Use these links to rapidly review the documentTABLE OF CONTENT PART IV INDEX TO FINANCIAL STATEMENTS

Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549



FORM 10-K/A

(Mark One)o

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

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from March 30, 2012 to December 31, 2012


Commission file number 1-8747



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

Delaware(State or other jurisdiction of
incorporation or organization)

43-1304369(I.R.S. Employer
Identification No.)920 Main
Kansas City, Missouri(Address of principal executive offices)

64105(Zip Code)


Registrant's
telephone number, including area code:(816) 221-4000



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



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

Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o    No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o    No ý

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 ý    No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulations S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes ý    No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter)
is not contained herein, and will not be contained, to the best of 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. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý (Do not check if a
smaller reporting company)

Smaller reporting company o


Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes o    No ý

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at
which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.

No
voting stock of AMC Entertainment Inc. is held by non-affiliates of AMC Entertainment Inc.

Title of each class of common stock

Number of shares
Outstanding as of March 29, 2013Common Stock, 1¢ par value

1


DOCUMENTS INCORPORATED BY REFERENCE

None





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EXPLANATORY NOTE

The Company is filing this Amendment No. 1 to its Transition Report on Form 10-K (the
"Form 10-K/A") to include separate audited financial statements of National CineMedia, LLC ("NCM"), Digital Cinema Implementation Partners, LLC ("DCIP") and Open Road
Releasing, LLC, operator of Open Road Films, LLC ("ORF"), pursuant to Rule 3-09 of Regulation S-X ("Rule 3-09"). The audited NCM, DCIP and Open
Road Releasing, LLC financial statements (the "NCM, DCIP and Open Road Releasing, LLC Financial Statements") are being filed as an amendment to the Transition Report on
Form 10-K within 90 days after the end of the Company's fiscal year in accordance with Rule 3-09(b)(1).

This
form 10-K/A amends the Transition Report on Form 10-K solely by the addition of the NCM, DCIP and Open Road Releasing, LLC Financial
Statements to Part IV, Item 15. No attempt has been made in this Form 10-K/A to update other disclosures presented in the Transition Report on
Form 10-K and this Form 10-K/A does not reflect events occurring after the filing of the Transition Report on Form 10-K or modify or update
those disclosures, including the exhibits to the Form 10-K affected by subsequent events. The following sections of the Transition Report on Form 10-K have been
amended by this Form 10-K/A:



This
Form 10-K/A has been signed as of a current date and all certifications of the Company's Chief Executive Officer and Chief Financial Officer are given as of a
current date. Accordingly, this Form 10-K/A should be read in conjunction with our filings made with the SEC subsequent to the filing of the Transition Report on
Form 10-K for the Transition Period ended December 31, 2012, including any amendments to those filings.

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AMC ENTERTAINMENT INC.

FORM 10-K/A
FOR THE TRANSITION PERIOD ENDED DECEMBER 31, 2012

INDEX



PagePART IVItem 15.

Exhibits, Financial Statement Schedules


2Signatures


3


1

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PART IV

Item 15.    Exhibits, Financial Statement Schedules

(a)(2)

Financial Statement SchedulesAll schedules have been omitted because the necessary information is included in the Notes to the Consolidated Financial Statements.




PageNational CineMedia, LLCReport of Independent Registered Public Accounting Firm


F-2Balance Sheets as of December 27, 2012 and December 29, 2011


F-3Statements of Income for the years ended December 27, 2012, December 29, 2011 and December 30,
2010


F-4Statements of Comprehensive Income for the years ended December 27, 2012, December 29, 2011 and December 30,
2010


F-5Statements of Members' Equity/(Deficit) for the years ended December 27, 2012, December 29, 2011 and
December 30, 2010


F-6Statements of Cash Flows for the years ended December 27, 2012, December 29, 2011 and December 30, 2010


F-7Notes to Financial Statements


F-8


Digital Cinema Implementation Partners, LLCIndependent Auditors' Report


F-33Consolidated Balance Sheets December 31, 2012 and 2011


F-34Consolidated Statements of Operations Years Ended December 31, 2012 and 2011


F-35Consolidated Statements of Members' Equity Years Ended December 31, 2012 and 2011


F-36Consolidated Statements of Cash Flows Years Ended December 31, 2012 and 2011


F-37Notes to Consolidated Financial Statements


F-38 - F-50


Open Road Releasing, LLCIndependent Auditors' Report


F-51Consolidated Financial Statements:Consolidated Balance Sheet December 31, 2012


F-53Consolidated Statement of Operations Year Ended December 31, 2012


F-54Consolidated Statement of Changes in Members' Equity Year Ended December 31, 2012


F-55Consolidated Statement of Cash Flows Year Ended December 31, 2012


F-56Notes to Consolidated Financial Statements


F-57


(b)

Exhibits


A
list of exhibits required to be filed as part of this report on Form 10-K/A is set forth in the Exhibit Index, which immediately precedes such exhibits.

2

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INDEX TO FINANCIAL STATEMENTS



PageNational CineMedia, LLCReport of Independent Registered Public Accounting Firm


F-2Balance Sheets as of December 27, 2012 and December 29, 2011


F-3Statements of Income for the years ended December 27, 2012, December 29, 2011 and December 30,
2010


F-4Statements of Comprehensive Income for the years ended December 27, 2012, December 29, 2011 and December 30,
2010


F-5Statements of Members' Equity/(Deficit) for the years ended December 27, 2012, December 29, 2011 and
December 30, 2010


F-6Statements of Cash Flows for the years ended December 27, 2012, December 29, 2011 and December 30,
2010


F-7Notes to Financial Statements


F-8Digital Cinema Implementation Partners, LLCIndependent Auditors' Report


F-33Consolidated Balance Sheets December 31, 2012 and 2011


F-34Consolidated Statements of Operations Years Ended December 31, 2012 and 2011


F-35Consolidated Statements of Members' Equity Years Ended December 31, 2012 and 2011


F-36Consolidated Statements of Cash Flows Years Ended December 31, 2012 and 2011


F-37Notes to Consolidated Financial Statements


F-38 - F-50Open Road Releasing, LLCIndependent Auditors' Report


F-51Consolidated Financial Statements:Consolidated Balance Sheet December 31, 2012


F-53Consolidated Statement of Operations Year Ended December 31, 2012


F-54Consolidated Statement of Changes in Members' Equity Year Ended December 31, 2012


F-55Consolidated Statement of Cash Flows Year Ended December 31, 2012


F-56Notes to Consolidated Financial Statements


F-57


F-1

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To
the Board of Directors and Members of
National CineMedia, LLC
Centennial, Colorado

We
have audited the accompanying balance sheets of National CineMedia, LLC (the "Company") as of December 27, 2012 and December 29, 2011 and the related statements
of income, comprehensive income, members' equity / (deficit) and cash flows for the years ended December 27, 2012, December 29, 2011 and December 30, 2010. These financial
statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, such financial statements present fairly, in all material respects, the financial position of National CineMedia, LLC as of December 27, 2012 and
December 29, 2011, and the results of its operations and its cash flows for the years ended December 27, 2012, December 29, 2011 and December 30, 2010, in conformity with
accounting principles generally accepted in the United States of America.

/s/
Deloitte & Touche LLP
Denver, Colorado
March 20, 2013

F-2

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NATIONAL CINEMEDIA, LLC        BALANCE SHEETS        (In millions)

As of
December 27,
2012

As of
December 29,
2011ASSETSCURRENT ASSETS:Cash and cash equivalents

$
10.4

$
9.2Receivables, net of allowance of $4.5 and $4.3, respectively


98.5


96.6Prepaid expenses


2.4


1.7Prepaid administration fees to managing member


0.8


1.0Total current assets


112.1


108.5NON-CURRENT ASSETS:Property and equipment, net of accumulated depreciation of $63.1 and $54.8, respectively


25.7


24.6Intangible assets, net of accumulated amortization of $32.5 and $20.8, respectively


280.3


274.9Debt issuance costs, net of accumulated amortization of $12.2 and $9.8, respectively


18.3


12.6Other investment


0.8


0.2Other non-current assets


0.2


0.6Total non-current assets


325.3


312.9TOTAL

$
437.4

$
421.4LIABILITIES AND MEMBERS' EQUITY/(DEFICIT)CURRENT LIABILITIES:Amounts due to founding members

$
19.8

$
22.0Amounts due to managing member


15.3


21.2Accrued expenses


18.3


16.2Current portion of interest rate swap agreements





24.0Accrued payroll and related expenses


9.6


9.0Accounts payable (including $0.9 and $0.9 to related party affiliates, respectively)


13.9


12.8Deferred revenue


5.7


2.9Total current liabilities


82.6


108.1NON-CURRENT LIABILITIES:Long-term debt


879.0


794.0Interest rate swap agreements





46.8Total non-current liabilities


879.0


840.8Total liabilities


961.6


948.9COMMITMENTS AND CONTINGENCIES (NOTE 9)MEMBERS' EQUITY/(DEFICIT) (including accumulated other comprehensive loss of $21.9 and $56.9 million, respectively)


(524.2
)

(527.5
)TOTAL

$
437.4

$
421.4




See accompanying notes to financial statements.

F-3

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NATIONAL CINEMEDIA, LLC        STATEMENTS OF INCOME        (In millions)

Years EndedDecember 27,
2012

December 29,
2011

December 30,
2010REVENUE:Advertising (including revenue from founding members of $39.9, $38.2 and $38.5, respectively)

$
409.5

$
386.2

$
379.5Fathom Events


39.3


49.2


48.0Total


448.8


435.4


427.5OPERATING EXPENSES:Advertising operating costs (including $4.2, $3.4 and $0.1 to related party affiliates, respectively)


31.3


24.6


21.7Fathom Events operating costs (including $5.9, $9.3 and $8.6 to founding members, respectively)


29.0


34.1


32.4Network costs


18.9


17.7


20.0Theatre access feesfounding members


64.5


55.4


52.6Selling and marketing costs (including $1.1, $1.1 and $1.2 to founding members, respectively)


60.5


59.8


57.9Administrative and other costs


20.3


17.6


17.9Administrative feemanaging member


12.1


13.7


16.6Depreciation and amortization


20.4


18.8


17.8Total


257.0


241.7


236.9OPERATING INCOME


191.8


193.7


190.6NON-OPERATING EXPENSES:Interest on borrowings


56.7


49.2


44.4Change in derivative fair value


1.0


1.3


5.3Loss on swap terminations


26.7





Impairment on investment and other non-operating expense


5.8


8.4


0.2Total


90.2


58.9


49.9INCOME BEFORE INCOME TAXES


101.6


134.8


140.7Income tax expense


0.6


0.3


0.5Equity loss from investment, net







$
0.7NET INCOME

$
101.0

$
134.5

$
139.5




See accompanying notes to financial statements.

