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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington D.C. 20549

                               ----------------

                                   Form 10-K

                               ----------------

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the fiscal year ended February 29, 2000     Commission file number 001-14099

                    LOEWS CINEPLEX ENTERTAINMENT CORPORATION
             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                   Delaware
         (State or other jurisdiction                            13-3386485
      of incorporation or organization)             (I.R.S. Employer Identification No.)
</TABLE>

<TABLE>
<S>                                       <C>
  711 Fifth Avenue, New York, New York                        10022
(Address of principal executive offices)                    (Zip Code)
</TABLE>

                                 (212) 833-6200
              (Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<S>                                            <C>
             Title of each class:                Name of each exchange on which registered:
    Common Stock, par value $.01 per share                New York Stock Exchange
</TABLE>

Securities registered pursuant to Section 12(g) of the Act: None

   Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]

   The aggregate market value of the Registrant's voting stock held by non-
affiliates of the Registrant was $40,327,677 as of May 10, 2000.

   The number of shares of common stock, $.01 par value per share, outstanding
on May 10, 2000 was 58,538,646. The number of shares of Class B non-voting
common stock, $.01 par value per share, outstanding on May 10, 2000 was 84,000
shares.

                      DOCUMENTS INCORPORATED BY REFERENCE

<TABLE>
<S>                                                             <C>
Portions of the Fiscal 2000 Annual Report to Shareholders.....  Parts II and IV
Portions of the Proxy Statement for the 2000 Annual Meeting of
 Stockholders.................................................  Part III
</TABLE>

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<PAGE>

                    LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                            FORM 10-K ANNUAL REPORT

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
 PART I

 <C>                                                                    <S>
    ITEM 1. BUSINESS...................................................         4

    Fiscal 2000 Highlights.............................................         4
    Our U.S. Partners..................................................         5
    Key Business Strategies............................................         5
        Operating Strategy.............................................         5
        Expansion Strategy and Portfolio Management....................         7
    Theatre Operations.................................................        10
    Competition........................................................        11
    Current Exhibition Industry Environment............................        12
    Segment Information................................................        13
    Seasonality........................................................        13
    Government Regulation..............................................        13
    Employees..........................................................        13
    Cautionary Notice Regarding Forward Looking Statements.............        13
    Factors That May Affect Future Performance.........................        14

    ITEM 2. PROPERTIES.................................................        14

    ITEM 3. LEGAL PROCEEDINGS..........................................        15

    Antitrust Proceedings..............................................        15
    Environmental Proceedings..........................................        15
    Six West Retail Acquisition, Inc...................................        16
    ADA Litigation.....................................................        16

    ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS........        16

    EXECUTIVE OFFICERS OF LOEWS CINEPLEX...............................        17

 PART II

    ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
           STOCKHOLDER MATTERS.........................................        19

    ITEM 6. SELECTED HISTORICAL FINANCIAL DATA.........................        19

    ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATIONS...................................        19

    ITEM 7A.QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK..        19

    ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA................        19

    ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
           AND FINANCIAL DISCLOSURE....................................        19

 PART III

    ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT........        19

    ITEM 11. EXECUTIVE COMPENSATION....................................        19

</TABLE>


                                       2
<PAGE>

<TABLE>
<S>                                                                          <C>
PART III--(continued)


  ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT...  20

  ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...................  20

PART IV

  ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K..........................................................  21

  SIGNATURES................................................................  23
</TABLE>

                                       3
<PAGE>

                                     PART I

ITEM 1. BUSINESS

   Loews Cineplex Entertainment Corporation ("Loews Cineplex," "we", "us" or
"our") is one of the world's largest publicly traded theatre exhibition
companies in terms of revenues and operating cash flow.

   Loews Cineplex was formed by the combination, completed on May 14, 1998, of
the Loews Theatres exhibition business of Sony Pictures Entertainment Inc.
("SPE"), a wholly owned subsidiary of Sony Corporation of America ("SCA"), and
Cineplex Odeon Corporation ("Cineplex Odeon"), another major motion picture
exhibitor with operations predominantly in the U.S. and Canada (the
"Combination"). Loews Cineplex was the first commercial motion picture
exhibitor in the U.S., perhaps the world, with operations beginning in 1904,
when Marcus Loew set up a "nickelodeon" in a rented room above a penny arcade
store in Cincinnati, Ohio. Our theatre circuits have grown over the years
through internal development and acquisitions. Today, we operate theatres under
the Loews, Sony and Cineplex Odeon names. Our partnerships and joint ventures
operate theatres under the Star, Magic Johnson and Yelmo Cineplex names.

   Our principal stockholders include SPE, Universal Studios, Inc.
("Universal") and The Charles Rosner Bronfman Discretionary Trust and related
stockholders (the "Claridge Group"), which own 39.5%, 25.5% and 7.4%,
respectively, of our capital stock and collectively own approximately 72.5% of
our capital stock and 72.4% of our voting common stock.

   LTM Holdings, Inc., our predecessor, was incorporated under the laws of the
State of Delaware in 1986. Our principal offices are located at 711 Fifth
Avenue, New York, New York 10022, and our telephone number is (212) 833-6200.

   Our Internet home page is:

                             www.loewscineplex.com.

   You can learn more about us by visiting our website.

Fiscal 2000 Highlights (all amounts in thousands of U.S. dollars unless
otherwise noted)

   For the fiscal year ended February 29, 2000, we had $930,423 in revenues,
generated $144,435 of Modified EBITDA (earnings before interest, taxes,
depreciation and amortization and gains/losses on sale/disposals of theatres),
and had a net loss of $51,390. On a combined basis (including 100% of the
operations of our joint ventures and partnerships) we had $1,047,146 in Total
Revenues and $165,590 in Total EBITDA (earnings before interest, taxes,
depreciation and amortization and gains/losses on sale/disposals of theatres
including 100% of the operations of our joint ventures and partnerships).
Additionally, our Attributable EBITDA (Total EBITDA net of partners' share of
Total EBITDA) was $154,274. Approximately 70% of these revenues came from box
office receipts and 30% from concession sales and other revenues. Based on
publicly available data, our share of the total industry box office receipts in
North America during fiscal 2000 was approximately 9.5% (including 100% of the
operations of our joint ventures and partnerships).

   As of February 29, 2000, we owned, operated or had an interest in 2,926
screens at 385 locations. Of these, 2,777 screens were located in 22 U.S.
states, the District of Columbia and six Canadian provinces. Our screens
represent approximately 7.5% of all exhibition screens in North America. Our
screens are mainly concentrated in densely populated urban and suburban areas,
with a strong presence in metropolitan New York, Boston, Chicago, Baltimore,
Dallas, Houston, Detroit, Los Angeles, Seattle, Washington, D.C., Toronto,
Montreal and Vancouver. Approximately 74% of our U.S. theatres are located in
the 10 largest areas of dominant influence (ADI) in the U.S., and 81% of our
Canadian theatres are located in the top 10 ADIs in Canada. ADIs are television
markets, defined by A.C. Nielsen Company/EDI--an international media research
firm, that are used as benchmarks by certain entertainment marketers. ADI
markets generally contain concentrations of substantial populations. The
exhibition industry uses ADI as an important media measure since there is a
correlation between television and movie viewing audiences.

   Our exhibition assets include a 50% interest in 130 screens in 15 locations
in Spain through a joint

                                       4
<PAGE>

venture established on June 10, 1998 with Yelmo Films S.A., a leading local
Spanish exhibitor. We will continue to build additional theatres in Spain
through this joint venture. Additionally, we have established an initial
presence in both Hungary and Austria; we operate a six-screen theatre in
Hungary and an eight-screen theatre in Vienna, Austria.

   We also hold a 50% interest in a joint venture in Italy, entered into on
March 13, 1999, with Aurelio De Laurentiis' Filmauro Srl., a leading producer,
distributor and exhibitor of motion pictures in Italy. The new venture, known
as De Laurentiis Cineplex Srl., plans to develop multiplexes in regions
throughout Italy.

   On May 19, 1999, we announced that we entered into a 50/50 joint venture in
Turkey with Transturk Holdings A.S. to develop, construct and operate movie
theatres throughout Turkey, Romania and the Turkic Republics of the CIS. The
new venture, to be known as Odeon Cineplex, plans to develop several multiplex
theatres in addition to the 5-screen Profilo Theatre and the 10-screen Migros
Theatre (which includes an IMAX(R) theatre) already in operation in Istanbul
and Ankara, respectively.

Our U.S. Partners

   Loews Cineplex holds a 50% partnership interest in each of Star Theatres
and Magic Johnson Theatres. As of February 29, 2000, these partnerships held
interests in and operated 13 locations with a total of 186 screens. The Star
theatre locations are concentrated in the metropolitan Detroit, Michigan area.
The Magic Johnson theatres are located in densely populated urban areas with
predominantly minority populations.

Key Business Strategies

   Our goals are:

  . to be the leading theatrical exhibitor in densely populated metropolitan
    centers in North America;

  . to expand into selected international markets through joint ventures, new
    theatre construction and acquisitions; and

  . to maintain our reputation as a preferred exhibitor for distributors and
    theatre-going patrons.

We have developed a number of successful operating and expansion strategies
designed to achieve these goals and place us at the forefront of our industry.

 Operating Strategy

   The fundamentals underlying our operating strategy are as follows:

  . actively managing and improving our portfolio;

  . providing a high level of customer service;

  . aggressively controlling operating costs;

  . closely monitoring and managing operations on a daily basis;

  . increasing efficiency through the integration of highly flexible state-
    of-the-art information systems into our theatre operations; and

  . seeking ancillary revenue streams.

   Key elements of our operating strategy include:

   Continue to Realize Cost Savings and Operating Efficiencies. During fiscal
years 1999 and 2000, we realized a significant portion of the anticipated
annual cost savings and operating efficiencies (estimated at approximately $30
million) as a result of the Combination by applying Loews Theatres' operating
practices and revenue generating programs throughout our combined chain of
theatres, eliminating unnecessary overhead and capitalizing on the benefits of
a larger number of theatres. These cost savings and operating efficiencies
represent ongoing annual savings to be realized by us each year.

   Apply Proven Operating Practices. During fiscal year 2000, we continued
implementing our operating strategies which include:

  . expanded concession offerings;

  . implementing employee training and incentive programs which encourage
    "upselling";

  . effective showtime scheduling to reduce congestion in the lobby and
    concession area enabling us to more efficiently service our patrons;

                                       5
<PAGE>

  . improved customer service; and

  . more efficient concession stand designs.

   Capitalize on Larger Presence in the Market. We believe we can improve
operations by realizing cost savings through eliminating unnecessary overhead
and by spreading the remaining overhead costs over a larger theatre group. We
also anticipate that we will realize additional benefits created by a larger
presence in the market. These benefits include:

  . volume purchase discounts;

  . receiving more favorable terms from vendors and service suppliers; and

  . entering into revenue generating contracts on a circuit-wide basis.

   We expect additional improvements through more efficient film programming
and scheduling, enabling us to exhibit motion pictures for the maximum play
time by matching the size of the auditorium with rapidly changing audience
demands.

   Focus on Customer Service. Our goal is to be the industry leader in customer
service. We want to provide a high level of customer service and convenience,
positioning us as the "theatre of choice" for movie-going patrons. We have
developed a proven customer service program focused on increasing patronage and
generating customer loyalty by improving the overall movie-going experience.

   This program includes:

  . optimizing the scheduling of showtimes to lessen congestion at our
    theatres;

  . offering more frequent showtimes of popular films; and

  . guaranteeing "next-in-line" service to improve ticket and concession
    sales.

   We also train our employees to improve service and sales techniques thereby
increasing overall concession sales. By serving customers more quickly, we
believe that we can increase our concession revenues per patron. To encourage
increased patronage, we have established new concession programs, provided a
wider selection of concession items and enhanced promotions and merchandising
activities. We have also established box office admission discount programs,
including bargain matinees, group admissions, and senior citizen and children
discounts. In addition, our Passport Ticket Program provides for the purchase
of admission tickets at a discount.

   Maintain State-of-the-Art Information Systems. In the three years before the
Combination, we upgraded our point-of-sale system at the Loews Theatres circuit
and invested in state-of-the-art computer technology at our theater box offices
and concession stands. These investments enabled us to increase productivity
and manage operating costs more efficiently. Additionally, during the current
fiscal year, we substantially completed the integration of the Cineplex Odeon
Canadian operating systems including general ledger and related applications,
our data receipt system and our executive information system. As a result, we
have now substantially completed integrating all North American Cineplex Odeon
theatre operations into our system.

   We use touch screen selling stations at our box offices and concession
stands to provide quicker service, resulting in higher customer turnover and
improved productivity. This system has shortened transaction processing times
and provides "real time" information to the home office regarding attendance
levels, box office receipts, concession sales and employee productivity at each
location, as well as better inventory management and control.

   With immediate access to this information, we can make daily adjustments to
staffing levels and inventories in order to maximize productivity and overall
profitability. This is especially important during critical operating periods
such as weekends and holidays. We have also made significant investments in
technology to integrate and enhance features within our major reporting
systems.

   Expand Other Revenues. We are continually seeking other potential revenue
opportunities in addition to box office and concession revenues. We believe we
can be an attractive medium for advertising and joint marketing and promotion
efforts, due to our offering access to mass audiences. In fiscal 2000, we had
approximately 135 million patrons, with highly attractive demographics. We

                                       6
<PAGE>

maintain screen advertising programs in all of our theatres with local and
national advertisers. For example, with our broad demographic audience, we
have been able to sign a long-term deal to advertise on our U.S. screens,
estimated to be worth in excess of $60 million. Additionally, during fiscal
year 2000, we entered into a 3 year deal in Spain (through our Yelmo Cineplex
joint venture) with an outside third party whereby we receive compensation for
on-screen advertising based upon actual attendance levels. We expect Yelmo
Cineplex will receive approximately $10 million over the term of this
contract. We are continuing to explore additional advertising and marketing
programs with other world class consumer product companies in North America
and internationally.

   We have also generated additional revenue through the leasing of our
theatres for motion picture premieres and screenings, corporate events and
private parties. Some of our theatres have earned reputations as the
"preferred" theatres for these events given their locations in key urban
markets as well as their upscale settings.

   On March 8, 2000, we announced that we and five other major movie theatre
companies intend to launch an internet movie portal. This new company will
offer remote ticketing services, showtimes, reviews and movie trailers for the
movie-going public. We also expect this new company will aggressively pursue
emerging technologies such as wireless and in-home ticket printing. We are an
equity holder in this new company, sharing in the revenues generated by this
new company as well as any appreciation of our equity.

   Motivate Key Employees. We have adopted a broad-based stock incentive plan
which is designed to link compensation of management with stockholder return.
During fiscal year 2000, we granted options in our common stock to
approximately 900 of our employees. Additionally, during fiscal year 2001 the
stock option committee of the Board of Directors approved an additional grant
of 340,000 options to our employees.

   We provide additional incentives to our theatre staff employees by paying
commissions for concession productivity over certain target levels. We also
offer benefits such as college tuition assistance designed to attract quality
employees, reduce employee turnover and increase operating efficiencies.

 Expansion Strategy and Portfolio Management

   A key component of our business strategy is pursuing significant expansion
and upgrades of our theatres including the following elements:

  . develop or acquire additional theatres in the North American and select
    international markets;

  . expand the number of screens at certain existing theatre locations; and

  . significantly upgrade and modernize existing theatres where appropriate.

  . Upgrade and Expand in North America. During the five years prior to the
Combination, Loews Theaters implemented a major theater reconfiguration and
expansion program, which we have extended to Cineplex Odeon following the
Combination. The essence of the reconfiguration and expansion program is to
build/acquire new modern state-of-the-art multi-screen theatres, expand and/or
renovate existing theatres where appropriate and close/dispose of old, obsolete
and/or unprofitable theatres. This program has increased screens per location
from 5.4 at the end of fiscal year 1994 to 7.4 at the end of fiscal year 1998.

   An integral component of our growth plan is our new build theatre program.
Overall, our new build theatres have been very successful, generating
significant cash flow and a very healthy return on investment. To illustrate,
key historical highlights of our new build theatre performance, for theatres
opened during fiscal years 1990-1998 (excluding Cineplex Odeon and joint
ventures), are as follows:

  . we opened 358 screens at 32 locations at a capital cost of $272.1
    million. First year ROI of 17.6%--current ROI of 22.4%;

  . through the end of fiscal 1999, 90% of the $272.1 million capital
    investment had been recouped from operating cash flow generated by these
    theatres; and

  . current overall attendance and operating cash flow levels reflect growth
    of approximately 7.7% and 27.6%, respectively, in comparison to the first
    full fiscal year of operations.

   In conjunction with this expansion program, we adopted a prototype design
for new theatre construction. This prototype has between 16 and 18 screens,
depending on the location, with oversized

                                       7
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screens, stadium seating, rocking chair seats, state-of-the-art digital sound
systems and spacious lobbies. The prototype incorporates state-of-the-art sales
technology, and the design, location and size of concession stands in the
prototype allow us to operate more efficiently. We believe larger multiscreen
theatres are more efficient to operate and provide for greater operating
margins and better use of assets. The greater number of screens per theatre
provides more effective leverage of fixed costs and staffing levels over a
larger revenue base. Multi-screen facilities also allow us to present a variety
of films with more frequent showtimes to the movie-going public.

   The quality of our new theatres and their location in major metropolitan
locations position them among the top grossing theatres in the U.S. Currently
we operate seven theatres which are consistently among the top twenty-five
highest grossing theatres in the U.S. according to A.C. Nielsen Company/EDI:

  . the 13-screen flagship Sony Theatres Lincoln Square in New York City,
    home of the first commercial 3-D IMAX(R) theatre in the United States;

  . the 16-screen Metreon theatre in San Francisco, home of the first
    commercial 3-D IMAX(R) theatre in San Francisco, California;

  . the 13-screen E-Walk theatre located in the heart of the rejuvenated
    Times Square in New York City;

  . the 20-screen Star Theatre in Southfield, Michigan;

  . the 15-screen Kips Bay theatre in New York City;

  . the 18-screen Universal City at Citywalk, a retail and entertainment
    complex in Universal City, California; and

  . the 21-screen Palisades Center theatre in West Nyack, New York.

   The following table indicates the number of theatre locations and screens
and changes in each as a result of our upgrading and reconfiguration program
and the addition of the Cineplex Odeon circuit to the Loews Theatres circuit
during the five fiscal years ended February 29, 2000. These figures include
screens and locations operated by Star, Magic Johnson and Yelmo Cineplex.
<TABLE>
<CAPTION>
                                       Fiscal Year ended February
                                               28 or 29,
                                      --------------------------------  Five Year
                                      1996   1997  1998   1999   2000     Total
                                      -----  ----  -----  -----  -----  ---------
<S>                                   <C>    <C>   <C>    <C>    <C>    <C>
Screens
Beginning of year.................... 1,030  950     959  1,035  2,881    1,030
  New builds.........................    36   44      92    168    237      577
  Expansions.........................     3   22      12     15      5       57
  J.V. investments--international....   --   --      --     113     22      135
  Combination........................   --   --      --   1,723    --     1,723
  Dispositions.......................  (119) (57)    (28)  (173)  (219)    (596)
                                      -----  ---   -----  -----  -----    -----
Year end.............................   950  959   1,035  2,881  2,926    2,926
                                      =====  ===   =====  =====  =====    =====
Locations
Beginning of year....................   180  154     143    139    423      180
  New builds.........................     3    4       6     12     15       40
  J.V. investments--international....   --   --      --      14      2       16
  Combination........................   --   --      --     312    --       312
  Dispositions.......................   (29) (15)    (10)   (54)   (55)    (163)
                                      -----  ---   -----  -----  -----    -----
Year end.............................   154  143     139    423    385      385
                                      =====  ===   =====  =====  =====    =====
Average screens per location.........   6.2  6.7     7.4    6.8    7.6
</TABLE>


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   Since the Combination, we have pursued the sale of certain theatres in New
York City and Chicago that were subject to approval by the Department of
Justice ("DOJ"), in accordance with the terms of an agreement reached with the
DOJ to permit the Combination. As a result, during the fourth quarter of fiscal
1999, we sold to Cablevision Systems Corporation 33 screens in 12 theatres in
New York City, in accordance with the DOJ order, and an additional 14 screens
in 4 theatres in the suburban New York area for aggregate cash proceeds of
$87.5 million. Approximately $87.2 million of these proceeds was utilized to
pay down our Senior Revolving Credit Facility.

   Under the agreement with the DOJ, we were also required to sell 49 screens
at 11 theatre locations in Chicago. On April 7, 1999, we completed the sale of
30 screens at 8 of these theatre locations to a third party. This transaction
was not significant to our operating results or financial position. A portion
of these proceeds was utilized to pay down our Senior Revolving Credit
Facility. Additionally, under the agreement with the DOJ, we are required to
sell the remaining 19 screens at 3 theatre locations in Chicago. No sale of
these locations has occurred and, pursuant to the original agreement with the
DOJ, a trustee has been appointed to effect the sale of these locations.

