Company did not have any interest or penalties accrued associated with unrecognized tax benefits. The liabilities for interest and penalties increased by $101,000 and $45,000, as of April 1, 2010 and April 2, 2009, respectively.

        There are currently unrecognized tax benefits which the Company anticipates will be resolved in the next 12 months; however, the Company is unable at this time to estimate what the impact on its unrecognized tax benefits will be.

        The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. An IRS examination of the tax years February 28, 2002 through December 31, 2003 of the former Loews Cineplex Entertainment Corporation and subsidiaries was concluded during fiscal 2007. An IRS examination for the tax years ended March 31, 2005 and March 30, 2006 was completed during 2009. Generally, tax years beginning after March 28, 2002 are still open to examination by various taxing authorities. Additionally, the Company has net operating loss ("NOL") carryforwards for tax years ended October 31, 2000 through March 28, 2002 in the U.S.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 9—INCOME TAXES (Continued)


and various state jurisdictions which have carryforwards of varying lengths of time. These NOLs are subject to adjustment based on the statute of limitations of the return in which they are utilized, not the year in which they are generated. Various state, local and foreign income tax returns are also under examination by taxing authorities. The Company does not believe that the outcome of any examination will have a material impact on its financial statements.

NOTE 10—LEASES

        Beginning in fiscal 1998, the Company has completed numerous real estate lease agreements with Entertainment Properties Trust ("EPT") including transactions accounted for as sale and leaseback transactions in accordance with Accounting Standards Codification No. 840, Leases. The leases are triple net leases that require the Company to pay substantially all expenses associated with the operation of the theatres such as taxes and other charges, insurance, utilities, service, maintenance and any ground lease payments. As of April 1, 2010, the Company leased from EPT 42 theatres with 924 screens located in the United States and Canada.

        Following is a schedule, by year, of future minimum rental payments required under existing operating leases that have initial or remaining non-cancelable terms in excess of one year as of April 1, 2010:

(In thousands)
  Minimum operating
lease payments
 

2011

  $ 390,558  

2012

    392,317  

2013

    380,224  

2014

    353,535  

2015

    350,352  

Thereafter

    2,016,646  
       

Total minimum payments required

  $ 3,883,632  
       

        As of April 1, 2010, the Company has a lease agreement for one theatre with 12 screens which is expected to begin construction in fiscal 2011 and open in fiscal 2012. Included above are equipment leases payable to DCIP.

        Included in other long-term liabilities as of April 1, 2010 and April 2, 2009 is $226,061,000 and $225,957,000, respectively, of deferred rent representing future minimum rental payments for leases with scheduled rent increases and unfavorable lease liabilities.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 10—LEASES (Continued)

        Rent expense is summarized as follows:

(In thousands)
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
  53 Weeks
Ended
April 3, 2008
 

Minimum rentals

  $ 391,493   $ 398,289   $ 387,449  

Common area expenses

    41,189     43,409     44,667  

Percentage rentals based on revenues

    7,982     7,105     7,273  
               

Theatre rent

    440,664     448,803     439,389  

General and administrative and other

    1,427     1,227     1,463  
               

Total

  $ 442,091   $ 450,030   $ 440,852  
               

NOTE 11—EMPLOYEE BENEFIT PLANS

        The Company sponsors frozen non-contributory qualified and non-qualified defined benefit pension plans generally covering all employees who, prior to the freeze, were age 21 or older and had completed at least 1,000 hours of service in their first twelve months of employment, or in a calendar year ending thereafter, and who were not covered by a collective bargaining agreement. The Company also offers eligible retirees the opportunity to participate in a health plan (medical and dental). Certain employees are eligible for subsidized postretirement medical benefits. The eligibility for these benefits is based upon a participant's age and service as of January 1, 2009. The Company also sponsors a postretirement deferred compensation plan.

        In the fourth quarter of fiscal 2009, the Company recorded a curtailment gain of $1,072,000 as a result of the retirement of its former chief executive officer on February 23, 2009. The curtailment gain relates to the Retirement Enhancement Plan which included only one active unvested participant and one retired vested participant. Because the former chief executive officer had not vested in his eligible benefit, his retirement created a significant elimination of the accrual of deferred benefits for his future services.

        On May 2, 2008, the Company's Board of Directors approved revisions to the Company's Post Retirement Medical and Life Insurance Plan effective January 1, 2009 and on July 3, 2008 the changes were communicated to the plan participants. As a result of these revisions, the Company recorded a negative prior service cost of $5,969,000 through other comprehensive income to be amortized over eleven years based on expected future service of the remaining participants.

        Effective March 29, 2007, the Company adopted the amended guidance for employers' accounting for defined benefit pension and other postretirement plans in ASC 715, Compensation-Retirement Benefits, ("ASC 715"). ASC 715 requires that, effective for fiscal years ending after December 15, 2008 the assumptions used to measure annual pension and retiree medical expense be determined as of the balance sheet date and all plan assets and liabilities be reported as of that date. Accordingly, as of the beginning of fiscal 2009, the Company changed the measurement date for the annual pension and postretirement medical expense and all plan assets and liabilities by applying the transition option under which a 15 month measurement was determined as of January 1, 2008, that covers the period to the Company's year-end balance sheet date. As a result of this change in measurement date, the

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 11—EMPLOYEE BENEFIT PLANS (Continued)


Company recorded an $82,000 loss to fiscal 2009 opening accumulated deficit and a $411,000 unrealized loss to other comprehensive income.

        As a result of the merger with LCE Holdings in January 2006, the Company acquired two pension plans in the U.S. and one in Mexico. One of the U.S. plans is a frozen cash balance plan and neither of the U.S. plans has admitted new participants post-merger. On December 29, 2008, the Company sold all of its interests in Cinemex, which includes the Mexico Plan. See Note 2—Discontinued Operations for more information.

        On November 7, 2006, the Company's Board of Directors approved an amendment to freeze the Company's Defined Benefit Retirement Income Plan, Supplemental Executive Retirement Plan and Retirement Enhancement Plan (the "Plans") as of December 31, 2006. On December 20, 2006 the Company amended and restated the Plans to implement the freeze as of December 31, 2006. As a result of the freeze there will be no further benefits accrued after December 31, 2006, but continued vesting for associates with less than five years of vesting service. The Company will continue to fund existing benefit obligations and there will be no new participants in the future. As a result of amending and restating the Plans to implement the freeze, the Company recognized a curtailment gain of $10,983,000 in fiscal 2007 in its consolidated financial statements which was recorded within general and administrative: other.

        The measurement date used to determine pension and other postretirement benefits is April 1, 2010.

        Net periodic benefit cost for the plans consists of the following:

 
  Pension Benefits   Other Benefits  
(In thousands)
  52 Weeks
Ended
April 1,
2010
  52 Weeks
Ended
April 2,
2009
  53 Weeks
Ended
April 3,
2008
  52 Weeks
Ended
April 1,
2010
  52 Weeks
Ended
April 2,
2009
  53 Weeks
Ended
April 3,
2008
 

Components of net periodic Benefit cost:

                                     
 

Service cost

  $ 180   $ 369   $ 443   $ 210   $ 402   $ 846  
 

Interest cost

    4,403     4,468     4,440     1,296     1,111     1,555  
 

Expected return on plan assets

    (2,990 )   (5,098 )   (4,691 )            
 

Amortization of prior service credit

                (543 )   (407 )    
 

Amortization of net transition obligation

        28     39              
 

Amortization of net (gain) loss

    134     (1,622 )   (1,115 )   (278 )   (69 )    
 

Settlement

            (56 )            
 

Curtailment

        (1,072 )                
                           
 

Net periodic benefit cost

  $ 1,727   $ (2,927 ) $ (940 ) $ 685   $ 1,037   $ 2,401  
                           

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 11—EMPLOYEE BENEFIT PLANS (Continued)

        The following table summarizes the changes in other comprehensive income:

 
  Pension Benefits   Other Benefits  
(In thousands)
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
 

Net (gain) loss

  $ 4,224   $ 16,086   $ 7,315   $ (3,604 )

Net prior service credit

            (3,727 )   (5,969 )

Amortization of net gain (loss)

    (134 )   1,622     543     69  

Amortization of prior service credit

            278     407  

Amortization of net transition obligation

        (28 )        

Impact of changing measurement date

        411          

Disposition of Cinemex

        (877 )        
                   

Total recognized in other comprehensive income

  $ 4,090   $ 17,214   $ 4,409   $ (9,097 )
                   

Net periodic benefit cost

    1,727     (2,927 )   685     1,037  
                   

Total recognized in net periodic benefit cost and other comprehensive income

  $ 5,817   $ 14,287   $ 5,094   $ (8,060 )
                   

        The following tables set forth the plan's change in benefit obligations and plan assets and the accrued liability for benefit costs included in the consolidated balance sheets:

 
  Pension Benefits   Other Benefits  
(In thousands)
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
 

Change in benefit obligation:

                         
 

Benefit obligation at beginning of period

  $ 60,690   $ 73,330   $ 18,101   $ 26,830  
 

Service cost

    180     414     210     632  
 

Interest cost

    4,403     5,604     1,296     1,727  
 

Plan participant's contributions

            417     447  
 

Actuarial (gain) loss

    13,694     (12,017 )   7,315     (3,604 )
 

Plan amendment

            (3,727 )   (5,969 )
 

Benefits paid

    (2,526 )   (4,638 )   (1,628 )   (1,962 )
 

Disposition of Cinemex

        (1,468 )        
 

Currency translation adjustment

        (535 )        
                   
 

Benefit obligation at end of period

  $ 76,441   $ 60,690   $ 21,984   $ 18,101  
                   

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 11—EMPLOYEE BENEFIT PLANS (Continued)

 

 
  Pension Benefits   Other Benefits  
(In thousands)
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
 

Change in plan assets:

                         
 

Fair value of plan assets at beginning of period

  $ 39,600   $ 62,114   $   $  
 

Actual return on plan assets gain (loss)

    12,461     (20,623 )        
 

Employer contribution

    4,922     2,747     1,211     1,515  
 

Plan participant's contributions

            417     447  
 

Benefits paid

    (2,526 )   (4,638 )   (1,628 )   (1,962 )
                   
 

Fair value of plan assets at end of period

  $ 54,457   $ 39,600   $   $  
                   

Net liability for benefit cost:

                         
 

Funded status

  $ (21,984 ) $ (21,090 ) $ (21,984 ) $ (18,101 )
                   

 

 
  Pension Benefits   Other Benefits  
(In thousands)
  April 1, 2010   April 2, 2009   April 1, 2010   April 2, 2009  

Amounts recognized in the Balance Sheet:

                         
 

Accrued expenses and other liabilities

  $ (192 ) $ (249 ) $ (1,231 ) $ (1,300 )
 

Other long-term liabilities

    (21,792 )   (20,841 )   (20,753 )   (16,801 )
                   

Net liability recognized

  $ (21,984 ) $ (21,090 ) $ (21,984 ) $ (18,101 )
                   

Aggregate accumulated benefit obligation

  $ (76,441 ) $ (60,690 ) $ (21,984 ) $ (18,101 )
                   

        The following table summarizes pension plans with accumulated benefit obligations and projected benefit obligations in excess of plan assets:

 
  Pension Benefits  
(In thousands)
  April 1, 2010   April 2, 2009  

Aggregated accumulated benefit obligation

  $ (75,997 ) $ (60,690 )

Aggregated projected benefit obligation

    (75,997 )   (60,690 )

Aggregated fair value of plan assets

    53,977     39,600  

        Amounts recognized in accumulated other comprehensive income consist of the following:

 
  Pension Benefits   Other Benefits  
(In thousands)
  April 1, 2010   April 2, 2009   April 1, 2010   April 2, 2009  

Net actuarial (gain) loss

  $ 5,393   $ 1,303   $ 1,607   $ (5,986 )

Prior service credit

            (8,746 )   (5,562 )

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 11—EMPLOYEE BENEFIT PLANS (Continued)

        Amounts in accumulated other comprehensive income (loss) expected to be recognized in components of net periodic pension cost in fiscal 2011 are as follows:

(In thousands)
  Pension Benefits   Other Benefits  

Net actuarial loss

  $ 174   $  

Prior service credit

        (865 )
           

Total

  $ 174   $ (865 )
           

Actuarial Assumptions

        The weighted-average assumptions used to determine benefit obligations are as follows:

 
  Pension Benefits   Other Benefits  
 
  April 1, 2010   April 2, 2009   April 1, 2010   April 2, 2009  

Discount rate

    6.16 %   7.43 %   5.97 %   7.42 %

Rate of compensation increase

    N/A     N/A     N/A     5.00 %

        The weighted-average assumptions used to determine net periodic benefit cost are as follows:

 
  Pension Benefits   Other Benefits  
 
  52 Weeks
ended
April 1,
2010
  52 Weeks
ended
April 2,
2009
  53 Weeks
ended
April 3,
2008
  52 Weeks
ended
April 1,
2010
  52 Weeks
ended
April 2,
2009
  53 Weeks
ended
April 3,
2008
 

Discount rate

    7.43 %   6.25 %   5.71 %   7.42 %   6.25 %   5.75 %

Expected long-term return on plan assets

    8.00 %   8.25 %   8.25 %   N/A     N/A     N/A  

Rate of compensation increase

    N/A     N/A     N/A     N/A     5.00 %   5.00 %

        In developing the expected long-term rate of return on plan assets at each measurement date, the Company considers the plan assets' historical returns, asset allocations, and the anticipated future economic environment and long-term performance of the asset classes. While appropriate consideration is given to recent and historical investment performance, the assumption represents management's best estimate of the long-term prospective return.

        For measurement purposes, the annual rate of increase in the per capita cost of covered health care benefits assumed for 2010 was 8.0% for medical and 4.0% for dental and vision. The rates were assumed to decrease gradually to 5.0% for medical in 2017 and remain at 4.0% for dental. The health care cost trend rate assumption has a significant effect on the amounts reported. Increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of April 1, 2010 by $2,204,000 and the aggregate of the service and interest cost components of postretirement expense for fiscal 2010 by $147,000. Decreasing the assumed health care cost trend rates by one percentage point in each year would decrease the accumulated postretirement obligation for fiscal 2010 by $1,879,000 and the aggregate service and interest cost components of postretirement expense for fiscal 2010 by $125,000. The Company's retiree health plan provides a benefit to its retirees that is at least actuarially equivalent to

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 11—EMPLOYEE BENEFIT PLANS (Continued)


the benefit provided by the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("Medicare Part D").

Cash Flows

        The Company expects to contribute $2,559,000 to the pension plans during fiscal 2011.

        The following table provides the benefits expected to be paid (inclusive of benefits attributable to estimated future employee service) in each of the next five fiscal years, and in the aggregate for the five fiscal years thereafter:

(In thousands)
  Pension Benefits   Other Benefits
Net of Medicare
Part D Adjustments
  Medicare Part D
Adjustments
 

2011

  $ 2,778   $ 1,231   $ 77  

2012

    2,055     1,275     86  

2013

    2,272     1,298     95  

2014

    2,938     1,342     105  

2015

    2,454     1,360     116  

Years 2016 - 2019

    20,561     7,270     722  

Pension Plan Assets

        For its defined benefit pension plan investments, the Company employs a long-term risk-controlled approach using diversified investment options with minimal exposure to volatile investment options like derivatives. The Company uses a diversified allocation of equity, debt, and real estate exposures that are customized to the Plan's cash flow benefit needs. The target allocations for plan assets are 45 percent equity securities, 30 percent debt or fixed securities and 25 percent real estate and other.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 11—EMPLOYEE BENEFIT PLANS (Continued)

        The fair value of the pension plan assets at April 1, 2010, by asset class are as follows:

 
   
  Fair Value Measurements at April 1, 2010 Using  
(In thousands)
  Total Carrying
Value at
April 1, 2010
  Quoted prices in
active market
(Level 1)
  Significant other
observable inputs
(Level 2)
  Significant
unobservable inputs
(Level 3)
 

Cash and cash equivalents

  $ 544   $ 544   $   $  

U.S. Treasury Securities

    2,464     2,464          

Equity securities:

                         
 

U.S. companies

    21,734     3,595     18,139      
 

International companies

    8,686     8,686          

Bond market fund

    8,403     8,403          

Collective trust fund

    5,132     5,132          

Commodities broad basket fund

    1,443     1,443          

High yield bond fund

    2,387         2,387      

Inflation-protected bond fund

    788         788      

Intermediate-term bond fund

    1,057         1,057      

Real estate(1)

    1,819             1,819  
                   

Total assets at fair value

  $ 54,457   $ 30,267   $ 22,371   $ 1,819  
                   

(1)
This class invests mainly in commercial real estate and includes mortgage loans which are backed by the associated properties. These underlying real estate investments have unobservable Level 3 pricing inputs. The fair values have been estimated based on independent appraisals or cash flow projections.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)  
(In thousands)
  Real Estate  

Balance at April 2, 2009

  $ 2,283  
 

Purchases, sales, issuances, and settlements, net

    36  
 

Unrealized (losses)/gains, net, relating to instruments still held at end of year

    (500 )
       

Balance at April 1, 2010

  $ 1,819  
       

Defined Contribution Plan

        The Company sponsors a voluntary 401(k) savings plan covering employees age 21 or older who have completed at least 1,000 hours of service in their first twelve months of employment, or in a calendar year thereafter, and who are not covered by a collective bargaining agreement. Effective for fiscal year 2010, in the Company's 401(k) Savings Plan the Company matched 50% of each eligible employee's elective contributions up to 6% of the employee's eligible compensation. Previously, the Company matched 100% of elective contributions up to 5% of employee compensation. The Company's expense under the 401(k) savings plan was $1,654,000, $2,374,000, and $2,476,000 for the periods ended April 1, 2010, April 2, 2009 and April 3, 2008, respectively.

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Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 11—EMPLOYEE BENEFIT PLANS (Continued)

Union-Sponsored Plans

        Certain theatre employees are covered by union-sponsored pension and health and welfare plans. Company contributions into these plans are determined in accordance with provisions of negotiated labor contracts. Contributions aggregated $501,000, $559,000, and $1,004,000, for the periods ended April 1, 2010, April 2, 2009 and April 3, 2008, respectively. On November 7, 2008, the Company received notice of a written demand for payment of a partial withdrawal liability assessment from a collectively bargained multiemployer pension plan that covers certain of its unionized theatre employees. Based on a payment schedule that the Company received from this plan in December 2008, the Company began making quarterly payments on January 1, 2009 related to the $5,279,000 in partial withdrawal liability. In the second quarter of fiscal 2010, the Company made a complete withdrawal from the plan which triggered an additional liability of $1,422,000 which was assessed by the plan on April 19, 2010. However, the Company also estimates that approximately $2,839,000 of the total liability was discharged in bankruptcy by companies it acquired. As of April 1, 2010, the Company has recorded a liability related to this matter in the amount of $4,016,000 and has made contributions of approximately $2,905,000. The final withdrawal liability amount may be adjusted based on a legal review of the plan's assessment, the Company's records and ensuing discussions with the plan's trustees. The Company estimates its potential complete withdrawal liability from its other multiemployer pension plans is approximately $3,000,000 to $3,500,000.

NOTE 12—COMMITMENTS AND CONTINGENCIES

        The Company, in the normal course of business, is party to various legal actions. Except as described below, management believes that the potential exposure, if any, from such matters would not have a material adverse effect on the financial condition, cash flows or results of operations of the Company.

        United States of America v. AMC Entertainment Inc. and American Multi-Cinema, Inc. (No. 99 01034 FMC (SHx), filed in the U.S. District Court for the Central District of California). On January 29, 1999, the Department of Justice (the "Department") filed suit alleging that the Company's stadium style theatres violated the ADA and related regulations. The Department alleged that the Company had failed to provide persons in wheelchairs seating arrangements with lines-of-sight comparable to the general public. The Department alleged various non-line-of-sight violations as well. The Department sought declaratory and injunctive relief regarding existing and future theatres with stadium-style seating, compensatory damages in the approximate amount of $75,000 and a civil penalty of $110,000.

        As to line-of-sight matters, the trial court entered summary judgment in favor of the Justice Department as to both liability and as to the appropriate remedy. On December 5, 2008, the Ninth Circuit Court of Appeals reversed the trial court as to the appropriate remedy and remanded the case back to the trial court for findings consistent with its decision. The Company and the Department are negotiating the extent of betterments related to the remaining remedies required for line-of-sight violations consistent with the Ninth Circuit's decision. The improvements will likely be made over a five-year term. Absent settlement, the case will be tried in February 2011. The Company has recorded a liability of approximately $349,000 for estimated fines related to this matter.

        As to the non-line-of-sight aspects of the case, on January 21, 2003, the trial court entered summary judgment in favor of the Department on matters such as parking areas, signage, ramps,

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 12—COMMITMENTS AND CONTINGENCIES (Continued)


location of toilets, counter heights, ramp slopes, companion seating and the location and size of handrails. On December 5, 2003, the trial court entered a consent order and final judgment on non-line-of-sight issues under which the Company agreed to remedy certain violations at its stadium-style theatres and at certain theatres it may open in the future. Currently the Company estimates that these betterments will be required at approximately 140 stadium-style theatres. The Company estimates that the total cost of these betterments will be approximately $54,000,000, and through April 1, 2010 the Company has incurred approximately $33,355,000 of these costs. The estimate is based on actual costs incurred on remediation work completed to date. The actual costs of betterments may vary based on the results of surveys of the remaining theatres.

        Michael Bateman v. American Multi-Cinema, Inc. (No. CV07-00171). In January 2007, a class action complaint was filed against the Company in the Central District of the United States District Court of California (the "District Court") alleging violations of the Fair and Accurate Credit Transactions Act ("FACTA"). FACTA provides in part that neither expiration dates nor more than the last five numbers of a credit or debit card may be printed on receipts given to customers. FACTA imposes significant penalties upon violators where the violation is deemed to have been willful. Otherwise damages are limited to actual losses incurred by the card holder. On October 24, 2008, the District Court denied plaintiff's renewed motion for class certification. Plaintiff has appealed this decision and the case is stayed pending this appeal. The Company is currently unable to estimate a possible loss or range of loss related to this matter.

        On May 14, 2009, Harout Jarchafjian filed a similar lawsuit alleging that the Company willfully violated FACTA and seeking statutory damages, but without alleging any actual injury (Jarchafjian v. American Multi-Cinema, Inc. (C.D. Cal. Case No. CV09-03434). The Jarchafjian case has been deemed related to the Bateman case and is stayed pending a Ninth Circuit decision in the Bateman case. The Company believes the plaintiff's allegations in both these cases, particularly those asserting the Company's willfulness, are without merit. The Company is currently unable to estimate a possible loss or range of loss related to this matter.

        In addition to the cases noted above, the Company is also currently a party to various ordinary course claims from vendors (including concession suppliers, software technology vendors, and motion picture distributors), landlords and suppliers and other legal proceedings. If management believes that a loss arising from these actions is probable and can reasonably be estimated, the Company records the amount of the loss, or the minimum estimated liability when the loss is estimated using a range and no point is more probable than another. As additional information becomes available, any potential liability related to these actions is assessed and the estimates are revised, if necessary. Except as described above, management believes that the ultimate outcome of such other matters, individually and in the aggregate, will not have a material adverse effect on the Company's financial position or overall trends in results of operations. However, litigation and claims are subject to inherent uncertainties and unfavorable outcomes could occur. An unfavorable outcome could include monetary damages. If an unfavorable outcome were to occur, there exists the possibility of a material adverse impact on the results of operations in the period in which the outcome occurs or in future periods.

        Kerasotes Acquisition.    On December 9, 2009, the Company entered into a definitve agreement with Kerasotes Showplace Theatres,  LLC ("Kerasotes") pursuant to which the Company will acquire substantially all of the assets of Kerasotes. Kerasotes operates 95 theatres and 972 screens in mid-sized,

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 12—COMMITMENTS AND CONTINGENCIES (Continued)


suburban and metropolitan markets, primarily in the Midwest. On May 24, 2010, the Company completed the acquisition. The purchase price for the Kerasotes theatres paid in cash at closing was $275,000,000 and is subject to working capital and other purchase price adjustments as described in the Unit Purchase Agreement. In connection with the consummation of the acquisition, the Company sold one of its theatres for a gain on sale of approximately $10,000,000.

NOTE 13—THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS

        The Company has provided reserves for estimated losses from theatres which have been closed. As of April 1, 2010, the Company has reserved $6,694,000 for lease terminations which have either not been consummated or paid, related primarily to two theatres and vacant restaurant space. In connection with the merger with LCE Holdings, the Company accrued $4,845,000 for future lease obligations at facilities that had been closed or were duplicate facilities that were planned to be closed following the merger. The accrual was primarily related to the New York City home office lease, which has been fully paid in fiscal 2008. The Company is obligated under long-term lease commitments with remaining terms of up to 18 years for theatres which have been closed. As of April 1, 2010, base rents aggregated approximately $831,000 annually and $8,451,000 over the remaining terms of the leases.

        A rollforward of reserves for theatre and other closure is as follows:

 
  Fifty-two Week Period   Fifty-two Week Period   Fifty-three Week Period  
 
  April 1, 2010   April 2, 2009   April 3, 2008  
(In thousands)
  Theatre
and
Other
  Merger
Exit
Costs
  Total   Theatre
and
Other
  Merger
Exit
Costs
  Total   Theatre
and
Other
  Merger
Exit
Costs
  Total  

Beginning balance

  $ 7,386   $   $ 7,386   $ 10,844   $   $ 10,844   $ 17,621   $ 1,274   $ 18,895  
 

Theatre and other closure (income) expense

    2,573         2,573     (2,262 )       (2,262 )   (20,677 )   (293 )   (20,970 )
 

Transfer of property tax liability

    715         715     63         63     424         424  
 

Transfer of deferred rent and capital lease obligations

    2,112         2,112     2,828         2,828     10,514         10,514  

Cash (payments) receipts, net

    (6,092 )       (6,092 )   (4,087 )       (4,087 )   2,962     (981 )   1,981  
                                       

Ending balance

  $ 6,694   $   $ 6,694   $ 7,386   $   $ 7,386   $ 10,844   $   $ 10,844  
                                       

        During the 52 weeks ended April 1, 2010, the Company recognized $2,573,000 of theatre and other closure expense due primarily to closure of one theatre and accretion of the closure liability related to theatres closed during prior periods. During the 52 weeks ended April 2, 2009, the Company recognized $2,262,000 of theatre and other closure income due primarily to lease terminations negotiated on favorable terms for two theatres that were closed during this period. The Company did not receive cash payments in connection with the lease terminations, but recognized income from the write-off of the unamortized deferred rent liability. During the 53 weeks ended April 3, 2008, the

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 13—THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS (Continued)


Company recognized $20,970,000 of theatre and other closure income due primarily to lease terminations negotiated on favorable terms at seven of its theatres that were either closed or the lease terms were settled favorably during this period. The Company received net cash payments of $10,159,000 in connection with these seven lease terminations.