F-4

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NATIONAL CINEMEDIA, LLC        STATEMENTS OF COMPREHENSIVE INCOME        (In millions)

Years EndedDecember 27,
2012

December 29,
2011

December 30,
2010NET INCOME

$
101.0

$
134.5

$
139.5OTHER COMPREHENSIVE INCOME (LOSS):Unrealized gain (loss) on cash flow hedges


35.1


1.4


(10.9
)COMPREHENSIVE INCOME

$
136.1

$
135.9

$
128.6




See accompanying notes to financial statements.

F-5

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NATIONAL CINEMEDIA, LLC        STATEMENTS OF MEMBERS' EQUITY/ (DEFICIT)        (In millions, except unit amounts)

Units

AmountBalanceJanuary 1, 2010


101,557,505

$
(639.6
)Capital contribution from founding members


472,259


3.5Distribution to managing member





(71.0
)Distribution to founding members





(85.1
)Units issued for purchase of intangible asset


8,722,428


151.3Comprehensive Income





128.6Share-based compensation issued





(0.1
)Share-based compensation expense/capitalized





5.8BalanceDecember 30, 2010


110,752,192

$
(506.6
)Capital contribution from managing member


385,128


5.5Distribution to managing member





(78.7
)Distribution to founding members





(83.0
)Equity returned from purchase of intangible asset


(322,751
)

(5.5
)Comprehensive Income





135.9Share-based compensation issued





(0.1
)Share-based compensation expense/capitalized





5.0BalanceDecember 29, 2011


110,814,569

$
(527.5
)Capital contribution from managing member


551,654


2.3Distribution to managing member





(72.7
)Distribution to founding members





(76.8
)Units issued for purchase of intangible asset


651,612


10.1Comprehensive Income





136.1Share-based compensation issued





(0.0
)Share-based compensation expense/capitalized





4.3BalanceDecember 27, 2012


112,017,835

$
(524.2
)




See accompanying notes to financial statements.

F-6

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NATIONAL CINEMEDIA, LLC        STATEMENTS OF CASH FLOWS        (In millions)

Years EndedDecember 27,
2012

December 29,
2011

December 30,
2010CASH FLOWS FROM OPERATING ACTIVITIES:Net income

$
101.0

$
134.5

$
139.5Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization


20.4


18.8


17.8Non-cash share-based compensation


4.3


4.8


5.6Net unrealized loss on hedging transactions


1.0


1.3


5.3Impairment on investment





6.7


Equity loss from investment








0.7Amortization of debt issuance costs


2.4


2.3


1.9Write-off of debt issuance costs


5.9


1.5


Other non-cash operating activities








0.6Loss on swap terminations


26.7





Payment for swap terminations


(63.4
)




Changes in operating assets and liabilities:Receivables, net


(2.5
)

3.3


(11.1
)Accounts payable and accrued expenses


3.5


9.7


(1.6
)Amounts due to/from founding members and managing member


(5.0
)

(4.6
)

4.1Other, net


2.9


(1.1
)

0.8Net cash provided by operating activities


97.2


177.2


163.6CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property and equipment


(10.4
)

(13.5
)

(10.1
)Proceeds from sale of property and equipment to founding member








3.0Payment from NCM LLC's founding members for intangible assets


0.2Purchases of intangible assets from affiliates


(7.2
)

(15.9
)

Net cash used in investing activities


(17.4
)

(29.4
)

(7.1
)CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from borrowings


546.0


335.0


124.3Repayments of borrowings


(461.0
)

(317.2
)

(152.5
)Payment of debt issuance costs


(14.0
)

(9.1
)

Founding member integration payments





1.9


3.9Distributions to founding members and managing member


(151.9
)

(168.4
)

(159.6
)Unit settlement of share-based compensation


2.3


5.4


3.4Net cash used in financing activities


(78.6
)

(152.4
)

(180.5
)CHANGE IN CASH AND CASH EQUIVALENTS


1.2


(4.6
)

(24.0
)CASH AND CASH EQUIVALENTS:Beginning of period


9.2


13.8


37.8End of period

$
10.4

$
9.2

$
13.8Supplemental disclosure of non-cash financing and investing activity:Accrued distributions to founding members and managing member

$
40.7

$
43.1

$
49.8Purchase of an intangible asset with equity (equity returned)

$
10.1

$
(5.5
)
$
151.3Increase in cost method investment

$
0.6

$
0.2

$
Supplemental disclosure of cash flow information:Cash paid for interest

$
50.7

$
39.2

$
49.8Cash paid for income taxes

$
0.6

$
0.3

$
0.5




See accompanying notes to financial statements.

F-7

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NATIONAL CINEMEDIA, LLC        NOTES TO THE FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

National CineMedia, LLC ("NCM LLC" or "the Company") commenced operations on April 1, 2005 and operates the largest digital in-theatre network in North
America, allowing us to distribute advertising, Fathom entertainment programming events and corporate events (the "Services") under long-term exhibitor services agreements ("ESAs") with
American Multi-Cinema, Inc. ("AMC"), a wholly owned subsidiary of AMC Entertainment, Inc. ("AMCE"), Regal Cinemas, Inc., a wholly owned subsidiary of Regal Entertainment Group
("Regal"), and Cinemark USA, Inc. ("Cinemark USA"), a wholly owned subsidiary of Cinemark Holdings, Inc. ("Cinemark"). AMC, Regal and Cinemark and their affiliates are referred to in
this document as "founding members." The Company also provides the Services to certain third-party theatre circuits under "network affiliate" agreements, which expire at various dates.

As
of December 27, 2012, the Company had 112,017,835 common membership units outstanding, of which 54,486,259 (48.6%) were owned by NCM, Inc., 22,113,150 (19.7%) were owned
by Regal, 18,094,644 (16.2%) were owned by Cinemark, and 17,323,782 (15.5%) were owned by AMC. The membership units held by the founding members are exchangeable into NCM, Inc. common stock on
a one-for-one basis.

During
the first quarter of 2012, the Company restructured Fathom Events by winding down its Fathom Business Events division, to place more focus on the Fathom Consumer Events division.
The Company continued to operate the Fathom Business Events division for a portion of the first quarter of 2012 to satisfy contractual obligations for events and will continue to execute business
events on a periodic
basis for existing long-term Fathom clients, or if requested by the founding members or to support events staged for NCM's major advertising clients.



The Company has prepared its financial statements and related notes of NCM, LLC in accordance with accounting principles
generally accepted in the United States of America ("GAAP") and the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain reclassifications have been made to the prior
years' financial statements to conform to the current presentation. These reclassifications had no effect on previously reported results of operations or retained earnings

EstimatesThe preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates include those related to the reserve for uncollectible accounts receivable, share-based compensation and interest rate swaps. Actual results could differ from
those estimates.



Accounting PeriodThe Company operates on a 52-week fiscal year, with the fiscal year ending on the first Thursday after
December 25, which, in certain years, results in a 53-week year.

Segment ReportingAdvertising is the principal business activity of the Company and is the Company's reportable segment under the requirements of
ASC
280Segment Reporting. Fathom Events is an operating segment under ASC 280. The Company does not evaluate its
segments on a fully allocated cost basis, nor does the Company track segment assets separately. As such, the results are not

F-8

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NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

indicative
of what segment results of operations would have been had it been operated on a fully allocated cost basis. The Company cautions that it would be inappropriate to assume that unallocated
operating costs are incurred proportional to segment revenue or any directly identifiable segment expenses. Refer to Note 12Segment
Reporting.

Revenue RecognitionAdvertising revenue is recognized in the period in which an advertising contract is fulfilled against the contracted theatre
attendees. Make-good provisions are made to defer contracted revenue to future periods when attendance is delivered and is included in accrued expenses. Deferred revenue refers to the
unearned portion of advertising contracts. All deferred revenue is classified as a current liability. Fathom Events revenue is recognized in the period in which the event is held.

Barter TransactionsThe Company enters into barter transactions that exchange advertising program time for products and services used principally
for
selling and marketing activities. The Company records barter transactions at the estimated fair value of the advertising exchanged based on fair value received for similar advertising from cash paying
customers. Revenues for advertising barter transactions are recognized when advertising is provided, and products and services received are charged to expense when used. The Company limits the use of
such barter transactions to items and services for which it would otherwise have paid cash. Any timing differences between the delivery of the bartered revenue and the use of the bartered expense
products and services are recorded through deferred revenue. Revenue and expense from barter transactions for the year ended December 27, 2012 were $3.0 million and $1.3 million,
respectively, $1.6 million and $1.1 million for the year ended December 29, 2011 and $1.5 million and $1.1 million for the year ended December 30, 2010.

Operating CostsAdvertising related operating costs primarily include personnel and other costs related to advertising fulfillment, payments due
to
unaffiliated theatre circuits under the network affiliate agreements, and to a lesser extent, production costs of non-digital advertising.

Fathom
Events operating costs include revenue share under the amended and restated ESAs to the founding members and revenue share to affiliate theatres under separate agreements,
payments to event content producers and other direct costs of the meeting or event, including equipment rental, catering and movie tickets acquired primarily from the founding members.

Payment
to the founding members of a theatre access fee is comprised of a payment per theatre attendee, a payment per digital screen and a payment per digital cinema projector equipped
in the theatres, all of which escalate over time.

Network
costs include personnel, satellite bandwidth, repairs, and other costs of maintaining and operating the digital network and preparing advertising and other content for
transmission across the digital network. These costs are not specifically allocated between the advertising business and the Fathom Events business.