   Finally, we continue to close or dispose of certain overlapping theatre
locations and underperforming theatres, including older, obsolete theatres that
contribute only minimally to cash flow from operations or are operating at a
loss. We have targeted a significant number of screens for disposition or
closing. While in the aggregate these theatres generate significant revenues,
we believe that the disposition or closure of these screens will actually
improve our operating cash flow on an ongoing basis. Contractual obligations
related to most of these theatre closings have been provided for as part of the
cost of acquisition in connection with the Combination.

   We believe we have a significant opportunity to improve our competitive
position in many of our existing markets, as well as to selectively enter new
markets in North America that are currently underserved. Our goal in this
expansion effort is to develop a modern portfolio of multiplex and megaplex
theatre properties which offer customers an exceptional movie-going experience.
We are also implementing a program to upgrade certain existing theatres with
stadium seating.

  . Expand Internationally. According to the Baskerville Communications
Corporation, the international share of total worldwide box office receipts rose
from 43% in 1983 to 63% in 1998. International box office figures are expected
to rise by 41% between 1998 and 2007. We believe that the international market
offers significant growth opportunities to motion picture exhibitors,
particularly through the replication of the multiplexing process currently
underway in the domestic arena. Much of the world is underscreened and
underserved by poor quality theatres. According to Baskerville Communications
Corporation, there were approximately 8,400 people per screen in the U.S. in
1998, compared to an average of approximately 26,500 people per screen in Europe
and approximately 69,000 people per screen in Latin America. In the U.S., the
average person visits a theatre approximately 5.2 times per year, compared to
2.1 times per year in Europe and only 0.6 times per year in Latin America. The
international market has upside potential in that small increases in attendance
rates and increased average ticket prices have a dramatic impact in expanding
box office receipts.

   In June 1998, we formed the Loews Cineplex International division to
develop, construct and operate theatres outside of the U.S. We are currently
considering expansion opportunities in selected areas throughout the world that
we believe are underscreened and underserved. We have initially targeted
selected markets in Western Europe based on the favorable economy, ease of
doing business and availability of attractive partners. We intend to identify
local partners in targeted international markets with whom management can
pursue joint venture opportunities that capitalize on our development and
operating expertise and access to capital, and that take advantage of the local
partners' established presence and significant local expertise. For the year
ended February 29, 2000, our international operations, which primarily
represents equity income of our joint ventures, represent less than 1% of our
revenues.

   On June 10, 1998, Loews Cineplex and Yelmo Films formed Yelmo Cineplex, a
50/50 joint venture, to develop, construct and operate movie

                                       9
<PAGE>

theatres throughout Spain. Yelmo Films is Spain's second largest film
exhibition company and its leading builder of state-of-the-art multiplex
theatres. Yelmo Cineplex currently owns and operates 130 screens at 15 theatre
locations in high-density population areas in Madrid, Catalunya and Galicia.
This includes two theatres opened during fiscal year 2000 aggregating 22
screens: the Madrid Sur theatre comprising 9 screens and the Gijon theatre
comprising 13 screens. Under the terms of the agreement, Yelmo Films
contributed its existing theatre assets to the joint venture. We are
contributing cash equal to the agreed value of the assets net of debt on an
"as-needed" basis, primarily to fund the construction of new multiplexes.
Additionally, our joint venture in Spain is negotiating a revolving credit
facility with a group of banks in the amount of 100 million Euros which it
expects to have in place by the second quarter of fiscal year 2001. The
proceeds of this facility will be used to fund new theatre construction
activity and operations in Spain. Yelmo Cineplex expects to add approximately
14 new theatre locations and approximately 190 screens to its existing assets
in the next several years. These locations and screens include 6 theatre
locations with 75 screens currently under development and commitments for 3
additional theatre locations aggregating 46 screens. The Spanish film
exhibition market has experienced strong growth recently, with a 38% increase
in box office receipts between 1995 and 1998. In addition to the anticipated
increases in box office and concession revenues through the expansion of the
Yelmo Cineplex theatre circuit, we are continually seeking other potential
revenue opportunities in Spain. To illustrate, during fiscal year 2000 we
entered into a three-year deal with an outside third party whereby we receive
compensation for on-screen advertising based upon actual attendance levels. We
expect Yelmo Cineplex will receive approximately $10 million over the term of
this contract.

   On March 13, 1999, we entered into a 50/50 joint venture in Italy with
Aurelio De Laurentiis' Filmauro Srl., a leading producer, distributor and
exhibitor of motion pictures in Italy. The new venture, known as De Laurentiis
Cineplex Srl., plans to develop multiplexes in regions throughout Italy.

   On May 19, 1999, we announced that we entered into a 50/50 joint venture in
Turkey with Transturk Holdings A.S. to develop, construct and operate movie
theatres throughout Turkey, Romania and the Turkic Republics of the CIS. The
new venture, to be known as Odeon Cineplex, plans to develop several multiplex
theatres in addition to the 5-screen Profilo Theatre and the 10-screen Migros
Theatre (which includes the IMAX theatre) already in operation in Istanbul and
Ankara, respectively.

   We also operate a six-screen theatre in Hungary and an eight-screen theatre
in Vienna, Austria. We are currently evaluating several other specific
international expansion opportunities in Western and Eastern Europe, Latin
America and Asia.

  . Pursue Acquisitions and Joint Ventures. We are continually seeking
opportunities to acquire theatres with locations that complement our existing
locations and provide the opportunity to improve operations through significant
cost savings realized through economies of scale.

Theatre Operations

   Nearly all of our screens are located in multiscreen theatres. Our theatres
averaged 7.6 screens as of February 29, 2000. We intend to increase this ratio
through the construction of larger multiplex or megaplex theatres, by expanding
certain existing theatres and by closing smaller theatres. Multiplex theatres
enable us to present a variety of films appealing to several segments of the
movie-going public, while serving patrons from common facilities (i.e., box
office, concession areas, restrooms and lobbies). This strategy improves
attendance, enables us to operate more efficiently and uses more of our theatre
capacity, all of which enhance revenues and profitability.

   We rely upon advertising and movie schedules in newspapers as well as on our
website to inform our patrons of film selections and show times. We also
exhibit previews of coming attractions and films presently playing on other
screens.

   Additionally, in the future we expect to provide a comprehensive offering of
remote ticketing services, showtimes, reviews and movie trailers through an
internet movie portal company that we are developing with five other major
movie theatre companies.

                                       10
<PAGE>

Competition

   The U.S. motion picture exhibition industry is generally fragmented, with
nine large companies owning or operating a majority of screens. The following
table presents the nine largest exhibition companies in North America by box
office revenue, screens and theatres according to the most recent publicly
available information:

<TABLE>
<CAPTION>
                                                    Box Office
Company                                              Revenues  Screens Theatres
--------------------------------------------------- ---------- ------- --------
                                                    (millions)
<S>                                                 <C>        <C>     <C>
Loews Cineplex(1)..................................   $729.3    2,926    385
Regal/Act III......................................    690.5    4,413    430
AMC Entertainment..................................    662.2    2,735    233
Cinemark Cinemas...................................    441.4    2,576    248
United Artists Theatres............................    433.1    2,018    283
Carmike Cinemas....................................    336.0    2,848    458
GC Companies.......................................    255.8    1,052    138
Hoyts Cinemas Corp. ...............................      N/A      977    124
National Amusements................................      N/A    1,114    110
</TABLE>
--------
(1) Includes 100% of our partnerships.

   In 1999, U.S. motion picture attendance was approximately 1.47 billion
which was relatively consistent with the prior year, and box office revenues
exceeded $7.49 billion, an 8% increase over 1998. The average ticket price for
1999 was $5.10, an increase of 8% over 1998.

   Exhibitors' primary revenues are derived from box office sales of tickets
and sales of concession products. Box office revenues are directly related to:

  . attendance, which is driven by the quality of the movie-going experience,
    including the comfort, cleanliness and convenience of the location of
    theatres,

  . the content and quality of film product distributed by major motion
    picture and independent film studios,

  . the ticket price,

  . the quality of projection and sound presentation, and

  . the level of customer service.

   Exhibitors sell concessions, which consist of food and beverages, at stands
in the theatres, and the revenues they generate are largely dependent on
attendance levels, theatre staffing, training and the type and quality of
products offered.

   Exhibitors' primary operating costs include:

  . film costs for licensing rights paid to motion picture distributors,

  . costs of concession products and related supplies and services,

  . labor,

  . occupancy costs, including theatre rents and real estate taxes, and

  . advertising.

  . Relationship Between Motion Picture Production and Distribution and Motion
Picture Exhibition. The motion picture exhibition and the motion picture
production and distribution industries are closely related. Motion picture
theatres are the primary initial distribution channel for new motion picture
releases. Theatrical success of a motion picture is often the most important
factor in establishing its value in cable television, pay-per-view,
videocassette and other markets. At the same time, the ultimate success of an
exhibitor's box office depends on the quality, quantity, availability and
acceptance by movie-going patrons of the motion picture produced by production
companies and licensed to the motion picture exhibitors by distribution
companies.

   A few major movie studios and their distribution operations dominate the
motion picture production and distribution industry in the U.S. These include:

  . Columbia and TriStar, both owned by Sony,

  . Universal, which is approximately 92% owned by Seagram,

  . The Walt Disney Company,

  . Warner Bros., which is owned by Time-Warner Inc.,

  . Paramount Pictures, which is owned by Viacom Inc.,

  . Twentieth Century-Fox, which is owned by News Corporation Ltd.,

  . Metro-Goldwyn-Mayer Inc., and

  . Dreamworks.

                                      11
<PAGE>

   Based on box office receipts, these studios account for approximately 90% of
the motion pictures exhibited in the U.S.

  . Film Licensing. In order to secure motion pictures, exhibitors must engage
in negotiations with film distributors for licensing rights of first run feature
motion pictures. Exhibitors and distributors conduct negotiations on a film-by-
film and theatre-by-theatre basis. Film exhibition licenses typically specify
rental fees based upon gross receipts or on theatre admissions. Under gross
receipts arrangements, the distributor receives a specified percentage of box
office receipts, with the percentage declining over the term of the run. Based
upon a theatre admissions formula, the distributor receives a specified
percentage of the excess of box office receipts over an agreed upon house
operating expense.

   If there are multiple exhibitors in a film zone, a distributor may require
the exhibitors in a zone to bid for a film or may allocate its films among
them. When films are allocated, a distributor will choose which exhibitor is
offered a film and the exhibitor will negotiate film rental terms directly with
the distributor. Over the past several years, distributors have predominantly
favored the allocation over the bidding process to license their films.

   It is also important to note that the distribution of film product in Canada
is based on historical relationships that result in the two major exhibitors
(us and Famous Players) playing product from specific suppliers. As a result,
there can be large fluctuations from year-to-year in box office revenue
performance based on the strength of a particular studio's film product. Even
though this situation has changed moderately over the last two years, the
traditional relationships still hold in most of the major markets. One of the
challenges faced by us is to balance existing relationships with distributors
in order to receive the broadest mix of film product for our theatres in
Canada.

Current Exhibition Industry Environment

   During the past five years, the annual North American theatre attendance
level has experienced a gradual increase from 1 billion to over 1.4 billion
patrons and a steady increase in ticket prices driving the industry-wide box
office from $5.0 billion in 1990 to over $7.5 billion in 1999. The types of
theatres generating this increase have changed dramatically as there has been a
shift in movie-going from the older, smaller theatres to newly constructed
larger, state-of-the-art facilities. As a result, the U.S. exhibition industry
is currently experiencing a new wave of dramatic changes with the advent of
megaplex theatres and shifts in distribution patterns, leading to consolidation
in the industry. These changes are creating increased competition, increased
challenges and increased opportunities as exhibitors seek to increase market
share in vulnerable markets. Due to their ability to play virtually all
releases, megaplex theatres have had a significant impact in locations where
they have opened. We are an active participant in this market. Our optimal
megaplex theatre size is approximately 16 to 18 screens, which gives us the
ability to play all important releases and the flexibility to offer multiple
show times for releases in the greatest demand. Unfortunately, the industry
screen growth related to the megaplex build-out has been irrational at times,
focused on growth in revenues and screens as opposed to cash flow, and has not
been accompanied by the disposal or closure of older, obsolete screens. The
significant decay of older theatres and the underperformance of many new builds
have put pressure on industry-wide operating results, operating margins,
certain covenant requirements under bank facilities and the market price of our
and other exhibitors' stock. The future success of the industry will be
dependent on higher quality new builds, the availability of capital to fund
expansion, and the aggressive disposition of older, obsolete theatres.

   In addition, distributors have changed release patterns over the past
several years, opening films with significant box office potential on an
increasing number of screens and reducing the "zones of exclusivity" previously
held by distributors. The number of screens for a wide film release has
increased significantly, and while major film releases may have the same number
of play dates, the run has been compressed onto a larger number of screens in a
shorter period of time. The pressure on distributors to make a significant
impact in the opening weekend for certain films has led to distributors'
willingness to play films on screens in closer proximity to maximize initial
box office results which are at high film rent terms to the exhibitor. This
quick "burn off" of film has resulted in an industry-wide increase in film cost
over the past several years. As previously mentioned, it is

                                       12
<PAGE>

important that the number of older, obsolete industry-wide screens be reduced
significantly to relieve some of the current pressure being experienced related
to film terms.

   Despite these negative developments, we believe that our new build program
will continue to provide attractive opportunities for us and will be the
primary driver of our continued future growth. Our growth plan is predicated
upon a "measured approach" based upon moderate expansion on a fiscally
responsible basis. We are very cautious and deliberate in selecting our new
build properties; our goal is to build highly profitable modern theatres that
will "withstand the test of time". As previously mentioned in the "Upgrade and
Expand in North America" section, we have a strong track record in terms of our
historical new build theatre locations exemplified by the strong performance of
these theatres. We also recognize that our ability to maintain our new build
program depends on the availability of satisfactory financing which in turn is
followed by our ability to achieve satisfactory levels of cash flow. While we
strongly believe in our new build program, we also recognize that there needs
to exist a corresponding shift in the industry as older, smaller theatres are
disposed of or closed. As a result, we have targeted in the past and continue
to target a significant number of screens for disposition or closure.

Segment Information

   See Note 12 to our Consolidated Financial Statements included in the 2000
Annual Report to Stockholders which is incorporated by reference.

Seasonality

   The release of motion pictures is often seasonal, with a disproportionate
number of major motion picture releases taking place during the summer and
holiday seasons. This may cause significant changes, from quarter to quarter,
in our attendance levels, theatre staffing levels and reported results. We
expect this industry-wide trend to continue.

Government Regulation

   In the United States, federal and state antitrust laws in large part
regulate the distribution of motion pictures. These laws have been the subject
of numerous antitrust cases. The most significant of these cases is U.S. v.
Paramount Pictures Inc., et al., which was affirmed by the U.S. Supreme Court
in 1950. The decision from the Paramount case binds most major film
distributors and requires the distributors to offer and license their films to
exhibitors on a film-by-film and theatre-by-theatre basis. Consequently, we
cannot be assured of a supply of motion pictures by entering into long-term
arrangements with major distributors. Instead, we must compete and negotiate
for licenses on a film-by-film and theatre-by-theatre basis.

   Motion picture exhibitors are also subject to certain U.S. and Canadian
federal, state, provincial and local laws governing such matters as
construction, renovation and operation of their theatres, employee wages and
working conditions, and health and sanitation regulations. We believe all of
our theatres are in compliance with these requirements. We are also subject to
the evolving laws and increased public attention on the accessibility of our
theatres to persons with physical disabilities.

Employees

   As of February 29, 2000, we employed approximately 16,300 employees,
including approximately 2,000 full-time and 14,300 part-time employees. Our
employment levels are generally directly related to seasonal changes in
business activity. We are a party to collective bargaining agreements with 35
unions, of which approximately 1,700 employees are members. We believe that our
employee relations are generally good.

Cautionary Notice Regarding Forward Looking Statements

   This Annual Report on Form 10-K includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All statements
included in this Annual Report on Form 10-K, other than statements of
historical facts, may constitute forward-looking statements. Although we
believe that the expectations reflected in such forward looking statements are
reasonable, we cannot be assured that the expectations will prove to be
correct. Important factors that could cause results

                                       13
<PAGE>

to differ materially from our expectations are disclosed below. All forward-
looking statements are expressly qualified in their entirety by these
cautionary statements.

Factors That May Affect Future Performance

   In addition to other factors and matters previously mentioned, in our view,
the following items could cause results to differ materially from those
discussed in forward-looking statements:

  . the effect of economic conditions on a national, regional or
    international basis;

  . competitive pressures in the motion picture exhibition industry;

  . the financial resources of, and films available to, us and our
    competitors;

  . changes in laws and regulations, including changes in environmental and
    disabilities laws and changes in accounting standards;

  . our high debt levels, which may reduce our operating flexibility, may
    impair our ability to obtain financing and may make us more vulnerable in
    a downturn;

  . our ability to execute successfully our foreign expansion plans;

  . the interests of our two major shareholders, Sony Pictures and Universal,
    each of which produces and distributes motion pictures; and

  . opportunities that may be presented to and pursued by us.

   See the Liquidity and Capital Resources section and the Outlook section
included in the Management's Discussion and Analysis of Financial Condition and
Results of Operations, appearing on pages 48 to 52 of our 2000 Annual Report to
Stockholders, which is incorporated by reference in this Annual Report on Form
10-K.

ITEM 2. PROPERTIES

   At February 29, 2000, Loews Cineplex, including Star, Magic Johnson and
Yelmo Cineplex theatres, operated or had interests in 2,926 screens in 385
theatres, of which 35 theatres were owned by us, 346 theatres were leased and 4
theatres were subject to management arrangements. Our leases are entered into
on a long-term basis. The lease terms generally range from 20 to 40 years and
contain various renewal options, generally in intervals of 5 to 10 years.
Theatre leases provide for the payment of a fixed annual rent and, sometimes, a
percentage of box office receipts or total theatre revenue. The following
tables show the locations of our screens at February 29, 2000, including our
partnerships' theatres.

<TABLE>
<CAPTION>
                                 United States
--------------------------------------------------------------------------------
State                                                          Screens Locations
-------------------------------------------------------------- ------- ---------
<S>                                                            <C>     <C>
Arizona.......................................................     33       4
California....................................................     79       8
Connecticut...................................................     40       4
District of Columbia..........................................     30       9
Florida.......................................................     27       2
Georgia.......................................................     12       1
Idaho.........................................................     20       4
Illinois......................................................    320      45
Indiana.......................................................     51       5
Kentucky......................................................      9       2
Maryland......................................................    134      19
Massachusetts.................................................     93      10
Michigan......................................................    135       9
Minnesota.....................................................     15       3
New Hampshire.................................................     12       2
New Jersey....................................................    206      20
New York......................................................    282      41
Ohio..........................................................     32       2
Pennsylvania..................................................     27       2
Texas.........................................................    169      18
Utah..........................................................     62      11
Virginia......................................................     41       6
Washington....................................................    120      18
                                                                -----     ---
  Total.......................................................  1,949     245
                                                                =====     ===
</TABLE>

<TABLE>
<CAPTION>
                                     Canada
--------------------------------------------------------------------------------
Province                                                       Screens Locations
-------------------------------------------------------------- ------- ---------
<S>                                                            <C>     <C>
Alberta.......................................................   129       17
British Columbia..............................................    67       11
Manitoba......................................................    13        3
Ontario.......................................................   391       56
Quebec........................................................   201       31
Saskatchewan..................................................    27        4
                                                                 ---      ---
  Total.......................................................   828      122
                                                                 ===      ===
</TABLE>

<TABLE>
<CAPTION>
                                 International
--------------------------------------------------------------------------------
Country                                                        Screens Locations
-------------------------------------------------------------- ------- ---------
<S>                                                            <C>     <C>
Spain.........................................................    130      15
Austria.......................................................      8       1
Hungary.......................................................      6       1
Turkey........................................................      5       1
                                                                -----     ---
  Total.......................................................    149      18
                                                                -----     ---
  Grand Total.................................................  2,926     385
                                                                =====     ===
</TABLE>

                                       14
<PAGE>

   Under the partnership agreement governing the operation of the Star Theatres
circuit, we are responsible for film booking arrangements. Our joint venture
partner manages the theatres under an operating agreement. The partnership
agreement also has provisions governing the transfer of partnership interests
between the partners and to unaffiliated third parties.

   Under the partnership agreement governing the operation of the Magic Johnson
Theatres circuit, we are responsible for film booking arrangements and
management of the theatres. This agreement also has provisions governing the
transfer of partnership interests between the partners and to unaffiliated
third parties.