        Theatre and other closure reserves for leases that have not been terminated are recorded at the present value of the future contractual commitments for the base rents, taxes and maintenance. As of April 1, 2010, the future lease obligations are discounted at annual rates ranging from 7.55% to 8.54%.

NOTE 14—FAIR VALUE MEASUREMENTS

        Fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the entity transacts. The inputs used to develop these fair value measurements are established in a hierarchy, which ranks the quality and reliability of the information used to determine the fair values. The fair value classification is based on levels of inputs. Assets and liabilities that are carried at fair value are classified and disclosed in one of the following categories:

Level 1:   Quoted market prices in active markets for identical assets or liabilities.

Level 2:

 

Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3:

 

Unobservable inputs that are not corroborated by market data.

        The following table summarizes the fair value hierarchy of the Company's financial assets and liabilities carried at fair value on a recurring basis as of April 1, 2010:

 
   
  Fair Value Measurements at April 1, 2010 Using  
(In thousands)
  Total Carrying
Value at
April 1, 2010
  Quoted prices in
active market
(Level 1)
  Significant other
observable inputs
(Level 2)
  Significant
unobservable inputs
(Level 3)
 

Assets:

                         
 

Money Market Mutual Funds

  $ 135,994   $ 135,994   $   $  
 

Equity securities, available-for-sale:

                         
   

Mutual Fund International

    2,586     2,586          
   

Mutual Fund Large U.S. Equity

    111     111          
   

Mutual Fund Small/Mid U.S. Equity

    187     187          
   

Mutual Fund Other Equity

    19     19          
   

Mutual Fund Fixed Income

    283     283          
                   

Total assets at fair value

  $ 139,180   $ 139,180   $   $  
                   

Liabilities:

                 
                   

Total liabilities at fair value

  $   $   $   $  
                   

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 14—FAIR VALUE MEASUREMENTS (Continued)

        The following table summarizes the fair value hierarchy of the Company's financial assets and liabilities carried at fair value on a recurring basis as of April 2, 2009:

 
   
  Fair Value Measurements at April 2, 2009 Using  
(In thousands)
  Total Carrying
Value at
April 2, 2009
  Quoted prices in
active market
(Level 1)
  Significant other
observable inputs
(Level 2)
  Significant
unobservable inputs
(Level 3)
 

Assets:

                         
 

Money Market Mutual Funds

  $ 380,470   $ 380,470   $   $  
 

Equity securities, available-for-sale:

                         
   

Mutual Fund International

    2,214     2,214          
   

Mutual Fund Large U.S. Equity

    164     164          
   

Mutual Fund Small/Mid U.S. Equity

    181     181          
   

Mutual Fund Other Equity

    12     12          
   

Mutual Fund Fixed Income

    291     291          
                   

Total assets at fair value

  $ 383,332   $ 383,332   $   $  
                   

Liabilities:

                         
 

Interest rate swap agreements

    552         552      
                   

Total liabilities at fair value

  $ 552   $   $ 552   $  
                   

        Valuation Techniques.    The Company's cash and cash equivalents are primarily money market mutual funds invested in funds that seek to preserve principal, are highly liquid, and therefore are recorded on the balance sheet at the principal amounts deposited, which equals fair value. The equity securities primarily consist of mutual funds invested in equity, fixed income, and international funds. The equity securities are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy. The amortized cost basis of the equity securities held as of April 1, 2010 is $2,765,000.

        The Company is required to disclose the fair value of financial instruments that are not recognized in the statement of financial position, for which it is practicable to estimate that value. At April 1, 2010, the carrying amount of the Company's liabilities for corporate borrowings was approximately $2,271,914,000 and the fair value was approximately $2,334,395,000. At April 2, 2009, the carrying amount of the corporate borrowings was approximately $2,394,586,000 and the fair value was approximately $1,996,185,000. At April 1, 2010, quoted market prices were used to value publicly held corporate borrowings, as well as using indicative trading levels for term loans as compiled by a firm that makes a market in the security. At April 2, 2009, quoted market prices were used to value publicly held corporate borrowings, in addition to recent payments made to purchase term loans. The carrying value of cash and equivalents approximates fair value because of the short duration of those instruments.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 14—FAIR VALUE MEASUREMENTS (Continued)

        The following table summarizes the fair value hierarchy of the Company's assets that were measured at fair value on a nonrecurring basis:

 
   
  Fair Value Measurements at April 1, 2010 Using    
 
(In thousands)
  Total
Carrying
Value at
April 1, 2010
  Quoted prices in
active market
(Level 1)
  Significant
other
observable
inputs (Level 2)
  Significant
unobservable
inputs
(Level 3)
  Total Losses  

Long-lived assets held and used

  $ 10,335   $   $   $ 10,335   $ 3,765  

        In accordance with the provisions of the impairment of long-lived assets subsections of FASB Codification Subtopic 360-10, long-lived assets held and used were written down to their fair value of $10,335,000, resulting in an impairment charge of $3,765,000, which was included in earnings for the 52 weeks ending April 1, 2010.

        The fair value of assets is determined as either the expected selling price less selling costs (where appropriate) or the present value of the estimated future cash flows. The fair value of furniture, fixtures and equipment has been determined using similar asset sales and in some instances with the assistance of third party valuation studies. The discount rate used in determining the present value of the estimated future cash flows was based on management's expected return on assets during fiscal 2010.

NOTE 15—OPERATING SEGMENT

        The Company reports information about operating segments in accordance with ASC 280-10, Segment Reporting, which requires financial information to be reported based on the way management organizes segments within a company for making operating decisions and evaluating performance. The Company has identified one reportable segment for its theatrical exhibition operations. Prior to fiscal 2009, the Company had three operating segments which consisted of United States and Canada Theatrical Exhibition, International Theatrical Exhibition, and Other. The reduction in the number of operating segments was a result of the disposition of Cinemex in December 2008. Cinemex was previously reported in the International Theatrical Exhibition operating segment and accounted for a substantial majority of that segment. In addition, in the second quarter of fiscal 2009, the Company consolidated the Other operating segment with the United States and Canada Theatrical Exhibition operating segment due to a previous contribution of advertising net assets to NCM. During fiscal 2009, the United States and Canada Theatrical Exhibition operating segment was renamed the Theatrical Exhibition operating segment.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 15—OPERATING SEGMENT (Continued)

        Information about the Company's revenues and assets by geographic area is as follows:

Revenues (In thousands)
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
  53 Weeks
Ended
April 3, 2008
 

United States

  $ 2,328,069   $ 2,184,686   $ 2,254,399  

Canada

    70,260     61,830     56,581  

France

    5,979     5,015     6,100  

United Kingdom

    13,431     13,956     15,964  
               

Total revenues

  $ 2,417,739   $ 2,265,487   $ 2,333,044  
               

 

Long-term assets, net (In thousands)
  April 1, 2010   April 2, 2009  

United States

  $ 3,060,661   $ 3,120,822  

Canada

    2,891     3,209  

France

    70     724  

United Kingdom

    568     307  
           

Total long-term assets(1)

  $ 3,064,190   $ 3,125,062  
           

(1)
Long-term assets are comprised of property, intangible assets, goodwill and other long-term assets.

NOTE 16—RELATED PARTY TRANSACTIONS

Governance Agreements

        Agreements entered into by the Company, the Sponsors and the Company's other stockholders (collectively, the "Governance Agreements"), provide that the Board of Directors for the Company consist of up to nine directors, two of whom are designated by JPMP, two of whom are designated by Apollo, one of whom is the Chief Executive Officer of the Company, one of whom is designated by Carlyle, one of whom is designated by Bain, one of whom is designated by Spectrum and one of whom is designated by Bain, Carlyle and Spectrum, voting together, so long as such designee was consented to by each of Bain and Carlyle. Each of the directors respectively designated by JPMP, Apollo, Carlyle, Bain and Spectrum have three votes on all matters placed before the Board of Directors of the Company and the Chief Executive Officer of the Company and the director designated by Carlyle, Bain and Spectrum voting together have one vote each. The number of directors respectively designated by the Sponsors is to be reduced upon a decrease in such Sponsors' ownership in the Company below certain thresholds.

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 16—RELATED PARTY TRANSACTIONS (Continued)

        The Voting Agreement among the Company and the pre-existing stockholders of the Company provides that, until the fifth anniversary of the merger with LCE Holdings (the "Blockout Period"), the former continuing stockholders of the Company (other than Apollo and JPMP) would generally vote their voting shares of capital stock of the Company in favor of any matter in proportion to the shares of capital stock of Apollo and JPMP voted in favor of such matter, except in certain specified instances. The Voting Agreement among the Company and the former stockholders of LCE Holdings further provides that during the Blockout Period, the former LCE Holdings stockholders would generally vote their voting shares of capital stock of the Company on any matter as directed by any two of Carlyle, Bain and Spectrum, except in certain specified instances. In addition, certain actions of the Company, including, but not limited to, change in control transactions, acquisition or disposition transactions with a value in excess of $10,000,000, the settlement of claims or litigation in excess of $2,500,000, an initial public offering of the Company, hiring or firing a chief executive officer, chief financial officer or chief operating officer, incurring or refinancing indebtedness in excess of $5,000,000 or engaging in new lines of business, require the approval of either (i) any three of JPMP, Apollo, Carlyle or Bain or (ii) Spectrum and (a) either JPMP or Apollo and (b) either Carlyle or Bain (the "Requisite Stockholder Majority") if at such time the Sponsors collectively held at least a majority of the Company's voting shares.

        Prior to the earlier of the end of the Blockout Period and the completion of an initial public offering of capital stock, the Governance Agreements prohibit the Sponsors and the other pre-existing stockholders of the Company from transferring any of their interests in the Company, other than (i) certain permitted transfers to affiliates or to persons approved of by the Sponsors and (ii) transfers after the Blockout Period subject to the rights described below.

        The Governance Agreements set forth additional transfer provisions for the Sponsors and the other pre-existing stockholders of the Company with respect to the interests in the Company, including the following:

        Right of first offer.    After the Blockout Date and prior to an initial public offering, the Company and, in the event the Company did not exercise its right of first offer, each of the Sponsors and the other preexisting stockholders of the Company, have a right of first offer to purchase (on a pro rata basis in the case of the stockholders) all or any portion of the shares of the Company that a Sponsor or other former continuing stockholder of the Company was proposing to sell to a third party at the price and on the terms and conditions offered by such third party.

        Drag-along rights.    If, prior to an initial public offering, Sponsors constituting a Requisite Stockholder Majority propose to transfer shares of the Company to an independent third party in a bona fide arm's-length transaction or series of transactions that resulted in a sale of all or substantially all of the Company, such Sponsors may have elected to require each of the other stockholders of the Company to transfer to such third party all of its shares at the purchase price and upon the other terms and subject to the conditions of the sale.

        Tag-along rights.    Subject to the right of first offer described above, if any Sponsor or other former continuing stockholder of the Company proposes to transfer shares of the Company held by it, then such stockholder would give notice to each other stockholder, who would each have the right to

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 16—RELATED PARTY TRANSACTIONS (Continued)


participate on a pro rata basis in the proposed transfer on the terms and conditions offered by the proposed purchaser.

        Participant rights.    On or prior to an initial public offering, the Sponsors and the other pre-existing stockholders of the Company have the pro rata right to subscribe to any issuance by the Company or any subsidiary of shares of its capital stock or any securities exercisable, convertible or exchangeable for shares of its capital stock, subject to certain exceptions.

        The Governance Agreements also provide for certain registration rights in the event of an initial public offering of the Company, including the following:

        Demand rights.    Subject to the consent of at least two of any of JPMP, Apollo, Carlyle and Bain during the first two years following an initial public offering, each Sponsor has the right at any time following an initial public offering to make a written request to the Company for registration under the Securities Act of part or all of the registrable equity interests held by such stockholders at the Company's expense, subject to certain limitations. Subject to the same consent requirement, the other pre-existing stockholders of the Company as a group have the right at any time following an initial public offering to make one written request to the Company for registration under the Securities Act of part or all of the registrable equity interests held by such stockholders with an aggregate offering price to the public of at least $200,000,000.

        Piggyback rights.    If the Company at any time proposes to register under the Securities Act any equity interests on a form and in a manner which would permit registration of the registrable equity interests held by stockholders of the Company for sale to the public under the Securities Act, the Company must give written notice of the proposed registration to each stockholder, who then have the right to request that any part of its registrable equity interests be included in such registration, subject to certain limitations.

        Holdback agreements.    Each stockholder agrees that it would not offer for public sale any equity interests during a period not to exceed 90 days (180 days in the case of an initial public offering) after the effective date of any registration statement filed by the Company in connection with an underwritten public offering (except as part of such underwritten registration or as otherwise permitted by such underwriters), subject to certain limitations.

Amended and Restated Fee Agreement

        In connection with the merger with LCE Holdings, the Company and the Sponsors entered into an Amended and Restated Fee Agreement, which provided for an annual management fee of $5,000,000, payable quarterly and in advance to each Sponsor, on a pro rata basis, until the twelfth anniversary from December 23, 2004, and such time as the sponsors own less than 20% in the aggregate of the Company. In addition, the fee agreement provided for reimbursements by the Company to the Sponsors for their out-of-pocket expenses. The Amended and Restated Fee Agreement terminated on June 11, 2007, the date of the holdco merger, and was superseded by a substantially identical agreement entered into by the Company, the Sponsors and the Company's other stockholders.

        Upon the consummation of a change in control transaction or an initial public offering, each of the Sponsors will receive, in lieu of quarterly payments of the annual management fee, a fee equal to

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AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 16—RELATED PARTY TRANSACTIONS (Continued)


the net present value of the aggregate annual management fee that would have been payable to the Sponsors during the remainder of the term of the fee agreement (assuming a twelve year term from the date of the original fee agreement), calculated using the treasury rate having a final maturity date that is closest to the twelfth anniversary of the date of the original fee agreement date. As of April 1, 2010, the Company estimates this amount would be $29,190,000 should a change in control transaction or an IPO occur. The Company expects to record any lump sum payment to the Sponsors as a dividend.

        The fee agreement also provides that the Company will indemnify the Sponsors against all losses, claims, damages and liabilities arising in connection with the management services provided by the Sponsors under the fee agreement.

        The Company is owned by the Sponsors, other co-investors and by certain members of management as follows: JPMP (20.839%); Apollo (20.839%); Bain Capital Partners (15.13%); The Carlyle Group (15.13%); Spectrum Equity Investors (9.79%); Weston Presidio Capital IV, L.P. and WPC Entrepreneur Fund II, L.P. (3.91%); Co-Investment Partners, L.P. (3.91%); Caisse de Depot et Placement du Quebec (3.128%); AlpInvest Partners CS Investments 2003 C.V., AlpInvest Partners Later Stage Co-Investments Custodian II B.V. and AlpInvest Partners Later Stage Co-Investments Custodian IIA B.V. (2.737%); SSB Capital Partners (Master Fund) I, L.P. (1.955%); CSFB Strategic Partners Holdings II, L.P., CSFB Strategic Partners Parallel Holdings II, L.P., and GSO Credit Opportunities Fund (Helios), L.P. (1.564%); Credit Suisse Anlagestiftung, Pearl Holding Limited, Vega Invest (Guernsey) Limited and Partners Group Private Equity Performance Holding Limited (0.782%); Screen Investors 2004, LLC (0.152%); and current and former members of management (0.134%)(1).


(1)
All percentage ownerships are approximate.

Control Arrangement

        The Sponsors have the ability to control the Company's affairs and policies and the election of directors and appointment of management.

DCIP

        In February 2007, Mr. Travis Reid was hired as the chief executive officer of DCIP, a joint venture between the Company, Cinemark and Regal formed to explore the possibility of implementing digital cinema in the Company's theatres and to create a financing model and establish agreements with major motion picture studios for the implementation of digital cinema. Mr. Reid is a member of the Company's Board of Directors. See Note 5—Investments, for a discussion of transactions with DCIP.

Market Making Transactions

        On August 18, 2004, the Company sold $304,000,000 in aggregate principal amount at maturity of its 12% Senior Discount Notes due 2014. On June 9, 2009, the Company sold $600,000,000 in aggregate principal amount of its Notes due 2019. On January 26, 2006, the Company sold $325,000,000 in aggregate principal amount of its Notes due 2016. JP Morgan Securities Inc., an affiliate of J.P. Morgan Partners, LLC which owns approximately 20.8% of the Company, was an initial purchaser of these notes. Credit Suisse Securities (USA) LLC, whose affiliates own approximately 1.6% of the Company, was also an initial purchaser of these notes.

F-94


Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 17—CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY

        The Company is a holding company that conducts substantially all of its business operations through its subsidiaries.

        There are significant restrictions on the Company's ability to obtain funds from any of its subsidiaries through dividends, loans or advances. Accordingly, these condensed financial statements have been presented on a "parent-only" basis. Under a parent-only presentation, the Company's investments in its consolidated subsidiaries are presented under the equity method of accounting. These parent-only financial statements should be read in conjunction with the Company's audited consolidated financial statements.

AMC Entertainment Holdings, Inc.
CONDENSED STATEMENTS OF OPERATIONS—PARENT ONLY

(In thousands)
  52 Weeks
Ended
April 1,
2010
  52 Weeks
Ended
April 2,
2009
  53 Weeks
Ended
April 3,
2008
 

Operating Costs and Expenses

                   
 

General and administrative:

                   
   

Merger, acquisition and transaction costs

  $ 195   $ 829   $ 938  
   

Other

    310     53     (93 )
               
   

Operating costs and expenses

    505     882     845  
               

Operating loss

    (505 )   (882 )   (845 )

Other expense (income)

                   
 

Equity in (earnings) loss of Marquee Holdings Inc. 

    (39,654 )   111,158     (22,733 )
 

Other income

    (85,234 )        
 

Interest expense

                   
   

Corporate borrowings

    12,019     37,034     36,819  
 

Investment income

    (47 )   (28 )   (90 )
               

Total other (income) expense

    (112,916 )   148,164     13,996  
               

Earnings (loss) before income taxes

    112,411     (149,046 )   (14,841 )

Income tax provision (benefit)

    32,500         (8,600 )
               

Net earnings (loss)

  $ 79,911   $ (149,046 ) $ (6,241 )
               

F-95


Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 17—CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY (Continued)

AMC Entertainment Holdings, Inc.
CONSOLIDATED BALANCE SHEETS—PARENT ONLY

(In thousands, except share data)
  April 1, 2010   April 2, 2009  

Assets

             

Cash and equivalents

  $ 113,645   $ 3,017  

Receivables

         

Other current assets

    672     274  
           
 

Total current assets

    114,317     3,291  

Goodwill

    8,026     8,026  

Investment in Marquee Holdings Inc. 

    546,098     826,178  

Other long-term assets

    1,966     7,186  
           
 

Total assets

  $ 670,407   $ 844,681  
           

Liabilities and Stockholders' Equity

             

Current liabilities:

             
 

Accrued expenses and other liabilities

  $   $ 347  
           
   

Total current liabilities

        347  

Corporate borrowings

    198,265     465,850  

Deferred Taxes

    32,600        
           
 

Total liabilities

    230,865     466,197  
           

Stockholders' Equity:

             
 

Class A-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00000 and 382,475.00000 shares issued and outstanding as of April 1, 2010 and April 2, 2009, respectively)

    4     4  
 

Class A-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00000 and 382,475.00000 shares issued and outstanding as of April 1, 2010 and April 2, 2009, respectively)

    4     4  
 

Class N Common Stock nonvoting ($.01 par value, 375,000 shares authorized; 1,700.63696 shares issued and outstanding as of April 1, 2010 and April 2, 2009)

         
 

Class L-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61252 and 256,085.61252 shares issued and outstanding as of April 1, 2010 and April 2, 2009, respectively)

    3     3  
 

Class L-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61252 and 256,085.61252 shares issued and outstanding as of April 1, 2010 and April 2, 2009, respectively)

    3     3  
 

Additional paid-in capital

    669,837     668,453  

Treasury stock, 4,314 shares at cost

    (2,596 )   (2,596 )
 

Accumulated other comprehensive income (loss)

    (3,176 )   17,061  
 

Accumulated deficit

    (224,537 )   (304,448 )
           
   

Total stockholders' equity

    439,542     378,484  
           
   

Total liabilities and stockholders' equity

  $ 670,407   $ 844,681  
           

F-96


Table of Contents


AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 17—CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY (Continued)

AMC Entertainment Holdings, Inc.
CONDENSED STATEMENTS OF CASH FLOWS—PARENT ONLY

(In thousands)
  52 Weeks
Ended
April 1, 2010
  52 Weeks
Ended
April 2, 2009
  53 Weeks
Ended
April 3, 2008
 

INCREASE (DECREASE) IN CASH AND EQUIVALENTS

                   

Cash flows from operating activities

                   
 

Net earnings (loss)

  $ 79,911   $ (149,046 ) $ (6,241 )
 

Adjustments to reconcile net earnings (loss) to net cash used in operating activities:

                   
 

Amortization of discount on corporate borrowings

        795     643  
 

Interest accrued to principal on Corporate borrowings

    10,570     34,001     34,411  
 

Interest paid and discount on Repurchase of Parent Term Loan

    (29,046 )        
 

Deferred income taxes

    32,500         (8,600 )
 

Gain on extinguishment of debt

    (85,451 )        
 

Equity in (earnings) loss of Marquee Holdings Inc. 

    (39,654 )   111,158     (22,733 )
 

Net change in operating activities:

                   
   

Receivables and other assets

    (344 )   2,238     1,764  
   

Accrueds and other liabilities

        (289 )   289  
 

Other, net

    1,499     179      
               
 

Net cash used in operating activities

    (30,015 )   (964 )   (467 )
               

Cash flows from investing activities

                   
 

Contribution from Marquee Holdings Inc. 

    300,881     3,349     270,588  
               
 

Net cash provided by investing activities

    300,881     3,349     270,588  
               

Cash flows from financing activities

                   
 

Proceeds from issuance of Parent Term Loan Facility

            396,000  
 

Repurchase of Parent Term Loan

    (160,035 )        
 

Proceeds from exercise of stock options

            500  
 

Dividends paid to stockholders

            (652,800 )
 

Deferred financing costs

    (203 )       (10,718 )
 

Proceeds from issuance of common stock

        125      
 

Treasury stock purchases

        (2,596 )    
               
 

Net cash used in financing activities

    (160,238 )   (2,471 )   (267,018 )
               

Net increase in cash and equivalents

    110,628     (86 )   3,103  

Cash and equivalents at beginning of year

    3,017     3,103      
               

Cash and equivalents at end of year

  $ 113,645   $ 3,017   $ 3,103  
               

F-97


Table of Contents

AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 17—CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY (Continued)

AMC Entertainment Holdings, Inc.

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY—PARENT ONLY

 
  Class A-1
Voting
Common Stock
  Class A-2
Voting
Common Stock
  Class N
Nonvoting
Common Stock
 
(In thousands, except
share and per share data)
  Shares   Amount   Shares   Amount   Shares   Amount  

March 29, 2007 through April 1, 2010

                                     

Balance March 29, 2007

    382,475.00000   $ 4     382,475.00000   $ 4     5,128.77496   $  

Comprehensive loss

                                     
 

Net loss

                         
 

ASC 740 (formerly FIN 48) adoption adjustment

                         
 

Foreign currency translation adjustment

                         
 

Change in fair value of cash flow hedges

                         
 

Losses on interest rate swaps reclassified to interest expense corporate borrowings

                         
 

Pension and other benefit adjustments

                         
 

Unrealized loss on marketable securities

                         
 

Comprehensive loss

                         

Stock-based compensation—options

                         

Dividends paid to stockholders

                         

Exercise of stock options

                    500      
                           

Balance April 3, 2008

    382,475.00000     4     382,475.00000     4     5,628.77496      

Comprehensive earnings (loss):

                                     
 

Net loss

                         
 

Foreign currency translation adjustment

                         
 

Change in fair value of cash flow hedges

                         
 

Losses on interest rate swaps reclassified to interest expense corporate borrowings

                         
 

Pension and other benefit adjustments

                         
 

Unrealized loss on marketable securities

                         
 

Comprehensive loss

                         

ASC 715 (formerly SFAS 158) adoption adjustment

                         

Stock-based compensation—options

                         

Treasury Stock purchased

                    (4,314 )    

Issuance of Class N Common Stock

                    385.862      
                           

Balance April 2, 2009

    382,475.00000     4     382,475.00000     4     1,700.63696      

Comprehensive earnings

                                     

Net earnings

                         

Foreign currency translation adjustment

                         

Change in fair value of cash flow hedges

                         

Losses on interest rate swaps reclassified to interest expense corporate borrowings

                         

Pension and other benefit adjustments

                         

Unrealized gain on marketable securities

                         

Comprehensive earnings

                         
 

Stock-based compensation—options

                         
                           

Balance April 1, 2010

    382,475.0000   $ 4     382,475.0000   $ 4     1,700.63696   $  
                           

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Table of Contents

AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 17—CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY (Continued)

AMC Entertainment Holdings, Inc.

CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY—PARENT ONLY (Continued)

 
  Class L-1
Voting
Common Stock
  Class L-2
Voting
Common Stock
   
   
   
   
   
 
 
   
   
  Accumulated
Other
Comprehensive
Income (Loss)
   
   
 
 
  Additional
Paid-in
Capital
  Treasury
Stock
  Accumulated
Deficit
  Total
Stockholders'
Equity
 
 
  Shares   Amount   Shares   Amount  
                                                         
      256,085.61252   $ 3     256,085.61252   $ 3   $ 1,314,579   $   $ (3,834 ) $ (143,706 ) $ 1,167,053  
                                                         
                                    (6,241 )   (6,241 )
                                    (5,373 )   (5,373 )
                                (1,708 )       (1,708 )
                                (5,507 )       (5,507 )
                                                         
                                1,523         1,523  
                                6,532         6,532  
                                (674 )       (674 )
                                                       
                                              (11,448 )
                      3,426                 3,426  
                      (652,800 )               (652,800 )
                      500                 500  
                                       
      256,085.61252     3     256,085.61252     3     665,705         (3,668 )   (155,320 )   506,731  
                                                         
                                    (149,046 )   (149,046 )
                                25,558         25,558  
                                (1,833 )       (1,833 )
                                                         
                                5,230         5,230  
                                (8,117 )       (8,117 )
                                (109 )       (109 )
                                                       
                                        (128,317 )
                                  (82 )   (82 )
                      2,623                 2,623  
                          (2,596 )           (2,596 )
                      125                 125  
                                       
      256,085.61252     3     256,085.61252     3     668,453     (2,596 )   17,061     (304,448 )   378,484  
                                                         
                                  79,911     79,911  
                              (13,021 )       (13,021 )
                              (6 )       (6 )
                                                         
                              558         558  
                              (8,499 )       (8,499 )
                              731         731  
                                                       
                                          59,674  
                        1,384                 1,384  
                                       
      256,085.61252   $ 3     256,085.61252   $ 3   $ 669,837   $ (2,596 ) $ (3,176 ) $ (224,537 ) $ 439,542  
                                       

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Table of Contents

AMC Entertainment Holdings, Inc.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Years Ended April 1, 2010, April 2, 2009 and April 3, 2008

NOTE 18—SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)

AMC Entertainment Holdings, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS BY QUARTER
(In thousands)

 
   
   
   
   
   
   
   
   
  Fiscal Year  
 
  July 2,
2009
  July 3,
2008
  October 1,
2009
  October 2,
2008
  December 31,
2009
  January 1,
2009
  April 1,
2010
  April 2,
2009
 
 
  2010   2009  

Revenues

                                                             
 

Admissions

  $ 446,227   $ 416,931   $ 390,498   $ 404,517   $ 444,420   $ 376,917   $ 430,708   $ 381,963   $ 1,711,853   $ 1,580,328  
 

Concessions

    173,660     169,834     147,381     159,916     166,867     148,757     158,808     147,744     646,716     626,251  
 

Other theatre

    15,425     15,454     13,173     15,577     15,895     13,261     14,677     14,616     59,170     58,908  
                                           
   

Total revenues

    635,312     602,219     551,052     580,010     627,182     538,935     604,193     544,323     2,417,739     2,265,487  
                                           

Operating costs and expenses

                                                             
 

Film exhibition costs

    249,101     231,736     208,328     218,376     239,275     196,439     231,928     196,105     928,632     842,656  
 

Concession costs

    19,165     18,437     15,905     16,580     18,378     16,000     19,406     16,762     72,854     67,779  
 

Operating expense

    150,177     146,596     143,391     147,857     155,597     143,299     161,609     138,270     610,774     576,022  
 

Rent

    112,373     112,335     108,311     112,814     110,423     111,724     109,557     111,930     440,664     448,803  
 

General and administrative:

                                                             
   

Merger, acquisition and transaction costs

    432     67     54     1,025     487     310     1,605     79     2,578     1,481  
   

Management fee

    1,250     1,250     1,250     1,250     1,250     1,250     1,250     1,250     5,000     5,000  
   

Other

    13,282     11,209     13,065     11,928     14,826     10,741     17,101     19,922     58,274     53,800  
 

Depreciation and amortization

    48,788     50,586     46,689     50,470     47,472     50,464     45,393     49,893     188,342     201,413  
 

Impairment of long-lived assets(1)

                        73,547     3,765         3,765     73,547  
                                           
   

Operating costs and expenses

    594,568     572,216     536,993     560,300     587,708     603,774     591,614     534,211     2,310,883     2,270,501  
                                           

Operating income (loss)

    40,744     30,003     14,059     19,710     39,474     (64,839 )   12,579     10,112     106,856     (5,014 )

Other expense (income)

                                                             
 

Other income(2)

    (73,283 )   (2,203 )   (10,116 )   (7,701 )   (2,135 )   (1,889 )   (2,259 )   (2,346 )   (87,793 )   (14,139 )
 

Interest expense

                                                             
   

Corporate borrowings

    39,081     45,908     43,407     46,545     42,527     46,431     43,424     43,807     168,439     182,691  
   

Capital and financing lease obligations

    1,413     1,497     1,413     1,498     1,413     1,497     1,413     1,498     5,652     5,990  
 

Equity in earnings of non-consolidated entities

    (6,262 )   (4,385 )   (4,348 )   (5,321 )   (7,517 )   (6,033 )   (12,173 )   (9,084 )   (30,300 )   (24,823 )

Investment income

    (127 )   (293 )   (50 )   (316 )   (36 )   (928 )   (74 )   (222 )   (287 )   (1,759 )
                                           
   

Total other expense (income)

    (39,178 )   40,524     30,306     34,705     34,252     39,078     30,331     33,653     55,711     147,960  
                                           

Earnings (loss) from continuing operations before income taxes

    79,922     (10,521 )   (16,247 )   (14,995 )   5,222     (103,917 )   (17,752 )   (23,541 )   51,145     (152,974 )

Income tax provision (benefit)(3)

    32,700     1,880     (50 )   838     (550 )   882     (68,400 )   2,200     (36,300 )   5,800  
                                           

Earnings (loss) from continuing operations

    47,222     (12,401 )   (16,197 )   (15,833 )   5,772     (104,799 )   50,648     (25,741 )   87,445     (158,774 )

Earnings (loss) from discontinued operations, net of income taxes(4)

    723     4,304     (181 )   2,528     494     2,085     (8,570 )   811     (7,534 )   9,728  
                                           

Net earnings (loss)

  $ 47,945   $ (8,097 ) $ (16,378 ) $ (13,305 ) $ 6,266   $ (102,714 ) $ 42,078   $ (24,930 ) $ 79,911   $ (149,046 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per share:

                                                             
 

Earnings (loss) from continuing operations

  $ 36.93   $ (9.67 ) $ (12.67 ) $ (12.36 ) $ 4.51   $ (81.81 ) $ 39.61   $ (20.11 ) $ 68.38   $ (123.93 )
 

Earnings (loss) from discontinued operations

    0.56     3.36     (0.14 )   1.97     0.39     1.63     (6.71 )   0.64     (5.89 )   7.60  
                                           

Net earnings (loss) per share

  $ 37.49   $ (6.31 ) $ (12.81 ) $ (10.39 ) $ 4.90   $ (80.18 ) $ 32.90   $ (19.47 ) $ 62.49   $ (116.33 )
                                           

Diluted earnings (loss) per share:

                                                             
 

Earnings (loss) from continuing operations

  $ 36.93   $ (9.67 ) $ (12.67 ) $ (12.36 ) $ 4.50   $ (81.81 ) $ 39.23   $ (20.11 ) $ 68.24   $ (123.93 )
 

Earnings (loss) from discontinued operations

    0.56     3.36     (0.14 )   1.97     0.38     1.63     (6.64 )   0.64     (5.88 )   7.60  
                                           

Net earnings (loss) per share:

  $ 37.49   $ (6.31 ) $ (12.81 ) $ (10.39 ) $ 4.88   $ (80.18 ) $ 32.59   $ (19.47 ) $ 62.36   $ (116.33 )
                                           

Average shares outstanding:

                                                             
 

Basic

    1,278.82     1,282.57     1,278.82     1,280.98     1,278.82     1,280.98     1,278.82     1,280.24     1,278.82     1,281.20  
                                           
 

Diluted

    1,278.82     1,282.57     1,278.82     1,280.98     1,283.45     1,280.98     1,291.15     1,280.24     1,281.42     1,281.20  
                                           

(1)
During the 13 weeks ended January 1, 2009 and April 1, 2010, the Company recorded impairment charges of $73.5 million and $3.8 million, respectively.

(2)
During the 13 weeks ended July 2, 2009 and October 1, 2009, the Company recorded net gains on the extinguishment of debt of $71.2 million and $2.7 million, respectively.

(3)
During the 13 weeks ended April 1, 2010, we released $55.2 million of valuation allowance for deferred tax assets which reduced our income tax provision.

(4)
During the 13 weeks ended April 1, 2010, we recorded $8.9 million of bad debt expense related to Cinemex.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Members of
National CineMedia, LLC
Centennial, Colorado

        We have audited the accompanying balance sheets of National CineMedia, LLC (the "Company") as of December 30, 2010 and December 31, 2009, and the related statements of operations, members' equity (deficit), and cash flows for the years ended December 30, 2010, December 31, 2009 and January 1, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, such financial statements present fairly, in all material respects, the financial position of the Company as of December 30, 2010 and December 31, 2009, and the results of its operations and its cash flows for the years ended December 30, 2010, December 31, 2009 and January 1, 2009, in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Denver, Colorado
February 24, 2011

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NATIONAL CINEMEDIA, LLC

BALANCE SHEETS

(In millions)

 
  December 30, 2010   December 31, 2009  

ASSETS

             

CURRENT ASSETS:

             
 

Cash and cash equivalents

  $ 13.8   $ 37.8  
 

Receivables, net of allowance of $3.7 and $3.6 million, respectively

    100.1     89.0  
 

Prepaid expenses

    1.7     1.5  
 

Prepaid management fees to managing member

    0.8     0.6  
           
   

Total current assets

    116.4     128.9  

PROPERTY AND EQUIPMENT, net of accumulated depreciation of $46.4 and $39.3 million, respectively

    19.8     23.7  

INTANGIBLE ASSETS, net of accumulated amortization of $10.8 and $4.4 million, respectively

    275.2     134.2  

OTHER ASSETS:

             
 

Debt issuance costs, net

    7.3     9.2  
 

Other investment

    6.7     7.4  
 

Other long-term assets

    0.6     1.0  
           
   

Total other assets

    14.6     17.6  
           

TOTAL

  $ 426.0   $ 304.4  
           

LIABILITIES AND MEMBERS' EQUITY/(DEFICIT)

             

CURRENT LIABILITIES:

             
 

Amounts due to founding members

    25.2     29.8  
 

Amounts due to managing member

    28.2     22.9  
 

Accrued expenses

    8.6     12.4  
 

Current portion of long-term debt

    1.2     4.3  
 

Current portion of interest rate swap agreements

    25.3     24.4  
 

Accrued payroll and related expenses

    9.3     6.6  
 

Accounts payable

    10.5     11.3  
 

Deferred revenue and other current liabilities

    3.8     2.8  
           
   

Total current liabilities

    112.1     114.5  

NON-CURRENT LIABILITIES:

             
 

Borrowings

    775.0     799.0  
 

Interest rate swap agreements

    45.5     30.2  
 

Other long-term liabilities

    0.0     0.3  
           
   

Total non-current liabilities

    820.5     829.5  
           
   

Total liabilities

    932.6     944.0  
           

COMMITMENTS AND CONTINGENCIES (NOTE 11)

             

MEMBERS' EQUITY/(DEFICIT)

    (506.6 )   (639.6 )
           

TOTAL

  $ 426.0   $ 304.4  
           

See accompanying notes to financial statements.

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NATIONAL CINEMEDIA, LLC

STATEMENTS OF OPERATIONS

(In millions)

 
  Year Ended
December 30,
2010
  Year Ended
December 31,
2009
  Year Ended
January 1,
2009
 

REVENUE:

                   
 

Advertising (including revenue from founding members of $38.5, $38.2 and $45.6 million, respectively)

  $ 379.4   $ 335.1   $ 330.3  
 

Fathom Events

    48.0     45.5     38.9  
 

Other

    0.1     0.1     0.3  
               
   

Total

    427.5     380.7     369.5  
               

OPERATING EXPENSES:

                   
 

Advertising operating costs

    21.7     20.0     18.7  
 

Fathom Events operating costs (including costs to founding members of $7.3, $6.7, and $6.0 million, respectively)

    32.4     29.1     25.1  
 

Network costs

    20.0     18.6     17.0  
 

Theatre access fees—founding members

    52.6     52.7     49.8  
 

Selling and marketing costs

    57.9     50.2     47.9  
 

Administrative costs

    17.9     14.8     14.5  
 

Administrative fee—managing member

    16.6     10.8     9.7  
 

Severance plan costs

    0.0     0.0     0.5  
 

Depreciation and amortization

    17.8     15.6     12.4  
 

Other costs

    0.0     0.7     0.7  
               
   

Total

    236.9     212.5     196.3  
               

OPERATING INCOME

   
190.6
   
168.2
   
173.2
 

Interest Expense and Other, Net:

                   
 

Borrowings

    44.4     47.1     51.8  
 

Change in derivative fair value

    5.3     (7.0 )   14.2  
 

Interest income and other

    0.2     (2.0 )   (0.2 )
               
   

Total

    49.9     38.1     65.8  

Impairment and related loss

    0.0     0.0     11.5  
               

INCOME BEFORE INCOME TAXES

    140.7     130.1     95.9  
               

Provision for Income Taxes

    0.5     0.8     0.6  

Equity loss from investment, net

    0.7     0.8     0.0  
               

NET INCOME

  $ 139.5   $ 128.5   $ 95.3  
               

See accompanying notes to financial statements.

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NATIONAL CINEMEDIA, LLC

STATEMENTS OF MEMBERS' EQUITY/(DEFICIT)

(In millions)

 
  Total  

Balance—December 27, 2007

  $ (713.8 )

Contribution of severance plan payments

    0.5  

Capital contribution from managing member

    0.6  

Capital contribution from founding members

    4.7  

Distribution to managing member

    (55.5 )

Distribution to founding members

    (75.5 )

Units issued for purchase of intangible asset

    116.1  

Comprehensive Income:

       
 

Unrealized (loss) on cash flow hedge

    (59.1 )
 

Net income

    95.3  
       
   

Total Comprehensive Income

    36.2  

Share-based compensation expense

    1.1  
       

Balance—January 1, 2009

  $ (685.6 )
       

Capital contribution from founding members

    0.1  

Distribution to managing member

    (57.8 )

Distribution to founding members

    (81.5 )

Units issued for purchase of intangible asset

    28.5  

Comprehensive Income:

       
 

Unrealized (loss) on cash flow hedge

    26.1  
 

Net income

    128.5  
       
   

Total Comprehensive Income

    154.6  

Share-based compensation expense

    2.1  
       

Balance—December 31, 2009

  $ (639.6 )
       

Capital contribution from managing member

    3.5  

Distribution to managing member

    (71.0 )

Distribution to founding members

    (85.1 )

Units issued for purchase of intangible asset

    151.3  

Comprehensive Income:

       
 

Unrealized (loss) on cash flow hedge

    (10.9 )
 

Net income

    139.5  
       
   

Total Comprehensive Income

    128.6  

Share-based compensation expense

    5.7  
       

Balance—December 30, 2010

  $ (506.6 )
       

See accompanying notes to financial statements.

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NATIONAL CINEMEDIA, LLC

STATEMENTS OF CASH FLOWS

(In millions)

 
  Year Ended
December 30,
2010
  Year Ended
December 31,
2009
  Year Ended
January 1,
2009
 

CASH FLOWS FROM OPERATING ACTIVITIES:

                   
 

Net income

  $ 139.5   $ 128.5   $ 95.3  
 

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

                   
   

Depreciation and amortization

    17.8     15.6     12.4  
   

Non-cash severance and share-based compensation

    5.6     2.0     1.5  
   

Non-cash impairment and related loss

    0.0     0.0     11.5  
   

Net unrealized loss (gain) on hedging transactions

    5.3     (7.0 )   14.2  
   

Equity loss from investment

    0.7     0.8     0.0  
   

Amortization of debt issuance costs

    1.9     1.9     1.9  
   

Other non-cash operating activities

    0.6     0.0     0.0  
   

Changes in operating assets and liabilities:

                   
     

Receivables—net

    (11.1 )   3.0     (0.4 )
     

Accounts payable and accrued expenses

    (1.6 )   6.9     (0.7 )
     

Amounts due to founding members and managing member

    4.1     1.2     0.4  
     

Other operating

    0.8     (3.5 )   0.1  
               
       

Net cash provided by operating activities

    163.6     149.4     136.2  
               

CASH FLOWS FROM INVESTING ACTIVITIES:

                   
 

Purchases of property and equipment

    (10.1 )   (8.4 )   (16.6 )
 

Proceeds from sale of property and equipment to founding member

    3.0     0.0     0.0  
 

Increase in investment in affiliate

    0.0     (2.0 )   0.0  
               
       

Net cash used in investing activities

    (7.1 )   (10.4 )   (16.6 )
               

CASH FLOWS FROM FINANCING ACTIVITIES:

                   
 

Proceeds from borrowings

    124.3     0.0     139.0  
 

Repayments of borrowings

    (152.5 )   (3.0 )   (124.0 )
 

Founding members and managing member integration payments

    3.9     3.6     10.3  
 

Distributions to founding members and managing member

    (159.6 )   (135.9 )   (118.3 )
 

Unit settlement for share-based compensation

    3.4     0.0     0.0  
               
       

Net cash used in financing activities

    (180.5 )   (135.3 )   (93.0 )
               

CHANGE IN CASH AND CASH EQUIVALENTS

    (24.0 )   3.7     26.6  

CASH AND CASH EQUIVALENTS:

                   
   

Beginning of period

    37.8     34.1     7.5  
               
   

End of period

  $ 13.8   $ 37.8   $ 34.1  
               

Supplemental disclosure of non-cash financing and investing activity:

                   
 

Contribution for severance plan payments

  $ 0.0   $ 0.0   $ 0.5  
 

Purchase of an intangible asset with subsidiary equity

  $ 151.3   $ 28.5   $ 116.1  
 

Settlement of put liability by issuance of debt

  $ 0.0   $ 7.0   $ 0.0  
 

Assets acquired in settlement of put liability

  $ 0.0   $ 2.5   $ 0.0  

Supplemental disclosure of cash flow information:

                   
 

Cash paid for interest

  $ 49.8   $ 38.8   $ 48.3  
 

Cash paid for income taxes

  $ 0.5   $ 0.8   $ 0.6  

See accompanying notes to financial statements.

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1. THE COMPANY

        National CineMedia, LLC ("NCM LLC" or "the Company") commenced operations on April 1, 2005 and operates the largest digital in-theatre network in North America, allowing NCM LLC to distribute advertising, Fathom entertainment programming events and corporate events under long-term exhibitor services agreements ("ESAs") with American Multi-Cinema, Inc. ("AMC"), a wholly owned subsidiary of AMC Entertainment, Inc. ("AMCE"), Regal Cinemas, Inc., a wholly owned subsidiary of Regal Entertainment Group ("Regal"), and Cinemark USA, Inc. ("Cinemark USA"), a wholly owned subsidiary of Cinemark Holdings, Inc. ("Cinemark"). AMC, Regal and Cinemark and their affiliates are referred to in this document as "founding members". NCM LLC also provides such services to certain third-party theatre circuits under "network affiliate" agreements, which expire at various dates.

        At December 30, 2010, NCM LLC had 110,752,192 common membership units outstanding, of which 53,549,477 (48.3%) were owned by NCM, Inc., 21,452,792 (19.4%) were owned by Regal, 18,803,420 (17.0%) were owned by AMC, and 16,946,503 (15.3%) were owned by Cinemark. The membership units held by the founding members are exchangeable into NCM, Inc. common stock on a one-for-one basis. During the third quarter of 2010, AMC and Regal completed a common unit membership redemption and an underwritten public offering of an aggregate 10,955,471 shares of National CineMedia, Inc.'s ("NCM, Inc." or "managing member"), common stock (see Note 7).

        The Company has prepared its financial statements and related notes in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules and regulations of the Securities and Exchange Commission ("SEC").

        On February 13, 2007, NCM, Inc., a Company formed by NCM LLC and incorporated in the State of Delaware with the sole purpose of becoming a member and sole manager of NCM LLC, completed its initial public offering ("IPO"). The Company's business is seasonal and for this and other reasons operating results for interim periods may not be indicative of the Company's full year results or future performance. As a result of the various related-party agreements discussed in Note 7, the operating results as presented are not necessarily indicative of the results that might have occurred if all agreements were with non-related third parties.

        Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include those related to the reserve for uncollectible accounts receivable, and equity-based compensation. Actual results could differ from those estimates.

        Reclassifications—Certain reclassifications of previously reported amounts within operating activities in the statement of cash flows have been made to conform to the current year presentation.

2. SIGNIFICANT ACCOUNTING POLICIES

        Accounting Period—The Company operates on a 52-week fiscal year, with the fiscal year ending on the first Thursday after December 25, which, in certain years, results in a 53-week year, as was the case for fiscal year 2008.

        Segment Reporting—Segments are accounted for under ASC 280 Segment Reporting. Refer to Note 14.

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2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Revenue Recognition—Advertising revenue is recognized in the period in which an advertising contract is fulfilled against the contracted theatre attendees. Advertising revenue is recorded net of make-good provisions to account for delivered attendance that is less than contracted attendance. When remaining delivered attendance is provided in subsequent periods, that portion of the revenue earned is recognized in that period. Deferred revenue refers to the unearned portion of advertising contracts. All deferred revenue is classified as a current liability. Fathom Events revenue is recognized in the period in which the event is held.

        Barter Transactions—The Company enters into barter transactions that exchange advertising program time for products and services used principally for selling and marketing activities. The Company records barter transactions at the estimated fair value of the advertising exchanged based on fair value received for similar advertising from cash paying customers. Revenues for advertising barter transactions are recognized when advertising is provided, and products and services received are charged to expense when used. The Company limits the use of such barter transactions to items and services for which it would otherwise have paid cash. Any timing differences between the delivery of the bartered revenue and the use of the bartered expense products and services are recorded through deferred revenue. Revenue and expense from barter transactions for the year ended December 30, 2010 were $1.5 million and $1.1 million, respectively and were not material to the Company's statement of operations for the years ended December 31, 2009 and January 1, 2009.

        Operating Costs—Advertising related operating costs primarily include personnel and other costs related to advertising fulfillment, and to a lesser degree, production costs of non-digital advertising, and payments due to unaffiliated theatre circuits under the network affiliate agreements.

        Fathom Events operating costs include equipment rental, catering, movie tickets acquired primarily from the founding members, revenue share under the amended and restated ESAs and other direct costs of the meeting or event.

        Payment to the founding members of a theatre access fee is comprised of a payment per theatre attendee and a payment per digital screen, both of which escalate over time.

        Network costs include personnel, satellite bandwidth, repairs, and other costs of maintaining and operating the digital network and preparing advertising and other content for transmission across the digital network. These costs are not specifically allocable between the advertising business and the Fathom Events business.

        Leases—The Company leases various office facilities under operating leases with terms ranging from 3 to 15 years. The Company calculates straight-line rent expense over the initial lease term and renewals that are reasonably assured.

        Advertising Costs—Costs related to advertising and other promotional expenditures are expensed as incurred. Due to the nature of the business, the Company has an insignificant amount of advertising costs included in selling and marketing costs on the statement of operations.

        Cash and Cash Equivalents—All highly liquid debt instruments and investments purchased with an original maturity of three months or less are classified as cash equivalents and are considered available for sale securities. There are cash balances in a bank in excess of the federally insured limits or in the form of a money market demand account with a major financial institution.

        Restricted Cash—At December 30, 2010 and December 31, 2009, other non-current assets included restricted cash of $0.3 million, which secures a letter of credit used as a lease deposit on NCM LLC's New York office.

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2. SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Receivables—Bad debts are provided for using the allowance for doubtful accounts method based on historical experience and management's evaluation of outstanding receivables at the end of the period. Receivables are written off when management determines amounts are uncollectible. Trade accounts receivable are uncollateralized and represent a large number of geographically dispersed debtors. At December 30, 2010, there was two advertising agency groups through which the Company sources national advertising revenue representing approximately 17% and 21%, of the Company's outstanding gross receivable balance, respectively; however, none of the individual contracts related to the advertising agencies were more than 10% of advertising revenue. At December 31, 2009 there was one advertising agency group through which the Company sources national advertising revenue representing approximately 19% of the Company's outstanding gross receivable balance; however, none of the individual contracts related to the advertising agency were more than 10% of advertising revenue. The collectability risk is reduced by dealing with large, national advertising agencies who have strong reputations in the advertising industry and clients with stable financial positions.

        Receivables consisted of the following, in millions:

 
  As of December 30, 2010   As of December 31, 2009  

Trade accounts

  $ 100.9   $ 91.6  

Other

    2.9     1.0  

Less allowance for doubtful accounts

    (3.7 )   (3.6 )
           
 

Total

  $ 100.1   $ 89.0  
           

        Allowance for doubtful accounts consisted of the following, in millions:

 
  Years Ended  
 
  December 30,
2010
  December 31,
2009
  January 1,
2009
 

Balance at beginning of period

  $ 3.6   $ 2.6   $ 1.5  

Provision for bad debt

    2.3     2.4     2.3  

Write-offs, net

    (2.2 )   (1.4 )   (1.2 )
               

Balance at end of period

  $ 3.7   $ 3.6   $ 2.6  
               

        Long-lived Assets—Property and equipment is stated at cost, net of accumulated depreciation or amortization. Refer to Note 4. Major renewals and improvements are capitalized, while replacements, maintenance, and repairs that do not improve or extend the lives of the respective assets are expensed currently. In general, the equipment associated with the digital network that is located within the theatre is owned by the founding members, while equipment outside the theatre is owned by the Company. The Company records depreciation and amortization using the straight-line method over the following estimated useful lives:

Equipment   4 - 10 years
Computer hardware and software   3 - 5 years
Leasehold improvements   Lesser of lease term or asset life

        Software and web site development costs developed or obtained for internal use are accounted for in accordance with ASC Subtopic 350-40 Internal Use Software and ASC Subtopic 350-50 Website Development Costs. The subtopics require the capitalization of certain costs incurred in developing or obtaining software for internal use. The majority of software costs and web site development costs,

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2. SIGNIFICANT ACCOUNTING POLICIES (Continued)


which are included in equipment, are depreciated over three to five years. As of December 30, 2010 and December 31, 2009, the Company had a net book value of $9.2 million and $11.0 million, respectively, of capitalized software and web site development costs. Approximately $6.5 million, $6.7 million and $4.9 million was recorded for the years ended December 30, 2010, December 31, 2009 and January 1, 2009, respectively, in depreciation expense. For the years ended December 30, 2010, December 31, 2009 and January 1, 2009 the Company recorded $1.2 million, $1.6 million and $1.2 million in research and development expense, respectively.