Cash and Cash EquivalentsAll highly liquid debt instruments and investments purchased with an original maturity of three months or less are
classified as cash equivalents and are considered available-for-sale securities. There are cash balances in a bank in excess of the federally insured limits or in the form of a
money market demand account with a major financial institution.

F-9

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Restricted CashAs of December 27, 2012 and December 29, 2011, other non-current assets included restricted cash of
$0.3 million, which secures a letter of credit used as a lease deposit on our New York office.

Marketable SecuritiesMarketable securities are reported at fair value, with unrealized gains and losses recognized in earnings. The fair value of
substantially all securities is determined by quoted market prices. The estimated fair value of securities for which there are no quoted market prices is based on similar types of securities that are
traded in the market.

Concentration of Credit Risk and Significant CustomersBad debts are provided for based on historical experience and management's evaluation of
outstanding receivables at the end of the period. Receivables are written off when management determines amounts are uncollectible. Trade accounts receivable are uncollateralized and represent a large
number of geographically dispersed debtors. The collectability risk is reduced by dealing with large, national advertising agencies who have strong reputations in the advertising industry and clients
with stable financial positions. As of December 27, 2012, there were no customers or advertising agency groups which accounted for more than 10% of the gross receivables balance or advertising
revenues. As of December 29, 2011, there was one advertising agency group through which the Company sources national advertising revenues representing approximately 15% of the Company's
outstanding gross receivables balance; however, none of the individual contracts related to the advertising agencies were more than 10% of advertising revenues.

Receivables
consisted of the following (in millions):

Years EndedDecember 27,
2012

December 29,
2011Trade accounts

$
101.8

$
98.4Other


1.2


2.5 .5.5Less allowance for doubtful accounts


(4.5
)

(4.3
)Total

$
98.5

$
96.6


Long-lived AssetsProperty and equipment is stated at cost, net of accumulated depreciation or amortization. Generally, the equipment
associated with the digital network of the founding member theatres is owned by the founding members, while the equipment associated with network affiliate theatres is owned by the Company. Major
renewals and improvements are capitalized, while replacements, maintenance, and repairs that do not improve or extend the lives of the respective assets are expensed as incurred. The Company records
depreciation and amortization using the straight-line method over the following estimated useful lives:

Equipment

4 - 10 yearsComputer hardware and software

3 - 5 yearsLeasehold improvements

Lesser of lease term or asset life


Software
and web site development costs developed or obtained for internal use are accounted for in accordance with ASC Subtopic 350-40Internal Use
Softwareand ASC Subtopic 350-50Website

F-10

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Development Costs. The subtopics require the capitalization of certain costs incurred in developing or obtaining software for internal use. The majority of software costs and
website development costs, which are included in equipment, are depreciated over three to five years. As of December 27, 2012 and December 29, 2011, the Company had a net book value of
$10.4 million and $9.3 million, respectively, of capitalized software and website development costs. Approximately $4.1 million, $4.8 million and $6.5 million was
recorded for the years ended December 27, 2012, December 29, 2011 and December 30, 2010, respectively, in depreciation expense. For the years ended December 27, 2012,
December 29, 2011 and December 30, 2010, the Company recorded $0.8 million, $0.9 million and $1.2 million in research and development expense, respectively.

The
Company assesses impairment of long-lived assets pursuant with ASC 360Property, Plant and Equipment.This
includes determining if certain triggering events have occurred that could affect the value of an asset. The Company has not recorded impairment charges related to long-lived assets.

Intangible assetsIntangible assets consist of contractual rights and are stated at cost, net of accumulated amortization. The Company records
amortization using the straight-line method over the contractual life of the intangibles, corresponding to the term of the ESAs or the term of the contract with the network affiliate.
Refer to Note 3Intangible Assets.

Amounts Due to/from Founding MembersAmounts due to/from founding members include
amounts due for the theatre access fee, offset by a receivable for advertising time purchased by the founding members on behalf of their beverage concessionaire, revenue share earned for Fathom Events
plus any amounts outstanding under other contractually obligated payments. Payments to or received from the founding members against outstanding balances are made monthly.

Amounts Due to Managing MemberAmounts due to the managing member include amounts due under the NCM LLC operating agreement and other
contractually obligated payments. Payments to or received from the managing member against outstanding balances are made monthly

Income TaxesAs a limited liability company, NCM LLC's taxable income or loss is allocated to the founding members and managing member and,
therefore, the only provision for income taxes included in the financial statements is for income-based state and local taxes.

Accumulated Other Comprehensive LossAccumulated other comprehensive income/(loss) consists of the fair value of derivative instruments and income
of
$35.1 million, income of $1.4 million and a loss of $10.9 million as of December 27, 2012, December, 29, 2011 and December 30, 2010, respectively.

Debt Issuance CostsIn relation to the issuance of outstanding debt discussed in
Note 6Borrowings, there is a balance of $18.3 million and $12.6 million in deferred financing costs as of
December 27, 2012 and December 29, 2011, respectively. The debt issuance costs are being amortized on a straight-line basis over the terms of the underlying obligation and
are included in interest on borrowings, which approximates the effective interest method.

F-11

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

The
changes in debt issuance costs are as follows (in millions):

Years EndedDecember 27,
2012

December 29,
2011

December 30,
2010Beginning Balance

$
12.6

$
7.3

$
9.2Debt issuance payments


14.0


9.1


Amortization of debt issuance costs


(2.4
)

(2.3
)

(1.9
)Write-off of debt issuance costs


(5.9
)

(1.5
)

Ending balance

$
18.3

$
12.6

$
7.3


Other InvestmentThe Company received equity securities in a privately held company as consideration for an advertising contract. The equity
securities are accounted as a cost method investment. At December 27, 2012 and December 29, 2011, the carrying amount of the investment was $0.8 million and $0.2 million,
respectively. There were no identified events or changes in circumstances that had an adverse effect on the fair value of the investment.

Share-Based CompensationNCM, Inc. issues two types of share-based compensation awards: stock options and non-vested (restricted)
stock. Compensation cost of non-vested stock is valued based on the market price on the grant date, the probability of vesting and is expensed over the vesting period. Compensation cost of
stock options is based on the estimated grant date fair value using the Black-Scholes option pricing model, which requires that NCM, Inc. make estimates of various factors. Under the fair value
recognition provisions of ASC 718CompensationStock Compensation, the Company recognizes share-based compensation net of an estimated
forfeiture rate, and therefore only recognizes compensation cost for those shares expected to vest over the requisite service period of the award. The recognized expense, including equity based
compensation costs of NCM, Inc. employees, is included in the operating results of the Company. Refer to Note 7Share Based
Compensation.

Fair Value MeasurementsFair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly
transaction
between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases
the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:



F-12

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Derivative InstrumentsThe Company is exposed to various financial and market risks
including changes in interest rates that exist as part of its ongoing operations. The Company utilizes certain derivative instruments to enhance its ability to manage these risks. In accordance with
ASC 815Derivatives and Hedging,the effective portion of changes in the fair value of a derivative that is designated as a cash flow hedge
is recorded in Accumulated Other Comprehensive Income ("AOCI") and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any ineffectiveness
associated with designated cash flow hedges, as well as any change in the fair value of a derivative that is not designated as a hedge, is recorded immediately in the Statements of Operations. Refer
to Note 11Derivative Instruments and Hedging Activities.



In December 2011, the FASB issued Accounting Standards Update 2011-12Deferral of the
Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05("ASU
2011-12"). ASU 2011-12 indefinitely defers the specific requirement within ASU 2011-05 to present on the face of the financial statements items that are
reclassified from accumulated other comprehensive income to net income separately with their respective components of net income and other comprehensive income. The effective dates for
ASU 2011-12 are consistent with the effective dates for ASU 2011-05 and, similar to the Company's evaluation for the adoption of ASU 2011-05, the
adoption of this guidance does not have a material effect on the Company's financial statements.

The
Company has considered all other recently issued accounting pronouncements and does not believe the adoption of such pronouncements will have a material impact on its financial
statements.

2. PROPERTY AND EQUIPMENT

The following is a summary of property and equipment, at cost less accumulated depreciation (in millions):

As of
December 27,
2012

As of
December 29,
2011Equipment, computer hardware and software

$
84.3

$
73.7Leasehold Improvements


3.4


3.4Less accumulated depreciation


(63.1
)

(54.8
)Subtotal


24.6


22.3Construction in Progress


1.1


2.3Total property and equipment

$
25.7

$
24.6


For
the years ended December 27, 2012, December 29, 2011, and December 30, 2010, the Company recorded depreciation expense of $8.7 million,
$8.8 million, and $11.4 million, respectively.

F-13

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

3. INTANGIBLE ASSETS

The Company's intangible assets consist of contractual rights with the founding members and network affiliates. The Company records amortization using the straight-line
method over the contractual life of the intangibles, corresponding to the term of the ESAs or the term of the contract with the network affiliate. The Company's intangible assets with its founding
members are recorded at the fair market value of NCM, Inc.'s publicly traded stock as of the date on which the common membership units were issued. The Company's common membership units are
fully convertible into NCM, Inc.'s common stock. The Company also records intangible assets for up-front fees paid to network affiliates upon commencement of a network affiliate
agreement. Pursuant to ASC 350-10IntangiblesGoodwill and Other, the Company's intangible assets have a finite
useful life and the Company amortizes the assets over the remaining useful life corresponding with the ESAs or the term of the contract with the network affiliate. If common membership units are
issued to a founding member for newly acquired theatres that are subject to an existing on-screen advertising agreement with an alternative provider, the amortization of the intangible
asset commences after the existing agreement expires and the Company can utilize the theatres for all of its services.