ITEM 3. LEGAL PROCEEDINGS

   We are involved in routine litigation and legal proceedings in the ordinary
course of our business relating to personal injury claims, employment matters
and contractual disputes. Except for those noted below, we do not have any
litigation or proceedings that we believe will have a material adverse effect
on us, individually or in the aggregate.

Antitrust Proceedings

   On April 16, 1998, the United States of America, the State of New York, by
and through its Attorney General, Dennis C. Vacco, and the State of Illinois,
by and through its Attorney General, Jim Ryan, on one hand, and us, Sony
Corporation of America, Cineplex Odeon and Seagram Co. Ltd., on the other hand,
entered into, and the Southern District of New York ordered, a Stipulation &
Order setting forth a proposed Final Judgment relating to alleged federal
antitrust violations in New York and Illinois stemming from the Loews/Cineplex
combination. This Stipulation & Order followed the filing of a complaint on the
same day relating to these alleged violations. Under the terms of the
agreement, we were required to divest certain theatres in New York and Chicago.

   Since the Combination, we pursued the sale of certain theatres in New York
City and Chicago that were subject to approval by the Department of Justice
("DOJ"), in accordance with the terms of an agreement reached to permit the
merger of Loews Theatres with Cineplex Odeon. As a result, during the fourth
quarter of fiscal 1999, we sold to Cablevision Systems Corporation 33 screens
in 12 theatres in New York City, in accordance with the DOJ order, and an
additional 14 screens in 4 theatres in the suburban New York area for aggregate
cash proceeds of $87.5 million. Approximately $87.2 million of these proceeds
was used to pay down our Senior Revolving Credit Facility.

   Under the agreement with the DOJ, we were also required to sell 49 screens
at 11 theatre locations in Chicago. On April 7, 1999, we completed the sale of
30 screens at 8 of these theatre locations to a third party. This transaction
was not significant to our operating results or financial position. A portion
of these proceeds was utilized to pay down our Senior Revolving Credit
Facility. Additionally, under the agreement with the DOJ, we are required to
sell the remaining 19 screens at 3 theatre locations in Chicago. No sale of
these locations has occurred and, pursuant to the original agreement with the
DOJ, a trustee has been appointed to effect the sale of these locations.

Environmental Proceedings

   We own, manage and/or operate theatres and other properties that are subject
to certain U.S. and Canadian federal, state and local laws and regulations
relating to environmental protection and human health and safety, including
those governing the investigation and remediation of contamination resulting
from past or present releases of hazardous substances. Some of these laws and
regulations may impose joint and several liability on statutory classes of
persons for the costs of investigation or remediation of contamination,
regardless of fault or the legality of the original disposal. These persons
include the present or former owner or operator of a contaminated property and
companies that generated or disposed of hazardous substances found at the
property.

   One of our leased drive-in theatres and one formerly leased drive-in
theatre, both in the State of Illinois, are located on properties on which
third parties disposed of, or may have disposed of, substantial quantities of
construction debris, auto shredder residue and other debris. Such material may
contain hazardous substances. One of these

                                       15
<PAGE>

properties is the subject of an action, filed in August 1998 in the Circuit
Court of Cook County, Illinois by the Illinois Attorney General's office
seeking civil penalties and various forms of equitable relief, including the
removal of all wastes allegedly present at the property, soil and groundwater
testing and remediation, if necessary. Our range of probable liability with
respect to this action cannot be reasonably estimated at this time due to
several unknown factors, including the scope of contamination at the theatre
property, the likelihood of any particular remedial action being required, the
allocation of liability, if any, to other responsible parties, and the ability
of such parties to satisfy their share of such liability. We will continue to
evaluate future information and developments with respect to conditions at the
theatre property and will periodically reassess any liability accordingly.
Based on the foregoing, there can be no assurance that our liability, if any,
in connection with this action will not be material.

Six West Retail Acquisition, Inc.

   On July 24, 1997, Six West Retail Acquisition, Inc., a real estate
development company, initiated a lawsuit against us and some of our affiliates
in the U.S. District Court for the Southern District of New York, seeking
injunctive relief and unspecified monetary damages. Six West alleges that we
have violated federal antitrust laws by engaging in block booking agreements
and monopolizing the motion picture exhibition market in New York City. Six
West owns or leases the Paris and New York Twin theatres in Manhattan. The
Paris theatre was managed by one of our subsidiaries under an oral management
agreement that has been terminated. The New York Twin theatre is managed by one
of our subsidiaries under a written management agreement. Six West also alleges
that we violated our contractual and fiduciary responsibilities in managing the
two theatres. On December 3, 1997, Six West filed an amended complaint
asserting similar claims with respect to the Festival Theatre which was
operated by one of our subsidiaries until it was closed in 1994. All of the
defendants moved to dismiss the amended complaint by motion dated January 8,
1998. The court decided both motions in a memorandum opinion and order dated
March 8, 2000. The court granted defendants' motion to dismiss the contract
claims against the individual non-corporate defendants and a portion of one
claim against Loews. The court denied the motion with respect to the remainder
of the amended complaint and the non-Loews corporate defendants. Discovery in
the action is still in progress. We believe that Six West's claims are without
merit and intend to oppose them vigorously.

ADA Litigation

   The Department of Justice, in coordination with the New York City Commission
on Human Rights, is currently investigating Cineplex Odeon's theatres in New
York City with respect to its compliance with the ADA and the New York City
Human Rights Law. The Department of Justice has alleged that its investigation
has identified numerous violations of the ADA. We have opposed, and will
continue to vigorously oppose the allegations and claims of the Department of
Justice with respect to the compliance of these theatres under the ADA.
However, we cannot guarantee that the remediation costs relating to the ADA
will not be material.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

   Not applicable.

                                       16
<PAGE>

EXECUTIVE OFFICERS OF LOEWS CINEPLEX

   The following executive officers of Loews Cineplex hold the offices
indicated until their successors are chosen and qualified.

<TABLE>
<CAPTION>
                                                                        Position, Principal Occupation,
          Name, Age and Position with Loews Cineplex                 Business Experience and Directorships
          ------------------------------------------                 -------------------------------------
 <C>                                                          <S>
 Lawrence J. Ruisi................................ 52         Mr. Ruisi has been President and Chief Executive
                   .President                                 Officer of Loews Cineplex since May 1998. Mr.
                   .Chief Executive Officer                   Ruisi was President of Sony Retail Entertainment
                   .Director                                  Inc. from September 1994 until May 1998. Mr. Ruisi
                     since May 1998                           also served as Executive Vice President of Sony
                                                              Pictures from 1990 through May 1998. In these
                                                              capacities, Mr. Ruisi was responsible for
                                                              oversight of Sony Pictures' theatrical exhibition
                                                              group, including the Loews Theatres, Star Theatres
                                                              and Magic Johnson Theatres circuits.

 Allen Karp....................................... 59         Mr. Karp has served as Chairman and Chief
                   .Chairman and CEO of                       Executive Officer of Cineplex Odeon Canada since
                     Cineplex Odeon Canada                    May 1998. From May 1993 until May 1998, Mr. Karp
                   .Director                                  served as President and Chief Executive Officer of
                     since May 1998                           Cineplex Odeon Corporation.

 Travis Reid...................................... 46         Mr. Reid served as President of Loews Theatres
                   .President, North                          from October 1996 until May 1998 and, for the
                     American Operations                      preceding year, served as Executive Vice
                     since May 1998                           President-Film Buying of Loews Theatres. As
                                                              Executive Vice President of Loews Theatres, Mr.
                                                              Reid was involved in all aspects of the circuit's
                                                              strategic planning, corporate development and
                                                              expansion. For the three years prior to 1995, Mr.
                                                              Reid served as Senior Vice President of Film.
                                                              Prior to joining Loews Theatres in 1991, Mr. Reid
                                                              served as Vice President of Film for General
                                                              Cinema's Midwestern, Southwestern and Western
                                                              regions.

 J. Edward Shugrue................................ 50         Mr. Shugrue has served as President of Loews
                   .President,                                Cineplex International since June 1998. From 1996
                     Loews Cineplex International             until June 1998, Mr. Shugrue served as a senior
                     since June 1998                          corporate executive of Sony Pictures' Corporate
                                                              Development Group where he was responsible for
                                                              identifying and developing growth opportunities
                                                              for Sony Pictures in international markets. From
                                                              1987 to 1996, Mr. Shugrue served as President of
                                                              Columbia TriStar Film Distributors International,
                                                              the international theatrical arm of Sony Pictures.
</TABLE>

                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                                          Position, Principal Occupation,
          Name, Age and Position with Loews Cineplex                   Business Experience and Directorships
          ------------------------------------------                   -------------------------------------
 <C>                                                            <S>
 John J. Walker................................... 47           Mr. Walker served as Senior Vice President and
                   .Senior Vice President,                      Chief Financial Officer of Loews Theatres, from
                     Chief Financial Officer                    1990 until May 1998. From 1988 to 1990, Mr. Walker
                   .Treasurer                                   served as Vice President-Controller of Loews
                     since May 1998                             Theatres. Mr. Walker is responsible for overseeing
                                                                all aspects of financial reporting, budgeting,
                                                                internal auditing, management information systems,
                                                                treasury, risk management and insurance.
                                                                Mr. Walker is a certified public accountant and is
                                                                a member of the American Institute of Certified
                                                                Public Accountants and the New York State Society
                                                                of Certified Public Accountants.

 John C. McBride, Jr. ............................ 44           Mr. McBride served as Senior Vice President, Legal
                   .Senior Vice President,                      Affairs of Sony Pictures, from 1996 to 1998. From
                     General Counsel                            1992 to 1996, Mr. McBride served as Vice
                     since May 1998                             President, Legal Affairs of Sony Pictures. From
                                                                1990 to 1992, Mr. McBride served as Assistant
                                                                General Counsel of Sony Pictures.

 Joseph Sparacio.................................. 40           Mr. Sparacio served as Vice President of Finance
                   .Vice President, Finance                     and Controller of Loews Theatres, from 1994 to May
                     and Controller                             1998. From 1990 to 1994, Mr. Sparacio served as
                     since May 1998                             Controller of Loews Theatres. Prior to joining
                                                                Loews Theatres, Mr. Sparacio spent eight years
                                                                with the New York City office of the independent
                                                                accounting firm of Ernst & Young where he was a
                                                                Senior Manager of Audit. Mr. Sparacio is a
                                                                certified public accountant and is a member of the
                                                                American Institute of Certified Public Accountants
                                                                and the New York State Society of Certified Public
                                                                Accountants.

 Mindy Tucker..................................... 40           Ms. Tucker served as Senior Vice President of
                   .Corporate Vice President,                    Development and Planning for Sony Retail
                     Strategic Planning                         Entertainment, from 1996 to May 1998. From 1994 to
                   .Secretary                                   1996, Ms. Tucker served as Vice President of
                     since May 1998                             Business Development for Sony Retail
                                                                Entertainment. From 1992 to 1994, Ms. Tucker
                                                                served as Vice President of Corporate Strategy and
                                                                Planning of Sony Pictures.
</TABLE>

                                       18
<PAGE>

                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

   Our common stock is traded on the New York and Toronto Stock Exchanges. As
of May 10, 2000 there were approximately 10,500 holders of record of our Common
Stock. Additional information required by this item is incorporated by
reference from page 73 of the 2000 Annual Report to Stockholders.

ITEM 6. SELECTED HISTORICAL FINANCIAL DATA

   The selected historical financial data and selected key operating statistics
for the five years ended February 29, 2000, which appear on pages 43 to 45 of
the 2000 Annual Report to Stockholders, is incorporated by reference in this
Form 10-K Annual Report.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

   Management's Discussion and Analysis of Financial Condition and Results of
Operations for the three years ended February 29, 2000, which appear on pages
46 to 53 of the 2000 Annual Report to Stockholders, is incorporated by
reference in this Form 10-K Annual Report.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

   Loews Cineplex has limited exposure to financial market risks, including
changes in interest rates, movement in foreign currency exchange rates and
other relevant market prices.

   An increase or decrease in interest rates would affect interest costs
relating to our variable rate senior credit facilities. However, a portion of
these facilities are hedged through interest rate swap agreements. At February
29, 2000, the amount outstanding under our senior credit facility was $530
million and the notional amount of our interest rate hedges was $250 million.
These amounts approximate fair value. The senior credit facility has a five
year term with interest priced at the bank base rate or LIBOR, at our option.
The weighted average interest rate as of February 29, 2000 was 7.48%.
Generally, there is no required amortization of this credit facility prior to
maturity. Our swaps have terms of four years.

   We are exposed to market risk arising from changes in foreign currency
exchange rates as a result of international operations. See Item 7--
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing on pages 46 to 53 of the 2000 Annual Report to
Stockholders, incorporated by reference in this Form 10-K Annual Report.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

   The consolidated financial statements of Loews Cineplex together with the
report thereon of PricewaterhouseCoopers LLP dated May 1, 2000, appearing on
pages 54 to 72 of the 2000 Annual Report to Stockholders are incorporated by
reference in this Form 10-K Annual Report.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

   Not applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

   Information concerning the directors of Loews Cineplex is contained in, and
incorporated by reference from, our Proxy Statement for the 2000 Annual Meeting
of Stockholders. The balance of the response to this item is contained in the
discussion entitled Executive Officers of Loews Cineplex in Part I of this
report.

ITEM 11. EXECUTIVE COMPENSATION

   Information about executive compensation is incorporated by reference from
the discussion under the heading Executive Compensation in our Proxy Statement
for the 2000 Annual Meeting of Stockholders.


                                       19
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

   Information about security ownership of certain beneficial owners and
management is incorporated by reference from the discussion under the headings
Stock Ownership and Stockholders Agreement in our Proxy Statement for the 2000
Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   Information about certain relationships and transactions with related
parties is incorporated by reference from the discussion under the headings
Related Transactions and Stockholders Agreement in our Proxy Statement for the
2000 Annual Meeting of Stockholders.

                                       20
<PAGE>

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)The following documents are filed as part of this report:

(1)Financial Statements

<TABLE>
<CAPTION>
                                                      Page(s) in Annual Report*
                                                      -------------------------
<S>                                                   <C>
  Consolidated Balance Sheet at February 29, 2000 and
   February 28, 1999.................................            54
  Consolidated Statement of Operations for the years
   ended February 28 or 29, 2000, 1999 and 1998......            55
  Consolidated Statement of Changes in Stockholders'
   Equity for the years ended February 28 or 29,
   2000, 1999 and 1998...............................            56
  Consolidated Statement of Cash Flows for the years
   ended February 28 or 29, 2000, 1999 and 1998......            57
  Notes to Consolidated Financial Statements.........         58 to 71
  Report of Independent Accountants..................            72
</TABLE>

(2)Financial Statement Schedules:

  Report of Independent Accountants on Financial Statement Schedules.
   For each of the three years in the period ended February 29, 2000
  II. Valuation and Qualifying Accounts

  All other schedules are omitted because they are not applicable or the
  required information is shown in the financial statements or notes thereto.
  --------
  *Incorporated by reference from the indicated pages of the 2000 Annual
  Report to Stockholders.

(3)Exhibits:

<TABLE>
   <C>     <S>
    2.1(1)  Amended and Restated Master Agreement among Sony Pictures Entertainment Inc., Registrant and
            Cineplex Odeon Corporation dated as of September 30, 1997.
    2.2(2)  Amending Agreement dated May 14, 1998.
    2.3(1)  Subscription Agreement by and between Registrant and Universal Studios, Inc. dated as of September
            30, 1997.
    2.4(1)  Plan of Arrangement.
    3.1(2)  Amended and Restated Certificate of Incorporation of Registrant.
    3.2(3)  Amended and Restated By-laws of Registrant.
   10.1(1)  Amended and Restated Stockholders Agreement among Registrant, Sony Pictures Entertainment Inc.,
            Universal Studios, Inc., The Charles Rosner Bronfman Family Trust and Other Parties thereto dated as
            of September 30, 1997.
   10.2(2)  Tax Sharing and Indemnity Agreement, dated May 14, 1998, by and among Registrant and Sony
            Corporation of America.
   10.3(2)  Sony Trademark Agreement, dated May 14, 1998, by and among Registrant and Sony Corporation of
            America.
   10.4(2)  Transition Services Agreement, dated May 14, 1998, among Registrant, Sony Corporation of America and
            Sony Pictures Entertainment, Inc.
   10.5(2)  Sony Entertainment Center Lease made as of May 9, 1997 between SRE San Francisco Retail Inc. and
            Loews California Theatres Inc. (portions of such exhibit have been filed separately with the SEC
            under an application for confidential treatment pursuant to Rule 83 of the SEC Rules on
            Organization, Conduct and Ethics, and Information and Regulation (17 CFR (S) 200.83)).
</TABLE>

                                       21
<PAGE>

<TABLE>
   <C>       <S>
   10.6(2)    Sony YBG Entertainment Center Tenant Work Agreement.
   10.7(1)    Form of Director Indemnification Agreement.
   10.8(1)    Loews Cineplex Entertainment Corporation Amended and Restated 1997 Stock Incentive Plan.
   10.9(2)    Credit Agreement, dated as of May 14, 1998, among Registrant, as Borrower, the lenders listed
              therein, as Lenders, Bankers Trust Company, as Administrative Agent and Co-Syndication Agent, and
              Bank of America NT&SA, The Bank of New York and Credit Suisse First Boston, as Co-Syndication
              Agents.
   10.9.1(6)  First Amendment to Credit Agreement, dated as of February 29, 2000.
   10.10(4)   Indenture, dated as of August 5, 1998, by and among Registrant and Bankers Trust Company, as
              Trustee.
   10.11(2)   Agreement between Registrant and Lawrence J. Ruisi, dated April 30, 1998.
   10.13(5)   Agreement between Cineplex Odeon Corporation and Allen Karp, dated August 18, 1999.
   10.15(6)   Agreement between Registrant and Seymour H. Smith, dated November 1, 1999.
   10.16(6)   Agreement between Registrant and Travis Reid, dated May 1, 1998.
   10.17(1)   Agreement between Registrant and Joseph Sparacio, dated August 20, 1994, including Term Extension
              Letter dated March 5, 1997.
   10.18(1)   Agreement between Registrant and John J. Walker, dated June 1, 1993, including Term Extension Letter
              dated March 5, 1997.
   10.19(6)   Agreement between Registrant and John C. McBride, Jr., dated January 19, 1998.
   10.20(6)   Agreement between Registrant and Mindy Tucker, dated December 15, 1997.
   10.21(3)   Letter Agreement between Registrant and J. Edward Shugrue, dated December 15, 1997.
   21.1       Subsidiaries of the Registrant.
   23.1       Consent of PricewaterhouseCoopers LLP
   27.1       Financial Data Schedule (for SEC use only)
   99         Financial Statement Schedule
</TABLE>
  --------
  (1) Incorporated by reference from Loews Cineplex's Registration Statement
      on Form S-4 filed on February 13, 1998, Commission file number 333-
      46313.
  (2) Incorporated by reference from Loews Cineplex's Annual Report on Form
      10-K for the fiscal year ended February 28, 1998, as amended,
      Commission file number 1-14099.
  (3) Incorporated by reference from Loews Cineplex's Registration Statement
      on Form S-1 filed on June 15, 1998, as amended, Commission file number
      333-56897.
  (4) Incorporated by reference from Loews Cineplex's Registration Statement
      on Form S-4 filed on October 13, 1998, Commission file number 333-
      64883.
  (5) Incorporated by reference from Loews Cineplex's Quarterly Report on
      Form 10-Q for the period ended August 31, 1999, Commission file number
      1-14099.
  (6) Filed herewith.

(b) Form 8-K: No reports on Form 8-K were filed by Registrant during the
quarter ended February 29, 2000.