        Construction in progress includes costs relating to installations of equipment into affiliate theatres. Assets under construction are not depreciated until placed into service.

        The Company assesses impairment of long-lived assets pursuant with ASC 360 Property, Plant and Equipment annually. This includes determining if certain triggering events have occurred that could affect the value of an asset. Thus far, we have recorded no impairment charges related to long-lived assets.

        Intangible assets—Intangible assets consist of contractual rights and are stated at cost, net of accumulated amortization. Refer to Note 5. The Company records amortization using the straight-line method over the estimated useful life of the intangibles, corresponding to the term of the ESAs. During the year ended December 30, 2010, NCM LLC recorded an intangible asset of $111.5 million, which is amortized over a weighted average amortization period of 26.7 years, and a second addition of $39.8 million, which is amortized over a weighted average amortization period of 27.0 years. As of December 30, 2010, the gross carrying amount of the intangible assets is $286.0 million, with a remaining weighted average amortization period of 27.0 years.

        Amounts Due to Founding Members—Amounts due to founding members in the 2010 and 2009 periods include amounts due for the theatre access fee, offset by a receivable for advertising time purchased by the founding members, as well as revenue share earned for Fathom Events plus any amounts outstanding under other contractually obligated payments. Payments to or received from the founding members against outstanding balances are made monthly.

        Amounts Due to Managing Member—Amounts due to the managing member include amounts due under the NCM LLC Operating Agreement and other contractually obligated payments. Payments to or received from the managing member against outstanding balances are made periodically.

        Income Taxes—As a limited liability company, NCM LLC's taxable income or loss is allocated to the founding members and managing member and, therefore, the only provision for income taxes included in the financial statements is for income-based state and local taxes.

        Accumulated Other Comprehensive Loss—Accumulated other comprehensive loss is composed of the following (in millions):

 
  Year Ended
December 30,
2010
  Year Ended
December 31,
2009
  Year Ended
January 1,
2009
 

Beginning Balance

  $ (47.4 ) $ (73.5 ) $ (14.4 )
 

Change in fair value on cash flow hedge

    (12.2 )   24.8     (59.5 )
 

Reclassifications into earnings

    1.3     1.3     0.4  
               

Ending Balance

  $ (58.3 ) $ (47.4 ) $ (73.5 )
               

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        Debt Issuance Costs—In relation to the issuance of long-term debt discussed in Note 8, there is a balance of $7.3 million and $9.2 million in deferred financing costs as of December 30, 2010 and December 31, 2009, respectively. These debt issuance costs are being amortized over the terms of the underlying obligation and are included in interest expense. For each of the years ended December 30, 2010, December 31, 2009, and January 1, 2009 we amortized $1.9 million.

        Other Investment—Through March 15, 2010, the Company accounted for its investment in RMG Networks, Inc., ("RMG") (formerly Danoo, Inc.) under the equity method of accounting as required by ASC 323-10 Investments—Equity Method and Joint Ventures ("ASC 323-10") because we exerted "significant influence" over, but did not control, the policy and decisions of RMG, due to ownership of approximately 24% of the issued and outstanding preferred and common stock of RMG. During the first quarter of 2010, RMG sold additional common stock to other third party investors for cash, which reduced the Company's ownership in RMG resulting in cost method accounting. At December 30, 2010, the Company's ownership in RMG was approximately 19% of the issued and outstanding preferred and common stock of RMG. The investment in RMG and the Company's share of its operating results through December 30, 2010 are not material to the Company's financial position or results of operations and as a result summarized financial information is not presented. Refer to Note 11 and 12 for additional discussion.

        Share-Based Compensation—Stock-based employee compensation is accounted for at fair value under ASC 718 Compensation—Stock Compensation. Refer to Note 9.

        Derivative Instruments—Derivative Instruments are accounted for under ASC 815 Derivatives and Hedging. Refer to Note 13.

        Current Liabilities—For the year ended December 31, 2009, the Company presented the liability for interest rate swap agreements in a single line on its Balance Sheet in other non-current liabilities. However, after further review, the Company determined that the current portion of the liability should be reclassified and presented with total current liabilities. As a result, the Company has restated its Balance Sheet to reflect this classification. The correction has no effect on total assets, total liabilities, total equity/(deficit), the Statements of Operations, or the Cash Flows from Operations.

        The following is a summary of the effects of the restatement on our Balance Sheet as of December 31, 2009:

 
  BALANCE SHEET
As of
December 31, 2009
 
 
  As
Previously
Reported
  As
Restated
 

Current portion of interest rate swap agreements

    0.0   $ 24.4  
 

Total current liabilities

  $ 90.1   $ 114.5  

Interest rate swap agreements

  $ 54.6   $ 30.2  
 

Total non-current liabilities

  $ 853.9   $ 829.5  

3. RECENT ACCOUNTING PRONOUNCEMENTS

        In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements, which revises the existing multiple-element revenue arrangements guidance and changes the determination of when the individual deliverables included in a multiple-element revenue arrangement may be treated as separate units of accounting, modifies the manner in which the transaction consideration is allocated

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across the separately identified deliverables and expands the disclosures required for multiple-element revenue arrangements. The pronouncement is effective for revenue arrangements entered into or materially modified in fiscal years beginning after June 15, 2010. The Company does not expect the pronouncement to have a material effect on its financial statements.

        In January 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements, which requires additional disclosures about (1) the different classes of assets and liabilities measured at fair value, (2) the valuation techniques and inputs used, (3) the activity in Level 3 fair value measurements, and (4) the transfers between Levels 1, 2 and 3. The Company adopted this pronouncement effective January 1, 2010 with no impact on its financial statements.

        The Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial statements.

4. PROPERTY AND EQUIPMENT

 
  As of
December 30,
2010
  As of
December 31,
2009
 
 
  (in millions)
 

Equipment, computer hardware and software

  $ 63.3   $ 60.6  

Leasehold Improvements

    1.7     1.6  

Less accumulated depreciation

    (46.4 )   (39.3 )
           
 

Subtotal

    18.6     22.9  

Construction in Progress

    1.2     0.8  
           
 

Total property and equipment

  $ 19.8   $ 23.7  
           

        For the years ended December 30, 2010, December 31, 2009, and January 1, 2009, the Company recorded depreciation of $11.4 million, $12.5 million, and $10.2 million, respectively.

5. INTANGIBLE ASSETS

        During the second quarter of 2010, NCM LLC issued 6,510,209 common membership units to a subsidiary of AMCE as a result of that subsidiary's acquisition of Kerasotes Showplace Theatres, LLC (the "AMC Kerasotes Acquisition"). Such issuance provided NCM LLC with exclusive access, in accordance with the ESA, to the net new theatre screens and attendees added by AMCE to NCM LLC's network since the date of the last annual common unit adjustment through the date of the AMC Kerasotes Acquisition. As a result, NCM LLC recorded an intangible asset at the market value of the common membership units equal to $111.5 million. During the first quarter of 2010, NCM LLC issued 2,212,219 common membership units to its founding members in exchange for the rights to exclusive access, in accordance with the ESA, to net new theatre screens and projected attendees added by the founding members to NCM LLC's network during 2009. As a result, NCM LLC recorded an intangible asset at the market value of the common membership units equal to $39.8 million. During the first quarter of 2009, NCM LLC issued 2,126,104 common membership units to its founding members in exchange for the rights to exclusive access to net new theatre screens and projected attendees added by the founding members to NCM LLC's network. The Company recorded an intangible asset at the market value of the common membership units equal to $28.5 million. The Company based the fair value of the intangible assets on the market value of the common membership units issued on the date of grants, which are freely convertible into the Company's common stock.

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        Pursuant to ASC 350-10 Intangibles—Goodwill and Other, the intangible assets have a finite useful life and the Company amortizes the assets over the remaining useful life corresponding with the ESAs. Amortization of the asset related to Regal Consolidated Theatres will not begin until after 2011 since the Company will not have access to on-screen advertising in the Regal Consolidated Theatres until the run-out of their existing on-screen advertising agreement.

 
  As of
December 30,
2010
  As of
December 31,
2009
 
 
  (in millions)
 

Beginning balance

  $ 134.2   $ 111.8  

Purchase of intangible asset subject to amortization

    151.3     28.5  

Less integration payments(1)

    (3.9 )   (3.2 )

Less amortization expense

    (6.4 )   (2.9 )
           
 

Total intangible assets

  $ 275.2   $ 134.2  
           

(1)
See Note 7 for further information on integration payments.

        For the years ended December 30, 2010, December 31, 2009 and January 1, 2009 the Company recorded amortization of $6.4 million, $2.9 million and $1.5 million, respectively.

        The estimated aggregate amortization expense for each of the five succeeding years is as follows (in millions):

2011   $ 9.9  
2012     10.5  
2013     10.5  
2014     10.5  
2015     10.5  

6. ACCRUED EXPENSES

 
  As of December 30,
2010
  As of December 31,
2009
 
 
  (in millions)
 

Make-good reserve

  $ 2.8   $ 0.3  

Accrued interest

    2.1     9.8  

Other accrued expenses

    3.7     2.3  
           
 

Total accrued expenses

  $ 8.6   $ 12.4  
           

7. RELATED-PARTY TRANSACTIONS

        Pursuant to the ESAs, the Company makes monthly theatre access fee payments to the founding members, comprised of a payment per theatre attendee and a payment per digital screen with respect to the founding member theatres included in our network. The total theatre access fee to the founding members for the years ended December 30, 2010, December 31, 2009 and January 1, 2009 was $52.6 million, $52.7 million and $49.8 million, respectively.

        Under the ESAs, for the years ended December 30, 2010 and December 31, 2009, the founding members purchased 60 seconds of on-screen advertising time (with a right to purchase up to 90 seconds) from NCM LLC to satisfy their obligations under their beverage concessionaire agreements at

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a specified 30 second equivalent cost per thousand ("CPM") impressions. For the year ended January 1, 2009, two of the founding members purchased 90 seconds and one purchased 60 seconds of on-screen advertising time under their beverage concessionaire agreement. The total revenue related to the beverage concessionaire agreements for the years ended December 30, 2010, December 31, 2009 and January 1, 2009 was $37.2 million, $36.3 million and $43.3 million, respectively. In addition, the Company made payments to the founding members for use of their screens and theatres for its Fathom Events businesses. These payments are at rates (percentage of event revenue) included in the ESAs based on the nature of the event. Payments to the founding members for these events totaled $7.3 million, $6.7 million, and $6.0 million for the years ended December 30, 2010, December 31, 2009 and January 1, 2009, respectively.

        Also, pursuant to the terms of the NCM LLC Operating Agreement in place since the completion of the IPO, NCM LLC is required to make mandatory distributions on a proportionate basis to its members of available cash, as defined in the NCM LLC Operating Agreement, on a quarterly basis in arrears. Distributions for the years ended December 30, 2010, December 31, 2009, and January 1, 2009 are as follows (in millions):

 
  2010   2009   2008  

AMC

  $ 28.8   $ 25.8   $ 24.3  

Cinemark

    24.0     20.8     18.5  

Regal

    32.3     34.9     32.7  

NCM, Inc. 

    71.0     57.8     55.6  
               

Total

  $ 156.1   $ 139.3   $ 131.1  
               

        The available cash payment by NCM LLC to its founding members for the quarter ended December 30, 2010 of $25.7 million was included in amounts due to founding members at December 30, 2010 and will be made in the first quarter of 2011. The available cash payment by NCM LLC to its managing member for the quarter ended December 30, 2010 of $24.1 million was included in amounts due to managing member as of December 30, 2010 and will be made in the first quarter of 2011.

        On January 26, 2006, AMC acquired the Loews Cineplex Entertainment Inc. ("AMC Loews") theatre circuit. The Loews screen integration agreement, effective as of January 5, 2007 and amended and restated as of February 13, 2007, between NCM LLC and AMC, committed AMC to cause substantially all of the theatres it acquired as part of the Loews theatre circuit to be included in the NCM digital network in accordance with the ESAs on June 1, 2008. In accordance with the Loews screen integration agreement, prior to June 1, 2008 AMC paid the Company amounts based on an agreed-upon calculation to reflect cash amounts that approximated what NCM LLC would have generated if the Company sold on-screen advertising in the Loews theatre chain on an exclusive basis. These AMC Loews payments were made on a quarterly basis in arrears through May 31, 2008, with the exception of Star Theatres, which were paid through February 2009 in accordance with certain run-out provisions. For the years ended December 31, 2009 and January 1, 2009, the AMC Loews payment was $0.1 million and $4.7 million, respectively. The AMC Loews payment was recorded directly to NCM LLC's members' equity account.

        On April 30, 2008, Regal acquired Consolidated Theatres and NCM issued common membership units to Regal upon the closing of its acquisition in exchange for the right to exclusive access to the theatres. The Consolidated Theatres had a pre-existing advertising agreement and, as a result, Regal must make "integration" payments pursuant to the ESAs on a quarterly basis in arrears through

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mid-2011 in accordance with certain run-out provisions. For the years ended December 30, 2010, December 31, 2009 and January 1, 2009, the Consolidated Theatres payment was $3.9 million, $3.2 million and $2.8 million, respectively and represents a cash element of the consideration received for the common membership units issued. The Consolidated Theatres payment of $1.2 million for the quarter ended December 30, 2010 was included in amounts due from founding members at December 30, 2010 and will be received in the first quarter of 2011.

        In connection with AMC's acquisition of Kerasotes, AMC reimbursed NCM LLC approximately $3.0 million for the net book value of NCM LLC capital expenditures invested in digital network technology within the acquired Kerasotes theatres prior to the acquisition date.

        Amounts due to founding members at December 30, 2010 were comprised of the following (in millions):

 
  AMC   Cinemark   Regal   Total  

Theatre access fees, net of beverage revenues

  $ 0.5   $ 0.4   $ 0.5   $ 1.4  

Cost and other reimbursement

    (0.2 )   (0.5 )   (0.0 )   (0.7 )

Distributions payable, net

    8.5     7.6     8.4     24.5  
                   
 

Total

  $ 8.8   $ 7.5   $ 8.9   $ 25.2  
                   

        Amounts due to founding members at December 31, 2009 were comprised of the following (in millions):

 
  AMC   Cinemark   Regal   Total  

Theatre access fees, net of beverage revenues

  $ 0.5   $ 0.4   $ 0.5   $ 1.4  

Cost and other reimbursement

    (0.5 )   (0.5 )   (0.5 )   (1.5 )

Distributions payable, net

    9.9     7.9     12.1     29.9  
                   
 

Total

  $ 9.9   $ 7.8   $ 12.1   $ 29.8  
                   

        During the years ended December 30, 2010, December 31, 2009 and January 1, 2009, AMC, Cinemark and Regal purchased $1.3 million, $1.9 million and $2.3 million respectively, of NCM LLC's advertising inventory for their own use. The value of such purchases are calculated by reference to NCM LLC's advertising rate card and included in advertising revenue.

        Included in selling and marketing costs and Fathom Events operating costs is $2.5 million, $2.1 million and $2.7 million for the years ended December 30, 2010, December 31, 2009 and January 1, 2009 respectively, related to purchases of movie tickets and concession products from the founding members primarily for marketing to NCM LLC's advertising clients and marketing resale to Fathom Business customers.

        During 2009, NCM LLC entered into a digital content agreement and a Fathom agreement with LA Live Cinemas LLC ("LA Live"), an affiliate of Regal, for NCM LLC to provide in-theatre advertising and Fathom Events services to LA Live in its theatre complex. The affiliate agreement was entered into at terms that are similar to those of our other advertising affiliates. LA Live joined the NCM LLC advertising network during the fourth quarter of 2009. Included in advertising operating costs and Fathom Events operating costs is $0.1 million for the year ended December 30, 2010, for

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payments made to the affiliate under the agreement. As of December 30, 2010 approximately $0.1 million is included in accounts payable for amounts due to LA Live under the agreement.

        During 2009, NCM LLC entered into a network affiliate agreement with Starplex Operating L.P. ("Starplex"), an affiliate of Cinemark, for NCM LLC to provide in-theatre advertising services to Starplex in its theatre locations. The affiliate agreement was entered into at terms that are similar to those of our other advertising affiliates. Starplex joined the NCM LLC advertising network in the first quarter of 2010. Included in advertising operating costs is $1.3 million for the year ended December 30, 2010, for payments made to the affiliate under the agreement. As of December 30, 2010, approximately $0.5 million is included in accounts payable for amounts due to Starplex under the agreement.

        The NCM LLC Operating Agreement provides a redemption right of the founding members to exchange common membership units of NCM LLC for shares of the Company's common stock on a one-for-one basis, or at the Company's option, a cash payment equal to the market price of one share of NCM, Inc. common stock. During the third quarter of 2010, AMC and Regal exercised the redemption right of an aggregate 10,955,471 common membership units, whereby AMC and Regal surrendered 6,655,193 and 4,300,278 common membership units to NCM LLC for cancellation, respectively. The Company contributed an aggregate 10,955,471 shares of its common stock to NCM LLC in exchange for a like number of newly issued common membership units. NCM LLC then distributed the shares of common stock to AMC and Regal to complete the redemptions. Such redemptions took place immediately prior to the closing of the underwritten public offering and the subsequent closing of the overallotment option; in each case the NCM, Inc. common stock was sold at a price to the public of $16.00 per share by AMC and Regal. NCM, Inc. did not receive any proceeds from the sale of its common stock by AMC and Regal. Pursuant to ASC 810-10-45, the Company accounted for the change in its ownership interest in NCM LLC as an equity transaction and no gain or loss was recognized in net income.

        Pursuant to the NCM LLC Operating Agreement, as the sole manager of NCM LLC, NCM, Inc. provides certain specific management services to NCM LLC, including those services of the positions of president and chief executive officer, president of sales and chief marketing officer, executive vice president and chief financial officer, executive vice president and chief operations officer and executive vice president and general counsel. In exchange for the services, NCM LLC reimburses NCM, Inc. for compensation and other expenses of the officers and for certain out-of-pocket costs. During the years ended December 30, 2010, December 31, 2009 and January 1, 2009, NCM LLC paid NCM, Inc. $16.6 million, $10.8 million and $9.7 million, respectively, for these services and expenses. The payments for estimated management services related to employment are made one month in advance. At December 30, 2010 and December 31, 2009, $0.8 million and $0.6 million, respectively, has been paid in advance and is reflected as prepaid management fees to managing member in the accompanying financial statements. NCM LLC also provides administrative and support services to NCM, Inc. such as office facilities, equipment, supplies, payroll and accounting and financial reporting at no charge. Based on the limited activities of NCM, Inc. as a standalone entity, the Company does not believe such unreimbursed costs are significant. The management services agreement also provides that NCM LLC employees may participate in the NCM, Inc. equity incentive plan (see Note 9).

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        Amounts due to/from managing member were comprised of the following (in millions):

 
  As of December 30, 2010   As of December 31, 2009  

Distributions payable

  $ 24.1   $ 22.0  

Cost and other reimbursement

    4.1     0.9  
           
 

Total

  $ 28.2   $ 22.9  
           

8. BORROWINGS

        On February 13, 2007, concurrently with the closing of the IPO of NCM, Inc., NCM LLC entered into a senior secured credit facility with a group of lenders. The facility consists of a six-year $80.0 million revolving credit facility and an eight-year, $725.0 million term loan facility. The revolving credit facility portion is available, subject to certain conditions, for general corporate purposes of the Company in the ordinary course of business and for other transactions permitted under the credit agreement, and a portion is available for letters of credit.

        The outstanding balance of the term loan facility at December 30, 2010 and December 31, 2009 was $725.0 million. The outstanding balance under the revolving credit facility at December 30, 2010 and December 31, 2009 was $50.0 million and $74.0 million, respectively. As of December 30, 2010, the effective rate on the term loan was 5.61% including the effect of the interest rate swaps (both those accounted for as hedges and those that are not). The interest rate swaps hedged $550.0 million of the $725.0 million term loan at a fixed interest rate of 6.734% while the unhedged portion was at an interest rate of 2.06%. The weighted-average interest rate on the unhedged revolver was 2.01%. Commencing with the fourth fiscal quarter in fiscal year 2009, the applicable margin for the revolving credit facility is determined quarterly and is subject to adjustment based upon a net senior secured leverage ratio for NCM LLC and its subsidiaries (the ratio of secured funded debt less unrestricted cash and cash equivalents, over a non-GAAP measure defined in the credit agreement). The senior secured credit facility also contains a number of covenants and financial ratio requirements, with which the Company was in compliance at December 30, 2010, including the net senior secured leverage ratio. There are no distribution restrictions as long as the Company is in compliance with its debt covenants. As of December 30, 2010, its net senior secured leverage ratio was 3.5 times the covenant. The debt covenants also require 50% of the term loan, or $362.5 million to be hedged at a fixed rate. As of December 30, 2010, the Company had approximately $550 million or 76% hedged. Of the $550.0 million that is hedged, $137.5 million was transferred from Lehman Brothers Special Financing ("LBSF") to Barclays Bank PLC ("Barclays") in February 2010. See Note 13 for an additional discussion of the interest rate swaps.

        NCM LLC, Lehman Brothers Holdings Inc. ("Lehman") and Barclays entered into an agreement in March 2010 whereby Lehman resigned its agency function and restructured its outstanding $14.0 million revolving credit loan. NCM LLC and the remaining revolving credit lenders consented to the appointment of Barclays as successor administrative agent and swing line lender under the credit agreement. Additionally, the revolving credit commitments of Lehman were reduced to zero and the aggregate revolving credit commitments were reduced to $66.0 million. The $14.0 million outstanding principal of the revolving credit loans held by Lehman will not be repaid in connection with any future prepayments of revolving credit loans, but rather Lehman's share of the revolving credit facility will be paid in full by NCM LLC, along with any accrued and unpaid fees and interest, on the revolving credit termination date, February 13, 2013.

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        On March 19, 2009, the Company gave an $8.5 million note payable to Credit Suisse, Cayman Islands Branch ("Credit Suisse") with no stated interest to settle the $10.0 million contingent put obligation and to acquire the $20.7 million outstanding principal balance of debt of IdeaCast, Inc. ("IdeaCast") (together with all accrued interest and other lender costs required to be reimbursed by IdeaCast). Quarterly payments to Credit Suisse began on April 15, 2009 and will continue through January 15, 2011. At issuance the Company recorded the note at a present value of $7.0 million. At December 30, 2010 and December 31, 2009, $1.2 million and $4.3 million, respectively, of the balance was recorded in current liabilities. Interest on the note is accreted at the Company's estimated incremental cost of debt based on then current market indicators over the term of the loan to interest expense. The amount of interest expense recognized on the note for the years ended December 30, 2010 and December 31, 2009 was $0.5 million and $0.7 million, respectively.

        The scheduled annual maturities on the credit facility for the next five years as of December 30, 2010 are as follows (in millions):

2011

  $ 1.2  

2012

    0.0  

2013

    50.0  

2014

    0.0  

2015

    725.0  
       

Total

  $ 776.2  
       

9. SHARE-BASED COMPENSATION

        At the date of the IPO, the Company adopted the NCM, Inc. 2007 Equity Incentive Plan. As of December 30, 2010, there were 7,076,000 shares of common stock available for issuance or delivery under the Equity Incentive Plan of which 1,690,186 remain available for grants as of December 30, 2010. Options awarded under the Equity Incentive Plan are granted with an exercise price equal to the market price of NCM, Inc. common stock on the date of the grant. Upon vesting of the awards, NCM LLC will issue common membership units to the Company equal to the number of shares of the Company's common stock represented by such awards. Under the fair value recognition provisions of ASC 718, the Company recognizes stock-based compensation net of an estimated forfeiture rate, and therefore only recognizes stock-based compensation cost for those shares expected to vest over the requisite service period of the award. Options and non-vested restricted stock vest annually over a three or five-year period and options have either 10-year or 15-year contractual terms. A forfeiture rate of 5% was estimated to reflect the potential separation of employees.

        The recognized expense, including equity based compensation costs of NCM, Inc. employees, is included in the operating results of NCM LLC. The Company recognized $7.0 million, $3.1 million and $2.1 million for the years ended December 30, 2010, December 31, 2009 and January 1, 2009, respectively, of share-based compensation expense for these options and $0.1 million were capitalized during each of the years ended December 30, 2010, December 31, 2009 and January 1, 2009, respectively. As of December 30, 2010, unrecognized compensation cost related to nonvested options was approximately $9.1 million, which will be recognized over a weighted average remaining period of 1.70 years.

        The weighted average grant date fair value of granted options was $4.84, $2.17 and $3.77 for the years ended December 30, 2010, December 31, 2009 and January 1, 2009, respectively. The intrinsic

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9. SHARE-BASED COMPENSATION (Continued)


value of options exercised during the year was $2.2 million, $0.2 million and $0.2 million for the years ended December 30, 2010, December 31, 2009, and January 1, 2009, respectively. During the year ended December 30, 2010 there was $4.9 million of cash received on options exercised and an immaterial amount for the year December 31, 2009. The total fair value of awards vested during the years ended December 30, 2010 and December 31, 2009 was $3.2 million and $0.3 million, respectively.