The
following is a summary of the Company's intangible assets (in millions):

As of
December 29,
2011

Additions(1)

Amortization

Other(2)

As of
December 27,
2012Gross carrying amount

$
295.7

$
17.1

$


$


$
312.8Accumulated amortization


(20.8
)




(11.7
)




(32.5
)Total intangible assets, net

$
274.9

$
17.1

$
(11.7
)
$


$
280.3




As of
December 30,
2010

Additions(3)

Amortization

Other(2)

As of
December 29,
2011Gross carrying amount

$
286.0

$
10.4

$


$
(0.7
)
$
295.7Accumulated amortization


(10.8
)




(10.0
)




(20.8
)Total intangible assets, net

$
275.2

$
10.4

$
(10.0
)
$
(0.7
)
$
274.9


(1)During
the first quarter of 2012, the Company issued 651,612 common membership units to its founding members for the rights to exclusive access to net new
theatre screens and attendees added by the founding members to NCM LLC's network during 2011. The Company recorded a net intangible asset of $9.9 million in the first quarter of 2012 as
a result of the common unit adjustment. In lieu of surrendering 16,727 units, AMC paid NCM LLC $0.2 million in the first quarter of 2012.
During
2012, the Company purchased intangible assets for $7.2 million associated with network affiliate agreements. The assets will be amortized over the term of the respective agreements.(2)See
Note 5Related-Party Transactionsfor further information on integration payments.(3)During
the first quarter of 2011, our founding members returned a net 322,751 common membership units to NCM LLC. This results in an adjustment to
the previously issued common membership units issued in exchange for the rights to exclusive access in accordance with the ESA, to net new theatre screens and attendees added by the founding members
to NCM LLC's network.


F-14

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

3. INTANGIBLE ASSETS (Continued)

As
a result, the Company recorded a reduction to the intangible asset at fair value of the common membership units of $5.5 million.


During
2011, the Company purchased intangible assets for $15.9 million associated with network affiliate agreements. The assets will be amortized over the term of the respective agreements.


As
of December 27, 2012 and December 29, 2011, the Company's intangible assets associated to the founding members, net of accumulated amortization was $258.7 million
and $259.4 million, respectively with weighted average remaining lives of 23.6 years and 25.2 years as of December 27, 2012 and December 29, 2011, respectively.

As
of December 27, 2012 and December 29, 2011, the Company's intangible assets related to the network affiliates, net of accumulated amortization was $21.6 and
$15.5 million, respectively with weighted average remaining lives of 19.7 years and 19.2 years as of December 27, 2012 and December 29, 2011, respectively.

For
the years ended December 27, 2012, December 29, 2011 and December 30, 2010 the Company recorded amortization expense of $11.7 million,
$10.0 million and $6.4 million, respectively. The estimated aggregate amortization expense for each of the five succeeding years is as follows (in millions):

Year

Amortization2013

$
12.12014


12.12015


12.12016


12.12017


12.1


4. ACCRUED EXPENSES

The following is a summary of the Company's accrued expenses (in millions):

As of
December 27,
2012

As of
December 29,
2011Make-good reserve

$
1.2

$
2.7Accrued interest


12.9


9.5Deferred rent


2.8


2.9Other accrued expenses


1.4


1.1Total accrued expenses

$
18.3

$
16.2


F-15

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

5. RELATED-PARTY TRANSACTIONS

Founding Member and Managing Member TransactionsFollowing is a summary of the transactions between the Company and the founding members and its
managing member (in millions):

Years EndedIncluded in the Statements of Income:

December 27,
2012

December 29,
2011

December 30,
2010Revenues:Beverage concessionaire revenue (included in advertising revenue)(1)

$
39.7

$
38.0

$
37.2Advertising inventory revenue (included in advertising revenue)(2)


0.2


0.2


1.3Operating expenses:Theatre access fee(3)


64.5


55.4


52.6Revenue share from Fathom Events (included in Fathom Events operating costs)(4)


5.5


8.3


7.3Purchase of movie tickets and concession products (included in Fathom Events operating costs)(5)


0.4


1.0


1.3Purchase of movie tickets and concession products (included in selling and marketing costs)(5)


1.1


1.1


1.2Administrative feemanaging member(6)


12.1


13.7


16.6Included in the Balance Sheets:Prepaid management fees to managing member(7)


0.8


1.0


0.8Integration payments (in intangible assets)(8)





0.7


3.9


(1)For
the years ended December 27, 2012, December 29, 2011 and December 30, 2010, the founding members purchased 60 seconds of
on-screen advertising time (with a right to purchase up to 90 seconds) from the Company to satisfy their obligations under their beverage concessionaire agreements at a specified 30 second
equivalent CPM.(2)The
value of such purchases is calculated by reference to the Company's advertising rate card.(3)Comprised
of payments per theatre attendee, payments per digital screen with respect to the founding member theatres included in the Company's network and
payments for access to higher quality digital cinema equipment.(4)These
payments are at rates (percentage of event revenue) included in the ESAs based on the nature of the event.(5)Used
primarily for marketing to the Company's advertising clients and marketing resale to Fathom Business customers.(6)Pursuant
to the Company's operating agreement, as the sole manager of NCM LLC, NCM, Inc. provides certain specific management services to
NCM LLC, including the services of the president and chief executive officer, president of sales and marketing, executive vice president and chief financial officer, executive vice president
and chief operations officer and executive vice president and general counsel. In exchange for these services, the Company reimburses NCM, Inc. for compensation paid to the officers (including
share based compensation) and other expenses of the officers and for certain out-of-pocket costs.


F-16

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

5. RELATED-PARTY TRANSACTIONS (Continued)

(7)The
payments for estimated management services related to employment are made one month in advance. NCM LLC also provides administrative and support
services to NCM, Inc. such as office facilities, equipment, supplies, payroll and accounting and financial reporting at no charge. Based on the limited activities of NCM, Inc. as a
standalone entity, the Company does not believe such unreimbursed costs are significant.(8)On
April 30, 2008, Regal acquired Consolidated Theatres and NCM LLC issued common membership units to Regal upon the closing of its
acquisition in exchange for the right to exclusive access to the theatres. The Consolidated Theatres had a pre-existing advertising agreement and, as a result, Regal made integration
payments pursuant to the ESAs on a quarterly basis in arrears through the second quarter of 2011 in accordance with certain run-out provisions.


Pursuant
to the terms of the NCM LLC Operating Agreement in place since the completion of NCM, Inc.'s IPO, the Company is required to make mandatory distributions on a
proportionate basis to its members of available cash, as defined in the NCM LLC Operating Agreement, on a quarterly basis in arrears. Mandatory distributions for the years ended
December 27, 2012, December 29, 2011 and December 30, 2010 are as follows (in millions):

Years EndedDecember 27,
2012

December 29,
2011

December 30,
2010AMC

$
23.1

$
25.3

$
28.8Cinemark


24.2


25.5


24.0Regal


29.5


32.2


32.3NCM, Inc.


72.8


78.7


71.0Total

$
149.6

$
161.7

$
156.1


The
mandatory distributions of available cash by the Company to its founding members for the quarter ended December 27, 2012 of $20.9 million, is included in amounts due to
founding members in the Balance Sheets as of December 27, 2012 and will be made in the first quarter of 2013.

Amounts
due to founding members as of December 27, 2012 were comprised of the following (in millions):

AMC

Cinemark

Regal

TotalTheatre access fees, net of beverage revenues

$
0.6

$
0.6

$
0.9

$
2.1Cost and other reimbursement


(1.1
)

(0.7
)

(1.4
)

(3.2
)Distributions payable


6.3


6.6


8.0


20.9Total

$
5.8

$
6.5

$
7.5

$
19.8


F-17

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

5. RELATED-PARTY TRANSACTIONS (Continued)

Amounts
due to founding members as of December 29, 2011 were comprised of the following (in millions):

AMC

Cinemark

Regal

TotalTheatre access fees, net of beverage revenues

$
0.5

$
0.5

$
0.6

$
1.6Cost and other reimbursement


(0.5
)

(0.5
)

(0.7
)

(1.7
)Distributions payable, net


6.7


6.8


8.6


22.1Total

$
6.7

$
6.8

$
8.5

$
22.0


Related Party AffiliatesThe Company enters into network affiliate agreements and Fathom agreements with network affiliates for NCM LLC to
provide in-theatre advertising and Fathom Events at theatre locations that are owned by companies that are affiliates of
certain of the founding members or directors of NCM, Inc. Related party affiliate agreements are entered into at terms that are similar to those of the Company's other network affiliates.

Following
is a summary of advertising operating costs in the Statements of Income between the Company and its related party affiliates (in millions):

Years EndedRelated Party Affiliate

December 27,
2012

December 29,
2011

December 30,
2010Starplex(1)

$
3.2

$
2.9

$
Showplex(2)


0.4


0.2


Other(3)


0.6


0.3


0.1Total

$
4.2

$
3.4

$
0.1


Following
is a summary of the accounts payable balance between the Company and its related party affiliates included in the Balance Sheets (in millions):

Related Party Affiliate

As of
December 27,
2012

As of
December 29,
2011Starplex(1)

$
0.7

$
0.7Showplex(2)


0.1


0.1Other(3)


0.1


0.1Total

$
0.9

$
0.9


(1)The
Company entered into a network affiliate agreement in 2009 with Starplex Operating L.P. ("Starplex"), an affiliate of Cinemark.(2)The
Company entered into a digital content agreement and a Fathom agreement in 2011 with Showplex Cinemas, Inc. ("Showplex"), an affiliate of one of
NCM, Inc.'s directors.(3)Other
affiliates include LA Live Cinemas LLC ("LA Live"), an affiliate of Regal, and Texas Cinemas, Corp., an affiliate of one of NCM, Inc.'s
directors.


F-18

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

5. RELATED-PARTY TRANSACTIONS (Continued)

National CineMedia, Inc.The management services agreement provides that the Company may participate in the NCM, Inc., equity incentive
plan (see Note 7Share-Based Compensation).

Amounts
due to/from managing member were comprised of the following (in millions):

As of
December 27,
2012

As of
December 29,
2011Distribution payable

$
19.8

$
21.0Costs and other reimbursement


(4.5
)

0.2Total

$
15.3

$
21.2


6. BORROWINGS

The following table summarizes the Company's total outstanding debt as of December 27, 2012 and December 29, 2011 and the significant terms of its borrowing arrangements:

Outstanding Balance as ofBorrowings ($ in millions)

December 27,
2012

December 29,
2011

Maturity Date

Interest RateRevolving Credit Facility

$
14.0

$
44.0

November 26, 2017(a)



(b)Term Loan


265.0


550.0

November 26, 2019



(b)Senior Unsecured Notes


200.0


200.0

July 15, 2021


7.875
%Senior Secured Notes


400.0




April 15, 2022


6.000
%Total

$
879.0

$
794.0


(a)A
portion of the revolving credit facility has a maturity date of December 31, 2014, as described in further detail below.(b)The
interest rates on the revolving credit facility and term loan are described below.