                                       22
<PAGE>

                                   SIGNATURES

   Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                          LOEWS CINEPLEX ENTERTAINMENT
                                          CORPORATION (Registrant)

Dated: May 25, 2000

                                                  /s/ John C. McBride, Jr.
                                          -------------------------------------
                                                  John C. McBride, Jr.
                                            Senior Vice President and General
                                                         Counsel

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                 Signature                           Title                  Date
                 ---------                           -----                  ----


<S>                                         <C>                      <C>
           /s/ Lawrence J. Ruisi            President, Chief            May 25, 2000
___________________________________________  Executive Officer and
             Lawrence J. Ruisi               Director (Principal
                                             Executive Officer)


            /s/ John J. Walker              Senior Vice President,      May 25, 2000
___________________________________________  Chief Financial Officer
              John J. Walker                 and Treasurer
                                             (Principal Financial
                                             Officer)

            /s/ Joseph Sparacio             Vice President, Finance     May 25, 2000
___________________________________________  and Controller
              Joseph Sparacio                (Principal Accounting
                                             Officer)

            /s/ George A. Cohon             Director                    May 25, 2000
___________________________________________
              George A. Cohon

              /s/ Nora Ephron               Director                    May 25, 2000
___________________________________________
                Nora Ephron

              /s/ Mel Harris                Director                    May 25, 2000
___________________________________________
                Mel Harris

            /s/ Andrew Hauptman             Director                    May 25, 2000
___________________________________________
              Andrew Hauptman

           /s/ Ronald N. Jacobi             Director                    May 25, 2000
___________________________________________
             Ronald N. Jacobi

              /s/ Allen Karp                Director                    May 25, 2000
___________________________________________
                Allen Karp

           /s/ Kenneth Lemberger            Director                    May 25, 2000
___________________________________________
             Kenneth Lemberger

               /s/ Ron Meyer                Director                    May 25, 2000
___________________________________________
                 Ron Meyer
</TABLE>



                                       23
<PAGE>

<TABLE>
<CAPTION>
                 Signature                           Title                  Date
                 ---------                           -----                  ----


<S>                                         <C>                      <C>
              /s/ Yuki Nozoe                Director                    May 25, 2000
___________________________________________
                Yuki Nozoe


             /s/ Karen Randall              Director                    May 25, 2000
___________________________________________
               Karen Randall

            /s/ Hellene Runtagh             Director                    May 25, 2000
___________________________________________
              Hellene Runtagh

             /s/ Bedi A. Singh              Director                    May 25, 2000
___________________________________________
               Bedi A. Singh

            /s/ Howard Stringer             Director                    May 25, 2000
___________________________________________
              Howard Stringer

           /s/ William A. Sutman            Director                    May 25, 2000
___________________________________________
             William A. Sutman

         /s/ Mortimer B. Zuckerman          Director                    May 25, 2000
___________________________________________
           Mortimer B. Zuckerman
</TABLE>

                                       24
<PAGE>

                      SELECTED HISTORICAL FINANCIAL DATA

The following table sets forth Selected Historical Financial Data for Loews
Cineplex Entertainment Corporation ("we", "us" and "our") for the five fiscal
years ended February 29, 2000 and has been derived from our annual consolidated
financial statements. The Selected Historical Financial Data and Selected Key
Operating Statistics should be read in conjunction with the separate
consolidated financial statements and notes thereto of Loews Cineplex
Entertainment Corporation and our "Management's Discussion and Analysis of
Financial Condition and Results of Operations", which are included elsewhere in
this annual report. Further, the Selected Historical Financial Data includes the
financial results of Cineplex Odeon Corporation ("Cineplex Odeon") for the
period from May 15, 1998 to February 29, 2000.  Cineplex Odeon became our
subsidiary on May 14, 1998.

<TABLE>
<CAPTION>

                                                              YEAR ENDED FEBRUARY 28 OR 29,
                                                              -----------------------------

                                              2000          1999          1998          1997          1996
                                           -----------   -----------   -----------   -----------   -----------

                                                              (IN THOUSANDS, EXCEPT SHARE DATA)
<S>                                       <C>           <C>           <C>           <C>           <C>
INCOME STATEMENT DATA:
Box Office                                 $   647,774   $   587,078   $   296,933   $   273,498   $   264,585
Concession                                     243,511       228,332       104,009        90,643        84,358
Other                                           39,138        35,750        12,568        11,204        10,153
                                           -----------   -----------   -----------   -----------   -----------

Total Operating Revenue                        930,423       851,160       413,510       375,345       359,096
                                           -----------   -----------   -----------   -----------   -----------

Theatre operations and other expenses
 (including concession costs)                  732,957       654,503       307,568       282,480       277,375
General and administrative                      53,031        47,882        28,917        21,447        20,282
Depreciation and amortization                  113,047        90,720        52,307        44,576        41,273
Loss on sale/disposals of theatres               8,388         4,532         7,787         9,951         7,249
Interest expense                                72,728        57,216        14,319        14,776        15,376
Income tax expense                               1,662         2,187         2,751         2,295           309
                                           -----------   -----------   -----------   -----------   -----------

Net loss                                   $   (51,390)  $    (5,880)  $      (139)  $      (180)  $    (2,768)
                                           ===========   ===========   ===========   ===========   ===========

Loss per common share:
  basic and diluted                       $       (.88)  $      (.12)  $      (.01)  $      (.01)  $      (.14)
Weighted average shares and
equivalent outstanding(A):
  Basic                                     58,622,646    47,834,541    20,472,807    20,472,807    20,472,807
  Diluted                                   58,622,646    47,834,541    20,472,807    20,472,807    20,472,807

BALANCE SHEET DATA (AT PERIOD END):
 Cash, equivalents and investments         $    31,735   $    48,174   $     9,064   $     2,160   $     2,390
 Property, equipment and leaseholds        $ 1,218,334   $ 1,119,977   $   609,152   $   613,692   $   602,435
 Total assets                              $ 1,907,389   $ 1,806,201   $   728,551   $   721,372   $   715,810
 Total long-term obligations (including
  debt)                                    $ 1,074,736   $   943,811   $   336,526   $   339,206   $   333,268
 Total liabilities                         $ 1,288,587   $ 1,140,905   $   404,040   $   396,722   $   390,980
 Stockholders' equity                      $   618,802   $   665,296   $   324,511   $   324,650   $   324,830

CASH FLOW STATEMENT DATA:
 Cash flow provided by operating
  activities                               $    57,097   $    82,711   $    64,185   $    47,976   $    46,326
</TABLE>

(A)  Restated in all periods presented to reflect impact of a stock dividend
declared on February 5, 1998.

                                      43
<PAGE>

Selected Key Operating Statistics

The table below sets forth unaudited Selected Key Operating Statistics for us as
of and for each of the periods indicated. Management views these statistics as
key financial measures and believes that certain investors find them useful in
analyzing companies in the motion picture exhibition industry. No one measure is
more meaningful than another and our management uses these measures collectively
to assess operating performance. In order to arrive at a more meaningful
presentation of financial operating data related to our productivity and
performance, except as otherwise noted, all amounts below include 100% of the
operating results of the Loeks-Star Theatres ("LST"), the Magic Johnson Theatres
("MJT") and the Yelmo Cineplex de Espana ("Yelmo") partnerships in which we have
a 50% interest. Further, the Selected Key Operating Statistics include data for
Cineplex Odeon for the period from May 15, 1998 to February 29, 2000.  Cineplex
Odeon became our subsidiary on May 14, 1998.

<TABLE>
<CAPTION>
                                                                                 YEAR ENDED FEBRUARY 28 OR 29,
                                                                                 -----------------------------
                                                                                          (UNAUDITED)

                                                                     2000        1999        1998        1997        1996
                                                                   ----------   ---------   ---------   ---------   ---------

                                                                   (IN THOUSANDS, EXCEPT LOCATIONS, SCREENS AND PER PATRON DATA)
 <S>                                                              <C>          <C>         <C>         <C>         <C>
CASH FLOW STATEMENT DATA(1):

Net cash provided by operating activities                          $   57,097   $  82,711   $  64,185   $  47,976   $  46,326
Net cash used in investing activities                              $ (218,503)  $ (91,741)  $ (51,439)  $ (53,254)  $ (34,690)
Net cash provided/(used) by financing
 activities                                                        $  144,967   $  48,140   $  (5,842)  $   5,048   $ (14,005)
Capital Expenditures (included in investing
activities noted above)                                            $  185,350   $ 147,198   $  42,431   $  60,920   $  51,987



OPERATING DATA:

Locations operated at period end                                          385         423         139         143         154
Screens operated at period end                                          2,926       2,881       1,035         959         950
Screens per location                                                      7.6         6.8         7.4         6.7         6.2
Attendance                                                            135,281     126,605      58,387      53,133      53,544
Total revenues                                                     $1,047,146   $ 947,401   $ 480,437   $ 421,613   $ 400,412
Revenues per screen(2)                                             $   359.60   $  389.84   $  464.19   $  439.64   $  421.49
Revenues per location(2)                                           $ 2,579.18   $2,554.45   $3,456.38   $2,948.34   $2,600.08
EBITDA(3)                                                          $  136,047   $ 144,243   $  69,238   $  61,467   $  54,190
Total EBITDA(4)                                                    $  165,590   $ 163,166   $  86,643   $  78,273   $  68,177
Partners' share of Total EBITDA                                    $   11,316   $   8,538   $   6,339   $   4,853   $   4,800
Attributable EBITDA(4)                                             $  154,274   $ 154,628   $  80,304   $  73,420   $  63,377
Total EBITDA per screen(2)                                         $    56.86   $   67.12   $   83.71   $   81.62   $   71.77
Total EBITDA per location(2)                                       $   407.86   $  439.80   $  623.33   $  547.36   $  442.71
Total EBITDA per patron                                            $     1.22   $    1.29   $    1.48   $    1.47   $    1.27
Box Office  revenue per patron                                     $     5.39   $    5.18   $    5.91   $    5.79   $    5.52
Concession revenue per patron                                      $     2.05   $    2.03   $    2.14   $    1.98   $    1.82
Concession  margin                                                       84.1%       84.4%       84.5%       82.8%       80.9%
Ratio of Total EBITDA to Total Revenue                                   15.8%       17.2%       18.0%       18.6%       17.0%
</TABLE>

(1)  Cash flow statement data includes cash flows from long-term investments in
     the partnerships to the extent of our equity interests.

(2)  All per screen and location ratios are calculated based upon screens and
     locations as of period end and include the LST, MJT and Yelmo partnerships,
     except for fiscal years 1999 and 2000 which are calculated using a weighted
     average number of screens and locations.  The use of weighted average
     amounts in fiscal years 1999 and 2000 is due to the inclusion of the
     operations of Cineplex Odeon for the period subsequent to May 14, 1998 and
     the significant number of theatre disposals and newly opened theatres in
     each of these periods.  Use of weighted average number of screens and
     locations for the remaining historical data would not result in
     substantially different data in comparison to the information presented.

(3)  EBITDA consists of earnings before interest, income taxes, depreciation and
     amortization, including equity earnings from   investments in the LST, MJT
     and Yelmo partnerships. EBITDA should not be construed as an alternative to
     measuring operating results or cash flows under U.S. GAAP.  In addition,
     the EBITDA measure presented herein may not be comparable to similarly
     titled measures reported by other companies.

                                      44
<PAGE>

(4)  Total EBITDA consists of EBITDA plus gains/losses on sale/disposals of
     theatres and 100% of the operating results of our partnerships. We believe
     that Total EBITDA is an important measure, in addition to cash flow from
     operations and EBITDA, in viewing our overall liquidity and borrowing
     capacity.

  A reconciliation of EBITDA to Modified EBITDA, Total EBITDA and Attributable
  EBITDA follows:

<TABLE>
<CAPTION>
                                                       YEAR ENDED FEBRUARY 28 OR 29,
                                                       -----------------------------
                                                                (UNAUDITED)
                                            2000      1999            1998         1997      1996
                                           --------  --------        -------      -------   -------

                                                                (IN THOUSANDS)
 <S>                                      <C>       <C>             <C>          <C>       <C>
  EBITDA (as defined above)                $136,047  $144,243        $69,238      $61,467   $54,190
  ADD: Loss on sale/disposals of
   theatres                                   8,388     4,532          7,787        9,951     7,249
                                           --------  --------        -------      -------   -------
  Modified EBITDA, including
   equity earnings                          144,435   148,775         77,025       71,418    61,439
  LESS: Equity earnings included
   in EBITDA                                  1,477     2,685          3,060        2,851     2,862
  ADD: EBITDA from partnerships              22,632    17,076         12,678        9,706     9,600
                                           --------  --------        -------      -------   -------
  Total EBITDA                              165,590   163,166         86,643       78,273    68,177
  LESS: Partners' share of Total EBITDA      11,316     8,538          6,339        4,853     4,800
                                           --------  --------        -------      -------   -------
  Attributable EBITDA                      $154,274  $154,628        $80,304      $73,420   $63,377
                                           ========  ========        =======      =======   =======
 </TABLE>

                                      45
<PAGE>

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

Overview

The following discussion of the Loews Cineplex Entertainment Corporation ("we",
"us" and "our") financial condition and operating results should be read in
conjunction with our Selected Historical Financial Data and our audited
consolidated financial statements for the three years ended February 29, 2000.
The information presented below includes the results of Cineplex Odeon
Corporation ("Cineplex Odeon"), which became our wholly owned subsidiary as of
May 14, 1998 (the "Combination"), for the period from May 15, 1998 through
February 29, 2000 and does not include any results prior to that time unless
otherwise noted.  Where noted, pro forma results compare results for the nine
months ended February 28, 1999 to the nine months ended February 28, 1998 for
Cineplex Odeon.  In addition, where noted, for a more meaningful comparison, we
have referred to the operating performance of theatres we were required to sell,
pursuant to an agreement with the Department of Justice (herein referred to as
the "DOJ theatres"), as a result of the Combination.

This discussion incorporates operating results of partnerships in which we have
an interest to the extent of our equity share as required by the equity method
of accounting, except as otherwise noted.

Results of Operations

FISCAL YEAR ENDED FEBRUARY 29, 2000 COMPARED TO FISCAL YEAR ENDED FEBRUARY 28,
1999

Operating Revenues of approximately $930.4 million for the fiscal year ended
February 29, 2000 were $79.3 million higher than the comparable period of the
prior year.  Operating revenues are generated primarily from box office revenues
and concession sales.  Box office revenues for the fiscal year ended February
29, 2000 of approximately $647.8 million were $60.7 million higher, and
concession revenues of approximately $243.5 million were $15.2 million higher in
comparison to the fiscal year ended February 28, 1999.  These increases in
operating revenues were due primarily to the inclusion of the Cineplex Odeon
theatre operating results for the full twelve month period in the current year
as compared to inclusion from the date of the Combination in the prior year
(partially offset by the reduction in operating revenues related to the sale of
the DOJ theatres), additional revenue from new theatre openings and improvements
in admission revenue per patron.  Excluding the impact of the Cineplex Odeon
operations, our operating revenues increased by $50.8 million, or 12.0%, due
primarily to additional revenue from new theatre openings and improvements in
admission revenue per patron of $.23.  These increases, which aggregated $86.6
million, were partially offset by other reductions in operating revenues, which
aggregated $35.8 million, including the effect of theatre dispositions and a
decline in attendance levels at some of our older locations.

Operating Costs of approximately $733.0 million for the fiscal year ended
February 29, 2000 were approximately $78.5 million higher than for the fiscal
year ended February 28, 1999, due primarily to the inclusion of the operating
results for the Cineplex Odeon theatres for the full twelve month period in the
current year as compared to inclusion from the date of the Combination in the
prior year (partially offset by the reduction in operating costs related to the
sale of the DOJ theatres), increased costs related to the aforementioned
increase in operating revenues and incremental occupancy costs attributable to
new theatre openings. Excluding the impact of the Cineplex Odeon operations, our
operating costs increased $38.5 million, or 12.3%, due primarily to the increase
in operating revenues mentioned above and an increase in film costs resulting
from higher than normal film rent terms for the period primarily associated with
the strong performance of Star Wars - Episode I: The Phantom Menace (circuit-
wide impact estimated at $6.2 million). These increases, which aggregated $67.3
million, were partially offset by lower costs, including the impact of theatre
dispositions and attendance declines at some of our older locations, aggregating
$28.8 million.

General and Administrative Costs of approximately $53.0 million for the fiscal
year ended February 29, 2000 were $5.1 million higher than for the fiscal year
ended February 28, 1999, due primarily to the inclusion of the operating results
for the Cineplex Odeon theatres for the entire period in the current year as
compared to inclusion from the date of the Combination in the prior year (net of
cost savings realized as a result of the Combination), normal inflationary
increases and the additional costs related to the continued development of our
international operations.

                                      46
<PAGE>

Depreciation and Amortization Costs of approximately $113.0 million for the
fiscal year ended February 29, 2000 were $22.3 million higher than for the
fiscal year ended February 28, 1999, due primarily to the inclusion of the
operating results for the Cineplex Odeon theatres for the full twelve month
period in the current year as compared to inclusion from the date of the
Combination in the prior year, incremental depreciation related to investments
in new theatres which commenced operations and incremental goodwill amortization
resulting from the Combination recorded for a full twelve month period in the
current year in comparison to a partial period in the prior year. The
aforementioned increases were partially offset by the effect of theatre
dispositions.

Loss on Sale/Disposals of Theatres of approximately $8.4 million for the fiscal
year ended February 29, 2000 was $3.9 million higher than for the fiscal year
ended February 28, 1999, due primarily to the timing, nature and characteristics
of theatre dispositions.  During fiscal year 2000, we disposed of 55 theatre
locations comprising 219 screens, which primarily were older, obsolete theatres
which generated marginal or negative cash flows.  We will continue to
aggressively dispose of theatres that are underperforming or non-strategic.  See
the Liquidity and Capital Resources section for additional information.

Interest Expense of approximately $72.7 million for the fiscal year ended
February 29, 2000 was $15.5 million higher than for the fiscal year ended
February 28, 1999, due primarily to higher borrowings relating to the
Combination (including debt amounts assumed from Cineplex Odeon) and the impact
of additional borrowings under our Senior Revolving Credit Facility to fund
investments in theatres and joint ventures coupled with the impact of an
increase in the variable borrowing rate relating to our Senior Revolving Credit
Facility.  See the Liquidity and Capital Resources section for additional
information.

Attributable EBITDA for the fiscal year ended February 29, 2000 of $154.3
million was $300 thousand lower in comparison to the fiscal year ended February
28, 1999, due primarily to the aforementioned lower attendance levels
experienced at some of our older locations, the higher than normal film rental
costs as previously discussed, the impact of theatre dispositions including the
DOJ theatres and the additional general and administrative costs relative to the
enhancement of our international operations.  These decreases were partially
offset by other increases in Attributable EBITDA including the impact of new
theatre openings and higher admissions revenue per patron.  Excluding the prior
year impact of the DOJ theatres, Attributable EBITDA for the year ended February
29, 2000 increased $5.5 million or 3.7% over the prior year.  Attributable
EBITDA (earnings before interest, taxes, depreciation and amortization,
gains/losses on asset disposal or sales, and equity earnings included in EBITDA
plus EBITDA from partnerships, net of partners' share) is a measure that
management uses to evaluate our financial performance.  Attributable EBITDA
measures the amount of cash that we have available for investment or other uses
and is used by us as a measure of performance.  Attributable EBITDA is primarily
a management tool and only one measure of financial performance to be considered
by the investment community.  Attributable EBITDA is not an alternative to
measuring operating results or cash flow under U.S. GAAP. In addition, the
Attributable EBITDA measure presented herein may not be comparable to similarly
titled measures reported by other companies.

FISCAL YEAR ENDED FEBRUARY 28, 1999 COMPARED TO FISCAL YEAR ENDED FEBRUARY 28,
1998

Operating Revenues of approximately $851.2 million for the fiscal year ended
February 28, 1999 were $437.7 million higher than the comparable period of the
prior year.  Operating revenues are generated primarily from box office revenues
and concession sales.  Box office revenues for the fiscal year ended February
28, 1999 of approximately $587.1 million were $290.1 million higher, and
concession revenues of approximately $228.3 million were $124.3 million higher
in comparison to the fiscal year ended February 28, 1998.  These increases in
operating revenues were due primarily to the inclusion of the Cineplex Odeon
theatre operating results for the period from May 15, 1998 to February 28, 1999,
additional revenue from new theatre openings and improvements in concession
revenue per patron, which were enhanced as a result of operating efficiencies
realized from the Combination.  Excluding the impact of the Cineplex Odeon
operations, our operating revenues increased by $8.2 million, or 2%, due
primarily to new theatre openings, increases in box office revenue per patron of
$.06 and productivity improvements resulting in an increase in concession
revenue per patron of $.11.  The operating revenues generated for the twelve
months ended February 28, 1999 included Cineplex Odeon operating revenues of
approximately $427.0 million for the period May 15, 1998 to February 28, 1999.
The operating revenues of $427.0 million generated by Cineplex Odeon include
operating efficiencies realized from the continuation of our concession programs
implemented throughout the Cineplex Odeon circuit, which resulted in a pro forma
increase in concession revenue per patron for the nine months of approximately
$.13 (excluding the effect of foreign currency fluctuations) over pro forma
prior year levels.

                                      47
<PAGE>

Operating Costs of approximately $654.5 million for the fiscal year ended
February 28, 1999 were approximately $346.9 million higher than for the fiscal
year ended February 28, 1998, due primarily to the inclusion of the operating
results for the Cineplex Odeon theatres, increased costs related to the
aforementioned increase in operating revenues, and higher occupancy costs
attributable to new theatre openings.  Excluding the impact of the Cineplex
Odeon operations, our operating costs increased $3.4 million, or 1%, due
primarily to the increase in operating revenues mentioned above.  Cineplex Odeon
operating costs for the period May 15, 1998 to February 28, 1999 were $342.2
million.  The operating cost level experienced by Cineplex Odeon for the period
reflects cost savings and operating efficiencies, primarily in concession
operations and theatre operating expenses, resulting from the Combination.  On a
pro forma basis, for the nine months, the Cineplex Odeon concession margin
improved 3.4%, from 80.4% in fiscal year 1998 to 83.8% in fiscal year 1999.