        The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model, which requires that the Company make estimates of various factors. The following assumptions were used in the valuation of the options:

 
  Fiscal 2010   Fiscal 2009   Fiscal 2008

Expected life of options

  6.0 years   6.5 years   6.5 years

Risk free interest rate

  1.38% to 3.76%   2.23% to 3.70%   3.74% to 4.09%

Expected volatility

  39%   30%   30%

Dividend yield

  3.8% to 4.0%   3%   3%

        Activity in the Equity Incentive Plan, as converted, is as follows:

 
  Shares   Weighted
Average
Exercise
Price
  Weighted
Average
Remaining
Contractual Life
(in years)
  Aggregate
Intrinsic
Value (in
millions)
 

Outstanding at December 31, 2009

    3,126,560   $ 14.51              

Granted

    1,186,507     17.62              

Exercised

    (388,302 )   12.64              

Forfeited

    (48,541 )   13.36              
                   

Outstanding at December 30, 2010

    3,876,224   $ 15.55     9.0   $ 18.1  

Exercisable at December 30, 2010

    1,030,120     16.45     9.1   $ 4.2  

Vested and Expected to Vest at December 30, 2010

    3,839,382     15.55     9.0   $ 18.0  

        The following table summarizes information about the stock options at December 30, 2010, including the weighted average remaining contractual life and weighted average exercise price:

 
  Options Outstanding   Options Exercisable  
Range of Exercise Price
  Number
Outstanding as of
Dec. 30, 2010
  Weighted
Average
Remaining Life
(in years)
  Weighted
Average
Exercise
Price
  Number
Exercisable as of
Dec. 30, 2010
  Weighted
Average
Exercise
Price
 

$5.35  - $10.41

    908,640     8.0   $ 9.06     175,554   $ 9.02  

$10.42 - $16.66

    1,250,143     10.0     16.09     578,485     16.20  

$16.67 - $16.97

    973,996     9.0     16.97     0     0.0  

$16.98 - $19.43

    383,079     9.2     18.79     73,330     18.70  

$19.44 - $29.05

    360,366     7.5     22.74     202,751     22.78  
                       

    3,876,224     9.0   $ 15.55     1,030,120   $ 16.45  
                       

        Non-vested (Restricted) Stock—NCM, Inc. has a non-vested stock program as part of the Equity Incentive Plan. The plan provides for non-vested stock awards to officers, board members and other key employees, including employees of NCM LLC. Under the non-vested stock program, common stock of NCM, Inc. may be granted at no cost to officers, board members and key employees, subject to a continued employment restriction and as such restrictions lapse, the award vests in that proportion.

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9. SHARE-BASED COMPENSATION (Continued)


The participants are entitled to cash dividends from NCM, Inc. and to vote their respective shares, although the sale and transfer of such shares is prohibited and the shares are subject to forfeiture during the restricted period. Additionally the accrued cash dividends for the 2009 and 2010 grants are subject to forfeiture during the restricted period. The shares are also subject to the terms and provisions of the Equity Incentive Plan. Non-vested stock awards granted in 2010 include performance vesting conditions, which permit vesting to the extent that NCM, Inc. achieves specified non-GAAP targets at the end of the three-year period. Non-vested stock granted to non-employee directors vest after one year. Compensation cost is valued based on the market price on the grant date and is expensed over the vesting period.

        The following table represents the shares of non-vested stock:

 
  Shares   Weighted
Average Grant-
Date Fair Value
 

Non-vested as of December 31, 2009

    590,374   $ 13.15  

Granted

    429,585     17.24  

Forfeited

    (8,011 )   15.84  

Vested

    (96,364 )   16.18  
           

Non-vested as of December 30, 2010

    915,584   $ 16.77  
           

        The recognized expense, including the equity based compensation costs of NCM, Inc. employees, is included in the operating results of NCM LLC. The Company recorded $7.0 million, $2.4 million and $1.3 million in compensation expense related to such outstanding non-vested shares during the years ended December 30, 2010, December 31, 2009 and January 1, 2009. Of the $7.0 million in compensation expense for the year ended December 30, 2010, $1.6 million was related to NCM, Inc.'s expected over performance of the specified non-GAAP targets for the 2009 and 2010 grants. During the year ended December 30, 2010 there was $0.1 million capitalized and an immaterial amount for the years ended December 31, 2009 and January 1, 2009. As of December 30, 2010, unrecognized compensation cost related to non-vested stock was approximately $11.2 million, which will be recognized over a weighted average remaining period of 1.82 years. The weighted average grant date fair value of non-vested stock was $17.24, $9.50 and $18.97 for the years ended December 30, 2010, December 31, 2009 and January 1, 2009, respectively. The total fair value of awards vested was $1.6 million, $0.3 million and $2.1 million during the years ended December 30, 2010, December 31, 2009 and January 1, 2009.

10. EMPLOYEE BENEFIT PLANS

        NCM LLC sponsors the NCM 401(k) Profit Sharing Plan (the "Plan") under Section 401(k) of the Internal Revenue Code of 1986, as amended, for the benefit of substantially all full-time employees. The Plan provides that participants may contribute up to 20% of their compensation, subject to Internal Revenue Service limitations. Employee contributions are invested in various investment funds based upon election made by the employee. The recognized expense, including the discretionary contributions of NCM, Inc. employees, is included in the operating results of NCM LLC. The Company made discretionary contributions of $0.9 million, $0.8 million and $0.8 million during the years ended December 30, 2010, December 31, 2009 and January 1, 2009, respectively.

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11. COMMITMENTS AND CONTINGENCIES

        The Company is subject to claims and legal actions in the ordinary course of business. The Company believes such claims will not have a material adverse effect on its financial position or results of operations.

        The Company leases office facilities for its headquarters in Centennial, Colorado and also in various cities for its sales and marketing personnel as sales offices. The Company has no capital lease obligations. Total lease expense for the years ended December 30, 2010, December 31, 2009 and January 1, 2009, was $2.2 million, $2.3 million and $2.0 million, respectively.

        Future minimum lease payments under noncancelable operating leases as of December 30, 2010 are as follows (in millions):

2011

  $ 1.6  

2012

    2.2  

2013

    2.2  

2014

    2.2  

2015

    2.1  

Thereafter

    9.1  
       

Total

  $ 19.4  
       

        On April 29, 2008, NCM LLC, IdeaCast, the IdeaCast lender and certain of its stockholders agreed to a financial restructuring of IdeaCast. Among other things, the restructuring resulted in the lender being granted an option to "put," or require NCM LLC to purchase, up to $10 million of the funded convertible debt at par, on or after December 31, 2010 through March 31, 2011. The put was accounted for under ASC 460-10 Guarantees. During the fourth quarter of 2008, the Company determined that the initial investment and call right in IdeaCast were other-than-temporarily impaired due to IdeaCast's defaults on its senior debt and liquidity issues and that the put obligation was probable. The Company estimated a liability at January 1, 2009 of $4.5 million, which represented the excess of the estimated probable loss on the put (net of estimated recoveries from the net assets of IdeaCast that serve as collateral for the convertible debt) obligation over the unamortized ASC 460-10 liability. The total amount of the impairment and related loss recorded in the fourth quarter of 2008 was $11.5 million.

        On March 19, 2009, NCM LLC, IdeaCast and IdeaCast's lender agreed to certain transactions with respect to the IdeaCast Credit Agreement. Among other things, these agreements resulted in (i) the termination of the Put and the Call; (ii) the transfer, sale and assignment by IdeaCast's lender to NCM LLC of all of its right, title and interest under the Credit Agreement, including without limitation the loans outstanding under the Credit Agreement; (iii) the resignation of IdeaCast's lender, and the appointment of NCM LLC, as administrative agent and collateral agent under the Credit Agreement; and (iv) the delivery by NCM LLC to IdeaCast's lender of a non-interest bearing promissory note in the amount of $8.5 million payable through January 2011. On June 16, 2009, NCM LLC's interest in the Credit Agreement was assigned to NCM Out-Of-Home, LLC ("OOH"), which was a wholly-owned subsidiary of NCM LLC. OOH was also appointed as administrative agent and collateral agent under the Credit Agreement. On June 16, 2009, OOH, as IdeaCast's senior secured lender, foreclosed on

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11. COMMITMENTS AND CONTINGENCIES (Continued)

substantially all of the assets of IdeaCast, consisting of certain tangible and intangible assets (primarily equipment, business processes and contracts with health clubs and programming partners). The assets were valued at approximately $8.2 million. On June 29, 2009, NCM LLC transferred its ownership interest in OOH to RMG, a digital advertising company, in exchange for approximately 24% of the equity (excluding out-of-the-money warrants) of RMG on a fully diluted basis through a combination of convertible preferred stock, common stock and common stock warrants (refer to Note 2-Other Investment). The Company's investment in RMG was valued at the fair value of the assets contributed.

        As part of the network affiliate agreements entered in the ordinary course of business under which the Company sells advertising for display in various theatre chains other than those of the founding members of NCM LLC, the Company has agreed to certain minimum revenue guarantees. If an affiliate achieves the attendance set forth in their respective agreement, the Company has guaranteed minimum revenue for the network affiliate per attendee if such amount paid under the revenue share arrangement is less than its guaranteed amount. The amount and term varies for each network affiliate, but initial terms range from two to five years, prior to any renewal periods. The maximum potential amount of future payments the Company could be required to make pursuant to the minimum revenue guarantees is $14.0 million over the remaining terms of the network affiliate agreements. As of December 30, 2010 and December 31, 2009 the Company had no liabilities recorded for these obligations as such guarantees are less than the expected share of revenue paid to the affiliate.

12. FAIR VALUE MEASUREMENTS

        The carrying amounts of cash and cash equivalents and other notes payable as reported in the Company's balance sheets approximate their fair value due to their short maturity. The carrying amount of the revolving credit facility is considered a reasonable estimate of fair value due to its floating-rate terms. The carrying amounts and fair values of interest rate swap agreements are the same since the Company accounts for these instruments at fair value. The Company has estimated the fair value of its term loan based on an average of three non-binding broker quotes and the Company's analysis to be $713.3 million and $688.8 million at December 30, 2010 and December 31, 2009, respectively. The carrying value of the term loan was $725.0 million as of December 30, 2010 and December 31, 2009.

        The fair value of the investment in RMG networks has not been estimated at December 30, 2010 as there were no monetary equity events or changes in circumstances that may have a significant adverse effect on the fair value of the investment, and as it is not practicable to do so because RMG is not a publicly traded company. The carrying amount of the Company's investment was $6.7 million and $7.4 million as of December 30, 2010 and December 31, 2009, respectively. Refer to Note 2—Other Investment.

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12. FAIR VALUE MEASUREMENTS (Continued)

        Recurring Measurements—The fair values of the Company's assets and liabilities measured on a recurring basis pursuant to ASC 820-10 Fair Value Measurements and Disclosures are as follows (in millions):

 
   
  Fair Value Measurements at
Reporting Date Using
 
 
  As of
December 30,
2010
  Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
  Significant
Other
Observable
Inputs
(Level 2)
  Significant
Unobservable
Inputs
(Level 3)
 

LIABILITIES:

    (25.3 )   0.0     (25.3 )   0.0  
 

Current Portion of Interest Rate Swap Agreements(1)

                         
 

Interest Rate Swap Agreements(1)

    (45.5 )   0.0     (45.5 )   0.0  
                   

  $ (70.8 ) $ 0.0   $ (70.8 ) $ 0.0  
                   

(1)
Interest Rate Swap Agreements—Refer to Note 13.

13. DERIVATIVE INSTRUMENTS

        NCM LLC has interest rate swap agreements with four counterparties that, at their inception, qualified for and were designated as cash flow hedges against interest rate exposure on $550.0 million of the variable rate debt obligations under the senior secured credit facility. The interest rate swap agreements have the effect of converting a portion of the Company's variable rate debt to a fixed rate of 6.734%. All interest rate swaps were entered into for risk management purposes. The Company has no derivatives for other purposes.

        Effective February 8, 2010, NCM LLC entered into a novation agreement with LBSF and Barclays whereby LBSF transferred to Barclays all the rights, liabilities, duties and obligations of NCM LLC's interest rate swap agreement with LBSF with identical terms. NCM LLC accepted Barclays as its sole counterparty with respect to the new agreement. The term runs until February 13, 2015, subject to earlier termination upon the occurrence of certain specified events. Subject to the terms of the new agreement, NCM LLC or Barclays will make payments at specified intervals based on the variance between LIBOR and a fixed rate of 4.984% on a notional amount of $137.5 million. NCM LLC effectively pays a rate of 6.734% on this notional amount inclusive of the 1.75% margin currently required by NCM LLC's credit agreement. The agreement with Barclays is secured by the assets of NCM LLC on a pari passu basis with the credit agreement and the other interest rates swaps that were entered into by NCM LLC. In consideration of LBSF entering into the transfer, NCM LLC agreed to pay to LBSF the full amount of interest rate swap payments withheld since LBSF's default, aggregating $7.0 million, and an immaterial amount of penalty interest.

        Cash flow hedge accounting was discontinued on September 15, 2008 due to the event of default created by the bankruptcy of Lehman and the inability of the Company to continue to demonstrate the swap would be effective. The Company did not elect cash flow hedge accounting and the interest rate swap with Barclays is recorded at fair value with any change in the fair value recorded in the statement of operations. There was a $4.0 million increase, $8.3 million decrease and $13.8 million increase in the fair value of the liability for the years ended December 30, 2010, December 31, 2009 and January 1, 2009, respectively, which the Company recorded as a component of interest expense and other, net.

        In accordance with ASC 815 Derivatives and Hedging, the net derivative loss as of September 14, 2008 related to the discontinued cash flow hedge with LBSF shall continue to be reported in

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13. DERIVATIVE INSTRUMENTS (Continued)


accumulated other comprehensive income unless it is probable that the forecasted transaction will not occur by the end of the originally specified time period. Accordingly, the net derivative loss is being amortized to interest expense over the remaining term of the interest rate swap through February 13, 2015. The amount amortized during the years ended December 30, 2010, December 31, 2009 and January 1, 2009 were $1.3 million, $1.3 million and $0.4 million, respectively. The Company estimates approximately $1.3 million will be amortized to interest expense and other, net in the next 12 months.

        Both at inception and on an on-going basis the Company performs an effectiveness test using the hypothetical derivative method. The fair values of the interest rate swaps with the counterparties other than Barclays (representing notional amounts of $412.5 million associated with a like amount of the variable rate debt) are recorded on the Company's balance sheet as a liability with the change in fair value recorded in other comprehensive income since the instruments were determined to be perfectly effective at December 30, 2010 and December 31, 2009. There were no amounts reclassified into current earnings due to ineffectiveness during the periods presented other than as described herein.

        The fair value of the Company's interest rate swap is based on dealer quotes, and represents an estimate of the amount the Company would receive or pay to terminate the agreements taking into consideration various factors, including current interest rates and the forward yield curve for 3-month LIBOR.

        As of December 30, 2010 and December 31, 2009, the estimated fair value and line item caption of derivative instruments recorded were as follows (in millions):

 
  Liability Derivatives  
 
  As of December 30, 2010   As of December 31, 2009  
 
  Balance Sheet
Location
  Fair
Value
  Balance Sheet
Location
  Fair
Value
 

Derivatives designated as hedging instruments in cash flow hedges:

                     
 

Current portion of interest rate swap agreements

  Current Liabilities   $ 19.0   Current Liabilities   $ 18.3  
 

Interest Rate Swaps

  Other Liabilities   $ 34.1   Other Liabilities   $ 22.6  

Derivatives not designated as hedging instruments:

                     
 

Current portion of interest rate swap agreements

  Current Liabilities   $ 6.3   Current Liabilities   $ 6.1  
 

Interest Rate Swaps

  Other Liabilities   $ 11.4   Other Liabilities   $ 7.6  
                   

Total derivatives

      $ 70.8       $ 54.6  
                   

        The effect of derivative instruments in cash flow hedge relationships on the financial statements for the years ended December 30, 2010, December 31, 2009 and January 1, 2009 were as follows (in millions):

 
   
   
   
   
   
 
 
  Unrealized Gain (Loss)
Recognized in
NCM LLC's OCI (Pre-tax)
  Realized Gain (Loss)
Recognized in
Interest Expense (Pre-tax)
 
 
  Year Ended
Dec. 30,
2010
  Year Ended
Dec. 31,
2009
  Year Ended
Jan. 1,
2009
  Year Ended
Dec. 30,
2010
  Year Ended
Dec. 31,
2009
  Year Ended
Jan. 1,
2009
 

Interest Rate Swaps

  ($ 30.3 ) $ 9.3   $ (67.9 ) ($ 19.4 ) $ (16.7 ) $ (8.8 )

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13. DERIVATIVE INSTRUMENTS (Continued)

        There was $1.3 million, $1.3 million and $0.4 million of ineffectiveness recognized for the years ended December 30, 2010, December 31, 2009 and January 1, 2009, respectively.

        The effect of derivatives not designated as hedging instruments under ASC 815 on the financial statements for the years ended December 30, 2010, December 31, 2009 and January 1, 2009 were as follows (in millions):

 
  Gain or (Loss) Recognized in
Interest Expense and Other, Net
(Pre-tax) for the Years Ended
 
 
  December 30,
2010
  December 31,
2009
  January 1,
2009
 

Borrowings

  $ (6.2 ) $ (6.2 ) $ (1.0 )

Change in derivative fair value

    (5.3 )   7.0     (14.2 )
               
 

Total

  $ (11.5 ) $ 0.8   $ (15.2 )
               

14. SEGMENT REPORTING

        Advertising is the principal business activity of the Company and is the Company's reportable segment under the requirements of ASC 280, Segment Reporting. Advertising revenue accounts for 88.7%, 88.0% and 89.4%, of revenue for the years ended December 30, 2010, December 31, 2009 and January 1, 2009, respectively. Fathom Consumer Events and Fathom Business Events are operating segments under ASC 280, but do not meet the quantitative thresholds for segment reporting. The following table presents revenues less directly identifiable expenses to arrive at operating income net of direct expenses for the advertising reportable segment, the combined Fathom Events operating segments, and network, administrative and unallocated costs. Management does not evaluate its segments on a fully allocated cost basis. Therefore, the measure of segment operating income net of direct expenses shown below is not prepared on the same basis as operating income in the statement of operations and the results below are not indicative of what segment results of operations would have been had it been operated on a fully allocated cost basis. Management cautions that it would be inappropriate to assume that unallocated operating costs are incurred proportional to segment revenue or any directly identifiable segment expenses. Unallocated operating costs consist primarily of network costs, general and administrative costs and other unallocated costs including depreciation and amortization. Management does not track segment assets and, therefore, segment asset information is not presented.

 
  Year Ended December 30, 2010 (in millions)  
 
  Advertising   Fathom
Events and
Other
  Network,
Administrative
and
Unallocated
Costs
  Total  

Revenue

  $ 379.4   $ 48.0   $ 0.1   $ 427.5  

Operating costs

    74.3     32.4           106.7  

Selling and marketing costs

    46.5     8.1     3.3     57.9  

Other costs

    3.2     0.8           4.0  
                       
 

Operating income, net of direct expenses

  $ 255.4   $ 6.7              

Network, administrative and other costs

                68.3     68.3  
                         

Total Operating Income

                    $ 190.6  
                         

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14. SEGMENT REPORTING (Continued)

 
  Year Ended December 31, 2009 (in millions)  
 
  Advertising   Fathom
Events and
Other
  Network,
Administrative
and
Unallocated
Costs
  Total  

Revenue

  $ 335.1   $ 45.5   $ 0.1   $ 380.7  

Operating costs

    72.7     29.1           101.8  

Selling and marketing costs

    40.6     8.6     1.0     50.2  

Other costs

    2.8     0.9           3.7  
                       
 

Operating income, net of direct expenses

  $ 219.0   $ 6.9              

Network, administrative and other costs

                56.8     56.8  
                         

Total Operating Income

                    $ 168.2  
                         

 


 

Year Ended January 1, 2009 (in millions)

 
 
  Advertising   Fathom
Events and
Other
  Network,
Administrative
and
Unallocated
Costs
  Total  

Revenue

  $ 330.3   $ 38.9   $ 0.3   $ 369.5  

Operating costs

    68.5     25.1           93.6  

Selling and marketing costs

    38.5     8.3     1.1     47.9  

Other costs

    2.8     0.8           3.6  
                       
 

Operating income, net of direct expenses

  $ 220.5   $ 4.7              

Network, administrative and other costs

                51.2     51.2  
                         

Total Operating Income

                    $ 173.2  
                         

        The following is a summary of revenues by category (in millions):

 
  Years Ended  
 
  December 30,
2010
  December 31,
2009
  January 1,
2009
 

National Advertising Revenue

  $ 271.9   $ 236.8   $ 223.1  

Founding Member Advertising Revenue

    37.2     36.3     43.3  

Regional Advertising Revenue

    70.3     62.0     63.9  

Fathom Consumer Revenue

    31.5     28.6     20.2  

Fathom Business Revenue

    16.5     16.9     18.7  

Other Revenue

    0.1     0.1     0.3  
               
 

Total Revenues

  $ 427.5   $ 380.7   $ 369.5  
               

15. SUBSEQUENT EVENTS

        ASC Topic 855-10, Subsequent Events (formerly SFAS No. 165, Subsequent Events) requires the Company to disclose the date through which subsequent events have been evaluated, as well as whether that date is the date the financial statements were issued. For the year ended December 30, 2010, the Company evaluated, for potential recognition and disclosure, events that occurred prior to the inclusion of the Company's financial statements in NCM, Inc.'s Annual Report on Form 10-K for the year ended December 30, 2010 on February 25, 2010.

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INDEPENDENT AUDITORS' REPORT

To the Member and Board of Directors of
Kerasotes Showplace Theatres, LLC
Chicago, Illinois

        We have audited the accompanying statements of assets and liabilities of the Kerasotes Showplace Theatres Sold to AMC Entertainment Inc. (the "Theatres") as of December 31, 2009, and 2008, and the related statements of income and cash flows for the years ended December 31, 2009, 2008 and 2007. These financial statements are the responsibility of the Theatres' management. Our responsibility is to express an opinion on these financial statements based on our audits.

        We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Theatres' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, such financial statements present fairly, in all material respects, the financial position of the Kerasotes Showplace Theatres Sold to AMC Entertainment Inc. as of December 31, 2009 and 2008, and the results of their operations and their cash flows for the years ended December 31, 2009, 2008 and 2007 in conformity with accounting principles generally accepted in the United States of America.

        As discussed in Note 2 to the financial statements, these financial statements pertain to the Kerasotes Showplace Theatres Sold to AMC Entertainment Inc. by Kerasotes Showplace Theatres, LLC (the "Parent"). The accompanying financial statements have been prepared from the records maintained by the Parent and may not necessarily be indicative of the conditions that would have existed or the results of the operations if the Theatres had been operated as an unaffiliated company. Portions of certain assets, liabilities, income and expenses represent allocations made from the Parent to the Theatres that are applicable to the Parent as a whole.

/s/ Deloitte & Touche LLP

Chicago, Illinois
July 13, 2010

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Kerasotes Showplace Theatres Sold to AMC Entertainment Inc.

STATEMENTS OF ASSETS AND LIABILITIES

As of December 31, 2009 and 2008

 
  2009   2008  

Assets

             

Current Assets:

             
 

Due from Parent

  $ 30,233,158   $ 67,321,610  
 

Accounts receivable

    4,227,816     5,167,257  
 

Inventories

    1,550,867     1,533,362  
 

Other current assets

    5,737,930     4,609,948  
           
   

Total current assets

    41,749,771     78,632,177  
           

Property and Equipment:

             
 

Land

    11,471,194     11,471,193  
 

Land improvements

    17,632,816     17,577,549  
 

Buildings and improvements

    85,905,548     85,899,287  
 

Leasehold improvements

    21,903,276     21,593,529  
 

Equipment

    170,476,408     166,604,851  
 

Construction in progress

    76,113     49,364  
           
   

Total property and equipment

    307,465,355     303,195,773  
           

Less accumulated depreciation

    (170,779,219 )   (151,025,656 )
           
   

Property and equipment—net

    136,686,136     152,170,117  
           

Other Assets:

             
 

Goodwill

    24,153,064     24,153,064  
 

Intangible assets—net

    25,963,411     27,408,299  
 

Other assets

    687,762     700,115  
           
   

Total other assets

    50,804,237     52,261,478  
           

Total

  $ 229,240,144   $ 283,063,772  
           

Liabilities and Net Assets

             

Current Liabilities:

             
 

Accounts payable

  $ 4,356,479   $ 8,244,810  
 

Accrued payroll and payroll taxes

    4,851,429     1,926,996  
 

Accrued property taxes

    10,938,383     12,204,983  
 

Other accrued expenses

    13,879,500     12,430,529  
 

Other accrued taxes

    1,221,388     831,361  
 

Deferred revenue and other liabilities

    6,060,329     5,632,324  
 

Current portion of developer reimbursements

    262,588     56,221  
 

Current portion of long-term debt to Parent

    665,613     40,665,612  
 

Current portion of deferred gain

    7,347,616     7,347,616  
           
   

Total current liabilities

    49,583,325     89,340,452  

Long-Term Liabilities:

             
 

Developer reimbursements

    16,784,275     14,793,366  
 

Long-term debt to Parent

    24,849,121     54,538,009  
 

Deferred gain from sale-leaseback transactions

    113,048,858     120,396,474  
 

Deferred rent and other long-term liabilities

    7,364,737     9,891,240  
           
 

Total liabilities

    211,630,316     288,959,541  

Commitments and Contingencies

         

Net Assets

    17,609,828     (5,895,769 )
           

Total

  $ 229,240,144   $ 283,063,772  
           

See Notes to Financial Statements.

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STATEMENTS OF INCOME

For the Years Ended December 31, 2009, 2008 and 2007

 
  2009   2008   2007  

Revenues:

                   
 

Box office revenue

  $ 211,489,296   $ 188,536,649   $ 167,070,271  
 

Concession revenue

    97,914,429     90,516,423     82,910,994  
 

Other operating revenue

    16,560,734     9,664,611     9,101,016  
               
   

Total revenues

    325,964,459     288,717,683     259,082,281  
               

Operating Revenues:

                   
 

Film expense and advertising costs

    117,493,029     105,299,786     93,013,579  
 

Cost of concession sales

    11,911,423     10,528,086     9,046,089  
 

General and administrative expenses

    17,011,193     16,671,037     14,904,875  
 

Theatre occupancy costs

    65,318,610     65,629,446     49,988,848  
 

Depreciation and amortization

    21,893,823     23,947,330     24,110,749  
 

Other operating expenses

    68,827,081     62,971,984     54,287,656  
 

Amortization of deferred gain

    (7,347,616 )   (7,268,376 )   (5,543,587 )
               
   

Total operating expenses

    295,107,543     277,779,293     239,808,209  
               

Income from operations

   
30,856,916
   
10,938,390
   
19,274,072
 
               

Other Expenses

                   
 

Interest expense to Parent

    (4,150,202 )   (5,215,322 )   (11,133,088 )
 

Other income and expenses—net

    (3,291,037 )   (279,297 )   (4,005,048 )
               
   

Total other expenses

    (7,441,239 )   (5,494,619 )   (15,138,136 )
               

Net Income

  $ 23,415,677   $ 5,443,771   $ 4,135,936  
               

See Notes to Financial Statements.