Senior Secured Credit FacilityThe Company's senior secured credit facility consists of a $124.0 million revolving credit facility and a
$265.0 million term loan. The obligations under the senior secured credit facility are secured by a lien on substantially all of the assets of NCM LLC.

Revolving Credit FacilityThe revolving credit facility portion is available, subject to certain terms and conditions, for general corporate purposes
of the Company in the ordinary course of business and for other transactions permitted under the senior secured credit facility, and a portion is available for letters of credit. The Company entered
into two amendments to the senior secured credit facility during 2012. As a result, the Company's total availability under the revolving credit facility is $124.0 million. On April 27,
2012, the Company entered into an amendment (the "Amendment") to its senior secured credit facility which resulted in the maturity of the remaining $105.0 million available under the revolving
credit facility to be extended to April 27, 2017, subject to acceleration if the term loan under the senior secured credit facility is not repaid, refinanced or extended by December 31,
2014. The Amendment became effective upon the completion of the private placement of the Senior Secured Notes (defined and discussed below) on April 27, 2012.

F-19

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

6. BORROWINGS (Continued)

On
November 26, 2012, the Company entered into an amendment and restatement of its senior secured credit facility, by and among NCM LLC, Barclays Bank PLC, as
administrative agent, and certain lenders party thereto (the "Amended Credit Facility"). Under the Amended Credit Facility, the amount available under the Company's revolving credit facility was
increased from $119.0 million to $124.0 million. The maturity date applicable to the $14.0 million outstanding principal formerly held by Lehman remained December 31, 2014.
The maturity date applicable to the remaining outstanding principal was extended to November 26, 2017. The unused line fee is 0.50% per annum.

Of
the total available, $14.0 million outstanding principal of the revolving credit facility formerly held by Lehman Brothers Holdings, Inc. ("Lehman") will not be repaid
in connection with any future prepayments of the revolving credit facility amounts, but rather Lehman's share of the revolving credit facility will be paid in full by NCM LLC to the successor
lenders, along with any accrued and unpaid fees and interest, on the termination date of December 31, 2014.

Borrowings
under the revolving credit facility bear interest at the Company's option of either the LIBOR index plus an applicable margin or the base rate (Prime Rate or the Federal Funds
Effective Rate, as defined in the senior secured credit facility) plus an applicable margin. The applicable margin for the revolving credit facility is determined quarterly and is subject to
adjustment based upon a net senior secured leverage ratio for NCM LLC (the ratio of secured funded debt less unrestricted cash and cash equivalents, over a non-GAAP measure defined
in the credit agreement). As part of the July 2011 amendment, the applicable margins on the $110.0 million portion of the revolving credit facility increased by 75 basis points based upon the
then current senior secured leverage ratio to the LIBOR index plus 2.25% or the base rate plus 1.25%. The margin on the $14.0 million portion of the revolving credit facility remained unchanged
at the LIBOR index plus 1.50% or the base rate plus 0.50%. The weighted-average interest rate on the outstanding balance on the revolving credit facility as of December 27, 2012 was 1.74%.

Term LoanAs a result of the Amended Credit Facility, the aggregate principal amount under the term loan increased from $225 million to
$265 million and the maturity date was extended from February 13, 2015 to November 26, 2019. The interest rate was increased from the LIBOR index plus 1.50% or the base rate
(Prime Rate or the Federal Funds Effective Rate, as defined in the Credit Facility) plus 0.50%, at the Company's option, to the LIBOR index plus 3.25% or the base rate (Prime Rate or the Federal Funds
Effective Rate, as defined in the Credit Facility) plus 2.25%, at the Company's option. The loan was entered into with an original issue discount of 0.75%. The amendment resulted in a
$3.4 million non-cash charge for the write-off of net deferred issuance costs.

In
connection with the amendment to the senior secured credit facility on April 27, 2012 and the private placement of $400.0 million of Senior Secured Notes (defined
below), the Company paid down the term loan by $325.0 million, reducing the balance from $550.0 million to $225.0 million resulting in a non-cash charge of
$2.5 million for the write-off of net deferred issuance costs associated with the payment on the term loan. Prior to the Amended Credit Facility, interest rate swaps resulted in the
entire $225.0 million term loan having a fixed annual interest rate of 6.484% (both those accounted for as hedges and those that are not). The interest rate swaps were terminated as part of the
Amended Credit Facility. See Note 11Derivative Instruments and Hedging Activitiesfor further discussion of the interest rate swaps.

F-20

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

6. BORROWINGS (Continued)

The senior secured credit facility contains a number of covenants and financial ratio requirements, with which the Company was in compliance at December 27, 2012, including
maintaining a consolidated net senior secured leverage ratio of 6.5 times on a quarterly basis. The Company is permitted to make quarterly dividend payments and other payments based on the Company's
leverage ratios so long as no default or event of default has occurred and continues to occur. The quarterly dividend payments and other distributions are made if the consolidated net senior secured
leverage ratio is less than or equal to 6.5 times.

There
are no borrower distribution restrictions as long as the Company's consolidated net senior secured leverage ratio is below 6.5 times and the Company is in compliance with its debt
covenants. If there are limitations on the restricted payments, the Company may not declare or pay any dividends, or make any payments on account of the Company, or set aside assets for the retirement
or other acquisition of capital stock of the borrower or any subsidiary, or make any other distribution for obligations of the Company. When these restrictions are effective, the Company may still pay
the services fee and reimbursable costs pursuant to terms of the management agreement. The Company can also make payments pursuant to the tax receivable agreement in the amount, and at the time
necessary to satisfy the contractual obligations with respect to the actual cash tax benefits payable to the Company's founding members.

As
of December 27, 2012, the Company's net senior secured leverage ratio was 3.1 times (versus the covenant of 6.5 times).

Senior Unsecured Notes due 2021On July 5, 2011, the Company completed a private placement of $200.0 million in aggregate principal
amount of 7.875% Senior Unsecured Notes ("Senior Unsecured Notes") for which the exchange offering was completed on September 22, 2011. The Senior Unsecured Notes have a maturity date of
July 15, 2021 and pay interest semi-annually in arrears on January 15 and July 15 of each year, commencing January 15, 2012. The notes are subordinated to all
existing and future secured debt, including indebtedness under the Company's existing senior secured credit facility and the Senior Secured Notes defined below. The Senior Unsecured Notes contain
certain covenants with which the Company was in compliance as of December 27, 2012.

Senior Secured Notes due 2022On April 27, 2012, the Company completed a private placement of $400.0 million in aggregate principal
amount of 6.00% Senior Secured Notes (the "Senior Secured Notes"). The Senior Secured Notes have a maturity date of April 15, 2022 and pay interest semi-annually in arrears on
April 15 and October 15 of each year, which commenced October 15, 2012. The Senior Secured Notes are senior secured obligations of NCM LLC, rank the same as
NCM LLC's senior secured credit facility, subject to certain exceptions, and share in the same collateral that secures NCM LLC's obligations under the senior secured credit facility. The
Senior Secured Notes contain certain covenants with which the Company was in compliance as of December 27, 2012.

F-21

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

6. BORROWINGS (Continued)

Future Maturities of BorrowingsThe scheduled annual maturities on the senior secured credit facility and Senior Secured and Senior Unsecured Notes
as
of December 27, 2012 are as follows (in millions):

Year

Amount2013

$
2014


14.02015


2016


2017


Thereafter


865.0Total

$
879.0


7. SHARE-BASED COMPENSATION

At the date of the IPO, NCM, Inc. adopted the NCM, Inc. 2007 Equity Incentive Plan. As of December 27, 2012, there were 10,076,000 shares of common stock available
for issuance or delivery under the Equity Incentive Plan of which 1,851,975 remain available for grants as of December 27, 2012. Options awarded under the Equity Incentive Plan are granted with
an exercise price equal to the closing market price of NCM, Inc. common stock on the date NCM, Inc.'s board of directors approves the grant. Upon vesting of the restricted stock awards
or exercise of options, NCM LLC will issue common membership units to NCM, Inc. equal to the number of shares of NCM, Inc.'s common stock represented by such awards. Options and
non-vested restricted stock vest annually over a three or five-year period and options have either 10-year or 15-year contractual terms. A forfeiture
rate of 5% was estimated to reflect the potential separation of employees.

The
Company recognized $4.7 million, $7.5 million and $7.0 million for the years ended December 27, 2012, December 29, 2011 and December 30,
2010, respectively, of share-based compensation expense and $0.1 million were capitalized during each of the years ended December 27, 2012, December 29, 2011 and
December 30, 2010, respectively. As of December 27, 2012, unrecognized compensation cost related to unvested options was approximately $3.7 million, which will be recognized over
a weighted average remaining period of 1.5 years.

The
weighted average grant date fair value of granted options was $4.08, $3.81 and $4.84 for the years ended December 27, 2012, December 29, 2011 and December 30,
2010, respectively. The intrinsic value of options exercised during the year was $1.4 million, $1.5 million and $2.2 million for the years ended December 27, 2012,
December 29, 2011 and December 30, 2010, respectively. The total fair value of awards vested during the years ended December 27, 2012, December 29, 2011 and
December 30, 2010 was $7.8 million, $6.2 million and $3.2 million, respectively.