General and Administrative Costs of approximately $47.9 million for the fiscal
year ended February 28, 1999 were $19.0 million higher than for the fiscal year
ended February 28, 1998, due primarily to the inclusion of the operating results
for the Cineplex Odeon theatres for the period May 15, 1998 to February 28, 1999
(net of cost savings realized as a result of the Combination), merit increases
and the additional costs relative to the continued development of our
international operations.

Depreciation and Amortization Costs of approximately $90.7 million for the
fiscal year ended February 28, 1999 were $38.4 million higher than for the
fiscal year ended February 28, 1998, due primarily to the inclusion of the
operating results for the Cineplex Odeon theatres for the period May 15, 1998 to
February 28, 1999, incremental depreciation related to investments in new
theatres which commenced operations and the amortization of goodwill recorded as
a result of the Combination.  Depreciation and amortization costs included
adjustments necessary to reflect the allocation of purchase price to the fair
value of Cineplex Odeon assets acquired and liabilities assumed as part of the
Combination.

Loss on Sale/Disposals of Theatres of approximately $4.5 million for the fiscal
year ended February 28, 1999 was $3.3 million lower than for the fiscal year
ended February 28, 1998, due primarily to the timing, nature and characteristics
of theatre dispositions.  During fiscal year 1999, we disposed of 54 theatre
locations comprising 173 screens including certain Cineplex Odeon theatres
acquired in the Combination.

Interest Expense of approximately $57.2 million for the fiscal year ended
February 28, 1999 was $42.9 million higher than for the fiscal year ended
February 28, 1998, due primarily to higher borrowings relating to the
Combination (including debt amounts assumed from Cineplex Odeon) and the impact
of additional borrowings under our Senior Revolving Credit Facility to fund
investments in theatres and joint ventures.  See the Liquidity and Capital
Resources section for additional information.

Attributable EBITDA for the fiscal year ended February 28, 1999 of $154.6
million increased $74.3 million in comparison to the fiscal year ended February
28, 1998, due primarily to the inclusion of the operating results for the
Cineplex Odeon theatres for the period from May 15, 1998 to February 28, 1999
(partially offset by the impact of the sale of the DOJ theatres), the increase
in concession revenues per patron, cost savings and operating efficiencies as a
result of the integration of the Cineplex Odeon operations and the impact of
newly opened theatres previously discussed.

Liquidity and Capital Resources

Cash flow provided by operating activities for the year ended February 29, 2000
was approximately $57.1 million, which was approximately $25.6 million lower
than for the year ended February 28, 1999.  This decrease is due primarily to
the lower level of cash flow generated from operations and additional interest
expense in comparison to the prior year.  See discussion of operating results
previously presented in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations".  We derive substantially all of our
revenues from cash collected at the box office and through concession sales.
Generally, this provides us with working capital operating float, which is
consistent with the industry, since cash revenues are generally collected in
advance of the payment of related expenses.  Although we have a working capital
deficit, this deficiency has not adversely impacted our ability to meet our
obligations when they become due primarily because of the availability of funds
through our Senior Revolving Credit Facility and the working capital operating
float previously mentioned.

                                      48
<PAGE>

We have experienced, and expect to continue to realize, successful operating
results as a result of investments in theatres (including new builds,
reconfigurations of existing theatres, and the closing of obsolete, unprofitable
or non-competitive theatres).  We expect to continue to increase revenues and
cash flows as a result of reconfiguration of the circuit and from the additional
future investment in North American and international exhibition.  In addition,
we continue to realize cost savings and operational efficiencies as a result of
the Combination.

We are continually seeking other potential revenue opportunities in addition to
box office and concession revenues.  For example, in May 2000, with our broad
demographic audience, we have been able to sign a long-term deal to advertise on
our U.S. screens, estimated to be worth in excess of $60 million.

We continue to close or dispose of certain overlapping theatre locations and
underperforming theatres, including older, obsolete theatres which contribute
only marginally to cash flow or operate at a cash flow loss. Contractual
obligations relating primarily to unfavorable lease terms or contractual buyouts
for certain theatres have been provided for as part of the cost of the merger
transaction.

At February 29, 2000, we had capital spending commitments aggregating
approximately $428.9 million anticipated to be funded over the next three year
period for the future development and construction of 44 theatre properties
comprising 643 screens. At February 29, 2000, our debt balance includes
approximately $145.2 million of capital spending on theatre projects in various
stages of development including theatres which opened during the latter part of
the current fiscal year. In the opinion of management, these capital commitments
and working capital requirements will be funded by free cash flow (recurring
annual earnings before depreciation, amortization and non-cash charges such as
loss on sale/disposals of theatres) generated from operations and by our capital
structure. Additionally, our joint venture in Spain is negotiating a revolving
credit facility with a group of banks in the amount of 100 million Euros which
it expects to have in place by the second quarter of fiscal year 2001. The
proceeds of this facility will be used to fund new theatre construction activity
and operations in Spain. Alternative sources of financing for these capital
commitments and working capital requirements, which we are considering, include
traditional sale-leaseback transactions, developer financed build-to-suit
properties and international lines of credit. The paragraphs below present a
summary of the significant capital transactions (debt and equity) that have been
completed in connection with and subsequent to the Combination.

In connection with the Combination, we entered into a $1 Billion Senior
Revolving Credit Facility with Bankers Trust Company, as administrative agent.
The Senior Revolving Credit Facility, together with an $84.5 million equity
contribution provided by Universal Studios, Inc. ("Universal"), replaced the
Sony Corporation of America ("SCA") Credit Facility and Cineplex Odeon's
existing credit facility, funded cash paid to Sony Pictures Entertainment Inc.
("SPE") and/or its affiliates upon closing of the Combination, and provides
ongoing financing to us to fund working capital requirements and theatre
expansion in North America and internationally. This Senior Revolving Credit
Facility is comprised of two tranches, a $750 million senior secured revolving
credit facility, secured by substantially all of our assets and the assets of
our domestic subsidiaries, and a $250 million uncommitted facility. The Senior
Revolving Credit Facility bears interest at a rate of either the current prime
rate as offered by Bankers Trust Company or an Adjusted Eurodollar rate (as
defined in the credit agreement) plus an applicable margin based on our Leverage
Ratio (as defined in the credit agreement).  Our borrowings under the Senior
Revolving Credit Facility at February 29, 2000 totaled $530 million.

We continue to believe that our new theatre building strategy is an important
part of our strategic plan (see Outlook section below). Our new build strategy
will continue to require significant amounts of capital which we anticipate
funding through a combination of cash flow from operations and from financing
activities. On February 24, 2000, our bank group agreed to a first amendment of
the Senior Revolving Credit Facility. Under terms of the first amendment, the
banks agreed to modify the Maximum Consolidated Leverage Ratio, the Maximum
Total Leverage Ratio and the Minimum Debt Service Coverage Ratio, as defined in
the agreement, for a period of 18 months. These ratios basically address our
ability to access funds under the credit facility as it relates to the Leverage
Ratios and Debt Service Ratio. Following the effectiveness of the amendment, we
anticipate that these new covenant levels will help us to access funds under the
credit facility and support our new theatre building strategy.

In connection with the Combination, we made payments totaling approximately $417
million to SPE and its affiliates representing (i) a cash payment to satisfy all
intercompany indebtedness to affiliates of SCA as of the closing date ($296
million), (ii) a cash payment equal to the fair value of certain transferred
assets ($18 million), and (iii) the payment of a dividend to a subsidiary of SPE
($103 million). The first payment was made on May 14, 1998, and the final
payment, which was as a result of post-closing audit procedures completed during
the third quarter of fiscal 1999, was made on November 17, 1998.

                                      49
<PAGE>

As a result of the Combination, Plitt Theatres, Inc. ("Plitt"), Cineplex Odeon's
U.S. theatre group, became our wholly owned subsidiary.  Plitt had outstanding
$200 million aggregate principal amount of 10 7/8% Senior Subordinated Notes due
2004 (the "Plitt Notes").  The Combination triggered a "change of control" under
provisions of the indenture under which the Plitt Notes were issued (the "Plitt
Indenture").  Accordingly, on June 15, 1998, Plitt commenced an offer to
purchase any and all of the Plitt Notes which it completed on August 4, 1998,
with holders of approximately 97% of the outstanding Plitt Notes tendering.
Payment for the tendered Plitt Notes was made during fiscal year 1999 in the
amount of $215.9 million, or 109.261% of the outstanding principal amount of the
Plitt Notes, plus accrued and unpaid interest.  On May 13, 1999, we called the
remaining 3% of the outstanding Plitt Notes.  Payment for the called Plitt Notes
was made on June 15, 1999 in the amount of $2.5 million, which included the
premium paid to noteholders as well as the accrued and unpaid interest.

On August 5, 1998, we sold to the public in an underwritten offering 10 million
shares of Common Stock at a public offering price of $11.00 per share.  Net
proceeds of approximately $103.0 million were used primarily to repay our
borrowings under the Senior Revolving Credit Facility.  Upon consummation of the
equity offering, our Class A Non-Voting Common Stock held by SPE automatically
converted into an equal number of shares of Common Stock and 3,255,212
additional shares of Common Stock were issued to Universal for no consideration
under anti-dilution provisions of the Company's subscription agreement with
Universal.

On August 5, 1998, we issued $300 million of 8 7/8% Senior Subordinated Notes
due 2008 to qualified institutional buyers in reliance on Rule 144A under the
Securities Act of 1933, as amended (the "Securities Act"). Net proceeds of
$288.6 million were used primarily to repay the Plitt Notes and borrowings under
the Senior Revolving Credit Facility. Subsequently, on November 19, 1998, we
completed an offering to exchange $300 million aggregate principal amount of our
8 7/8% Senior Subordinated Notes Due 2008, which were registered under the
Securities Act for a like principal amount of our privately placed 8 7/8% Senior
Subordinated Notes Due 2008.

In August 1998, we entered into interest rate swap agreements for a period of
four years to hedge a portion of the Senior Revolving Credit Facility variable
interest rate risk.  As a result of these agreements we have fixed a LIBOR rate
of 5.775% per annum (plus the applicable margin) on a notional amount of $250
million of indebtedness.  Each swap has a quarterly reset date for settlements.
We have accounted for these swaps as interest rate hedges.

Since the Combination, we pursued the sale of certain theatres in New York City
and Chicago that were subject to approval by the Department of Justice ("DOJ"),
in accordance with the terms of an agreement reached to permit the Combination.
As a result, during the fourth quarter of fiscal 1999, we sold to Cablevision
Systems Corporation 33 screens in 12 theatres in New York City, in accordance
with the DOJ order, and an additional 14 screens in 4 theatres in the suburban
New York area for aggregate cash proceeds of $87.5 million.  Approximately $87.2
million of these proceeds was utilized to pay down our Senior Revolving Credit
Facility.

Pursuant to the agreement with the DOJ, we were also required to sell 49 screens
at 11 theatre locations in Chicago.  On April 7, 1999, we completed the sale of
30 screens at 8 of these theatre locations to a third party.  This transaction
was not significant to our operating results or financial position.  A portion
of these proceeds was utilized to pay down our Senior Revolving Credit Facility.
Additionally, under the agreement with the DOJ, we are required to sell the
remaining 19 screens at 3 theatre locations in Chicago. No sale of these
locations has occurred and, pursuant to the original agreement with the DOJ, a
trustee has been appointed to effect the sale of these locations.

Although we continue to realize net operating losses ("NOL") for income tax
purposes, we continue to be subject to levels of minimum state and local income
and capital taxes in North America which are not offset by our NOLs.
Additionally, all of our goodwill arising from the Combination will be non-
deductible in determining future income tax expense in the United States.
However, we believe that any additional tax calculated on the add-back of
goodwill amortization will be substantially offset by our NOL carryforward from
prior years.

Outlook

Our growth plan is predicated upon moderate expansion. New theatre investments
in North America and internationally are evaluated in detail prior to commitment
with emphasis placed upon the quality and longevity of the cash flow
contribution and return on investment. The underlying fundamentals of our plan
include: (i) adding new theatres annually in North America which we expect
should generate average ROIs in excess of 20%, (ii) closing obsolete and
underperforming theatres and (iii) continuing to pursue international expansion.

                                      50
<PAGE>
During fiscal years 1990 - 1998, we opened 358 screens at 32 locations
(excluding Cineplex Odeon and joint ventures) at a capital cost of $272.1
million. These theatres currently generate an average return of 22.4% and over
90% of our capital investment in these theatres has already been recouped from
the cash flow of these theatres.  Moreover, the quality of our theatres and
their location in major metropolitan locations position these theatres among the
top grossing theatres in the U.S.  According to A.C. Nielsen Company/EDI, we
operate some of the top grossing theatres in the U.S. including (i) the 13-
screen flagship Sony Theatres Lincoln Square in New York City, home of the first
commercial 3-D IMAX(R) theatre in the United States; (ii) the 18-screen
Universal City at Citywalk, a retail and entertainment complex in Universal
City, California; and (iii) the 20-screen Star Theatres in Southfield, Michigan.
During the current fiscal year we opened three locations in major urban markets
which have consistently ranked in the top 15 grossing theatres in the U.S. from
their dates of opening.  They include the 16-screen Metreon/IMAX theatre in
California and the 15-screen Kips Bay and the 13-screen E-Walk theatres in
Manhattan.

We continue to believe that the new build theatre strategy and our growth
internationally are the fuel for growing our cash flow and profitability in the
long term. Accordingly, we hope to be able to continue to invest in new
theatres. Funding these investments is expected to come from a combination of
the Senior Revolving Credit Facility, cash flow from operations, international
credit markets (primarily to fund our foreign joint ventures) and the
monetization of certain existing theatre properties through sale-leaseback
transactions.

Although our Senior Revolving Credit Facility has a term through August 2003, we
will seek to commence negotiations with our Senior Revolving Credit Facility
bank group during the next 12 - 18 months, or sooner if necessary, to either
extend the terms of the existing agreement or negotiate a new facility subject
to prevailing market conditions.  There can, of course, be no assurance that we
will be able to do so successfully.  Among other things, a continued industry
downturn, a decline in the expected returns from our new build program, our
inability to successfully dispose of underperforming theatres, or significant
changes in the credit markets, will adversely effect our ability to renegotiate
our Senior Revolving Credit Facility on satisfactory terms.  In addition, these
same risk factors could impede our ability to comply with the covenant
requirements, as currently amended, which would also adversely effect our
ability to renegotiate our facility.  If we cannot so refinance our Senior
Revolving Credit Facility, we would have to seek additional capital through
other sources, including asset securitizations or equity offerings.  Equity
offerings could be potentially dilutive to our existing shareholders.  In
addition, if we are unable to obtain favorable financings at the levels we seek,
we would have to significantly reduce our capital spending plans, which will
have a negative impact on our growth and performance.  Finally, pending the
renegotiation of our Senior Revolving Credit Facility, unsatisfactory operating
performance in the near term may require that we seek further relaxation of
certain covenants or implementation of other capital raising transactions (such
as asset sale-leasebacks) to fund our capital investment plans. Any inability to
successfully negotiate interim adjustments to our covenants or otherwise
implement alternative capital transactions would have a material adverse effect
on our performance and may result in a deferral or reduction of our new build
plans.

Effect of Inflation and Foreign Currency

Inflation and foreign currency fluctuations have not had a material effect on
our operations.

Risk Management

The overall objective of our financial risk management program is to seek to
mitigate any potential negative earnings effects from changes in foreign
exchange and interest rates arising in our business activities.  We manage these
financial exposures through operational means and by using various financial
instruments.  These practices may change as economic conditions change. Under
certain market conditions, interest rate swap contracts and forward currency
exchange contracts are used to adjust these interest and currency sensitive
liabilities.

New Accounting Pronouncements

On June 23, 1999, the Financial Accounting Standards Board decided to defer the
effective date of Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activity".  As a result of
this deferral, SFAS No. 133 will be effective for all of our fiscal quarters
beginning March 1, 2001. This statement standardizes the accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, by requiring that we recognize those items as assets or
liabilities in our statement of financial position and measure them at fair
value.  We expect to adopt this standard when required and do not believe that
it will have a significant impact on our operating results or financial
position.

                                      51
<PAGE>

In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition in Financial Statements". SAB No. 101 expresses the views
of the SEC staff in applying generally accepted accounting principles to certain
revenue recognition issues.  We are currently evaluating the impact, if any, of
SAB No. 101 on our financial position or results of operations.

Litigation Matters

From time to time, we are involved in routine litigation and legal proceedings
in the ordinary course of business, such as personal injury claims, employment
matters and contractual disputes.  We believe that the ultimate disposition of
these matters, to the extent not previously provided for, will not have a
material impact on our operating results or financial position.  Certain
litigation and legal proceedings are discussed in footnote 14 of our
consolidated financial statements for the fiscal year ended February 29, 2000.

                                      52

<PAGE>

Theatre Portfolio Changes

The following table indicates the number of theatre locations and screens, and
changes to our theatre circuit configuration as a result of our theatre
reconfiguration program (including screens and locations relating to all of our
joint ventures) for the twelve months ended February 29, 2000:



                                          North
                                         America  International  Total
                                         -------  -------------  -----

Locations
---------

Beginning Balance                         408              15      423
New builds                                 14               1       15
J.V. Investments - International            -               2        2
Dispositions                              (55)              -      (55)
                                        -----             ---    -----
Ending Balance                            367              18      385
                                        =====             ===    =====

Screens
-------

Beginning Balance                       2,762             119    2,881
New builds/expansions                     234               8      242
J.V. Investments - International            -              22       22
Dispositions                             (219)              -     (219)
                                        -----             ---    -----
Ending Balance                          2,777             149    2,926
                                        =====             ===    =====


As a result of our theatre reconfiguration program the average screens per
location has grown from 6.8 screens per location at March 1, 1999 to 7.6 screens
per location at February 29, 2000.  During the twelve month period ended
February 29, 2000 we opened 15 new theatre locations aggregating 237 screens; in
the United States: the Woodridge 18 and the Woodfield 20 in Illinois, the Kips
Bay 15 and the E-Walk 13 in Manhattan, the Richmond Mall 20 and the Randall Park
12 in Ohio, the Plainville 20 in Connecticut, the North Versailles 20 in
Pennsylvania, the Universal Citywalk 20 in Florida, the Metreon/IMAX 16 in
California and the Great Lakes Crossing 25 in Michigan; in Canada: the Grande
(Barrie) 12 and the Niagara Square 10 in Ontario and the Aberdeen Mall 8 in
Kamloops; in Austria we opened the Auhof Center in Vienna comprising 8 screens.
We also expanded one existing theatre location adding five screens.

During fiscal year 2000, we further developed the existing circuit in Spain
called Yelmo Cineplex de Espana. This joint venture opened 2 theatres
aggregating 22 screens during the twelve month period ended February 29, 2000:
the Madrid Sur comprising 9 screens and the Gijon comprising 13 screens.

Additionally, for the twelve months ended February 29, 2000 we disposed
of/closed 55 theatre locations comprising 219 screens.

Forward Looking Statements

This annual report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act, and Section 21E of the Securities Exchange
Act of 1934, each as amended.  All statements included in this annual report,
other than statements of historical facts, may constitute forward-looking
statements.  Although we believe that the expectations reflected in such forward
looking statements are reasonable, we cannot be assured that the expectations
will prove to be correct.