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STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2009, 2008, and 2007

 
  2009   2008   2007  

Cash flows from operating activities:

                   
 

Net income

  $ 23,415,677   $ 5,443,771   $ 4,135,936  
 

Adjustments to reconcile net income to net cash flows from operating activities:

                   
   

Depreciation and amortization

    21,893,823     23,947,330     24,110,749  
   

Amortization of debt issuance costs and other noncash interest expense

    1,270,351     656,131     922,721  
   

Loss on disposal of property

    46,874     519,715     3,902,837  
   

Amortization of deferred gain

    (7,347,616 )   (7,268,376 )   (5,543,587 )
   

Loss from equity investment in Kerasotes Colorado Cinema, LLC

            228,795  
   

Changes in:

                   
     

Accounts receivable

    (285,560 )   (1,836,196 )   (212,753 )
     

Inventories

    (17,505 )   (57,658 )   (36,189 )
     

Other assets

    44,184     (484,661 )   (2,543,722 )
     

Accounts payable

    (2,691,554 )   (438,787 )   3,413,292  
     

Other current liabilities

    5,253,179     367,259     3,663,650  
     

Deferred rent and other long-term liabilities

    (337,764 )   1,404,736     2,773,609  
               
       

Net cash flows from operating activities

    41,244,089     22,253,264     34,815,338  
               

Cash flows from investing activities:

                   
 

Capital expenditures

    (7,515,670 )   (5,778,911 )   (26,915,634 )
 

Construction costs reimbursable by developers

        (14,750,000 )    
 

Cash paid for capitalized interest

        (336,858 )   (184,912 )
 

Proceeds from sale of property

    68,638     98,383,985     100,083,847  
 

Purchase of Kerasotes Colorado Cinemas—net of cash acquired

        817,305     (52,622,350 )
 

Acquisition of theatres

        (75,517,400 )   (12,652,954 )
               
       

Net cash flows from investing activities

    (7,447,032 )   2,818,121     7,707,997  
               

Cash flows from financing activities:

                   
 

Proceeds from borrowings from Parent

        30,454,014     82,697,526  
 

Principal payments on borrowings from Parent

    (69,688,884 )   (31,700,000 )   (103,437,522 )
 

Due from Parent

    37,088,452     (37,325,532 )   (20,567,887 )
 

Principal payments on developer reimbursement financing obligations

    (244,492 )   (24,867 )    
 

Payment of debt issuance costs

    (2,177,133 )         (1,215,452 )
 

Proceeds from developer reimbursements for construction costs

    1,225,000     13,525,000      
               
       

Net cash flows from financing activities

    (33,797,057 )   (25,071,385 )   (42,523,335 )
               

Net change in cash

             

Cash—beginning of year

             
               

Cash—end of year

  $   $   $  
               

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION—Cash paid during the year for:

                   
 

Interest—net of amount capitalized

  $ 2,972,064   $ 4,383,172   $ 10,539,433  
               
 

Replacement tax

  $ 3,444   $ 14,404   $  
               

SUPPLEMENTAL DISCLOSURES OF NONCASH OPERATING, INVESTING, AND FINANCING ACTIVITIES:

                   
 

Sale-leaseback deferred gain (amortization over 20 years)

  $   $ 19,017,834   $ 25,594,136  
               
 

Amounts reflected in accounts payable and fixed assets at year-end

  $ 190,204   $ 1,386,981   $  
               
 

Amounts reflected in accrued expenses and fixed assets at year-end

  $ 1,032   $ 1,329,377   $ 144,246  
               

See Notes to Financial Statements.

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Kerasotes Showplace Theatres Sold to AMC Entertainment Inc.

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2009 and 2008, and

For the Years Ended December 31, 2009, 2008, and 2007

1. THE THEATRES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        The principal business of the Kerasotes Showplace Theatres Sold to AMC Entertainment Inc (such theatres are hereafter referred to as the "Theatres") is the operation of motion picture theatres. Box office admission and concession sales are the Theatres' primary sources of revenue.

        The Theatres' operations are primarily located throughout the Midwest in the states of Illinois, Indiana, Iowa, Missouri, Minnesota, and Ohio. Over the years, the Theatres have grown through the construction and acquisition of theatres, most recently in the states of Colorado, Wisconsin, and California.

        The Theatres are not a separate legal entity, and were operated by Kerasotes Showplace Theatres, LLC (the "Parent") during the periods presented. On December 9, 2009, the Parent agreed to sell these theatre assets comprising a substantial majority of the Parent's theatres and transfer related liabilities to AMC Entertainment Inc. ("AMC") (the "Sale"); this sale was closed on May 24, 2010. Further discussion of the Sale is included in Note 2.

        Management's Use of Estimates—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

        Preopening Expenses—Costs incurred prior to opening of a new theatre are expensed as incurred. These costs include advertising and other start-up costs incurred prior to the operation of new theatres and are reported in their respective lines in the statements of income.

        Accounts Receivable—An allowance for doubtful accounts is provided only if specific accounts are considered uncollectible. If items become uncollectible, they will be charged to operations when that determination is made. Management determined no allowance was required as of December 31, 2009 or 2008.

        Inventories—Inventories consist primarily of concession items and are carried at the lower of cost, determined by the first-in, first-out method, or market.

        Property and Equipment—Property and equipment, consisting of buildings, land and leasehold improvements, and equipment, are carried at cost, less accumulated depreciation computed using both straight-line and accelerated methods. Land improvements are depreciated over an estimated useful life of 15 years. Buildings and improvements are depreciated over an estimated useful life of 39 years. Leasehold improvements are depreciated over the shorter of the lease term or economic life of the asset. Equipment is depreciated over an estimated useful life of five to seven years. Interest capitalized on Theatre-managed construction projects totaled $0 and $336,858 for the years ended December 31, 2009 and 2008.

        Leases—A significant portion of the Theatres' operations are conducted in premises occupied under lease agreements with initial base terms ranging generally from 15 to 20 years, with certain leases containing options to extend for up to an additional 20 years. The Theatres do not believe that exercise

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NOTES TO FINANCIAL STATEMENTS (Continued)

As of December 31, 2009 and 2008, and

For the Years Ended December 31, 2009, 2008, and 2007

1. THE THEATRES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


of the renewal options in its leases is reasonably assured at the inception of the lease agreements and therefore considers the initial base term the lease term. The leases provide for fixed and escalating rentals, contingent escalating rentals based on the consumer price index with a contractual floor and ceiling, and contingent rentals, including those that are based on revenues with a guaranteed minimum. As of December 31, 2009, all leases qualified as operating leases.

        The Theatres record rent expense for their operating leases on a straight-line basis over the base term of the lease agreements, commencing with the date the Theatres have control and access to leased premises.

        Occasionally, the Theatres are responsible for the construction of theatres subject to operating leases and receive reimbursement from the property developer for construction costs incurred. The Theatres evaluate these leases to determine who the accounting owner is during the construction period. For leases where the Theatres are determined to be the accounting owner during construction, they account for receipt of developer reimbursements under prevailing sale-leaseback accounting guidance. The Theatres have constructed four theatres subject to the circumstances described for which they have determined certain terms of the leases to be prohibited forms of continuing involvement. As a result, the Theatres have recorded developer reimbursement financing obligations of $17,046,863 and $14,849,587 in their statements of assets and liabilities as of December 31, 2009 and 2008, respectively, for operating leases related to these projects. The current portion of developer reimbursement financing obligations was $262,588 and $56,221, respectively, as of December 31, 2009 and 2008.

        Business Combinations—The Theatres account for their acquisitions of theatres using the purchase method. The purchase method requires that the Theatres estimate the fair value of the individual assets and liabilities acquired. The allocation of purchase price is based on management's judgment, including valuation assessments.

        Goodwill—The Theatres evaluate their goodwill for impairment annually during the fourth quarter, or more frequently, if events or changes in circumstances indicate that an asset might be impaired. The evaluation is performed using a two-step process. In the first step, the fair value of a reporting unit is compared with its carrying amount, including goodwill. If the estimated fair value of a reporting unit is less than its carrying amount, then a second step must be completed in order to determine the amount of the goodwill impairment that should be recorded. In the second step, the implied fair value of a reporting unit's goodwill is determined by allocating the reporting unit's fair value to all of its assets and liabilities other than goodwill (including any unrecognized intangible assets) in a manner similar to a business combination. The resulting implied fair value of the goodwill that results from the application of this second step is then compared to the carrying amount of the goodwill and an impairment charge is recorded for the difference if the implied goodwill is less than the carrying amount.

        The assumptions used in the estimate of fair value are generally consistent with the past performance of a reporting unit and are also consistent with the projections and assumptions that are used in current operating plans. Such assumptions are subject to change as a result of changing economic and competitive conditions. The Theatres recorded no goodwill impairment during the years ended December 31, 2009, 2008, or 2007.

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NOTES TO FINANCIAL STATEMENTS (Continued)

As of December 31, 2009 and 2008, and

For the Years Ended December 31, 2009, 2008, and 2007

1. THE THEATRES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        The changes in the carrying amount of goodwill during the fiscal years ended December 31, 2009 and 2008 are as follows:

Balance—January 1, 2008

  $ 12,810,797  
 

Purchase price adjustment—KCC acquisition

    (817,305 )
 

Finalization of purchase accounting

    2,335,779  
 

Star acquisition

    9,823,793  
       

Balance—December 31, 2008

    24,153,064  
       

Balance—December 31, 2009

  $ 24,153,064  
       

        Intangible Assets—As of December 31, 2009, definite-lived intangible assets were $25,963,411, net of accumulated amortization of $4,186,285. As of December 31, 2008, definite-lived intangible assets were $27,408,299, net of accumulated amortization of $2,741,397. These intangible assets consisted primarily of the intangible value associated with the operating leases that were acquired in the acquisitions discussed in Note 5. Amortization expense was $1,444,888, $1,902,252, and $839,145 for fiscal years 2009, 2008, and 2007, respectively, and is recorded in depreciation and amortization expense in the statements of income.

        Amortization expense is expected to be as follows:

Years Ending December 31
  Amount  

2010

  $ 1,514,507  

2011

    1,514,507  

2012

    1,514,507  

2013

    1,514,507  

2014

    1,514,507  

Thereafter

    18,390,876  
       

Total

  $ 25,963,411  
       

        Other Assets—As of December 31, 2009, debt issuance costs were $1,858,065, net of accumulated amortization of $1,393,590. As of December 31, 2008, other assets include debt issuance costs $698,253, net of accumulated amortization of $644,899. Costs resulting from the issuance of debt are capitalized and amortized over the term of the related debt agreement. Amortization expense of $1,017,322, $531,677, and $922,721 for fiscal years 2009, 2008, and 2007, respectively, is recorded in interest expense in the statements of income.

        Long-Lived Assets—The Theatres review the carrying value of their long-lived assets, including property and equipment, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. To the extent the estimated future cash inflows attributable to the assets, less estimated future cash outflows, are less than the carrying amount, an impairment loss would be recognized. No impairment loss was recognized during the years ended December 31, 2009, 2008, and 2007.

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NOTES TO FINANCIAL STATEMENTS (Continued)

As of December 31, 2009 and 2008, and

For the Years Ended December 31, 2009, 2008, and 2007

1. THE THEATRES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

        Revenue Recognition—Revenues include box office receipts, sales of concessions merchandise, advertising revenues, and other miscellaneous revenues, primarily fees for theatre rentals. The Theatres recognize box office and concession revenues at the point of sale and other revenues when earned.

        The Theatres sell gift certificates and gift cards both in the theatres and online. These receipts are excluded from revenues until the date the gift certificates and gift cards are redeemed. The Theatres recognize gift certificate breakage when its future performance obligation is determined to be remote. Gift certificate breakage was $777,298, $355,118, and $2,817,092, respectively, for the years ended December 31, 2009, 2008, and 2007. Gift certificate breakage is recorded as a component of other operating revenue in the statements of income.

        Operating Expenses—Film rental costs are recorded as revenue is earned based upon the terms of the respective film license arrangements. Advertising costs are expensed as incurred. Other operating expenses are principally comprised of payroll and benefits costs, utilities, maintenance, repairs, and other general operating expenses. The balance of operating expenses incurred by the corporate function is classified as general and administrative expenses. Theatre occupancy costs include rent, property taxes, and other occupancy costs.

        Vendor Allowances—The Theatres receive volume-based purchase rebates from vendors. These rebates are recorded as a reduction of inventories upon receipt and recognized as a reduction of the cost of concession sales when merchandise is sold.

        Comprehensive Income—Comprehensive income equals net income for all periods presented.

2. THE SALE

        As mentioned in Note 1, on December 9, 2009, the Parent agreed to sell certain theatre assets comprising a substantial majority of the Parent's theatres and transfer related liabilities to AMC; this sale closed on May 24, 2010. These theatres were sold for $275,000,000 in cash, subject to certain working capital and other purchase price adjustments finalized on the closing date.

        The financial statements pertain to these theatres sold to AMC by the Parent. The financial statements have been prepared from the records maintained by the Parent and may not necessarily be indicative of the conditions that would have existed or the results of the operations if these theatres had been operated as an unaffiliated company. The majority of the assets, liabilities, income and expenses presented in these financial statements are specifically-identifiable to the theatres sold by the Parent to AMC. Portions of certain assets, liabilities, income and expenses represent allocations made from the Parent to these theatres that are applicable to the Parent as a whole where specific-identification of these balances to each theatre is not practicable. These allocations primarily relate to certain receivables, payables, accrued expenses, debt and operating expenses generated or incurred at the Parent and not directly related to an individual theatre; these allocations have been made based on the proportion of the number of theatre screens within the theatres sold to AMC as a percentage of the total number of theatre screens owned by the Parent prior to the Sale. In the opinion of management, these allocations are reasonable for the purposes of presenting the financial statements of the Theatres.

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NOTES TO FINANCIAL STATEMENTS (Continued)

As of December 31, 2009 and 2008, and

For the Years Ended December 31, 2009, 2008, and 2007

3. NEW ACCOUNTING PRONOUNCEMENTS

        In June 2009, the Financial Accounting Standards Board (FASB) issued ASC 105, Generally Accepted Accounting Principles, as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernment entities. Generally, ASC 105 is not expected to change accounting principles generally accepted in the United States of America. The Theatres adopted ASC 105 for the year ended December 31, 2009, and any references to authoritative accounting literatures in the financial statements are referenced in accordance with the ASC, unless the literature has not been codified.

        In December 2007, the FASB revised ASC 805 (formerly FASB Statement No. 141(R), Business Combinations). ASC 805 is effective for fiscal years beginning on or after December 15, 2008, with early adoption prohibited. The provisions of ASC 805 are applied prospectively from the date of adoption, except for adjustments to a previously acquired entity's deferred tax assets and uncertain tax position balances occurring outside the measurement period, which are recorded as a component of income tax expense in the period of adjustment, rather than goodwill. The Theatres adopted ASC 805 on January 1, 2009. The adoption of ASC 805 did not have a material impact the Theatres' financial position, results of operations, or cash flows.

4. INVESTMENT IN KCC

        On January 15, 2004, the Parent made a $4,740,145 minority investment in a new company, KCC. The Parent made this investment in conjunction with Providence Growth Entrepreneurs Fund, L.P.; Providence Growth Investors, L.P.; and the management team of KCC. Prior to the March 2, 2007 acquisition of the controlling interest in KCC (as discussed in Note 5), the Theatres owned 23.685% of KCC and did not have managerial control. Accordingly, this investment had been accounted for under the equity method and the financial statements included the Theatres' share of the results of operations from January 15, 2004 through March 1, 2007. For the period from January 1, 2007 to March 1, 2007, KCC had operating revenues of $6,185,285, operating loss of $(201,044), and a net loss of $(840,998).

5. ACQUISITIONS

        On January 31, 2008, the Parent acquired the assets, property, and operations of six theatres located in Iowa and Wisconsin from AGT Enterprises, Inc., and Star-Iowa, LLC (the "Star acquisition") for $75,517,400. The Star acquisition added 81 screens to the Theatres' circuit. The purpose of the transaction was to increase the scale of the Theatres, diversify and expand the Theatres' customer base, and strengthen the Theatres' competitive position in the industry. In conjunction with this transaction, the Theatres consummated two separate sale-leaseback transactions. The proceeds of the sale-leaseback transactions were used to finance the Star acquisition, pay down debt, and pay taxes and fees associated with the deal. The results of theatre operations are included in the financial statements from the date of acquisition.

        On March 2, 2007, the Parent acquired the remaining 76.315% interest they did not previously own in their investment in KCC for a purchase price of $52,754,184, net of cash acquired ($424,773). The purchase price was subject to the terms of an escrow arrangement that was finalized in 2008 with a payment of $817,305 to the Parent, which reduced the total purchase price for the acquisition to

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NOTES TO FINANCIAL STATEMENTS (Continued)

As of December 31, 2009 and 2008, and

For the Years Ended December 31, 2009, 2008, and 2007

5. ACQUISITIONS (Continued)


$51,936,879. This acquisition added 11 theatres and 125 screens to the overall circuit and gave the Theatres a presence in the state of Colorado. The acquisition was financed with cash on hand and additional debt. The results of theatre operations are included in the financial statements from the date of acquisition.

        On March 2, 2007, the Parent also acquired the assets, properties, and operations of two existing theatres near Chicago, Illinois for a purchase price of $12,652,954. The acquisition of these theatres added 28 screens to the overall circuit and enhanced the Theatres' presence in the Chicago area market. The acquisition was financed with cash on hand and additional debt. The results of theatre operations are included in the financial statements from the date of acquisition.

        The Theatres have allocated the purchase price to the theatre assets acquired at estimated fair values. The excess of fair value of the net assets acquired compared to the amount paid as of the acquisition date has been reflected as goodwill. The Theatres completed the purchase price allocations for the 2007 acquisitions during 2008, reflecting finalization of consideration paid in the KCC acquisition (pursuant to the terms of the escrow arrangement in the transaction) and the finalization of other allocations for both transactions based on all available evidence subsequent to the transaction. The purchase price allocation was completed for the Star acquisition during 2008. The following table summarizes the estimated fair values of the assets acquired at the dates of acquisition:

 
  2008
Acquisition of
Star Cinemas
  2007
Acquisition of
76.315%
Interest in
KCC
  2007
Acquisition of
Chicago-Area
Theatres
 

Cash purchase price—net of cash acquired

  $ 73,821,240   $ 21,852,097   $ 12,582,000  

Debt assumed and repaid

        29,278,933      

Transaction fees

    1,696,160     805,849     70,954  
               

Total cash paid

  $ 75,517,400   $ 51,936,879   $ 12,652,954  
               

Allocation of purchase price:

                   
 

Other current assets

  $ 69,335   $ 602,202   $  
 

Property and equipment

    66,227,891     36,496,153     906,388  
 

Goodwill

    9,823,793     2,760,152     115,000  
 

Intangible assets

        18,019,179     11,746,566  
               
   

Total assets acquired

    76,121,019     57,877,686     12,767,954  
               

Current liabilities

    (318,165 )   (2,179,139 )    

Deferred revenue

    (285,454 )   (357,190 )   (115,000 )

Other long-term liabilities

        (3,404,478 )    
               
   

Total liabilities assumed

    (603,619 )   (5,940,807 )   (115,000 )
               

Net assets acquired

  $ 75,517,400   $ 51,936,879   $ 12,652,954  
               

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Kerasotes Showplace Theatres Sold to AMC Entertainment Inc.

NOTES TO FINANCIAL STATEMENTS (Continued)

As of December 31, 2009 and 2008, and

For the Years Ended December 31, 2009, 2008, and 2007

5. ACQUISITIONS (Continued)

        As a result of the 2007 acquisition of 76.315% interest in KCC included above, the previously owned 23.685% interest in KCC was consolidated into the Theatres' financial statements on a historical-cost basis. The amounts consolidated were as follows: cash of $131,834; other current assets of $175,056; property and equipment, net of $12,336,370; goodwill of $1,596,089; other assets of $161,670; current liabilities of $841,524; long-term debt of $8,870,033; and other long-term liabilities of $486,364.

6. DEBT AND DEVELOPER REIMBURSEMENT FINANCING OBLIGATIONS

        These financial statements include an allocation of the amounts outstanding on the Parent's bank debt, and also the related debt issuance costs. The Parent's outstanding debt facilities consisted of a revolving line of credit ("Revolver") and Term B notes. These outstanding Parent debt balances were secured by substantially all of the Parent's assets, which included the assets of the Theatres. The Parent's bank debt was repaid in full as of the closing date of the Sale.

        Allocated debt and developer reimbursement financing obligations at December 31, 2009 and 2008 consisted of the following:

 
  2009   2008  

Debt to Parent

  $ 25,514,734   $ 95,203,621  

Developer reimbursement financing obligations

    17,046,863     14,849,587  
           
 

Total debt to Parent and developer reimbursement financing obligations

    42,561,597     110,053,208  

Less current portion

    (928,201 )   (40,721,833 )
           

Long-term debt to Parent and developer reimbursement financing obligations

  $ 41,633,396   $ 69,331,375  
           

        The contractual terms of the Parent's Term B debt required quarterly installments of $166,403 from December 31, 2009, until December 31, 2010. Three quarterly installments of $15,974,687 were required from March 31, 2011, with the final payment due October 28, 2011. Draws and repayment on the revolving line are at the discretion of the Parent, and the Parent uses distributions from the Theatres to fund any debt repayments. At December 31, 2009 and 2008, the aggregate available borrowing capacity on this facility was $50,000,000 and $27,300,000, respectively.

        Interest on the Parent's Term B and Revolver debt was at variable rates based on the prime rate or the Eurodollar rate, adjusted for the Parent's consolidated economic performance, as specified in the agreement. During the year ended December 31, 2009, interest rates ranged from 4.81% to 5.56%. During the year ended December 31, 2008, interest rates ranged from 2.5% to 7.75%.

        The carrying value of the Parent's long-term debt approximated its fair value as of December 31, 2009, since the Parent's long-term debt has interest rates that fluctuate based on published market rates. The fair value of the Parent's long-term debt was $104,947,507 as of December 31, 2008. The fair value of the Parent's long-term debt as of December 31, 2008, was determined as the net present value

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Kerasotes Showplace Theatres Sold to AMC Entertainment Inc.

NOTES TO FINANCIAL STATEMENTS (Continued)

As of December 31, 2009 and 2008, and

For the Years Ended December 31, 2009, 2008, and 2007

6. DEBT AND DEVELOPER REIMBURSEMENT FINANCING OBLIGATIONS (Continued)


of the future cash flows at the prevailing balance sheet rate, discounted at the renegotiated market rate received in the amendment to the Parent's credit facility.

7. LEASE COMMITMENTS

        The Theatres conduct their operations in facilities and using equipment leased under noncancelable operating leases expiring at various dates through 2029. At the end of the lease terms, most of the leases are renewable at the fair rental value for periods of 5 to 20 years. The rental payments for some facilities are based on a minimum annual rent plus a percentage of receipts in excess of a specified amount. Refer to Note 1 for discussion of the Theatres' financing leases.

        Rental expense for noncancelable operating leases for the years ended December 31, 2009, 2008, and 2007, consists of the following:

 
  2009   2008   2007  

Minimum

  $ 49,086,692   $ 47,818,774   $ 32,967,017  

Contingent

    488,768     230,623     273,282  
               

Total

  $ 49,575,460   $ 48,049,397   $ 33,240,299  
               

        The minimum rental commitments related to noncancelable operating leases and developer reimbursement financing leases at December 31, 2009, are as follows:

 
  Minimum Lease Payments  
Year Ending December 31
  Financing   Operating  

2010

  $ 1,085,953   $ 49,607,208  

2011

    1,085,953     49,530,348  

2012

    1,085,953     49,109,526  

2013

    1,099,956     49,358,392  

2014

    1,169,968     49,250,480  

Thereafter

    27,749,433     499,068,004  
           
 

Total

    33,277,216   $ 745,923,958  
             

Less interest

   
(16,230,353

)
     
             
 

Developer reimbursement financing obligations

 
$

17,046,863
       
             

Less current portion of developer reimbursement financing obligations

   
(262,588

)
     
             

Long-term developer reimbursement financing obligations

 
$

16,784,275
       
             

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Kerasotes Showplace Theatres Sold to AMC Entertainment Inc.

NOTES TO FINANCIAL STATEMENTS (Continued)

As of December 31, 2009 and 2008, and

For the Years Ended December 31, 2009, 2008, and 2007

8. INCOME TAXES

        The Parent is a limited liability company, and is not subject to the payment of federal or state income taxes, as the components of its income and expenses flow directly to the Parent's members. Accordingly, the Parent is not liable for any federal or state income tax, except for minor taxes imposed by some of the states in which the Parent does business. These financial statements include an allocation of these taxes incurred and paid by the Parent on behalf of the Theatres. These taxes were $(3,882), $14,404, and $0 for the years ended December 31, 2009, 2008, and 2007, respectively.

9. RETIREMENT PLAN

        The Theatres have contributed to the Parent's 401(k) profit-sharing plan for all managers, assistant managers, trainees, and administrative employees who have reached the age of 21. Employees may contribute up to 60% of their pay, not exceeding $16,500 ($22,000 for employees over age 50). Following one year of employment, the Theatres will match 100% of the first 3% of contribution and 50% on the next 2% of contribution. Matching contributions are immediately vested.

        The Theatres fund the matching contributions as they accrue. These contributions were $372,328, $394,353, and $371,970 for the years ended December 31, 2009, 2008, and 2007, respectively.