The
fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing valuation model that uses the assumptions noted in the table below. Expected
volatilities are based on implied volatilities from traded options on the Company's stock, historical volatility of the
Company's stock, and other factors. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted is derived
from the output of the option valuation model and represents the period of time that options granted

F-22

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

7. SHARE-BASED COMPENSATION (Continued)

are
expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The
following assumptions were used in the valuation of the options for the years ended December 27, 2012, December 29, 2011 and December 30, 2010:

Years EndedDecember 27,
2012

December 29,
2011

December 30,
2010Expected term (in years)

6.0

6.0

6.0Risk free interest rate

.8% - 1.1%

1.2% - 2.4%

1.4% - 3.8%Expected volatility

53.2% - 54.6%

30.0% - 53.6%

39.0%Dividend yield

5.5%

3.8% to 4.0%

3.8% to 4.0%


A
summary of option award activity under the Equity Incentive Plan as of December 27, 2012, and changes during the year then ended are presented below:

Options

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Life
(in years)

Aggregate
Intrinsic
Value
(in millions)Outstanding at December 29, 2011


4,837,572

$
16.25Granted


562,623


13.28Exercised


(241,939
)

9.31Forfeited


(173,233
)

19.64Expired


(71
)

17.46Outstanding at December 27, 2012


4,984,952

$
16.13


7.6

$
3.6Exercisable at December 27, 2012


3,083,131

$
16.09


7.2

$
2.8Vested and Expected to Vest at December 27, 2012


4,965,564

$
16.14


7.6

$
3.5


The
following table summarizes information about the stock options at December 27, 2012, including the weighted average remaining contractual life and weighted average exercise
price:

Options Outstanding

Options ExercisableRange of Exercise Price

Number
Outstanding as of
December 27,
2012

Weighted
Average
Remaining Life
(in years)

Weighted
Average
Exercise Price

Number
Exercisable as of
December 27,
2012

Weighted
Average
Exercise Price$5.35 - $13.55


1,165,240


7.5

$
11.09


604,908

$
9.44$13.56 - $16.66


1,114,470


8.3


16.01


916,694


16.23$16.67 - $16.97


915,650


7.1


16.97


605,895


16.97$16.98 - $18.38


1,237,326


8.1


18.28


487,744


18.23$18.39 - $26.76


552,266


6.3


20.80


467,890


21.004,984,952


7.6

$
16.13


3,083,131

$
16.09


Non-vested (Restricted) StockNCM, Inc. has a non-vested stock program as part of the Equity Incentive Plan. The plan
provides for non-vested stock awards to officers, board members and other

F-23

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

7. SHARE-BASED COMPENSATION (Continued)

key
employees. Under the non-vested stock program, common stock of NCM, Inc. may be granted at no cost to officers, board members and key employees, subject to requisite service and
meeting financial performance targets (for certain grants beginning in 2009), and as such restrictions lapse, the award vests in that proportion. The participants are entitled to cash dividends from
NCM, Inc. and to vote their respective shares, although the sale and transfer of such shares is prohibited and the shares are subject to forfeiture during the restricted period. Additionally,
the accrued cash dividends for 2010, 2011 and 2012 grants are subject to forfeiture during the restricted period. The shares are also subject to the terms and provisions of the Equity Incentive Plan.
Non-vested stock awards granted in 2009 through 2012 (except grants to board members) include performance vesting conditions, which permit vesting to the extent that NCM, Inc.
achieves specified non-GAAP targets at the end of the measurement period. The length
of the measurement period is two to three years. Non-vested stock granted to non-employee directors vest after one year.

The
Company recorded $4.3 million, $4.3 million and $7.0 million in compensation expense related to such outstanding non-vested shares during the years
ended December 27, 2012, December 29, 2011 and December 30, 2010, respectively. No compensation expense was recorded for the 2011 non-vested restricted stock grants
subject to performance conditions as the grants are not expected to vest due to the projected underperformance against the specified non-GAAP targets as of December 27, 2012. Of the
$7.0 million in compensation expense for the year ended December 30, 2010, $1.6 million was related to the Company's expected performance against the specified
non-GAAP targets for the 2009 and 2010 grants as of December 30, 2010.

During
the years ended December 27, 2012, December 29, 2011 and December 30, 2010 there was $0.1 million, $0.1 million and $0.1 million
capitalized, respectively. As of December 27, 2012, unrecognized compensation cost related to non-vested stock was approximately $3.6 million, which will be recognized over a
weighted average remaining period of 1.7 years. The weighted average grant date fair value of non-vested stock was $13.23, $17.66 and $17.24 for the years ended December 27,
2012, December 29, 2011 and December 30, 2010, respectively. The total fair value of awards vested was $6.9 million, $1.8 million and $1.6 million during the years
ended December 27, 2012, December 29, 2011 and December 30, 2010, respectively.

A
summary of restricted stock award activity under the Equity Incentive Plan as of December 27, 2012, and changes during the year then ended are presented below:

Number of
Restricted
Shares

Weighted Average
Grant-Date
Fair ValueNon-vested as of December 29, 2011


1,285,508

$
16.92Granted


911,491


13.23Exercised/released


(454,850
)

15.72Forfeited


(35,021
)

16.02Non-vested as of December 27, 2012


1,707,128

$
15.30


8. EMPLOYEE BENEFIT PLANS

The Company sponsors the NCM 401(k) Profit Sharing Plan (the "Plan") under Section 401(k) of the Internal Revenue Code of 1986, as amended, for the benefit of substantially all
full-time employees.

F-24

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

8. EMPLOYEE BENEFIT PLANS (Continued)

The
Plan provides that participants may contribute up to 20% of their compensation, subject to Internal Revenue Service limitations. Employee contributions are invested in various investment funds
based upon election made by the employee. The Company made discretionary contributions of $1.0 million, $0.9 million and $0.9 million during the years ended December 27, 2012,
December 29, 2011 and December 30, 2010, respectively.

9. COMMITMENTS AND CONTINGENCIES

Legal ActionsThe Company is subject to claims and legal actions in the ordinary course of business. The Company believes such claims will not
have a
material effect on its financial position or results of operations.

Operating CommitmentsThe Company leases office facilities for its headquarters in Centennial, Colorado and also in various cities for its sales
and
marketing personnel as sales offices. The Company has no capital lease obligations. Total lease expense for the years ended December 27, 2012, December 29, 2011 and December 30,
2010, was $2.3 million, $2.3 million and $2.2 million, respectively.

Future
minimum lease payments under noncancelable operating leases as of December 27, 2012 are as follows (in millions):

Year

Minimum
Lease
Payments2013

$
2.52014


2.52015


2.52016


2.62017


2.0Thereafter


5.9Total

$
18.0


Minimum Revenue GuaranteesAs part of the network affiliate agreements entered in the ordinary course of business under which the Company sells
advertising for display in various network affiliate theatre chains, the Company has agreed to certain minimum revenue guarantees on a per attendee basis. If a network affiliate achieves the
attendance set forth in their respective agreement, the Company has guaranteed minimum revenue for the network affiliate per attendee if such amount paid under the revenue share arrangement is less
than its guaranteed amount. The amount and term varies for each network affiliate, but terms range from three to 20 years, prior to any renewal periods of which some are at the option of the
Company. The maximum potential amount of future payments the Company could be required to make pursuant to the minimum revenue guarantees is $47.3 million over the remaining terms of the
network affiliate agreements. As of December 27, 2012 and December 29, 2011, the Company had no liabilities recorded for these obligations as such guarantees are less than the expected
share of revenue paid to the affiliate.

F-25

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

10. FAIR VALUE MEASUREMENTS

Fair Value of Financial InstrumentsThe carrying amount of the revolving credit facility is considered a reasonable estimate of fair value due to its
floating-rate terms. The estimated fair values of the Company's financial instruments where carrying values do not approximate fair value are as follows (in millions):

As of December 27, 2012

As of December 29, 2011Carrying
Value

Fair Value(1)

Carrying
Value

Fair Value(1)Term Loan

$
265.0

$
265.8

$
550.0

$
530.6Senior Unsecured Notes


200.0


222.0


200.0


198.4Senior Secured Notes


400.0


425.5








(1)The
Company has estimated the fair value on an average of at least two non-binding broker quotes and the Company's analysis. If the Company were
to measure the borrowings in the above table at fair value on the balance sheet they would be classified as Level 2.


Recurring MeasurementsThe fair values of the Company's assets and liabilities measured on a recurring basis pursuant to ASC 820-10 Fair Value Measurements and Disclosuresare as follows (in millions):

Fair Value Measurements
at Reporting Date UsingAs of
December 27,
2012

Quoted Prices in
Active
Markets for
Identical Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)ASSETS:Other investment(1)


0.8





0.8


Total assets

$
0.8

$


$
0.8

$



(1)Other investmentThe Company's other investment are equity securities in a privately held
company.


F-26

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

10. FAIR VALUE MEASUREMENTS (Continued)

Fair Value Measurements
at Reporting Date UsingAs of
December 29,
2011

Quoted Prices in
Active Markets
for Identical
Assets (Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)ASSETS:Other investment(1)

$
0.2

$


$
0.2

$
Total assets

$
0.2

$


$
0.2

$
LIABILITIES:Current portion of interest rate swap agreements(2)

$
24.0

$


$
24.0

$
Interest rate swap agreements(2)


46.8





46.8


Total liabilities

$
70.8

$


$
70.8

$



(1)Other InvestmentThe Company's other investment are equity securities in a privately held
company.(2)Interest Rate Swap AgreementsRefer to Note 11.


11. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Risk Management Objectives and Strategies

The Company is exposed to various financial and market risks including changes in interest rates that exist as part of its ongoing
operations and utilizes certain derivative instruments to enhance its ability to manage these risks.

Accounting for Derivative Instruments and Hedging Activities

In accordance with ASC 815Derivatives and Hedging,the effective portion
of changes in the fair value of a derivative that is designated as a cash flow hedge is recorded in AOCI and reclassified into earnings in the same period or periods during which the hedged
transaction affects earnings.

The
Company formally documents all relationships between hedging instruments and the underlying hedged items, as well as its risk management objective and strategy for undertaking
various hedge transactions. This process includes linking all derivatives that have been designated as cash flow hedges to forecasted transactions. The Company formally assesses, both at inception of
the hedge and on an ongoing basis, whether the hedge is highly effective in offsetting changes in cash flows of the underlying hedged items. The Company also performs an assessment of the probability
of the forecasted transactions on a periodic basis. If it is determined that a derivative ceases to be highly effective during
the term of the hedge or if the forecasted transaction is no longer probable, the Company discontinues hedge accounting prospectively for such derivative.