                                      53
<PAGE>

                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                          CONSOLIDATED BALANCE SHEET
           (IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE INFORMATION)
<TABLE>
<CAPTION>

                                                                             FEBRUARY 28 or 29,
                                                                             2000         1999
                                                                          ----------   ----------
<S>                                                                     <C>          <C>
ASSETS
CURRENT ASSETS
 Cash and cash equivalents                                              $   31,735   $   48,174
 Accounts receivable                                                        17,288       28,590
 Inventories                                                                 5,148        4,462
 Prepaid expenses and other current assets                                   6,057        4,041
                                                                        ----------   ----------
   TOTAL CURRENT ASSETS                                                     60,228       85,267

PROPERTY, EQUIPMENT AND LEASEHOLDS, NET                                  1,218,334    1,119,977
OTHER ASSETS
 Investments in and advances to partnerships                                75,932       47,794
 Goodwill, net of accumulated amortization of $42,280 and $28,740          493,390      498,549
 Other intangible assets, net of accumulated amortization of $5,768
     and $4,367                                                             22,704       19,558
 Deferred charges and other assets                                          36,801       35,056
                                                                        ----------   ----------

   TOTAL ASSETS                                                         $1,907,389   $1,806,201
                                                                        ==========   ==========


LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
 Accounts payable and accrued expenses                                  $  201,077   $  175,943
 Deferred revenue                                                            8,625       17,241
 Current maturities of long-term debt and other obligations                  1,409        1,173
 Current portion of capital leases                                           2,740        2,737
                                                                        ----------   ----------
   TOTAL CURRENT LIABILITIES                                               213,851      197,094

LONG-TERM DEBT AND OTHER OBLIGATIONS                                       839,029      690,301
LONG-TERM CAPITAL LEASE OBLIGATIONS                                         59,217       61,997
ACCRUED PENSION AND POST RETIREMENT BENEFITS                                 8,325        9,570
OTHER LIABILITIES                                                          168,165      181,943
                                                                        ----------   ----------

   TOTAL LIABILITIES                                                     1,288,587    1,140,905
                                                                        ----------   ----------

COMMITMENTS AND CONTINGENCIES (Note 14)

STOCKHOLDERS' EQUITY
 Common stock ($.01 par value, 300,000,000 shares authorized;
  58,538,646 shares issued and outstanding in 2000 and 1999)                   586          586
 Common stock-Class B non-voting ($.01 par value, 10,000,000 shares
  authorized; 84,000 shares issued and outstanding in 2000 and 1999)             1            1
 Accumulated other comprehensive income                                       (167)      (5,063)
 Additional paid-in capital                                                671,707      671,707
 Retained deficit                                                          (53,325)      (1,935)
                                                                        ----------   ----------

   TOTAL STOCKHOLDERS' EQUITY                                              618,802      665,296
                                                                        ----------   ----------

   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $1,907,389   $1,806,201
                                                                        ==========   ==========
 </TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.

                                      54
<PAGE>

                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                     CONSOLIDATED STATEMENT OF OPERATIONS
           (IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE INFORMATION)

<TABLE>
<CAPTION>

                                                                  FOR THE YEARS ENDED
                                                                   FEBRUARY 28 or 29,
                                                          2000             1999        1998
                                                     -----------       -----------   -----------
<S>                                                  <C>               <C>           <C>
REVENUES
 Box office                                          $   647,774       $   587,078   $   296,933
 Concession                                              243,511           228,332       104,009
 Other                                                    39,138            35,750        12,568
                                                     -----------       -----------   -----------
                                                         930,423           851,160       413,510
                                                     -----------       -----------   -----------

EXPENSES
 Theatre operations and other expenses                   694,712           618,946       291,421
 Cost of concessions                                      38,245            35,557        16,147
 General and administrative                               53,031            47,882        28,917
 Depreciation and amortization                           113,047            90,720        52,307
 Loss on sale/disposals of theatres                        8,388             4,532         7,787
                                                     -----------       -----------   -----------
                                                         907,423           797,637       396,579
                                                     -----------       -----------   -----------

INCOME FROM OPERATIONS                                    23,000            53,523        16,931
INTEREST EXPENSE                                          72,728            57,216        14,319
                                                     -----------       -----------   -----------

(LOSS)/INCOME BEFORE INCOME TAXES                        (49,728)           (3,693)        2,612
INCOME TAX EXPENSE                                         1,662             2,187         2,751
                                                     -----------       -----------   -----------

NET LOSS                                             $   (51,390)      $    (5,880)  $      (139)
                                                     ===========       ===========   ===========

 Weighted Average Shares Outstanding--basic           58,622,646        47,834,541    20,472,807
                                                     ===========       ===========   ===========
 Weighted Average Shares Outstanding--diluted         58,622,646        47,834,541    20,472,807
                                                     ===========       ===========   ===========

 Loss per Share--basic and diluted                   $      (.88)      $      (.12)  $      (.01)
                                                     ===========       ===========   ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                      55
<PAGE>


                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
           (IN THOUSANDS OF U.S. DOLLARS, EXCEPT SHARE INFORMATION)

<TABLE>
<CAPTION>
                                                   Class A         Class B           Accumulated
                                                      Non-            Non-                 Other Additional  Retained         Total
                                                    voting          voting         Comprehensive    Paid-in  Earnings  Stockholders'
                                Shares  Amount      Shares  Amount  Shares  Amount        Income    Capital /(Deficit)       Equity
                            ---------- ------- ----------- -------  ------  ------  ------------ ---------- ---------- ------------
<S>                         <C>        <C>     <C>         <C>      <C>     <C>     <C>          <C>        <C>        <C>
Balance at March 1, 1997           973 $  195           -  $    -        -  $    -   $        -   $299,082   $ 25,373  $    324,650

 Stock dividend             19,269,348     (2)  1,202,486      12        -       -            -        195       (205)            -
 Comprehensive Income:
  Net loss for the fiscal
  year ended February 28,
   1998                              -      -           -       -        -       -            -          -       (139)         (139)
                                                                                                                          ---------
 Comprehensive Income                -      -           -       -        -       -            -          -          -          (139)
--------------------------- ---------- ------  ----------  ------   ------  ------  -----------  ---------  ---------     ---------

Balance at March 1, 1998    19,270,321    193   1,202,486      12        -       -            -    299,277     25,029       324,511

 Exchange of existing
     Cineplex Odeon shares
     in conjunction with
     the Combination        17,699,914    177           -       -   84,000       1            -    266,579          -       266,757
 Issuance of shares to
     Universal under a
     subscription agreement  4,426,607     44           -       -        -       -            -     84,456          -        84,500
 Issuance of shares to SCA
     affiliates for Star
     Theatres
     and S&J Theatres        2,664,304     27           -       -        -       -            -        (27)         -             -
 Exercise of Stock Options      19,802      -           -       -        -       -            -        366          -           366
 Dividend to SCA affiliates          -      -           -       -        -       -            -    (81,536)   (21,084)     (102,620)
 Issuance of shares in
     Public Offering, net
     of costs and expenses  10,000,000    100           -       -        -       -            -    102,625          -       102,725
 Automatic conversion of
     SCA's Class A
     non-voting shares
     to common shares        1,202,486     12  (1,202,486)    (12)       -       -            -          -          -             -
 Issuance of shares to
     Universal under an
     anti-dilution agreement 3,255,212     33           -       -        -       -            -        (33)         -             -
 Comprehensive Income:
     Foreign currency
     translation adjustment          -      -           -       -        -       -       (4,407)         -          -        (4,407)
     Unrealized loss on
     marketable securities           -      -           -       -        -       -         (656)         -          -          (656)
     Net loss for the fiscal
     year ended
     February 28, 1999                                                                                         (5,880)       (5,880)
                                                                                                                          ---------
Comprehensive Income                 -      -           -       -        -       -            -          -          -       (10,943)
--------------------------- ---------- ------  ----------  ------   ------  ------  -----------  ---------  ---------     ---------

Balance at March 1, 1999    58,538,646    586           -       -   84,000       1       (5,063)   671,707     (1,935)      665,296

 Comprehensive Income:
     Foreign currency
     translation adjustment          -      -           -       -        -       -        4,988          -          -         4,988
     Unrealized loss on
     marketable securities           -      -           -       -        -       -          (92)         -          -           (92)
     Net loss for the fiscal
     year ended
     February 29, 2000               -      -           -       -        -       -            -          -    (51,390)      (51,390)
                                                                                                                          ---------
 Comprehensive Income                -      -           -       -        -       -            -          -          -       (46,494)
--------------------------- ---------- ------  ----------  ------   ------  ------  -----------  ---------  ---------     ---------

Balance at February 29,
 2000                       58,538,646 $  586           -  $    -   84,000  $    1  $      (167) $ 671,707  $ (53,325)    $ 618,802
                            ========== ======  ==========  ======   ======  ======  ===========  =========  =========     =========

</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                      56
<PAGE>

                    LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                         (IN THOUSANDS OF U.S. DOLLARS)


<TABLE>
<CAPTION>
                                                                                            FOR THE YEARS ENDED
                                                                                            FEBRUARY 28 or 29,
                                                                                       2000                 1999       1998
                                                                                  ---------            ---------   --------
<S>                                                                               <C>                  <C>         <C>
OPERATING ACTIVITIES
 Net loss                                                                         $ (51,390)           $  (5,880)  $   (139)
 Adjustments to reconcile net loss to net cash provided by
  operating activities:
  Depreciation and amortization                                                     113,047               90,720     52,307
  Loss on sale/disposals of theatres                                                  8,388                4,532      7,787
  Equity earnings from long-term investments, net of distributions
   received                                                                           3,042                1,506        887
 Changes in operating assets and liabilities:
  Increase in due to SCA affiliates                                                       -                    -      2,487
  Decrease in deferred income taxes                                                       -                    -     (3,812)
  Decrease/(increase) in accounts receivable                                            404                5,292     (1,042)
  Increase/(decrease) in accounts payable and accrued expenses                        9,555               (6,559)     7,249
  Increase in other operating assets and liabilities, net                           (25,949)              (6,900)    (1,539)
                                                                                  ---------            ---------   --------

NET CASH PROVIDED BY OPERATING ACTIVITIES                                            57,097               82,711     64,185
                                                                                  ---------            ---------   --------

INVESTING ACTIVITIES
 Proceeds from sale of assets                                                         3,880               98,192          -
 Investment in/advances to partnerships, net of repayments                          (31,180)             (17,537)    (9,008)
 Merger related costs                                                                (5,853)             (25,198)         -
 Capital expenditures                                                              (185,350)            (147,198)   (42,431)
                                                                                  ---------            ---------   --------

NET CASH USED IN INVESTING ACTIVITIES                                              (218,503)             (91,741)   (51,439)
                                                                                  ---------            ---------   --------

FINANCING ACTIVITIES
 Repayment of debt due to SCA affiliate                                                   -             (299,487)    (5,333)
 Proceeds from senior credit facility, net of repayments and
   deferred financing fees                                                          151,025              224,044          -
 Repayment of long-term debt                                                         (3,758)             (34,644)      (509)
 Repayment of Plitt Theatre, Inc. notes                                              (2,300)            (215,907)         -
 Proceeds of senior subordinated note offering, net of deferred financing fees            -              289,263          -
 Proceeds from issuance of common stock, net of offering expenses                         -              102,991          -
 Proceeds from issuance of common stock to Universal upon Combination                     -               84,500          -
 Dividend paid to SCA affiliate in Combination                                            -             (102,620)         -
                                                                                  ---------            ---------   --------

NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES                                    144,967               48,140     (5,842)
                                                                                  ---------            ---------   --------

INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS                                    (16,439)              39,110      6,904
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                       48,174                9,064      2,160
                                                                                  ---------            ---------   --------

CASH AND CASH EQUIVALENTS AT END OF YEAR                                          $  31,735            $  48,174   $  9,064
                                                                                  =========            =========   ========

Supplemental Cash Flow Information:
 Income taxes paid, net of refunds received                                       $   1,735            $   3,229  $   1,934
                                                                                  =========            =========  =========
 Interest paid (including nil, $6,942 and $14,638 paid to SCA affiliates)         $  70,716            $  54,583  $  15,823
                                                                                  =========            =========  =========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

                                      57
<PAGE>

                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)


NOTE 1 - ORGANIZATION AND BUSINESS
-----------------------------------

Loews Cineplex Entertainment Corporation ("LCP" or the "Company"), is a major
motion picture theatre exhibition company with operations in North America and
Europe. The Company operates under the Loews Theatres, Sony Theatres, Cineplex
Odeon Theatres, Star Theatres, Magic Johnson Theatres and Yelmo Cineplex
Theatres marquees. As of February 29, 2000, LCP owns, or has interests in, and
operates 2,926 screens at 385 theatres in 22 states, the District of Columbia, 6
Canadian provinces, Spain, Hungary, Turkey and Austria. The Company's principal
markets include New York, Boston, Chicago, Baltimore, Dallas, Houston, Detroit,
Los Angeles, Seattle and Washington D.C. in the U.S., Toronto, Montreal and
Vancouver in Canada, and Madrid, Spain. The Company holds a 50% partnership
interest in each of the Yelmo Cineplex de Espana ("Yelmo"), Loeks-Star Theatres
("LST") and Magic Johnson Theatres ("MJT") partnerships. Yelmo, LST and MJT hold
interests in and operate 28 locations, comprising a total of 316 screens.
Screens and locations for the partnerships are included in the Company amounts
referred to above.

Business Combination

On May 14, 1998, pursuant to the Amended and Restated Master Agreement (the
"Master Agreement") dated September 30, 1997, LCP (formerly known as LTM
Holdings, Inc.) and Cineplex Odeon Corporation ("Cineplex Odeon"), another major
motion picture exhibitor with operations in the U.S. and Canada, combined (the
"Combination"). As called for in the Master Agreement, the outstanding common
shares of Cineplex Odeon were exchanged for LCP shares on a ten for one basis.
Universal Studios, Inc. ("Universal"), a major shareholder of Cineplex Odeon,
contributed cash of $84.5 million to the Company in exchange for additional
shares of stock in the Company. Sony Pictures Entertainment Inc. ("SPE") and its
affiliates received a cash payment of approximately $417 million representing
(i) a cash payment to satisfy all intercompany indebtedness to affiliates of
Sony Corporation of America ("SCA") as of the closing date, (ii) a cash payment
equal to the fair value of certain transferred assets, and (iii) the payment of
a dividend to a subsidiary of SPE. The consolidated financial statements include
the operating results of Cineplex Odeon following the date of Combination (May
14, 1998).

At the closing of the Combination, the Company issued 7,264,642 shares of Common
Stock and 80,000 shares of Class B Non-Voting Common Stock to Universal,
4,324,003 shares of Common Stock and 4,000 shares of Class B Non-Voting Common
Stock to the Charles Rosner Bronfman Family Trust and certain related
shareholders (the "Claridge Group") and 6,111,269 shares of common stock to the
other shareholders of record of Cineplex Odeon, for an aggregate value of
approximately $266.6 million, in exchange for the outstanding shares of Cineplex
Odeon and its wholly-owned subsidiary, Plitt Theatres, Inc. ("Plitt"). In
addition, the Company issued 4,426,607 shares of common stock to Universal for
consideration of $84.5 million as required under a subscription agreement, and
2,664,304 shares of Common Stock to SPE in connection with the transfer by SPE
of its interest in Star Theatres of Michigan, Inc. ("Star") and S&J Theatres,
Inc. ("S&J") to the Company.

On August 5, 1998, the Company sold to the public pursuant to a registered
public offering 10 million shares of Common Stock. Upon consummation of this
offering, the Company's Class A Non-Voting Common Stock held by SPE
automatically converted into an equal number of shares of Common Stock, and
3,255,212 additional shares of Common Stock were issued to Universal for no
consideration under anti-dilution provisions of the Company's subscription
agreement with Universal. As a result of the public offering, SPE, Universal and
the Claridge Group own 39.5%, 25.5% and 7.4%, respectively, of the Company's
common stock.

The Combination has been accounted for under the purchase method of accounting,
and, accordingly, the cost to acquire Cineplex Odeon has been allocated to the
assets acquired and liabilities assumed of Cineplex Odeon based on their
respective fair values, with the excess purchase price allocated to goodwill.
The Company arranged for an independent valuation and other studies required to
determine the fair value of the assets acquired and liabilities assumed. These
valuations and studies were completed during the first quarter of fiscal 2000.

                                      58
<PAGE>

                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)


Since the Combination, the Company pursued the sale of certain theatres in New
York City and Chicago that were subject to approval by the Department of Justice
("DOJ"), in accordance with the terms of an agreement reached to permit the
Combination. As a result, during the fourth quarter of fiscal 1999, the Company
sold to Cablevision Systems Corporation 33 screens in 12 theatres in New York
City, in accordance with the DOJ order, and an additional 14 screens in 4
theatres in the suburban New York area, for aggregate cash proceeds of $87.5
million. Approximately $87.2 million of these proceeds was utilized to pay down
the Company's Senior Revolving Credit Facility.

Under the agreement with the DOJ, the Company was also required to sell 49
screens at 11 theatres in Chicago. On April 7, 1999, the Company completed the
sale of 30 screens at 8 of these theatre locations to a third party. This
transaction was not significant to the Company's operating results or financial
position. A portion of these proceeds was utilized to pay down the Senior
Revolving Credit Facility. Additionally, under the agreement with the DOJ, the
Company is required to sell the remaining 19 screens at 3 theatre locations in
Chicago. No sale of these locations has occurred and, pursuant to the original
agreement with the DOJ, a trustee has been appointed to effect the sale of these
locations.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------------------

Basis of Presentation and Consolidation: The consolidated financial statements
include the accounts of Loews Cineplex Entertainment Corporation and its wholly-
owned subsidiaries. As part of the Combination, SPE and its affiliates have
transferred their interest in S&J, which owned a 50% interest in MJT, and Star,
which indirectly owned a 50% interest in LST, and certain other exhibition
assets to subsidiaries of the Company. As these transfers were among parties
under common control, the Company has included the assets, liabilities and
results of operations of S&J and Star in the financial statements for all
periods included herein on an as if pooled basis. Majority owned companies are
consolidated and 50% or less owned investments in which the Company has
significant influence are accounted for under the equity method of accounting.
Significant intercompany accounts and transactions have been eliminated.

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. Actual results could differ from those estimates.

Revenues and Expenses: Substantially all revenues are recognized when admission
and concession sales are received at the theatres. Other revenues include the
Company's equity earnings from long-term investments. 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.

Cash and Cash Equivalents: The Company considers all operating funds held in
financial institutions, cash held by the theatres and all highly liquid
investments with original maturities of three months or less when purchased to
be cash equivalents.

Inventories: Inventories of concession products are stated at the lower of cost
or market. Cost is determined by the first-in, first-out method.

Long-term Investments In/Advances to Partnerships: Investments in partnerships
are recorded under the equity method of accounting. Under the equity method the
cost of the investment is adjusted to reflect the Company's proportionate share
of the partnerships' operating results. Advances to partners represent advances
to respective partnerships, in which LCP has interests, for working capital and
other capital requirements.

Deferred Charges and Other Assets: Deferred charges and other assets consist
principally of debt issuance costs, long term receivables and marketable equity
securities. All marketable equity securities are designated as available for
sale and are reported at the lower of cost or market, with unrealized gains and
losses included in stockholders' equity, net of applicable taxes. Unrealized
losses that are other than temporary are recognized in earnings. Amortization of
debt issuance costs is calculated on a straight-line basis over the terms of the
underlying loan agreements (life of approximately five to ten years) and is
included as a component of interest expense.

                                      59
<PAGE>

                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)


Fair Value of Financial Instruments: Cash, accounts receivable, accounts
payable, accrued liabilities and notes payable are reflected in the financial
statements at carrying value which approximates fair value. Long-term debt
principally consists of obligations which carry floating interest rates that
approximate current market rates.

Property, Equipment and Leaseholds: Property, equipment and leaseholds are
stated at historical cost less accumulated depreciation and amortization. The
Company has acquired the rights to use certain theatre facilities under
previously existing operating leases from other motion picture exhibitors.
Purchase values assigned to these theatre lease rights acquired are capitalized
and amortized over future periods.

Depreciation and amortization are provided on the straight-line basis over the
following useful lives:

    Buildings                       30-40 years
    Equipment                       5-10 years
    Leasehold Improvements          Life of lease but not in excess of useful
                                    lives or 40 years
    Theatre Lease Rights            Life of lease but not in excess of useful
                                    lives or 40 years

Interest costs during the period of development and construction of new theatre
properties are capitalized as part of the historical cost of the asset. Interest
capitalized during the fiscal years ended February 28 or 29, 2000, 1999 and 1998
was $3,323, $2,422 and $741, respectively.

Goodwill and Other Intangible Assets: Goodwill, which represents the excess of
the purchase price over the fair values of net assets acquired, is amortized
using the straight-line method over 40 years. Other intangible assets, including
management agreements and tradenames, are amortized over their estimated useful
lives which range from 5 to 40 years. Management continuously assesses the
recoverability of the net unamortized goodwill and other intangibles by
determining whether the amortization of these balances over the remaining life
can be recovered through projected future undiscounted income from operations.
Amortization expense charged to operations amounted to $13,540, $10,751 and
$1,789 for goodwill and $1,401, $1,202 and $335 for other intangible assets for
the years ended February 28 or 29, 2000, 1999 and 1998, respectively.

Long-Lived Assets: Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed Of", requires the recoverability of the carrying value of long-lived
assets to be evaluated when changes occur in historical operating results,
future projections and economic and competitive factors, among others. The
Company continuously assesses the recoverability of its long-lived assets in
accordance with SFAS No. 121, by determining whether the carrying value of these
balances over the remaining life can be recovered through undiscounted projected
future cash flows primarily on a theatre-by-theatre basis. In making its
assessment, the Company also considers the useful lives of its assets, the
competitive landscape in which those assets operate, the introduction of new
technologies within the industry and decay factors (attendance erosion) in
theatre attendance. Based upon these measures, management has determined that
the carrying value of its long-lived assets is recoverable and fairly stated.