10. RELATED-PARTY TRANSACTIONS

        The Theatres are not a separate legal entity, and were operated by the Parent during the periods presented. As discussed in Note 2, the financial statements have been prepared from the records maintained by the Parent and may not necessarily be indicative of the conditions that would have existed or the results of the operations if these theatres had been operated as an unaffiliated company. Portions of certain assets, liabilities, income and expenses represent allocations made from the Parent to these theatres that are applicable to the Parent as a whole. The Parent maintains and manages the cash generated by the Theatres, including the transfer of cash deposits from Theatres' operations to the Parent's bank accounts; these funds are used to finance the operations and capital expenditures of the Theatres. The outstanding amounts owed by the Parent to the Theatres are presented as "Due from Parent" in the Statements of Assets and Liabilities.

        Total rental expense payable to related-parties of the Theatres amounted to $14,400 for the each of the years ended December 31, 2009, 2008, and 2007. Amounts payable to related-parties at December 31, 2009, 2008, and 2007, were $183,553, $169,153, and $154,753, respectively.

        Amounts paid to an advertising agency owned by a close relative of one of the Parent's shareholders were $82,632, $31,414, and $0 for 2009, 2008, and 2007, respectively.

11. SALE-LEASEBACK TRANSACTIONS

        On January 31, 2008, the Theatres entered into two separate sale-leaseback transactions, whereby the Theatres sold eight of their fee-owned theatres for a sale price of $97,560,246, net of closing costs of $430,317. The Theatres leased back the sold theatres subject to 20-year triple net operating leases (with renewal terms of either three five-year options or one 10-year option and one five-year option). The gain of $19,017,834 has been deferred and is being recognized ratably over the life of the leases.

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Kerasotes Showplace Theatres Sold to AMC Entertainment Inc.

NOTES TO FINANCIAL STATEMENTS (Continued)

As of December 31, 2009 and 2008, and

For the Years Ended December 31, 2009, 2008, and 2007

11. SALE-LEASEBACK TRANSACTIONS (Continued)


The proceeds from the transaction were used to pay down debt, with the remaining proceeds used to pay taxes and fees associated with the deal. The balance was retained to fund future capital expenditures.

        On September 19, 2007, the Theatres entered into a sale-leaseback transaction, whereby the Theatres sold 11 of their fee-owned theatres with a book value of $78,112,826 for $99,720,206, net of closing costs of $638,171 and leased back the same buildings for a period of 20 years with three five-year options for each of the sold properties. The resulting leases are classified as being accounted for as operating leases. The gain of $25,594,136 has been deferred and is being recognized ratably over the life of the leases. Losses of $3,986,755 were immediately recognized in earnings. The proceeds from the transaction were used to pay down debt, with the remaining proceeds used to pay an owner distribution, taxes, and fees associated with the deal. The balance was retained to fund future capital expenditures.

        On September 30, 2005, the Theatres entered into a sale-leaseback transaction, whereby the Theatres sold 17 of their fee-owned theatres with a book value of $94,759,887 for $200,000,000 and leased back the same buildings for a period of 20 years with three five-year options for each of the sold properties. The resulting leases are classified as operating leases. The gain of $102,340,355 has been deferred and is being recognized ratably over the life of the leases. The proceeds from the transaction were used to pay down debt, with the remaining proceeds used to pay an owner distribution, taxes, and fees associated with the deal. The balance was retained to fund future capital expenditures.

12. SUBSEQUENT EVENTS

        Management has evaluated subsequent events through July 13, 2010, which is the date the financial statements were issued.

******

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Kerasotes Showplace Theatres Sold to AMC Entertainment Inc.

UNAUDITED CONDENSED STATEMENTS OF ASSETS AND LIABILITIES

As of March 31, 2010 and December 31, 2009

 
  March 31, 2010   December 31, 2009  

Assets

             

Current Assets:

             
 

Due from Parent

  $ 26,684,867   $ 30,233,158  
 

Accounts receivable

    4,032,833     4,227,816  
 

Inventories

    1,603,051     1,550,867  
 

Other current assets

    7,486,135     5,737,930  
           
   

Total current assets

    39,806,886     41,749,771  
           
   

Property and equipment—net

    132,035,369     136,686,136  
           

Other Assets:

             
 

Goodwill

    24,153,064     24,153,064  
 

Intangible and other assets—net

    26,357,192     26,651,173  
           
   

Total other assets

    50,510,256     50,804,237  
           

Total

  $ 222,352,511   $ 229,240,144  
           

Liabilities and Net Assets

             

Current Liabilities:

             
 

Accounts payable

  $ 7,124,618   $ 4,356,479  
 

Accrued payroll and payroll taxes

    4,416,835     4,851,429  
 

Accrued property taxes

    11,897,572     10,938,383  
 

Other accrued expenses

    7,939,998     13,879,500  
 

Other accrued taxes

    891,541     1,221,388  
 

Deferred revenue and other liabilities

    4,847,632     6,060,329  
 

Current portion of developer reimbursements

    263,895     262,588  
 

Current portion of long-term debt to Parent

    665,613     665,613  
 

Current portion of deferred gain

    7,347,616     7,347,616  
           
   

Total current liabilities

    45,395,320     49,583,325  

Long-term Liabilities:

             
 

Developer reimbursements

    16,717,804     16,784,275  
 

Long-term debt to Parent

    19,942,171     24,849,121  
 

Deferred gain from sale-leaseback transactions

    111,211,954     113,048,858  
 

Deferred rent and other long-term liabilities

    7,338,795     7,364,737  
           
   

Total liabilities

    200,606,044     211,630,316  

Commitments and Contingencies

         

Net assets

    21,746,467     17,609,828  
           

Total

  $ 222,352,511   $ 229,240,144  
           

See Notes to Unaudited Condensed Financial Statements.

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Kerasotes Showplace Theatres Sold to AMC Entertainment Inc.

UNAUDITED CONDENSED STATEMENTS OF INCOME

For the Quarterly Periods Ended March 31, 2010 and 2009

 
  Three Months Ended  
 
  March 31, 2010   March 31, 2009  

Revenues:

             
 

Box office revenue

  $ 51,046,633   $ 50,074,621  
 

Concession revenue

    23,279,896     23,327,533  
 

Other operating revenue

    5,396,288     2,880,437  
           
   

Total revenues

    79,722,817     76,282,591  
           

Operating Expenses:

             
 

Film expense and advertising costs

    29,078,389     26,759,638  
 

Cost of concession sales

    2,688,490     2,719,832  
 

General and administrative expenses

    3,973,215     4,017,098  
 

Theatre occupancy costs

    16,803,336     17,267,930  
 

Depreciation and amortization

    4,627,864     5,252,133  
 

Other operating expenses

    18,848,447     16,852,893  
 

Amortization of deferred gain

    (1,836,904 )   (1,836,904 )
           
   

Total operating expenses

    74,182,837     71,032,620  
           

Income from Operations

    5,539,980     5,249,971  
           

Other Expenses

             
 

Interest expense to Parent

    (744,316 )   (1,042,513 )
 

Other income and expenses—net

    (569,103 )   (714,787 )
           
   

Total other expenses

    (1,313,419 )   (1,757,300 )
           

Net income

  $ 4,226,561   $ 3,492,671  
           

See Notes to Unaudited Condensed Financial Statements.

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Kerasotes Showplace Theatres Sold to AMC Entertainment Inc.

UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS

For the Quarterly Periods Ended March 31, 2010 and 2009

 
  Three Months Ended  
 
  March 31, 2010   March 31, 2009  

Cash flows from operating activities:

             
 

Net income

  $ 4,226,561   $ 3,492,671  
 

Adjustments to reconcile net income to net cash flows from operating activities:

             
   

Depreciation and amortization

    4,627,864     5,252,133  
   

Noncash interest expense

    283,138     477,116  
   

Loss on disposal of property

    38,532     (22,806 )
   

Amortization of deferred gain

    (1,836,904 )   (1,836,904 )
   

Changes in:

             
     

Accounts receivable

    194,983     706,943  
     

Inventories

    (52,184 )   33,142  
     

Other assets

    (1,748,206 )   (1,601,233 )
     

Accounts payable

    2,958,343     4,535,158  
     

Other current liabilities

    (6,956,419 )   (1,154,026 )
     

Deferred rent and other long-term liabilities

    (25,941 )   161,900  
           
       

Net cash flows from operating activities

    1,709,767     10,044,094  
           

Cash flows from investing activities:

             
 

Capital expenditures

    (289,944 )   (5,707,699 )
 

Proceeds from sales of property

    4,000     38,345  
           
       

Net cash flows from investing activities

    (285,944 )   (5,669,354 )
           

Cash flows from financing activities:

             
 

Principal payments on borrowings from Parent

    (4,906,950 )   (43,705,260 )
 

Due from Parent

    3,548,291     39,519,164  
 

Principal payments on developer reimbursement financing obligations

    (65,164 )   (54,153 )
 

Payment of debt issuance costs

        (1,359,491 )
 

Proceeds from developer reimbursements for construction costs

        1,225,000  
           
       

Net cash flows from financing activities

    (1,423,823 )   (4,374,740 )
           

Net change in cash

         

Cash—beginning of period

         
           

Cash—end of period

  $   $  
           

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION—Cash paid during the quarter for:

             
 

Interest—net of amount capitalized

  $ 430,558   $ 880,537  
           

SUPPLEMENTAL DISCLOSURE OF NONCASH OPERATING, INVESTING AND FINANCING ACTIVITIES:

             

Amounts reflected in accounts payable and fixed assets at period-end

  $   $  
           

Amounts reflected in accrued expenses and fixed assets at period-end

  $   $  
           

See Notes to Unaudited Condensed Financial Statements.

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Kerasotes Showplace Theatres Sold to AMC Entertainment Inc.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

As of and for the Quarters Ended March 31, 2010 and 2009

1. BASIS OF PRESENTATION

        The principal business of the Kerasotes Showplace Theatres Sold to AMC Entertainment Inc (such theatres are hereafter referred to as the "Theatres") is the operation of motion picture theatres. Box office admission and concession sales are the Theatres' primary sources of revenue. The Theatres' operations are primarily located throughout the Midwest in the states of Illinois, Indiana, Iowa, Missouri, Minnesota, and Ohio. Over the years, the Theatres have grown through the construction and acquisition of theatres, most recently in the states of Colorado, Wisconsin, and California.

        The Theatres are not a separate legal entity, and were operated by Kerasotes Showplace Theatres, LLC (the "Parent") during the periods presented. On December 9, 2009, the Parent agreed to sell these theatre assets comprising a substantial majority of the Parent's theatres and transfer related liabilities to AMC Entertainment Inc. ("AMC") (the "Sale"); this sale was closed on May 24, 2010. Further discussion of the Sale is included in Note 2.

        These unaudited condensed financial statements have been prepared in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 270, Interim Reporting. Accordingly, they do not include all of the information and footnotes required in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments (which consist of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year. These interim financial statements and related notes should be read in conjunction with the audited financial statements and related notes for the year ended December 31, 2009.

2. THE SALE

        As mentioned in Note 1, on December 9, 2009, the Parent agreed to sell certain theatre assets comprising a substantial majority of the Parent's theatres and transfer-related liabilities to AMC; this sale closed on May 24, 2010. These theatres were sold for $275,000,000 in cash, subject to certain working capital and other purchase price adjustments finalized on the closing date.

        The unaudited condensed financial statements pertain to these theatres sold to AMC by the Parent. The financial statements have been prepared from the records maintained by the Parent and may not necessarily be indicative of the conditions that would have existed or the results of the operations if these theatres had been operated as an unaffiliated company. The majority of the assets, liabilities, income and expenses presented in these financial statements are specifically-identifiable to the theatres sold by the Parent to AMC. Portions of certain assets, liabilities, income and expenses represent allocations made from the Parent to these theatres that are applicable to the Parent as a whole where specific-identification of these balances to each theatre is not practicable. These allocations primarily relate to certain receivables, payables, accrued expenses, debt, and operating expenses generated or incurred at the Parent and not directly related to an individual theatre; these allocations have been made based on the proportion of the number of theatre screens within the theatres sold to AMC as a percentage of the total number of theatre screens owned by the Parent prior to the Sale. In the opinion of management, these allocations are reasonable for the purposes of presenting the unaudited condensed interim financial information of the Theatres.

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Kerasotes Showplace Theatres Sold to AMC Entertainment Inc.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS (Continued)

As of and for the Quarters Ended March 31, 2010 and 2009

3. DEBT

        These financial statements include an allocation of the amounts outstanding on the Parent's bank debt, and also the related debt issuance costs. The Parent's outstanding debt facilities consisted of a revolving line of credit ("Revolver") and Term B notes. These outstanding Parent debt balances were secured by substantially all of the Parent's assets, which included the assets of the Theatres. The Parent's bank debt was repaid in full as of the closing date of the Sale.

4. RELATED-PARTY TRANSACTIONS

        The Theatres are not a separate legal entity, and were operated by the Parent during the periods presented. As discussed in Note 2, the financial statements have been prepared from the records maintained by the Parent and may not necessarily be indicative of the conditions that would have existed or the results of the operations if these theatres had been operated as an unaffiliated company. Portions of certain assets, liabilities, income and expenses represent allocations made from the Parent to these theatres that are applicable to the Parent as a whole. The Parent maintains and manages the cash generated by the Theatres, including the transfer of cash deposits from Theatres' operations to the Parent's bank accounts; these funds are used to finance the operations and capital expenditures of the Theatres. The outstanding amounts owed by the Parent to the Theatres are presented as "Due from Parent" in the Statements of Assets and Liabilities.

        Total rental expense payable to related-parties of the Theatres amounted to $3,600 and $3,600 for the quarterly-periods ended March 31, 2010 and 2009, respectively. Amounts payable to related-parties at March 31, 2010 and December 31, 2009 were $187,153 and $183,553, respectively.

        Amounts paid to an advertising agency owned by a close relative of one of the Parent's shareholders were $0 and $22,087 for the quarterly-periods ended March 31, 2010 and 2009, respectively.

5. SUBSEQUENT EVENTS

        Management has evaluated subsequent events through July 13, 2010, which is the date the unaudited condensed financial statements were issued.

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Dealer Prospectus Delivery Obligation

        Until                    , 2011, (25 days after the commencement of the offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer's obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.



LOGO

J.P. MORGAN
GOLDMAN, SACHS & CO.



BARCLAYS CAPITAL
CITI
CREDIT SUISSE
DEUTSCHE BANK SECURITIES



PROSPECTUS
                        , 2011




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PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.    OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

        The following table sets forth the expenses expected to be incurred in connection with the issuance and distribution of common stock registered hereby, all of which expenses, except for the Securities and Exchange Commission registration fee, are estimated.

Securities and Exchange Commission registration fee

  $ 32,085  
       

National securities exchange listing fee

       

National Association of Securities Dealers, Inc. filing fee

       

Printing fees and expenses

       

Legal fees and expenses

       

Accounting fees and expenses

       

Blue Sky fees and expenses

       

Transfer agent and registrar fees and expenses

       

Miscellaneous expenses

       
       
 

Total

  $    
       

ITEM 14.    INDEMNIFICATION OF DIRECTORS AND OFFICERS

        Section 102 of the Delaware General Corporation Law (the "DGCL") grants us the power to limit the personal liability of our directors or our stockholders for monetary damages for breach of a fiduciary duty. Article VIII, Section A of our Amended and Restated Certificate of Incorporation eliminates the personal liability of directors for monetary damages for actions taken as a director, except for liability for breach of duty of loyalty; for acts or omissions not in good faith or involving intentional misconduct or knowing violation of law; under Section 174 of the Delaware General Corporation Law (unlawful dividends); or for transactions from which the director derived improper personal benefit.

        Under Section 145 of the DGCL, a corporation has the power to indemnify directors and officers under certain prescribed circumstances against certain costs and expenses, actually and reasonably incurred in connection with any action, suit or proceeding, whether civil, criminal, administrative or investigative, to which any of them is a party by reason of his being a director or officer of the corporation if it is determined that he acted in accordance with the applicable standard of conduct set forth in such statutory provision. Article VIII, Section B of our Amended and Restated Certificate of Incorporation requires us to indemnify any current or former directors or officers to the fullest extent permitted by the DGCL, and to pay expenses incurred in defending any such proceeding in advance of its final disposition upon delivery to us of an undertaking, by or on behalf of an indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled to be indemnified under this section or otherwise. Article VIII, Section B also permits us to indemnify any current or former employees or agents to the fullest extent permitted by the DGCL, and to pay expenses incurred in defending any such proceeding in advance of its final disposition upon such terms and conditions, if any, as we deem appropriate.

        Section 145 of the DGCL authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation against any liability asserted against and incurred by such person in any such capacity, or arising out of such person's status as such. As permitted by Section 145 and Section 6.08 of our Amended and Restated Bylaws, we carry insurance policies insuring its directors and officers against certain liabilities that they may incur in their capacity as directors and officers.

        The indemnification rights set forth above shall not be exclusive of any other right which an indemnified person may have or hereafter acquire under any statute, provision of our Amended and

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Restated Certificate of Incorporation or Amended and Restated Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

ITEM 15.    RECENT SALES OF UNREGISTERED SECURITIES

        In the past three years, we have not sold securities without registration under the Securities Act of 1933, except as described below.

        In connection with the Reclassification, we will issue                        shares of our common stock to holders of common stock of AMC Entertainment Holdings, Inc. This transaction will be effected without registration under the Securities Act in reliance on the exemption from registration provided under Section 4(2) promulgated thereunder.

ITEM 16.    EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

ITEM 17.    UNDERTAKINGS

        (a)   Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

        (b)   The undersigned registrant hereby undertakes that:

        (c)   The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

II-2


Table of Contents


SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Kansas City, state of Missouri, on April 29, 2011.

    AMC Entertainment Holdings, Inc.

 

 

By:

 

/s/ GERARDO I. LOPEZ

Gerardo I. Lopez
Chief Executive Officer, President and Director

        Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

Signature
 
Title
 
Date

 

 

 

 

 

 

 
/s/ GERARDO I. LOPEZ

Gerardo I. Lopez
  Chief Executive Officer, President
(Principal Executive Officer)
  April 29, 2011

/s/ CRAIG R. RAMSEY

Craig R. Ramsey

 

Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

 

April 29, 2011

*

Aaron J. Stone

 

Chairman of the Board and Director

 

April 29, 2011

*

Dana B. Ardi

 

Director

 

April 29, 2011

*

Stephen P. Murray

 

Director

 

April 29, 2011

*

Stan Parker

 

Director

 

April 29, 2011

*

Phillip H. Loughlin

 

Director

 

April 29, 2011

II-3


Table of Contents

Signature
 
Title
 
Date

 

 

 

 

 

 

 
*

Eliot P. S. Merrill
  Director   April 29, 2011

*

Kevin Maroni

 

Director

 

April 29, 2011

*

Kevin M. Connor

 

Senior Vice President, General Counsel and Secretary

 

April 29, 2011

*

Chris A. Cox

 

Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)

 

April 29, 2011

*By:

 

/s/ CRAIG R. RAMSEY

Craig R. Ramsey
Attorney-in-Fact

 

 

 

 

II-4


Table of Contents


EXHIBIT INDEX

 
  EXHIBIT
NUMBER
  DESCRIPTION
      †1.1   Underwriting Agreement.
      2.1(a)   Modified First Amended Joint Plan of Reorganization of Debtors and Official Committee of Unsecured Creditors for GC Companies, Inc. and its Jointly Administered Subsidiaries filed on March 1, 2002 with the United States Bankruptcy Court for the District of Delaware (incorporated by reference from Exhibit 2.2 of AMCE's Form 8-K (File No. 1-8747) filed March 7, 2002).

 

 

 

2.1(b)

 

Agreement and Plan of Merger, dated June 20, 2005, by and among Marquee Holdings Inc. and LCE Holdings, Inc. (incorporated by reference from Exhibit 2.1 to Holdings' Form 8-K (File No. 1-33344) filed on June 24, 2005).

 

 

 

2.2

 

Purchase and Sale Agreement, dated as of March 9, 2002, by and among G.S. Theaters, L.L.C., a Louisiana limited liability Company, Westbank Theatres, L.L.C., a Louisiana limited liability company, Clearview Theatres, L.L.C., a Louisiana limited liability company, Houma Theater, L.L.C., a Louisiana limited liability company, Hammond Theatres, L.L.C., a Louisiana limited liability company, and American Multi-Cinema, Inc. together with Form of Indemnification Agreement (Appendix J) (incorporated by reference from Exhibit 2.1 to AMCE's Form 8-K (File No. 1-8747) filed March 13, 2002).

 

 

 

2.3

 

Agreement and Plan of Merger, dated as of July 22, 2004 by and among Marquee Holdings Inc., Marquee Inc. and AMC Entertainment Inc. (incorporated by reference from Exhibit 2.1 to AMCE's Form 8-K (File No. 1-8747) filed June 23, 2004).

 

 

 

2.4

 

Agreement and Plan of Merger, dated June 11, 2007, by and among AMC Entertainment Holdings, Inc., Marquee Holdings Inc., and Marquee Merger Sub Inc. (incorporated by reference from Exhibit 2.1 to the Company's Form 8-K filed on June 13, 2007)

 

 

 

2.5

 

Unit Purchase Agreement among Kerasotes Showplace Theatres Holdings, LLC, Kerasotes Showplace Theatres, LLC, Showplace Theatres Holding Company, LLC, AMC ShowPlace Theatres, Inc. and American Multi-Cinema, Inc. (incorporated by reference from Exhibit 2.1 to the Company's Form 8-K (File No. 1-8747) filed on July 14, 2010)

 

 

 

†3.1

 

Second Amended and Restated Certificate of Incorporation of AMC Entertainment Holdings, Inc.

 

 

 

†3.2

 

Second Amended and Restated Bylaws of AMC Entertainment Holdings, Inc.

 

 

 

4.1(a)

 

Credit Agreement, dated January 16, 2006 among AMC Entertainment Inc., Grupo Cinemex, S.A. de C.V., Cadena Mexicana de Exhibicion, S.A. de C.V., the Lenders and the Issuers named therein, Citicorp U.S. and Canada, Inc. and Banco Nacional de Mexico, S.A., Integrante del Groupo Financiero Banamex. (incorporated by reference from Exhibit 10.4 to AMCE's Form 8-K (File No. 1-8747) filed January 31, 2006).

 

 

 

4.1(b)

 

Guaranty, dated January 26, 2006 by AMC Entertainment Inc. and each of the other Guarantors party thereto, in favor of the Guaranteed Parties named therein (incorporated by reference from Exhibit 10.5 to AMCE's Form 8-K (File No. 1-8747) filed January 31, 2006).

 

 

 

4.2(a)

 

Indenture, dated February 24, 2004, respecting AMC Entertainment Inc.'s 8% Senior Subordinated Notes due 2014. (incorporated by reference from Exhibit 4.7 to AMCE's Registration Statement on Form S-4 (File No. 333-113911) filed on March 24, 2004).

 

 

 

4.2(b)

 

First Supplemental Indenture, dated December 23, 2004, respecting AMC Entertainment Inc.'s 8% Senior Subordinated Notes due 2014 (incorporated by reference from Exhibit 4.7(b) to AMCE's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).

Table of Contents

 
  EXHIBIT
NUMBER
  DESCRIPTION
      4.2(c)   Second Supplemental Indenture, dated January 26, 2006, respecting AMC Entertainment Inc.'s 8% Senior Subordinated Notes due 2014 (incorporated by reference from Exhibit 4.6(c) to AMCE's Form 10-Q (File No. 1-8747) filed on February 13, 2006).

 

 

 

4.2(d)

 

Third Supplemental Indenture dated April 20, 2006, respecting AMC Entertainment Inc.'s 8% Senior Subordinated Notes due 2014 (incorporated by reference from Exhibit 4.6(d) to AMCE's Form S-4 (File No. 333-133574) filed April 27, 2006).

 

 

 

4.2(e)

 

Fourth Supplemental Indenture dated June 24, 2010, respecting AMC Entertainment Inc.'s 8% Senior Subordinated Notes due 2014 (incorporated by reference from Exhibit 4.1 to AMCE's Form 10-Q (File 1-8747) filed on August 10, 2010).

 

 

 

4.3

 

Registration Rights Agreement, dated February 24, 2004, respecting AMC Entertainment Inc.'s 8% senior subordinated notes due 2014. (incorporated by reference from Exhibit 4.8 to AMCE's Registration Statement on Form S-4 (File No. 333-113911) filed on March 24, 2004).

 

 

 

4.4(a)

 

Indenture, dated as of June 9, 2009, respecting AMCE's 8.75% Senior Notes due 2019, by and among AMCE, a Delaware corporation, the Guarantors party thereto from time to time and U.S. Bank National Association, as Trustee (incorporated by reference from Exhibit 4.1 to AMCE's Current Report on Form 8-K (File No. 001-08747) filed on June 9, 2009).

 

 

 

4.4(b)

 

First Supplemental Indenture, dated June 24, 2010, respecting AMC Entertainment Inc.'s 8.75% Senior Notes due 2019 (incorporated by reference from Exhibit 4.3 to AMCE's Form 10-Q (File 1-8747) filed on August 10, 2010).

 

 

 

4.5

 

Registration Rights Agreement, dated as of June 9, 2009, respecting AMCE's 8.75% Senior Notes due 2019, by and among AMCE, the Guarantors party thereto from time to time, Credit Suisse Securities (USA) LLC, for itself and on behalf of the other Initial Purchasers, and J.P. Morgan Securities Inc., as Market Maker (incorporated by reference from Exhibit 4.2 to AMCE's Current Report on Form 8-K (File No. 001-08747) filed on June 9, 2009).

 

 

 

4.6(a)

 

Indenture, dated January 26, 2006, respecting AMC Entertainment Inc.'s 11% senior subordinated notes due 2016, between AMC Entertainment Inc. and HSBC Bank USA, National Association (incorporated by reference from Exhibit 4.1 to AMCE's Form 8-K (File No. 1-8747) filed on January 31, 2006).

 

 

 

4.6(b)

 

First Supplemental Indenture dated April 20, 2006, respecting AMC Entertainment Inc.'s 11% Senior Subordinated Notes due 2016 (incorporated by reference from Exhibit 4.12(b) to AMCE's Form S-4 (File No. 333-133574) filed April 27, 2006).

 

 

 

4.7(a)

 

Indenture, dated January 26, 2006, respecting AMC Entertainment Inc.'s 11% senior subordinated notes due 2016, between AMC Entertainment Inc. and HSBC Bank USA, National Association (incorporated by reference from Exhibit 4.1 to the Company's Form 8-K (File No. 1-8747) filed on January 31, 2006).