F-27

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

11. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

As
of December 27, 2012 and December 29, 2011, the estimated fair value and line item caption of derivative instruments recorded were as follows (in millions):

Fair Value of Derivative
Liability as ofBalance Sheet
Location

December 27,
2012

December 29,
2011Derivatives designated as hedging instruments in cash flow hedges:Current portion of interest rate swap agreements

Current Liabilities

$


$
18.0Interest rate swap agreements

Other Liabilities





35.1Derivatives not designated as hedging instruments:Current portion of interest rate swap agreements

Current Liabilities





6.0Interest rate swap agreements

Other Liabilities





11.7Total derivatives



$


$
70.8


During
2012, the Company entered into two amendments to the senior secured credit facility (see Note 6Borrowings)
resulting in amendments to our derivative instruments.

On
April 27, 2012, the Company amended its existing interest rate swap agreements terminating a notional amount of $325.0 million (the aggregate amount of the term loan
prepayment) such that 100% of the Company's interest rate exposure relating to the remaining $225.0 million term loan debt balance remained hedged at 6.484%. Since the forecasted transactions,
or quarterly interest payments, on the $325.0 million term loan prepayment are no longer probable of occurring, the Company discontinued cash flow hedge accounting on those swaps and
reclassified the corresponding outstanding balance in AOCI related to those interest rate swaps into earnings. As a result, the Company recorded a loss of approximately $26.7 million related to
the partial swap terminations and paid approximately $40.2 million in breakage fees.

The
swaps were terminated ratably among the four counterparties, however the Company's cash flow hedge accounting designation for each swap was pegged to varying balances of the
underlying term loan. Cash flow hedge accounting was discontinued because the underlying debt instrument is no longer outstanding and the interest payments are no longer probable.

The
Company also discontinued cash flow hedge accounting for swaps in which the Company terminated its swap with the counterparty, however, the corresponding term loan associated with
those swaps remained outstanding. In accordance with ASC 815, the net derivative loss related to the discontinued cash flow hedges shall continue to be reported in AOCI because it is probable that the
forecasted transaction will occur by the end of the originally specified time period.

In
connection with the amendment to the term loans on November 26, 2012, the entire notional amount of NCM LLC's interest rate swaps with four counterparties, equal to
$225.0 million, was terminated such that the Company's interest rate exposure related to the Amended Term Loan will be unhedged. The Company paid approximately $23.2 million in breakage
fees in connection with the swap. The net derivative loss related to the discontinued cash flow hedges shall continue to be reported in AOCI because it is probable that the forecasted transaction will
occur by the end of the originally specified time period.

F-28

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

11. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Continued)

As
of December 27, 2012, a total of $21.9 million of cash flow hedges remaining in AOCI will be amortized in the Statements of Income over the original swap term or
February 13, 2015. The Company estimates approximately $10.3 million will be amortized to change in derivative fair value in the Statements of Income in the next 12 months.

During
the periods presented, the Company also recorded changes in the fair value and amortization of AOCI related to an interest rate swap in which the Company discontinued cash flow
hedge accounting in 2008 due to the bankruptcy of its counterparty. In connection with the swap terminations in April 2012, the entire balance of this swap was terminated and the remaining balance in
AOCI of $3.5 million was reclassified into earnings during the second quarter of 2012.

The
effect of derivative instruments in cash flow hedge relationships on the financial statements for the years ended December 27, 2012, December 29, 2011 and
December 30, 2010 were as follows (in millions):

Unrealized Gain (Loss) Recognized in
NCM, Inc.'s Other Comprehensive
Income (Pre-tax)

Realized Loss Recognized
in Interest on
Borrowings (Pre-tax)Years Ended

Years EndedDecember 27,
2012

December 29,
2011

December 30,
2010

December 27,
2012

December 29,
2011

December 30,
2010Interest Rate Swaps

$
26.0

$
(18.1
)
$
(30.3
)
$
(9.1
)
$
(19.5
)
$
(19.4
)


The
effect of derivatives not designated as hedging instruments under ASC 815 on the financial statements for the years ended December 27, 2012, December 29, 2011 and
December 30, 2010 were as follows (in millions):

Gain (Loss) Recognized in
Non-Operating Expenses (Pre-tax)Years EndedDerivative Instruments not
Designated as Hedging Instruments

Income Statement
Location

December 27,
2012

December 29,
2011

December 30,
2010Realized loss on derivative instruments

Interest on borrowings

$
(5.1
)
$
(6.5
)
$
(6.2
)Gain (loss) from change in fair value on cash flow hedges

Change in derivative fair value


3.0





(4.0
)Amortization of AOCI on discontinued cash flow hedges

Change in derivative fair value


(4.0
)

(1.3
)

(1.3
)Total



$
(6.1
)
$
(7.8
)
$
(11.5
)


F-29

---



Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

12. SEGMENT REPORTING

Advertising revenue accounts for 91.2%, 88.7% and 88.7%, of revenue for the years ended December 27, 2012, December 29, 2011 and December 30, 2010, respectively. The
following table presents revenues less directly identifiable expenses to arrive at income before income taxes for the advertising reportable segment, the combined Fathom Events operating segments, and
network, administrative and unallocated costs. Refer to Note 1Segment Reporting.

Year Ended December 27, 2012 (in millions)Advertising

Fathom
Events and
Other

Network,
Administrative
and
Unallocated
Costs

TotalRevenue

$
409.5

$
39.3

$


$
448.8Operating costs


95.8


29.0


18.9


143.7Selling and marketing costs


53.9


4.2


2.4


60.5Administrative and other costs


2.6


0.8


29.0


32.4Depreciation and amortization








20.4


20.4Interest and other costs








90.2


90.2Income before income taxes

$
257.2

$
5.3

$
(160.9
)
$
101.6




Year Ended December 29, 2011 (in millions)Advertising

Fathom
Events and
Other

Network,
Administrative
and
Unallocated
Costs

TotalRevenue

$
386.2

$
49.2

$


$
435.4Operating costs


80.0


34.1


17.7


131.8Selling and marketing costs


49.2


7.9


2.7


59.8Administrative and other costs


2.6


0.8


27.9


31.3Depreciation and amortization








18.8


18.8Interest and other costs








58.9


58.9Income before income taxes

$
254.4

$
6.4

$
(126.0
)
$
134.8


F-30

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

12. SEGMENT REPORTING (Continued)



Year Ended December 30, 2010 (in millions)Advertising

Fathom
Events and
Other

Network,
Administrative
and
Unallocated
Costs

TotalRevenue

$
379.5

$
48.0

$


$
427.5Operating costs


74.3


32.4


20.0


126.7Selling and marketing costs


46.5


8.1


3.3


57.9Administrative and other costs


3.2


0.8


30.5


34.5Depreciation and amortization








17.8


17.8Interest and other costs








49.9


49.9Income before income taxes

$
255.5

$
6.7

$
(121.5
)
$
140.7


The
following is a summary of revenues by category (in millions):

Years EndedDecember 27,
2012

December 29,
2011

December 30,
2010National advertising revenue

$
288.7

$
267.6

$
272.0Local advertising revenue


81.1


80.6


70.3Founding member advertising revenue from beverage concessionaire agreements


39.7


38.0


37.2Fathom Consumer revenue


34.2


35.0


31.5Fathom Business revenue


5.1


14.2


16.5Total revenue

$
448.8

$
435.4

$
427.5


During
the first quarter of 2012, the Company began to wind down the Fathom Business Events division, to place more focus on the Fathom Consumer Events division.

13. VALUATION AND QUALIFYING ACCOUNTS

The Company's valuation allowance for doubtful accounts for the years ended December 27, 2012, December 29, 2011 and December 30, 2010 were as follows (in millions):

Years EndedDecember 27,
2012

December 29,
2011

December 30,
2010ALLOWANCE FOR DOUBTFUL ACCOUNTS:Balance at beginning of period

$
4.3

$
3.7

$
3.6Provision for bad debt


1.2


2.1


2.3Write-offs, net


(1.0
)

(1.5
)

(2.2
)Balance at end of period

$
4.5

$
4.3

$
3.7


F-31

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Table of Contents

NATIONAL CINEMEDIA, LLC

NOTES TO THE FINANCIAL STATEMENTS (Continued)

14. QUARTERLY FINANCIAL DATA (UNAUDITED)

The following represents selected information from the Company's unaudited quarterly Statements of Income for the years ended December 27, 2012 and December 29, 2011 (in
millions):

2012

First
Quarter

Second
Quarter

Third
Quarter

Fourth
QuarterRevenues

$
79.1

$
110.1

$
143.7

$
115.9Operating expenses


62.1


64.8


65.6


64.5Operating income


17.0


45.3


78.1


51.4Net income(1)


3.2


1.8


62.9


33.1




2011

First
Quarter

Second
Quarter

Third
Quarter

Fourth
QuarterRevenues

$
70.8

$
114.0

$
136.0

$
114.6Operating expenses


55.8


63.8


62.0


60.1Operating income


15.0


50.2


74.0


54.5Net income


5.1


37.6


56.6


35.2


(1)During
the second quarter, the Company recorded a loss of approximately $26.7 million related to partial swap terminations. See
Note 11Derivative Instruments and Hedging Activities.


15. SUBSEQUENT EVENTS

During the first quarter of 2013, NCM LLC issued 4,536,014 common membership units to its founding members, which is an adjustment to the previously issued common membership units
issued in exchange for the rights to exclusive access, in accordance with the ESAs, to net new theatre screens and attendees added by the founding members to NCM LLC's network. As a result,
NCM LLC recorded an intangible asset at fair value of the common membership units of $69.0 million. The Company based the fair value of the intangible asset on the market value of the
common membership units when issued, which are freely convertible into NCM, Inc.'s common stock. Pursuant to ASC 350-10 IntangiblesGoodwill and Other, the intangible asset has a finite
useful life and the Company will amortize the asset over the remaining
useful life corresponding with the ESAs.

F-32

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Table of Contents

Independent Auditors' Report

The
Members
Digital Cinema Implementation Partners, LLC

We
have audited the accompanying consolidated financial statements of Digital Cinema Implementation Partners, LLC and Subsidiaries, which comprise the consolidated balance sheets as of
December 31, 2012 and 2011, and the related consolidated statements of operations, members' equity and cash flows for the years then ended, and the related notes to the consolidated financial
statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in
accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.