Stock Based Compensation: As permitted under SFAS No. 123, "Accounting for
Stock-Based Compensation", the Company elected to account for its stock based
compensation plans under the provisions of Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees", and related
interpretations. The Company has complied with the disclosure requirements of
SFAS No. 123 (see Note 13 to these Consolidated Financial Statements).

Income Taxes: Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to the differences between the financial statement
carrying amounts, less applicable allowances, of existing assets and liabilities
and their respective tax bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

                                      60
<PAGE>

                    LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)


Foreign Currency Translation: The effect of translating foreign currency
financial statements into U.S. dollars is included in the accumulated other
comprehensive income account in stockholders' equity. Gains and losses on
foreign currency transactions are not significant to operations and have been
included in operating expenses. Under certain market conditions and as of the
date of these financial statements, forward currency contracts are used to
manage changes in foreign exchange rates. These forward currency contracts are
accounted for as hedges of contractual foreign currency commitments.

Earnings per Share: SFAS No. 128, "Earnings Per Share", establishes standards
for computing and presenting earnings per share ("EPS") which applies to
entities with publicly held common stock or potential common stock.  The Company
calculates EPS in accordance with SFAS No. 128 which states that basic EPS is
computed by dividing net income/(loss) by the weighted average number of common
shares outstanding for the period, and diluted EPS is computed similarly to
basic EPS while giving effect to the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock.  However, pursuant to SFAS No. 128, the computation of
diluted EPS shall not assume conversion or exercise of securities that would
have an antidilutive effect on earnings per share.  Since including potential
common shares in the diluted per share computation always results in an
antidilutive per share amount when an entity has a net loss, we have therefore
not calculated diluted EPS for each of the three years ended February 29, 2000
as presented in the Consolidated Statement of Operations.

New Accounting Pronouncements:

On June 23, 1999, the Financial Accounting Standards Board decided to defer the
effective date of SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activity".  As a result of this deferral, SFAS No. 133 will be effective
for all of our fiscal quarters beginning March 1, 2001. This statement
standardizes the accounting for derivative instruments, including certain
derivative instruments embedded in other contracts, by requiring that we
recognize those items as assets or liabilities in the statement of financial
position and measure them at fair value.  The Company expects to adopt this
standard when required and does not believe that it will have a significant
impact on its operating results or financial position.

In December 1999, the SEC issued Staff Accounting Bulletin ("SAB") No. 101,
"Revenue Recognition in Financial Statements". SAB No. 101 expresses the views
of the SEC staff in applying generally accepted accounting principles to certain
revenue recognition issues. The Company is currently evaluating the impact, if
any, of SAB No. 101 on its financial position or its results of operations.

NOTE 3 - ACCOUNTS RECEIVABLE
----------------------------

As of February 29, 2000, accounts receivable of $17.3 million consists of trade
receivables of $9.9 million, receivables related to construction advances of
$4.0 million and other receivables of $3.4 million. As of February 28, 1999,
accounts receivable of $28.6 million consists of trade receivables of $9.6
million, receivables related to construction advances of $11.5 million and other
receivables of $7.5 million.

NOTE 4 - PROPERTY, EQUIPMENT AND LEASEHOLDS
-------------------------------------------

Property, equipment and leaseholds consists of:


                                                     FEBRUARY 28 or 29,
                                                         2000        1999
                                                   ----------  ----------
Land                                               $   85,274  $   72,360
Buildings                                             474,386     372,797
Equipment                                             301,010     239,655
Leasehold Improvements                                204,496     206,001
Theatre Lease Rights                                  449,254     478,841
Construction in Progress                               73,148      82,363
                                                   ----------  ----------
     TOTAL PROPERTY, EQUIPMENT AND LEASEHOLDS       1,587,568   1,452,017
Less: Accumulated Depreciation and Amortization       369,234     332,040
                                                   ----------  ----------

                                                   $1,218,334  $1,119,977
                                                   ==========  ==========

                                      61
<PAGE>

                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)


The cost of property and equipment under capital leases amounted to $59.5
million and $34.2 million, with accumulated depreciation of $10.1 million and
$5.8 million as of February 29, 2000 and February 28, 1999, respectively.
Depreciation expense of property and equipment under capital leases is included
in depreciation and amortization expense in the Consolidated Statement of
Operations.

The Company continues to review the assets and related intangibles of its motion
picture theatres for impairment in accordance with the provisions of SFAS No.
121. As a result of this process, the Company has recognized a provision for
asset impairment of $5.5 million, $4.8 million and $4.4 million for the years
ended February 29, 2000, February 28, 1999, and February 28, 1998, respectively,
which is included in depreciation and amortization expense in the Consolidated
Statement of Operations.

NOTE 5 - LONG-TERM INVESTMENTS IN AND ADVANCES TO PARTNERSHIPS
--------------------------------------------------------------

The Company's long-term investments consist of a 50% interest in LST which
operated 9 theatres with 135 screens, MJT which operated 4 theatres with 51
screens, and Yelmo which operated 15 theatres with 130 screens at February 29,
2000. The Company accounts for these investments following the equity method of
accounting.

The Company's carrying value of its investment in LST was approximately $13.5
million and $13.4 million, its investment in MJT was approximately $19.1 million
and $16.0 million, and its investment in Yelmo was $43.3 million and $18.5
million, at February 29, 2000 and February 28, 1999, respectively.  The
investments were in the form of equity, interest bearing notes and working
capital advances.

The Company's equity share of earnings in LST, MJT and Yelmo for the fiscal
years ended February 28 or 29, 2000, 1999 and 1998 was approximately $1.5
million, $2.7 million and $2.9 million, respectively.

The following table presents condensed financial information for the LST, MJT
and Yelmo partnerships on a combined basis:

<TABLE>
<CAPTION>
                                            YEAR ENDED FEBRUARY 28 or 29,
                                              2000        1999        1998
                                          --------     -------     -------
<S>                                       <C>          <C>         <C>

Box Office                                $ 81,531     $68,410     $48,036
Concessions/Other                           37,209      30,606      22,461
                                          --------     -------     -------
Total Revenues                             118,740      99,016      70,497
Total Operating Costs                       91,319      78,289      55,768
General and Administrative Costs             4,789       3,651       2,051
                                          --------     -------     -------
                                            22,632      17,076      12,678
Depreciation and Amortization               10,351       6,905       5,459
                                          --------     -------     -------
Income from Operations                    $ 12,281     $10,171     $ 7,219
                                          ========     =======     =======
Net Income                                $  2,954     $ 5,370     $ 6,120
                                          ========     =======     =======
 </TABLE>

                                      62
<PAGE>

                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)


NOTE 6 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES
-----------------------------------------------

Accounts payable and accrued expenses consist of:

                                            FEBRUARY 28 OR 29,
                                             2000           1999
                                         --------       --------

Accounts payable -- trade                $ 96,783       $ 74,065
Accrued occupancy                          19,452         19,634
Other accrued expenses                     84,842         82,244
                                         --------       --------

                                         $201,077       $175,943
                                         ========       ========

At February 29, 2000 and February 28, 1999, other accrued expenses include $21.5
million and $28.1 million, respectively, of contractual obligations and other
liabilities related to the Combination. Additionally, approximately $104.5
million and $123.3 million of contractual obligations related to the Combination
are included in Other Long-term Liabilities at February 28 or 29, 2000 and 1999,
respectively. These contractual obligations relate to unfavorable above market
lease obligations or contractual buyouts for certain theatres identified in the
Cineplex Odeon circuit at the time of the acquisition and were included in the
acquisition cost of the Combination.

NOTE 7 - LONG-TERM DEBT AND OTHER OBLIGATIONS
----------------------------------------------

Long-term debt and other obligations consist of:

<TABLE>
<CAPTION>
                                                                                     FEBRUARY 28 OR 29,
                                                                                     2000            1999
                                                                                 --------        --------
<S>                                                                              <C>             <C>
Senior Revolving Credit Facility due 2003 - average interest rate of 7.48%
 and 6.42% at February 29, 2000 and February 28, 1999, respectively              $530,000        $378,000
Senior Subordinated Notes with interest at 8.875% due 2008, net of
 original issue discount                                                          297,940         297,695
Plitt Theatres, Inc. Notes with interest at 10.875% due 2004                            -           2,300
Mortgages payable - non-recourse, payable from 1998 through 2008
 Interest rates from 8.5% to 11.5%                                                 12,498          13,479
                                                                                 --------        --------
                                                                                  840,438         691,474
Less: Current maturities                                                            1,409           1,173
                                                                                 --------        --------
                                                                                 $839,029        $690,301
                                                                                 ========        ========


</TABLE>

Annual maturities of obligations under long-term debt for the next five fiscal
years and thereafter are set forth as follows:

YEAR ENDING FEBRUARY 28 or 29,                     DEBT
-----------------------------                      ----
    2001                                       $  1,409
    2002                                          4,611
    2003                                        530,264
    2004                                            228
    2005                                            252
    Thereafter                                  303,674
                                               --------
                                               $840,438
                                               ========

On May 14, 1998, in connection with the Combination, the Company entered into a
$1 Billion Senior Revolving Credit Facility with Bankers Trust Company, as
administrative agent. The Senior Revolving Credit Facility has been used to
repay all intercompany amounts due to SCA and affiliates and has replaced
Cineplex Odeon's existing credit facility. This Senior Revolving Credit Facility
is comprised of a $750 million senior secured revolving credit facility, secured
by substantially all of the assets of LCP and its U.S.

                                      63
<PAGE>

                    LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)


subsidiaries, and a $250 million uncommitted facility. The Senior Revolving
Credit Facility bears interest at a rate of either the current prime rate as
offered by Bankers Trust Company or an Adjusted Eurodollar rate plus an
applicable margin based on the Company's Leverage Ratio (as defined). The Senior
Revolving Credit Facility includes various financial covenants, including: (i)
limitations on indebtedness, (ii) limitations on dividends and other payment
restrictions, (iii) limitations on asset sales, (iv) limitations on transactions
with affiliates, (v) limitations on the issuance and sale of capital stock of
subsidiaries, (vi) limitations on lines of business, (vii) limitations on
merger, consolidation or sale of assets and (viii) certain reporting
requirements. An annual commitment fee of 0.25% on unused amounts is payable
under the Senior Revolving Credit Facility. On February 24, 2000, the Company's
bank group agreed to a first amendment of the Senior Revolving Credit Facility.
Under terms of the first amendment, the banks agreed to modify the Maximum
Consolidated Leverage Ratio, the Maximum Total Leverage Ratio and the Minimum
Debt Service Coverage Ratio, as defined in the agreement, for a period of 18
months.

On August 5, 1998, the Company issued $300 million of 8 7/8% Senior Subordinated
Notes due 2008. These notes include various financial covenants substantially
similar to those of the Senior Revolving Credit Facility.

On August 18, 1998, the Company entered into interest rate swap agreements, with
an aggregate notional amount of $250 million. Under these swap agreements the
Company receives a floating rate of interest based on three month LIBOR, which
resets quarterly, and the Company pays a fixed rate of interest, each quarter,
for the terms of the respective agreements. The terms of these agreements are
for a period of four years and the weighted average fixed rate the Company pays
is 5.775%. The Company has entered into these agreements solely to hedge its
interest rate risk under its floating rate bank debt. These interest rate swaps
are entered into for hedging purposes and as such are designated and effective
as a hedge against the risk of increased interest rates. The differential
between the amounts paid and received is recorded as an adjustment to interest.
For the year ended February 29, 2000, these interest rate swaps did not have a
material impact on the Company's operating results or financial position.

NOTE 8 - LEASES
-----------------

The Company conducts a significant part of its operations in leased premises.
Leases generally provide for minimum rentals plus percentage rentals based upon
sales volume and also require the tenant to pay a portion of real estate taxes
and other property operating expenses.  Lease terms generally range from 20 to
40 years and contain various renewal options, generally in intervals of 5 to 10
years.

Future minimum rental commitments at February 29, 2000 under the above mentioned
operating and capital leases, having an initial or remaining non-cancelable
lease term of one or more years are set forth as follows:


                                                OPERATING      CAPITAL
YEAR ENDING FEBRUARY 28 or 29,                    LEASES        LEASES
----------------------------------------        ----------     --------
   2001                                         $  119,702     $  8,067
   2002                                            116,660        7,890
   2003                                            116,033        7,691
   2004                                            114,116        7,622
   2005                                            111,163        7,446
   Thereafter                                    1,178,728       75,701
                                                ----------     --------

   Total Minimum Rentals                        $1,756,402      114,417
                                                ==========

  Less Amount Representing Interest                              52,460
                                                               --------

  Present Value of Net Minimum Rentals                         $ 61,957
                                                               ========

Minimum rental expense related to operating leases was $102,888, $74,610 and
$31,368 for the years ended February 28 or 29, 2000, 1999 and 1998,
respectively. Percentage rental expense for those same periods was $7,521,
$7,265 and $3,449, respectively.

                                      64
<PAGE>

                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)

NOTE 9 - EMPLOYEE AND POSTRETIREMENT BENEFIT PLANS
---------------------------------------------------

The Company accrues amounts ranging from 17% to 23% of gross salaries in the
U.S. and 10% of gross salaries in Canada for fringe benefits (i.e., Medical,
Dental, FICA and Savings Plan Contributions), which approximates actual costs
incurred.

Profit Sharing and Savings Plan

The Company has a defined contribution Profit Sharing and Savings Plan ("Savings
Plan") for substantially all eligible salaried employees in the United States
and Canada under which the Company contributes by matching 50% of the employee
contribution up to a maximum of 6% of the statutory limit of eligible
compensation. A participant may elect to contribute up to an additional 10% of
eligible compensation (subject to the statutory limit), however this amount is
not eligible for matching contributions by the Company. The Savings Plan also
provides for special profit sharing contributions, the annual amount of which is
determined at the discretion of the Company. The expense recorded by the Company
related to contributions to the Savings Plan aggregated $2,377, $1,922 and
$1,670 for the years ended February 28 or 29, 2000, 1999, and 1998,
respectively.

Employee Health and Welfare and Other Post-retirement Benefits

The Company provides health and welfare benefits and post-retirement benefits to
eligible executives and employees in the United States and Canada. The Company
has accrued post-retirement benefits of $3,640 and $3,846 at February 29, 2000
and February 28, 1999, respectively, and recognized an annual cost of nil, $162
and $339 for the years ended February 28 or 29, 2000, 1999, and 1998,
respectively. The cost and accrued benefit obligations are calculated using a
discount rate of 8% and 7% for the years ended February 29, 2000 and February
28, 1999, respectively, and a health care trend rate of 5% for fiscal years 1999
and 2000.

Pension Plans

As a result of the Combination, the Company acquired the U.S. and Canadian
pension plans previously administered by Cineplex Odeon.

Cineplex Odeon had a defined benefit pension plan covering all full-time
employees in the United States which provides benefits based on years of service
and the employees' compensation for certain periods during the last years of
employment. During the prior fiscal year, the Company decided to freeze benefits
under this plan and convert the plan to a cash balance plan. This plan was
restructured as of January 1, 1999 and all eligible employees previously covered
under the plan became eligible to participate in the Company's Savings Plan. The
fair value of the pension plan assets acquired and the projected benefit
obligations assumed as a result of the Combination were $6,679 and $12,779,
respectively. As of February 28 or 29, 2000 and 1999, the pension fund assets
were $7,256 and $7,276, respectively, the projected benefits obligations were
$11,137 and $13,000, respectively, and the Company had accrued pension costs of
$4,661 and $5,724, respectively, associated with this plan. Additionally, the
Company has recognized an annual cost of $402 and nil for the year ended
February 29, 2000 and February 28, 1999, respectively. The cost and accrued
benefit obligations associated with the pension plan were calculated utilizing a
discount rate of 8% and 7% for the years ended February 29, 2000 and February
28, 1999, respectively, and a long-term rate of return of 8.5% for fiscal years
1999 and 2000.

The Company has a pension plan covering substantially all full-time Canadian
employees. Prior to January 1, 1993 this plan was a defined benefit plan, and
effective on that date it was converted to a defined contribution plan. At the
date of conversion, benefits under the defined benefit plan were frozen. The
actuarial estimate for the plan covering Canadian employees indicate a surplus
of pension fund assets over accrued benefits of approximately $1,538 and $1,485
as of February 29, 2000 and February 28, 1999. The cost and accrued benefit
obligations associated with the pension plan were calculated utilizing a
discount rate of 7% and a long-term rate of return of 7% for fiscal years 1999
and 2000.

Other Plans

Various employees are covered by union sponsored pension plans. The
contributions are determined in accordance with provisions of negotiated labor
contracts. Under these agreements, benefit expenses aggregated $1,790, $1,731
and $1,204 for the years ended February 28 or 29, 2000, 1999 and 1998,
respectively.

                                      65
<PAGE>

                    LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)

The Company also has a non-funded deferred compensation plan for certain
employees. As of February 29, 2000 and February 28, 1999, liabilities under this
plan were $496 and $99, respectively.

NOTE 10 - RELATED PARTY TRANSACTIONS
------------------------------------

The Company has exhibited films distributed by SPE in the past, and expects to
continue to do so in the future. Payments are based on negotiated and/or
contracted rates established on terms that management believes are on an arm's-
length basis. At February 29, 2000 and February 28, 1999, the Company owed SPE
and affiliates $6,186 and $1,950, respectively, under film licensing agreements.
The Company has recognized film rental expenses relating to the exhibition of
films distributed by SPE in the amount of $38,449, $33,799 and $30,399, for the
years ended February 28 or 29, 2000, 1999 and 1998, respectively. Additionally,
the Company leases a theatre property from an affiliate of SCA. Total occupancy
related payments during fiscal year 2000 were $1,967.

The Company has exhibited films distributed by Universal in the past, and
expects to continue to do so in the future. Payments are based on negotiated
and/or contracted rates established on terms that management believes are on an
arm's-length basis. At February 29, 2000 and February 28, 1999, the Company owed
Universal $5,221 and $1,814, respectively, under film licensing agreements. The
Company has recognized film rental expenses relating to the exhibition of films
distributed by Universal in the amount of $51,266 and $20,222 for the years
ended February 28 or 29, 2000 and 1999, respectively.

At February 28, 1998, the Company had debt due to SCA affiliates totaling $296.3
million. This amount was comprised of a promissory note and working capital
advances. The debt due to SCA affiliates carried interest at an intercompany
interest rate determined by SCA (5.9% at February 28, 1998) and was due October
31, 1998. This amount was repaid in conjunction with the closing of the
Combination on May 14, 1998. Interest expense incurred on the "Debt due to SCA
Affiliates" was nil, $6,942 and $14,638 for the years ended February 28 or 29,
2000, 1999 and 1998, respectively.

In addition to the above related party transactions, SCA and LCP provided
certain services to one another, primarily relating to activities prior to the
Combination. SCA affiliates provided certain services relating to the following
activities: Insurance and risk management services, including excess liability,
workman's compensation and officers and directors coverage among others,
benefits administration and payroll processing, and tax processing services. LCP
provided certain services to SCA affiliates relating to the following
activities: Finance, Administrative and MIS support. The net amount charged to
the Company for these services amounted to $143, $610 and $570 for the years
ended February 28 or 29, 2000, 1999 and 1998, respectively. For the years ended
February 28 or 29, 2000, 1999 and 1998, the Company was also charged by a SCA
affiliate for certain administrative related services in the amounts of nil,
$115 and $1,835, respectively. The Company believes the costs of the above
mentioned services are commensurate with that which would be charged by third
parties for similar services.

NOTE 11 - INCOME TAXES
-----------------------

The Company accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes". This statement applies to an asset and liability approach that requires
the recognition of deferred tax assets and liabilities with respect to the
expected future tax consequences of events that have been recognized in the
consolidated financial statements and tax returns.

For periods prior to the closing of the Combination, the Company filed a
consolidated tax return with SCA for federal income tax purposes and combined
tax returns with SCA in certain state and local jurisdictions. However, for
financial reporting purposes, the Company calculated federal, state and local
income taxes as if it filed its returns on a stand-alone basis. Any state or
local income tax liability resulting from separately filed income tax returns by
the Company was recorded as state and local income taxes payable. For the period
after the closing of the Combination and all future periods, the Company will
file a consolidated tax return for federal income tax purposes, and appropriate
state and local tax returns, independent of SCA.