 

 

 

4.7(b)

 

First Supplemental Indenture dated April 20, 2006, respecting AMC Entertainment Inc.'s 11% Senior Subordinated Notes due 2016 (incorporated by reference from Exhibit 4.12(b) to the Company's Form S-4 (File No. 333-133574) filed April 27, 2006).

 

 

 

4.7(c)

 

Second Supplemental Indenture, dated June 24, 2010, respecting AMC Entertainment Inc.'s 11% Senior Subordinated Notes due 2016 (incorporated by reference to Exhibit 4.2 to AMCE's Form 10-Q (File 1-8747) filed on August 10, 2010).

Table of Contents

 
  EXHIBIT
NUMBER
  DESCRIPTION
      4.8   Registration Rights Agreement dated January 26, 2006, respecting AMC Entertainment Inc.'s 11% senior subordinated notes due 2016, among AMC Entertainment Inc., the guarantors party thereto, Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., and J.P. Morgan Securities Inc. (incorporated by reference from Exhibit 4.2 to AMCE's Form 8-K (File No. 1-8747) filed on January 31, 2006).

 

 

 

4.9(a)

 

Indenture, dated August 18, 2004, respecting Marquee Holdings Inc.'s 12% Senior Discount Notes due 2014 (incorporated by reference from Exhibit 4.13 to Holdings' Registration Statement on Form S-4 (File No. 333-122636) filed on February 8, 2005).

 

 

 

4.9(b)

 

Registration Rights Agreement dated August 18, 2004, respecting Marquee Holdings Inc.'s 12% Senior Discount Notes due 2014 (incorporated by reference from Exhibit 4.14 to Holdings' Registration Statement on Form S-4 (File No. 333-122636) filed on February 8, 2005).

 

 

 

4.9(c)

 

First Supplemental Indenture dated June 12, 2007, respecting Marque Holding Inc.'s 12% Senior Discount Notes due 2014 (incorporated by reference from Exhibit 4.1 to Holdings' Form 8-K (File No. 1-33344) Filed on June 13, 2007).

 

 

 

4.10(a)

 

Credit Agreement, dated June 13, 2007 among AMC Entertainment Holdings, Inc., the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (Incorporated by reference from Exhibit 4.10(a) to Amendment No. 1 to the Company's Form S-1 (File No. 333-168105) filed August 25, 2010).

 

 

 

4.10(b)

 

First Amendment to the Credit Agreement, dated April 17, 2009 among AMC Entertainment Holdings, Inc. and the Lenders party thereto (Incorporated by reference from Exhibit 4.10(b) to Amendment No. 1 to the Company's Form S-1 (File No. 333-168105) filed August 25, 2010).

 

 

 

4.11

 

Indenture, dated December 15, 2010, respecting AMC Entertainment Inc.'s 9.75% senior subordinated notes due 2020, between AMC Entertainment Inc, the Guarantors named therein and U.S. Bank National Association, as trustee (incorporated by reference from Exhibit 4.1 to AMCE's Form 8-K (File No. 1-8747) filed on December 17, 2010).

 

 

 

4.12

 

Registration Rights Agreement, dated December 15, 2010, respecting AMC Entertainment Inc.'s 9.75% Senior Subordinated Notes due 2020, among Goldman, Sachs & Co., J.P. Morgan Securities LLC, Barclays Capital Inc., Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and Foros Securities LLC, as representatives of the initial purchasers of the 2020 Senior Subordinated Notes and J.P. Morgan Securities LLC, as market maker (incorporated by reference from Exhibit 4.2 to AMCE's Form 8-K (File No. 1-8747) filed on December 17, 2010).

 

 

 

†4.13

 

Form of Certificate of Common Stock.

 

 

 

*5.1

 

Opinion of O'Melveny & Myers LLP.

 

 

 

10.1

 

Consent Decree, dated December 21, 2005, by and among Marquee Holdings Inc., LCE Holdings, Inc. and the State of Washington (incorporated by reference from Exhibit 10.1 to AMCE's Form 8-K (File No. 1-8747) filed on December 27, 2005).

 

 

 

10.2

 

Hold Separate Stipulation and Order, dated December 21, 2005, by and among Marquee Holdings Inc., LCE Holdings, Inc. and the State of Washington (incorporated by reference from Exhibit 10.2 to AMCE's Form 8-K (File No. 1-8747) filed on December 27, 2005).

Table of Contents

 
  EXHIBIT
NUMBER
  DESCRIPTION
      10.3   Final Judgment, dated December 20, 2005, by and among Marquee Holdings Inc., LCE Holdings, Inc. and the Antitrust Division of the United States Department of Justice (incorporated by reference from Exhibit 10.3 to AMCE's Form 8-K (File No. 1-8747) filed on December 27, 2005).

 

 

 

10.4

 

Hold Separate Stipulation and Order, dated December 20, 2005, by and among Marquee Holdings Inc., LCE Holdings and the Antitrust Division of the United States Department of Justice (incorporated by reference from Exhibit 10.4 to AMCE's Form 8-K (File No. 1-8747) filed on December 27, 2005).

 

 

 

10.5

 

District of Columbia Final Judgment, dated December 21, 2005, by and among Marquee Holdings Inc., LCE Holdings, Inc. and the District of Columbia (incorporated by reference from Exhibit 10.5 to AMCE's Form 8-K (File No. 1-8747) filed on December 27, 2005).

 

 

 

10.6

 

Stipulation for Entry into Final Judgment, dated December 20, 2005, by and among Marquee Holdings Inc., LCE Holdings, Inc. and the State of California (incorporated by reference from Exhibit 10.6 to AMCE's Form 8-K (File No. 1-8747) filed on December 27, 2005).

 

 

 

10.7

 

Stipulated Final Judgment, dated December 20, 2005, by and among Marquee Holdings Inc., LCE Holdings, Inc. and the State of California (incorporated by reference from Exhibit 10.7 to AMCE's Form 8-K (File No. 1-8747) filed on December 27, 2005).

 

 

 

†10.8

 

Form of amended and restated Stockholders Agreement of AMC Entertainment Holdings, Inc., among AMC Entertainment Holdings, Inc. and the stockholders of AMC Entertainment Holdings, Inc. party thereto.

 

 

 

†10.9

 

Form of amended and restated Management Stockholders Agreement of AMC Entertainment Holdings, Inc. among AMC Entertainment Holdings, Inc. and the stockholders of AMC Entertainment Holdings, Inc. party thereto.

 

 

 

10.10

 

Continuing Service Agreement, dated January 26, 2006, among AMC Entertainment Inc. (as successor to Loews Cineplex Entertainment Corporation) and Travis Reid, and, solely for the purposes of its repurchase obligations under Section 7 thereto, Marquee Holding Inc. (incorporated by reference from Exhibit 10.1 to AMCE's Form 8-K (File No. 1-8747) filed on January 31, 2006).

 

 

 

10.11

 

Non-Qualified Stock Option Agreement, dated January 26, 2006, between Marquee Holdings Inc. and Travis Reid (incorporated by reference from Exhibit 10.2 to AMCE's Form 8-K (File No. 1-8747) filed on January 31, 2006).

 

 

 

10.12

 

Fee Agreement, dated June 11, 2007, by and among AMC Entertainment Holdings, Inc., Marquee Holdings Inc., AMC Entertainment Inc., J.P. Morgan Partners (BHCA), L.P., Apollo Management V, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Netherlands Partners V(A), L.P., Apollo Netherlands Partners V(B), L.P., Apollo German Partners V GmbH & Co KG, Bain Capital Partners, LLC, TC Group, L.L.C., a Delaware limited liability company and Applegate and Collatos, Inc. (incorporated by reference from Exhibit 10.7 to AMCE's Form 8-K (File No. 1-8747) filed on June 13, 2007).

 

 

 

10.13

 

American Multi-Cinema, Inc. Savings Plan, a defined contribution 401(k) plan, restated January 1, 1989, as amended (incorporated by reference from Exhibit 10.6 to AMCE's Form S-1 (File No. 33-48586) filed June 12, 1992, as amended).

Table of Contents

 
  EXHIBIT
NUMBER
  DESCRIPTION
      10.14(a)   Defined Benefit Retirement Income Plan for Certain Employees of American Multi-Cinema, Inc., as Amended and Restated, effective December 31, 2006, and as Frozen, effective December 31, 2006 (incorporated by reference from Exhibit 10.15(a) to AMCE's Form 10-K (File No. 1-8747) filed June 15, 2007).

 

 

 

10.14(b)

 

American Multi-Cinema, Inc. Supplemental Executive Retirement Plan, as Amended and Restated, generally effective January 1, 2006, and as Frozen, effective December 31, 2006 (incorporated by reference from Exhibit 10.15(b) to AMCE's Form 10-K (File No. 1-8747) filed June 15, 2007).

 

 

 

10.15

 

Division Operations Incentive Program (Incorporated by reference from Exhibit 10.15 to AMCE's Form S-1 (File No. 33-48586) filed June 12, 1992, as amended).

 

 

 

10.16

 

Summary of American Multi-Cinema, Inc. Executive Incentive Program (Incorporated by reference from Exhibit 10.36 to AMCE's Registration Statement on Form S-2 (File No. 33-51693) filed December 23, 1993).

 

 

 

10.17

 

American Multi-Cinema, Inc. Retirement Enhancement Plan, as Amended and Restated, effective January 1, 2006, and as Frozen, effective December 31, 2006 (Incorporated by reference from Exhibit 10.19 to the Company's Form S-1 (File No. 333-139249) filed April 12, 2007, as amended).

 

 

 

10.18

 

AMC Non-Qualified Deferred Compensation Plan, as Amended and Restated, effective January 1, 2005 (Incorporated by reference from Exhibit 10.21 to the Company's Form S-1 (File No. 333-139249) filed April 12, 2007, as amended).

 

 

 

10.19

 

American Multi-Cinema, Inc. Executive Savings Plan (Incorporated by reference from Exhibit 10.28 to AMCE's Registration Statement on Form S-4 (File No. 333-25755) filed April 24, 1997).

 

 

 

10.20

 

Agreement of Sale and Purchase dated November 21, 1997 among American Multi-Cinema, Inc. and AMC Realty, Inc., as Seller, and Entertainment Properties Trust, as Purchaser (Incorporated by reference from Exhibit 10.1 of the Company's Current Report on Form 8-K (File No. 1-8747) filed December 9, 1997).

 

 

 

10.21

 

Option Agreement dated November 21, 1997 among American Multi-Cinema, Inc. and AMC Realty, Inc., as Seller, and Entertainment Properties Trust, as Purchaser (Incorporated by reference from Exhibit 10.2 of the Company's Current Report on Form 8-K (File No. 1-8747) filed December 9, 1997).

 

 

 

10.22

 

Right to Purchase Agreement dated November 21, 1997, between AMC Entertainment Inc., as Grantor, and Entertainment Properties Trust as Offeree (Incorporated by reference from Exhibit 10.3 of the Company's Current Report on Form 8-K (File No. 1-8747) filed December 9, 1997.)

 

 

 

10.23

 

Lease dated November 21, 1997 between Entertainment Properties Trust, as Landlord, and American Multi-Cinema, Inc., as Tenant (Incorporated by reference from Exhibit 10.4 of the Company's Current Report on Form 8-K (File No. 1-8747) filed December 9, 1997). (Similar leases have been entered into with respect to the following theatres: Mission Valley 20, Promenade 16, Ontario Mills 30, Lennox 24, West Olive 16, Studio 30 (Houston), Huebner Oaks 24, First Colony 24, Oak View 24, Leawood Town Center 20, South Barrington 30, Gulf Pointe 30, Cantera 30, Mesquite 30, Hampton Town Center 24, Palm Promenade 24, Westminster Promenade 24, Hoffman Center 22, Elmwood Palace 20, Westbank Palace 16, Clearview Palace 12, Hammond Palace 10, Houma Palace 10, Livonia 20, Forum 30, Studio 29 (Olathe), Hamilton 24, Deer Valley 30, Mesa Grand 24 and Burbank 16.

Table of Contents

 
  EXHIBIT
NUMBER
  DESCRIPTION
      10.24   Guaranty of Lease dated November 21, 1997 between AMC Entertainment Inc., as Guarantor, and Entertainment Properties Trust, as Owner (Incorporated by reference from Exhibit 10.5 of the Company's Current Report on Form 8-K (File No. 1-8747) filed December 9, 1997, (Similar guaranties have been entered into with respect to the following theatres: Mission Valley 20, Promenade 16, Ontario Mills 30, Lennox 24, West Olive 16, Studio 30 (Houston), Huebner Oaks 24, First Colony 24, Oak View 24, Leawood Town Center 20, South Barrington 30, Gulf Pointe 30, Cantera 30, Mesquite 30, Hampton Town Center 24, Palm Promenade 24, Westminster Promenade 24, Hoffman Center 22, Elmwood Palace 20, Westbank Palace 16, Clearview Palace 12, Hammond Palace 10, Houma Palace 10, Livonia 20, Forum 30, Studio 29 (Olathe), Hamilton 24, Deer Valley 30, Mesa Grand 24 and Burbank 16.

 

 

 

10.30

 

Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and John D. McDonald which commenced July 1, 2001. (Incorporated by Reference from Exhibit 10.29 to Amendment No. 1 to the Company's Form 10-K (File No. 1-8747) for the year ended March 29, 2001).

 

 

 

10.31

 

Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and Craig R. Ramsey which commenced on July 1, 2001. (Incorporated by Reference from Exhibit 10.36 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended June 27, 2002).

 

 

 

10.32

 

Investment Agreement entered into April 19, 2001 by and among AMC Entertainment Inc. and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Management IV, L.P. and Apollo Management V, L.P. (Incorporated by reference from Exhibit 4.7 to the Company's Form 8-K (File No. 1-8747) filed on April 20, 2001).

 

 

 

10.33

 

Standstill Agreement by and among AMC Entertainment Inc., and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Management IV, L.P. and Apollo Management V, L.P., dated as of April 19, 2001. (Incorporated by reference from Exhibit 4.8 to the Company's Form 8-K (File No. 1-8747) filed on April 20, 2001).

 

 

 

10.34

 

Registration Rights Agreement dated April 19, 2001 by and among AMC Entertainment Inc. and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P. (Incorporated by reference from Exhibit 4.9 to the Company's Form 8-K (File No. 1-8747) filed on April 20, 2001).

 

 

 

10.35

 

Securities Purchase Agreement dated June 29, 2001 by and among Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Management IV, L.P., Apollo Management V, L.P., AMC Entertainment Inc., Sandler Capital Partners V, L.P., Sandler Capital Partners V FTE, L.P. and Sandler Capital Partners V Germany, L.P. (Incorporated by reference from Exhibit 4.6 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended June 28, 2001).

 

 

 

10.36

 

Form of Indemnification Agreement dated September 18, 2003 between the Company and Peter C. Brown, Charles S. Sosland, Charles J. Egan, Jr., Michael N. Garin, Marc J. Rowan, Paul E. Vardeman, Leon D. Black and Laurence M. Berg (incorporated by reference from Exhibit 10.1 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended January 1, 2004).

 

 

 

10.37

 

2003 AMC Entertainment Inc. Long-Term Incentive Plan (incorporated by reference from Exhibit 10.2 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended October 2, 2003).

Table of Contents

 
  EXHIBIT
NUMBER
  DESCRIPTION
      10.40   Description of 2004 Grant under the 2003 AMC Entertainment Inc. Long-Term Incentive Plan (incorporated by reference from Exhibit 10.3 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended October 2, 2003).

 

 

 

10.41(a)

 

AMC Entertainment Holdings, Inc. Amended and Restated 2004 Stock Option Plan (incorporated by reference from Exhibit 10.9 to the Company's Form 8-K filed on June 13, 2007).

 

 

 

10.41(b)

 

Form of Non-Qualified Stock Option Agreement (incorporated by reference from Exhibit 10.32(b) to AMCE's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).

 

 

 

10.41(c)

 

Form of Incentive Stock Option Agreement (incorporated by reference from Exhibit 10.32(c) to AMCE's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).

 

 

 

10.42(a)

 

AMC Entertainment Holdings, Inc. 2010 Equity Incentive Plan (incorporated by reference from Exhibit 10.1 to the Company's Form 8-K (File No. 1-8747) filed on July 14, 2010).

 

 

 

10.42(b)

 

Form of Non-Qualified Stock Option Award Agreement (incorporated by reference from Exhibit 10.2 to the Company's Form 8-K (File No. 1-8747) filed on July 14, 2010).

 

 

 

10.42(c)

 

Form of Restricted Stock Award Agreement (Time Vesting) (incorporated by reference from Exhibit 10.3 to the Company's Form 8-K (File No. 1-8747) filed on July 14, 2010).

 

 

 

10.42(d)

 

Form of Restricted Stock Award Agreement (Performance Vesting) (incorporated by reference from Exhibit 10.4 to the Company's Form 8-K (File No. 1-8747) filed on July 14, 2010).

 

 

 

10.43

 

Contribution and Unit Holders Agreement, dated as of March 29, 2005, among National Cinema Network, Inc., Regal CineMedia Corporation and National CineMedia, LLC (incorporated by reference from Exhibit 10.1 to the Company's Form 8-K filed April 4, 2005).

 

 

 

10.44

 

Exhibitor Services Agreement, dated February 13, 2007 between National CineMedia, LLC and American Multi-Cinema, Inc. (filed as Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-33296) of National CineMedia, Inc., filed on February 16, 2007, and incorporated herein by reference).

 

 

 

10.45

 

First Amended and Restated Loews Screen Integration Agreement, dated February 13, 2007 between National CineMedia, LLC and American Multi-Cinema, Inc. (filed as Exhibit 10.8 to the Current Report on Form 8-K (File No. 001-33296) of National CineMedia, Inc., filed on February 16, 2007, and incorporated herein by reference).

 

 

 

10.46

 

Third Amended and Restated Limited Liability Company Operating Agreement, dated February 13, 2007 between American Multi-Cinema, Inc., Cinemark Media, Inc., Regal CineMedia Holdings, LLC and National CineMedia, Inc. (incorporated by reference from Exhibit 10.3 to the Company's Form 8-K filed February 20, 2007).

 

 

 

10.47

 

Amendment No. 1 to Credit Agreement, dated as of February 14, 2007, between AMC Entertainment Inc., and Citicorp North America, as Administrative Agent (incorporated by reference from Exhibit 10.4 to the Company's Form 8-K filed February 20, 2007).

 

 

 

10.48

 

Amendment No. 2 to Credit Agreement, dated as of March 13, 2007, between AMC Entertainment Inc., and Citicorp North America, as Administrative Agent (incorporated by reference from Exhibit 10.1 to the Company's Form 8-K filed March 15, 2007).

Table of Contents

 
  EXHIBIT
NUMBER
  DESCRIPTION
      10.49   Amendment No.3 to Credit Agreement, dated December 15, 2010 among AMC Entertainment Inc., Citibank, N.A. as issuer and Citicorp North America, Inc., as swing lender and as administrative agent (incorporated by reference from Exhibit 4.4 to AMCE's Form 8-K (File No. 1-8747) filed on December 17, 2010).

 

 

 

10.50

 

Voting and Irrevocable Proxy Agreement, dated June 11, 2007, among AMC Entertainment Holdings, Inc., Carlyle Partners III Loews, L.P., CP III Coinvestment, L.P., Bain Capital Holdings (Loews) I, L.P., Bain Capital AIV (Loews) II, L.P., Spectrum Equity Investors IV, L.P., Spectrum Equity Investors Parallel IV, L.P. and Spectrum IV Investment Managers' Fund, L.P. (incorporated by reference from Exhibit 10.6 to the Company's Form 8-K (File No. 333-122636) filed on June 13, 2007)

 

 

 

10.51

 

Voting and Irrevocable Proxy Agreement, dated June 11, 2007, among AMC Entertainment Holdings, Inc., J.P. Morgan Partners (BHCA), L.P., J.P. Morgan Partners Global Investors, L.P., J.P. Morgan Partners Global Investors (Cayman), L.P., J.P. Morgan Partners Global Investors (Cayman) II, L.P., J.P. Morgan Partners Global Investors (Selldown), L.P., J.P. Morgan Partners Global Investors (Selldown) II, L.P., JPMP Global Fund/AMC/Selldown II, L.P., J.P. Morgan Partners Global Investors (Selldown) II-C, L.P., AMCE (Ginger), L.P., AMCE (Luke), L.P., AMCE (Scarlett), L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Netherlands Partners V(A), L.P., Apollo Netherlands Partners V(B), L.P., Apollo German Partners V GmbH & Co KG and other co-investors. (incorporated by reference from Exhibit 10.5 to the Company's Form 8-K (File No. 333-122636) filed on June 13, 2007)

 

 

 

10.52

 

Employment Agreement, dated as of November 6, 2002, by and among Kevin M. Connor, AMC Entertainment Inc. and American Multi-Cinema, Inc. (incorporated by reference from Exhibit 10.49 to the Company's Form 10-K (File No. 1-8747) filed on June 15, 2007).

 

 

 

10.53

 

Voting and Irrevocable Proxy Agreement, dated June 11, 2007, among AMC Entertainment Holdings, Inc., Carlyle Partners III Loews, L.P., CP III Coinvestment, L.P., Bain Capital Holdings (Loews) I, L.P., Bain Capital AIV (Loews) II, L.P., Spectrum Equity Investors IV, L.P., Spectrum Equity Investors Parallel IV, L.P. and Spectrum IV Investment Managers' Fund, L.P. (incorporated by reference from Exhibit 10.6 to the Company's 8-K (File No. 1-8747) filed on June 13, 2007).

 

 

 

10.54

 

Voting and Irrevocable Proxy Agreement, dated June 11, 2007, among AMC Entertainment Holdings, Inc., J.P. Morgan Partners (BHCA), L.P., J.P. Morgan Partners Global Investors, L.P., J.P. Morgan Partners Global Investors (Cayman), L.P., J.P. Morgan Partners Global Investors (Cayman) II, L.P., J.P. Morgan Partners Global Investors (Selldown), L.P., J.P. Morgan Partners Global Investors (Selldown) II, L.P., JPMP Global Fund/AMC/Selldown II, L.P., J.P. Morgan Partners Global Investors (Selldown) II-C, L.P., AMCE (Ginger), L.P., AMCE (Luke), L.P., AMCE (Scarlett), L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Netherlands Partners V(A), L.P., Apollo Netherlands Partners V(B), L.P., Apollo German Partners V GmbH & Co KG and other co-investors. (incorporated by reference from Exhibit 10.5 to the Company's 8-K (File No. 1-8747) filed on June 13, 2007).

 

 

 

10.55

 

Employment Agreement, dated as of July 1, 2001 by and among Mark A. McDonald, AMC Entertainment Inc. and American Multi-Cinema, Inc. (incorporated by reference from Exhibit 10.48 to the Company's Form 10-K (File No. 1-8747) filed on June 18, 2008)

Table of Contents

 
  EXHIBIT
NUMBER
  DESCRIPTION
      10.56   Amendment to Stock Purchase Agreement dated as of November 5, 2008 among Entretenimiento GM de Mexico S.A. de C.V., as Buyer, and AMC Netherlands HoldCo B.V., LCE Mexican Holdings, Inc., and AMC Europe S.A., as sellers (incorporated by reference from Exhibit 10.2 to the Company's Form 8-K (File No. 1-33344) filed January 5, 2009).

 

 

 

10.57

 

Stock Purchase Agreement dated as of November 5, 2008 among Entretenimiento GM de Mexico S.A. de C.V., as Buyer, and AMC Netherlands HoldCo B.V., LCE Mexican Holdings, Inc., and AMC Europe S.A., as sellers (filed as Exhibit 10.1 to the Company's Form 10-Q (File No. 1-33344) filed on November 17, 2008).

 

 

 

10.58

 

Amendment to Exhibitor Services Agreement dated as of November 5, 2008, by and between National CineMedia, LLC and American Multi-Cinema, Inc. (filed as Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-33296) of National CineMedia, Inc., filed on February 6, 2008, and incorporated herein by reference)

 

 

 

10.59

 

Separation and General Release Agreement, dated as of February 23, 2009, by and between Peter C. Brown, AMC Entertainment Holdings, Inc., Marquee Holdings Inc. and AMC Entertainment Inc. (incorporated by reference from Exhibit 10.1 to the Company's Form 8-K (File No. 1-33344) filed on February 25, 2009)

 

 

 

10.60

 

Employment Agreement, dated as of February 23, 2009, by and between Gerardo I. Lopez and AMC Entertainment Inc. (incorporated by reference from Exhibit 10.2 to the Company's Form 8-K (File No. 1-33344) filed on February 25, 2009)

 

 

 

10.61

 

Employment Agreement, dated as of April 17, 2009, by and between Robert J. Lenihan and AMC Entertainment Inc. (incorporated by reference from Exhibit 10.62 to the Company's Form 10-K (File No. 1-33344) filed on June 15, 2010)

 

 

 

10.62

 

Employment Agreement, dated as of July 1, 2001, by and between Samuel D. Gourley and AMC Entertainment Inc. (incorporated by reference from Exhibit 10.63 to the Company's Form 10-K (File No. 1-33344) filed on June 15, 2010)

 

 

 

14

 

Code of Ethics (incorporated by reference from Exhibit 14 to AMCE's Form 10-K filed on June 23, 2004).

 

 

 

*21

 

Subsidiaries of AMC Entertainment Holdings, Inc.

 

 

 

*23.1

 

Consent of PricewaterhouseCoopers LLP as to AMC Entertainment Holdings, Inc.'s financial statements.

 

 

 

*23.2

 

Consent of KPMG LLP, Independent Registered Public Accounting Firm, as to AMC Entertainment Holdings, Inc.'s consolidated financial statements as of and for the year ended April 1, 2010.

 

 

 

*23.3

 

Consent of Deloitte & Touche LLP as to National CineMedia, LLC's financial statements.

 

 

 

*23.4

 

Consent of Deloitte & Touche LLP as to Kerasotes Showplace Theatres, LLC's financial statements.

 

 

 

*23.5

 

Consent of O'Melveny & Myers LLP (included in Exhibit 5.1).

 

 

 

**24

 

Powers of Attorney.

*
Filed herewith.

**
Previously filed.

To be filed by amendment.