                                      66
<PAGE>

                    LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)


The provision for income taxes consists of the following:

                                  FEBRUARY 29,  FEBRUARY 28,   FEBRUARY 28,
                                          2000          1999           1998
                                  ------------  ------------   ------------
Current tax expense/(benefit)
 U.S. Federal                           $    -       $     -        $ 4,013
 State and Local                           593        (1,321)         2,551
     Foreign                             1,069           618              -
                                        ------       -------        -------
   Total Current                         1,662          (703)         6,564
Deferred tax expense/(benefit)
 U.S. Federal                                -         1,929         (2,744)
 State and Local                             -           961         (1,069)
                                        ------       -------        -------

   Total tax provision                  $1,662       $ 2,187        $ 2,751
                                        ======       =======        =======

Reconciliation of the provision for income taxes to the statutory federal income
tax rate follows:

<TABLE>
<CAPTION>
                                                                        FEBRUARY 29,           FEBRUARY 28,       FEBRUARY 28,
                                                                                2000       %      1999       %     1998     %
                                                                        --------------------   ---------------   -------------
<S>                                                                     <C>                    <C>                <C>
(Benefit)/provision on pre-tax (loss)/income at statutory
 federal income tax rate                                                    $(17,405)  (35.0)  $(1,293)   (35.0)  $  914   35.0
(Benefit)/provision for state and local taxes (net of federal income
 tax benefit)                                                                    385     0.8      (234)    (6.3)     963   36.9
Change in valuation allowance                                                 13,205    26.6    (1,000)   (27.1)       -      -
Impact of foreign operations (primarily minimum/capital taxes)                 1,069     2.1       618     16.7        -      -
Other non-deductible expenses (primarily amortization
 of goodwill and other intangible assets)                                      4,408     8.9     4,096    110.9      874   33.5
                                                                            --------   -----   -------    -----   ------  -----

                                                                            $  1,662     3.4   $ 2,187     59.2   $2,751  105.4
                                                                            ========   =====   =======    =====   ======  =====
</TABLE>

Significant components of the deferred tax assets and liabilities follow:

                                          FEBRUARY 29,   FEBRUARY 28,
                                                  2000           1999
                                          ------------   ------------
Net deferred tax assets:
Net operating loss carryforwards             $ 211,860      $ 206,038
Contractual obligations                         47,119         56,642
Book/tax fixed asset basis differences          25,588         27,687
Loss on sale/disposals of theatres              15,110         20,143
Other                                           15,150         16,676
                                             ---------      ---------
                                               314,827        327,186
Less: Valuation allowance                     (296,854)      (308,379)
                                             ---------      ---------
Total net deferred tax assets                   17,973         18,807

Net deferred tax liabilities:
Depreciation and Amortization                   17,973         18,807
                                             ---------      ---------
Total net deferred tax liabilities              17,973         18,807
                                             ---------      ---------

    Net Deferred Tax Liability               $       -      $       -
                                             =========      =========

The valuation allowance of $296.9 million as of February 29, 2000 represents a
provision for the uncertainty as to the realization of deferred tax assets,
including temporary differences associated with certain contractual obligations,
book/tax fixed asset basis differences and net operating loss ("NOL")
carryforwards. The Company has concluded that based upon expected future
results, it cannot be reasonably assured that the deferred tax asset balance
will be realized. During the current year, the valuation allowance for deferred
tax assets decreased by approximately $11.5 million. This decrease was primarily
due to expiration of NOL's of $24.7 million at February 29, 2000 partially
offset by the generation of NOL's relating to a book taxable loss of $13.2
million. For tax purposes, NOL's of approximately $493 million, expiring between
the years 2001 and 2019, are available to offset future

                                      67
<PAGE>

                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)


taxable income. A portion of the U.S. NOL carryforwards, in the amount of $267.7
million, is subject to certain limitations and restrictions under the Internal
Revenue Code of 1986, as amended.

No provisions have been made for foreign withholding taxes or United States
income taxes associated with the cumulative undistributed earnings of foreign
subsidiaries as of February 29, 2000, as these earnings are expected to be
reinvested in working capital and other business needs indefinitely. A
determination of the amount of unrecognized deferred tax liability with respect
to such earnings is not practicable. Moreover, any additional taxes payable on
these earnings if remitted, would be substantially offset by U.S. tax credits
for foreign taxes already paid.

NOTE 12 - SEGMENT AND GEOGRAPHIC DATA
-------------------------------------

In fiscal 1999, the Company adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information". This statement requires that the
internal organization that is used by management for making operating decisions
and assessing performance be the source of the Company's reportable segments.
SFAS No. 131 also requires disclosure about products and services, geographic
areas and major customers. The adoption of SFAS No. 131 did not affect results
of operations or financial position.

The Company is engaged in one line of business, motion picture exhibition. The
following table presents summarized financial information about the Company by
geographic area. There were no material amounts of sales or transfers among
geographic areas.

<TABLE>
<CAPTION>

                                           UNITED                           INT.'L/
                                           STATES           CANADA            OTHER          CONSOLIDATED
                                       ----------        ---------         --------          ------------
<S>                                    <C>               <C>               <C>               <C>
February 29, 2000

   Box office revenue                  $  525,698         $119,847          $ 2,229            $  647,774
   Concessions                         $  191,749         $ 51,088          $   674            $  243,511
   Total operating revenue             $  744,773         $180,272          $ 5,378            $  930,423
   Income/(loss) from operations       $   28,140         $   (834)         $(4,306)           $   23,000
   Total assets                        $1,487,981         $362,998          $56,410            $1,907,389
   Capital expenditures                $  149,158         $ 28,778          $ 7,414            $  185,350
   Depreciation and
      amortization expense             $   91,861         $ 20,586          $   600            $  113,047

February 28, 1999

   Box office revenue                  $  489,980         $ 95,895          $ 1,203            $  587,078
   Concessions                         $  186,336         $ 41,586          $   410            $  228,332
   Total operating revenue             $  703,532         $145,148          $ 2,480            $  851,160
   Income/(loss) from operations       $   45,817         $  9,512          $(1,806)           $   53,523
   Total assets                        $1,444,547         $339,773          $21,881            $1,806,201
   Capital expenditures                $  113,978         $ 33,220          $     -            $  147,198
   Depreciation and
      amortization expense             $   79,744         $ 10,851          $   125            $   90,720

February 28, 1998

   Box office revenue                  $  296,933         $      -          $     -            $  296,933
   Concessions                         $  104,009         $      -          $     -            $  104,009
   Total operating revenue             $  413,510         $      -          $     -            $  413,510
   Income/(loss) from operations       $   16,931         $      -          $     -            $   16,931
   Total assets                        $  728,551         $      -          $     -            $  728,551
   Capital expenditures                $   42,431         $      -          $     -            $   42,431
   Depreciation and
      amortization expense             $   52,307         $      -          $     -            $   52,307
</TABLE>

No single customer accounts for more than 10% of total revenues for each of the
three years ended February 29, 2000.

                                      68
<PAGE>

                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)


NOTE 13 - STOCK OPTION PLANS
----------------------------

During fiscal 1998, the Company created the 1997 Stock Incentive Plan ("the
Plan") providing for the granting of options to employees, officers, directors,
consultants, and advisors of the Company or an affiliate. The Plan is
administered by a committee of the Board of Directors (the "Committee"). The
Plan provides for the grants or awards of incentive and non-qualified stock
options, stock appreciation and dividend equivalent rights, restricted stock,
performance units and performance shares. During December 1997, the Company
granted non-qualified stock options to certain key employees. During April 1999,
the Company granted 1,991,472 additional non-qualified stock options to 900 of
its employees. Under the Plan, the Company has a total of 5,862,265 shares
available for the grant of awards. As of February 29, 2000, an aggregate of
5,152,560 shares were outstanding with 709,705 available for future grant.
During April 2000, the Committee approved a grant of 340,000 of these non-
qualified stock options to the Company's employees. These options granted, in
addition to the 369,705 options available for future grant, could potentially
dilute future earnings per share. Except in the case of 500,000 options granted,
which vested immediately, the options generally vest and become exercisable
ratably over a five year period, commencing on the first anniversary of the
closing date of the Combination, but in any event, will be fully vested and
exercisable as of the fifth anniversary of the date of grant. The options
generally expire ten years after grant.

Cineplex Odeon had a stock option plan in place prior to the Combination.
Following the Combination, the Cineplex Odeon options were converted to 1.2
million options in LCP shares at an exchange ratio of 10 for 1 and the
historical option prices were converted by a factor of 10 times. The Cineplex
Odeon options denominated in Canadian dollars have been converted utilizing the
exchange rate in effect on the date of conversion. The conversion costs relating
to the Cineplex Odeon options were not material.

The following table summarizes information about the stock options outstanding
at February 29, 2000 and February 28, 1999 (per share amounts are in whole
dollars):

<TABLE>
                                                        2000                                   1999
                                                        ----                                   ----
                                                Number of      Weighted Average      Number of        Weighted Average
                                                 Shares         Exercise Price        Shares           Exercise Price
                                                 ------         ----------------      ------           --------------
<S>                                            <C>             <C>                  <C>               <C>
Shares  under option:
  Outstanding at beginning of year               3,336,553      $     13.059          2,170,000        $    13.125
  Granted                                        1,991,472      $     11.140                 --        $        --
  Cineplex Odeon Options Converted                      --      $         --          1,223,843        $    12.939
  Exercised                                             --      $         --            (19,802)       $    12.910
  Forfeited/Expired                               (175,465)     $     11.201            (37,488)       $    13.063
                                               -----------------------------        ------------------------------
Outstanding at end of year                       5,152,560      $     12.381          3,336,553        $    13.059
Options exercisable at year-end                  2,033,511      $     12.994          1,626,016        $    13.000
Weighted average fair value of
  options granted/converted                                     $       4.35                           $      8.24
</TABLE>

The Company applies APB No. 25 and related interpretations in accounting for the
Plan.  For purposes of the disclosure below, compensation costs for the Plan
have been determined based upon the fair value at the date of grant for awards
under the Plan, consistent with the methodology under SFAS No. 123, utilizing
the Black-Scholes option pricing model based on the following assumptions:

                                            2000    1999
                                           -----   -----
          Expected life (years)                5    2.58
          Expected volatility              34.27%  33.98%
          Expected dividend yield             --      --
          Risk free interest rate           5.13%   5.61%

                                      69
<PAGE>

                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (all dollar amounts in thousands of U.S. dollars, except as otherwise noted)


The Company's net loss and loss per share for the years ended February 29, 2000
and February 28, 1999 are presented in the pro forma amounts indicated below:

                                        2000       1999      1998
                                        ----       ----      ----
Net loss                  As reported  ($51,390)  ($5,880)    ($139)
                                       ========   =======   =======
                          Pro forma    ($53,102)  ($7,323)  ($1,555)
                                       ========   =======   =======

Loss per share-basic      As reported    ($0.88)   ($0.12)   ($0.01)
                                       ========   =======   =======
                          Pro forma      ($0.91)   ($0.15)   ($0.08)
                                       ========   =======   =======

Loss per share-diluted    As reported    ($0.88)   ($0.12)   ($0.01)
                                       ========   =======   =======
                          Pro forma      ($0.91)   ($0.15)   ($0.08)
                                       ========   =======   =======

                                       70
<PAGE>

NOTE 14 - COMMITMENTS AND CONTINGENCIES
---------------------------------------

Commitments

The Company has entered into commitments for the future development and
construction of theatre properties aggregating approximately $428.9 million
(including letters of credit of approximately $15.5 million) anticipated to be
funded over the next three year period. The Company has also guaranteed an
additional $35.4 million related to obligations under lease agreements entered
into by MJT. The Company is of the opinion that MJT will be able to perform its
obligations and that no payment will be required and no losses will be incurred
under these guarantees.

ADA Litigation

The Department of Justice, in coordination with the New York City Commission on
Human Rights, is currently investigating Cineplex Odeon's theatres in New York
City with respect to its compliance with the Americans with Disabilities Act
("ADA") and the New York City Human Rights Law.  The Department of Justice has
alleged that its investigation had identified numerous violations of the ADA.
The Company has opposed, and will continue to vigorously oppose the allegations
and claims of the Department of Justice with respect to the compliance of these
theatres under the ADA.  However, the Company cannot guarantee that the
remediation costs relating to the ADA will not be material.

Environmental Litigation

One of the Company's leased drive-in theatres and one formerly leased drive-in
theatre, both in the State of Illinois, are located on properties on which
certain third parties disposed of, or may have disposed of, substantial
quantities of construction debris, auto shredder residue and other debris.  Such
material may contain hazardous substances.  One of these properties is the
subject of an action, filed in August 1998 in the circuit court of Cook County,
Illinois by the Illinois Attorney General's office seeking civil penalties and
various forms of equitable relief, including the removal of all wastes allegedly
present at the property, soil and ground water testing and remediation, if
necessary.  The Company's range of probable liability with respect to this
action cannot be reasonably estimated at this time due to several unknown
factors, including the scope of contamination at the theatre property, the
likelihood of any particular remedial action being required, the allocation of
liability, if any, to other responsible parties, and the ability of such parties
to satisfy their share of such liability.  The Company will continue to evaluate
future information and developments with respect to conditions at the theatre
property and will periodically reassess any liability accordingly.  Based on the
foregoing, there can be no assurance that the Company's liability, if any, in
connection with this action will not be material.

Other

Other than the lawsuits noted above, the Company is a defendant in various
lawsuits arising in the ordinary course of business and is involved in certain
environmental matters.  From time to time the Company is involved in disputes
with landlords, contractors and other third parties.  It is the opinion of
management that any liability to the Company which may arise as a result of
these matters will not have a material adverse effect on its operating results
and financial position.

                                      71
<PAGE>

REPORTS OF MANAGEMENT AND INDEPENDENT ACCOUNTANTS

REPORT OF MANAGEMENT
TO THE SHAREHOLDERS OF LOEWS CINEPLEX ENTERTAINMENT CORPORATION

The accompanying consolidated financial statements of Loews Cineplex
Entertainment Corporation and its subsidiaries have been prepared by management,
who are responsible for the integrity and objectivity of these statements.  The
statements have been prepared in conformity with generally accepted accounting
principles and include amounts based on management's best estimates and
judgments.

Management has established and maintains a system of internal control designed
to provide reasonable assurance that errors or irregularities that could be
material to the financial statements are prevented or are detected within a
timely period.  The system of internal control includes widely communicated
statements of policies and business practices which are designed to require all
employees to maintain high ethical standards in the conduct of Company affairs.
The internal controls are augmented by policies and procedures that provide for
appropriate delegation of authority and division of responsibility and by a
program of internal audit with management follow-up.

The Audit Committee of the Board of Directors, composed entirely of outside
directors, meets periodically with the Company's independent accountants,
management and internal auditors to review accounting, auditing, internal
accounting controls and financial reporting matters.  The independent
accountants and the internal auditors have free access to this committee.

May 1, 2000


<TABLE>
<S>                                           <C>                                         <C>
/s/  Lawrence J. Ruisi                        /s/  John J. Walker                         /s/  Joseph Sparacio
___________________________________           ____________________________________        ____________________________________
Lawrence J. Ruisi                             John J. Walker                              Joseph Sparacio
President & Chief Executive Officer           Senior Vice President                       Vice President, Finance & Controller
                                              Chief Financial Officer & Treasurer
</TABLE>

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders of Loews Cineplex Entertainment
Corporation

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in stockholders' equity and of
cash flows present fairly, in all material respects, the financial position of
Loews Cineplex Entertainment Corporation and its subsidiaries (the "Company") at
February 29, 2000 and February 28, 1999, and the results of their operations and
their cash flows for each of the three years in the period ended February 29,
2000, 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 auditing standards generally accepted in the
United States of America, which 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 the opinion expressed above.

/s/  PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
May 1, 2000

                                      72
<PAGE>

                   LOEWS CINEPLEX ENTERTAINMENT CORPORATION

                    SELECTED QUARTERLY DATA (UNAUDITED)(1)
  (all dollar amounts in thousands of U.S. dollars, except per share amounts)

<TABLE>
<CAPTION>


                                                              FIRST       SECOND         THIRD            FOURTH
                                                            QUARTER      QUARTER       QUARTER      QUARTER/(2)/           TOTAL
                                                          ---------     --------     ---------     -------------        --------
<S>                                                       <C>           <C>          <C>           <C>                  <C>
February 29, 2000

  Revenue                                                  $201,784     $303,292      $209,250          $216,097        $930,423
  (Loss)/Income from operations                            $ (5,155)    $ 34,291      $ (6,320)         $    184        $ 23,000
  Net (loss)/income                                        $(21,879)    $ 15,863      $(23,838)         $(21,536)       $(51,390)
  (Loss)/Earnings per share - basic and diluted            $   (.37)    $    .27      $   (.41)         $   (.37)       $   (.88)
  Stock prices - New York Stock Exchange (US$)
    High                                                   $  12.88     $  10.94      $   8.38          $   6.50        $  12.88
    Low                                                    $   9.13     $   7.94      $   6.19          $   4.13        $   4.13
  Stock prices - Toronto Stock Exchange (CDN$)
    High                                                   $  18.50     $  16.05      $  12.50          $   9.40        $  18.50
    Low                                                    $  13.60     $  11.75      $   9.00          $   5.95        $   5.95

February 28, 1999 (3)

  Revenue                                                  $117,814     $297,459      $211,414          $224,473        $851,160
  Income from operations                                   $  5,244     $ 33,184      $    233          $ 14,862        $ 53,523
  Net (loss)/income                                        $   (743)    $  8,274      $(12,106)         $ (1,305)       $ (5,880)
  (Loss)/Earnings per share - basic and diluted            $   (.03)    $    .17      $   (.21)         $   (.02)       $   (.12)
  Stock prices - New York Stock Exchange (US$)
    High                                                   $  19.00     $  15.50      $  10.69          $  10.88        $  19.00
    Low                                                    $  15.44     $   7.88      $   7.50          $   8.63        $   7.50
  Stock prices - Toronto Stock Exchange (CDN$)
    High                                                   $  27.95     $  22.80      $  16.55          $  16.70        $  27.95
    Low                                                    $  22.70     $  12.90      $  11.50          $  12.45        $  11.50
</TABLE>

Earnings per share is computed independently for each of the quarters presented.
Therefore, the sum of the quarterly earnings per share do not necessarily equal
the total for the year.

Notes:
(1)  The Company's business is seasonal with a substantial portion of its
     revenues being derived during the summer months and holiday season.

(2)  Depreciation and amortization costs include adjustments necessary to
     reflect the allocation of purchase price to the fair value of Cineplex
     Odeon assets acquired and liabilities assumed as part of the Combination.
     This allocation of value was substantially completed during the fourth
     quarter of fiscal year 1999 and was completed during the first quarter of
     the current fiscal year.  As a result, adjustments of approximately $3.2
     million to reduce previous preliminary estimates of depreciation and
     amortization expense were recorded in the fourth quarter of fiscal year
     1999.

(3)  Results for the fiscal year ended February 28, 1999 include the operating
     results for Cineplex Odeon for the period May 15, 1998 through February 28,
     1999.  Cineplex Odeon became a subsidiary of the Company on May 14, 1998.

                                      73
<PAGE>



                      Report of Independent Accountants on
                         Financial Statement Schedules

To the Board of Directors
of Loews Cineplex Entertainment Corporation:

   Our audits of the consolidated financial statements referred to in our
report dated May 1, 2000 appearing in the 2000 Annual Report to Shareholders of
Loews Cineplex Entertainment Corporation (which report and consolidated
financial statements are incorporated by reference in this Annual Report on
Form 10-K) also included an audit of the financial statement schedules listed
in Item 14(a)(2) of this Form 10-K. In our opinion, these financial statement
schedules present fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.

/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
May 1, 2000
<PAGE>

                                                                     SCHEDULE II

                    LOEWS CINEPLEX ENTERTAINMENT CORPORATION
                       VALUATION AND QUALIFYING ACCOUNTS
                         (IN THOUSANDS OF U.S. DOLLARS)

<TABLE>
<CAPTION>
                                                Additions
                                    Balance at (Charged to Deductions Balance at
                                    Beginning   Costs and  and Other    End of
                                    of Period   Expenses)   Charges     Period
                                    ---------- ----------- ---------- ----------
<S>                                 <C>        <C>         <C>        <C>
Year Ended February 29, 2000
  Reserve for net book value of
   property, equipment and
   leaseholds......................   $7,309     $5,534     $12,706     $  137
  Reserve for other costs..........   $4,044     $    0     $ 2,256     $1,788
Year Ended February 28, 1999
  Reserve for net book value of
   property, equipment and
   leaseholds......................   $5,999     $4,800     $ 3,490     $7,309
  Reserve for other costs..........   $3,797     $1,050     $   803     $4,044
Year Ended February 28, 1998
  Reserve for net book value of
   property, equipment and
   leaseholds......................   $3,979     $4,409     $ 2,389     $5,999
  Reserve for other costs..........   $    0     $4,656     $   859     $3,797
</TABLE>