An
audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment,
including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Digital Cinema Implementation
Partners, LLC and Subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for the years then ended, in accordance with accounting principles
generally accepted in the United States of America.

/s/
CohnReznick LLP

Roseland,
New Jersey
February 20, 2013

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DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC        CONSOLIDATED BALANCE SHEETS        ($ in thousands)

December 31,2012

2011ASSETSCurrent assets:Cash and cash equivalents

$
19,161

$
2,866Accounts receivable, net


36,953


29,976Other current assets


208


195Total current assets


56,322


33,037Property and equipment, net


900,186


776,387Deferred financing costs, net


24,894


32,091Deferred warranty reimbursement costs, net


190,351


219,757Restricted cash


11,396


14,271Other noncurrent assets


26,783


12,239Total assets

$
1,209,932

$
1,087,782LIABILITIES AND MEMBERS' EQUITYCurrent liabilities:Accounts payable and accrued liabilities

$
22,455

$
28,153Current maturities of long-term debt


24,700


2,200Warranty reimbursement liability, current


7,056


3,790Total current liabilities


54,211


34,143Warranty reimbursement liability (excluding current)


223,464


236,554Long-term debt (excluding current)


763,176


692,416Derivative liabilities


29,419


34,580Other noncurrent liabilities


76


42Total liabilities


1,070,346


997,735CommitmentsMembers' equity


139,586


90,047Total liabilities and members' equity

$
1,209,932

$
1,087,782




See Notes to Consolidated Financial Statements.

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Table of Contents



DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC        CONSOLIDATED STATEMENTS OF OPERATIONS        ($ in thousands)

Years Ended
December 31,2012

2011REVENUESVirtual print fees

$
158,327

$
109,396Exhibitor lease fees


13,114


8,633Alternative content fees


955


764Peak period payments


343


243Management fees


2,149


1,672Subtotal, operating revenues


174,888


120,708Warranty reimbursement costs


(23,371
)

(16,737
)Exhibitor lease, step-up rent adjustment


14,500


9,453Net operating revenues


166,017


113,424OPERATING EXPENSESGeneral and administrative


9,796


7,749Depreciation and amortization


53,558


35,167Total operating expenses


63,354


42,916Operating income


102,663


70,508INTEREST EXPENSEInterest


58,574


43,918Paid-in-kind interest


5,459


4,286Amortization of deferred financing costs


7,198


7,658Derivative (gain) loss


(5,161
)

17,160Total interest expense


66,070


73,022OTHER INCOME (EXPENSE)Interest income


5


4Loss on sale of assets


(43
)

Other income


197


Total other income, net


159


4Net income (loss)

$
36,752

$
(2,510
)




See Notes to Consolidated Financial Statements.

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DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC        CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY        ($ in thousands)

Years Ended
December 31,2012

2011Balance, beginning of year

$
90,047

$
63,942Capital contributions


12,787


28,615Net income (loss)


36,752


(2,510
)Balance, end of year

$
139,586

$
90,047




See Notes to Consolidated Financial Statements.

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DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC        CONSOLIDATED STATEMENTS OF CASH FLOWS        ($ in thousands)

Years Ended December 31,2012

2011Operating activities:Net income (loss)

$
36,752

$
(2,510
)Adjustments to reconcile net income (loss) to net cash provided by operating activities:Depreciation and amortization


53,558


35,167Amortization of deferred warranty reimbursement costs


23,371


16,737Amortization of deferred financing costs


7,198


7,658Derivative loss


(5,161
)

17,160Loss on sale of assets


43


Paid-in-kind interest


5,459


4,286Changes in operating assets and liabilities:Accounts recevable


(6,977
)

(15,997
)Other current and noncurrent assets


(14,557
)

(9,311
)Accounts payable and accrued liabilities


2,432


207Warranty reimbursement liability


(2,428
)

(733
)Payment of prior period warranty reimbursement liability


(528
)

Other noncurrent liabilities


34


(37
)Net cash provided by operating activities


99,196


52,627Investing activities:Purchase of property and equipment


(160,320
)

(423,927
)Payment of prior period property and equipment


(26,341
)

(37,416
)Sale of property and equipment


298


Restricted cash


2,875


(7,797
)Net cash used in investing activities


(183,488
)

(469,140
)Financing activities:Increase in long-term debt


90,000


603,750Paydown of long-term debt


(2,200
)

(206,650
)Capital contributions from Members


12,787


28,615Deferred financing costs





(11,684
)Net cash provided by financing activities


100,587


414,031Net increase (decrease) in cash and cash equivalents


16,295


(2,482
)Cash and cash equivalents, beginning of year


2,866


5,348Cash and cash equivalents, end of year

$
19,161

$
2,866Supplemental schedule of non-cash investing and financing activities:Additions to property and equipment included in accounts payable and accrued liabilities

$
17,378

$
26,341Warranty reimbursement payable in accounts payable and accrued liabilities

$
1,361

$
528Deferred warranty asset and warranty reimbursement obligation

$
(6,035
)
$
122,636




See Notes to Consolidated Financial Statements.

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Table of Contents



DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1Nature of Operations

Digital Cinema Implementation Partners, LLC, ("DCIP", and together with its consolidated wholly-owned subsidiaries, the "Company") was formed as a Delaware limited liability
company on February 12, 2007 for the purpose of raising third-party capital to purchase and deploy digital cinema projection equipment ("Digital Systems") in theatres located throughout the
United States and Canada. The Company is headquartered in New Jersey and has offices in Colorado and Minnesota. The Company is owned by its founding members American Multi-Cinema, Inc. ("AMC"),
Cinemark Media, Inc. ("Cinemark") and Regal/DCIP Holdings, LLC ("Regal") (collectively, the "Founding Members").

On
March 10, 2010, the Company completed an initial financing transaction for the deployment of Digital Systems utilizing its subsidiary entities Kasima, LLC ("Kasima"),
Kasima Holdings, LLC ("Holdings") and Kasima Parent Holdings, LLC ("Parent") to execute its business plan. Kasima is a wholly-owned subsidiary of Holdings, Holdings is a wholly-owned
subsidiary of Parent and Parent is a wholly-owned subsidiary of the DCIP. On March 31, 2011, the Company obtained the incremental financing necessary to complete its planned deployment of
Digital Systems. See Note 3 for a more detailed description of these financing transactions.

Digital
Systems are purchased by Kasima and leased to each Founding Member or one of its affiliates (each such entity, an "Exhibitor") pursuant to the terms of a Master Equipment Lease
Agreement ("ELA"). Kasima facilitates the installation of the leased Digital Systems into each Exhibitor's theatres pursuant to the terms of an Installation Agreement. The Exhibitor is responsible for
the ongoing
maintenance and insurance of the Digital Systems. The Company has also entered into (and assigned to Kasima) long-term Digital Cinema Deployment Agreements ("DCDAs") with six major motion
picture studios ("Major Studios") pursuant to which Kasima receives a virtual print fee ("VPF") each time the studio books a film or certain other content on the Digital Systems. Other content
distributors have entered into DCDAs or shorter term agreements with the Company that provide for the payment of VPFs to Kasima for bookings of the distributor's content on a Digital System.

On
June 20, 2011, DCIP and Canadian Digital Cinema Partnership ("CDCP") entered into a long-term management services agreement (an "MSA" and with respect to CDCP, the
"CDCP MSA") to manage a similar deployment of Digital Systems in Canada and to perform certain other specified services for CDCP related thereto (see Note 2). CDCP is a Canadian limited
partnership formed by Cineplex Entertainment LP ("Cineplex") and Empire Theatres Ltd. ("Empire") to facilitate the purchase and deployment of Digital Systems to their theatres in Canada.
On April 1, 2012, DCIP entered into a long-term MSA with Cinemark USA, Inc., a Texas corporation and an affiliate of Cinemark, to manage deployment of Digital Systems to
theatres operated by its affiliates in Latin America (the "CNI MSA").

Note 2Summary of Significant Accounting Policies

Principles of consolidation

The consolidated financial statements include the accounts of DCIP and its subsidiaries. Intercompany accounts have been eliminated in
consolidation.

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DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2Summary of Significant Accounting Policies (Continued)

Use of estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management
to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company's most significant estimates relate to depreciation and
recoverability of property and equipment, amortization, the valuation of derivative agreements and the reimbursement liability concerning equipment warranty and replacement costs under the ELAs. The
Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates under different assumptions or
conditions.

Cash and cash equivalents

The Company considers all highly-liquid investments with an original maturity of three months or less to be cash equivalents. The
carrying amount of the Company's cash equivalents approximates fair value due to the short maturities of these investments and consists primarily of money market funds and other overnight investments.
The Company maintains bank accounts with major banks, which from time to time may exceed the Federal Deposit Insurance Corporation's insured limits. The Company periodically assesses the financial
condition of the institutions and believes that the risk of any loss is minimal.

Concentration of credit risk

At December 31, 2012 and 2011, the Company had five customers that represented 56% and 62%, respectively, of operating revenues
and five customers that represented 63% and 71%, respectively, of net accounts receivable. These customers are each parties to DCDAs. None of the Company's other customers individually represented
more than 10% of operating revenues or accounts receivable at December 31, 2012 and 2011.

The
Company has credit risk associated with certain accounts receivable, which consists primarily of amounts owed by the Major Studios and other digital content distributors. The Company
actively monitors the status of its accounts receivable and has mechanisms in place to minimize the potential for incurring material accounts receivable credit losses. At December 31, 2012 and
2011, management has determined that there is no requirement for an allowance for doubtful accounts.

Concentration of supplier risk

The Company currently purchases Digital System components from a limited number of suppliers. The inability to obtain certain
components on a timely basis would limit the Company's ability to complete installation of such systems in a timely manner and could affect the amount of future revenues. In 2012 and 2011, two
suppliers represented 81% and 74%, respectively, of the amount spent by the Company on Digital System component purchases.

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DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2Summary of Significant Accounting Policies (Continued)

Concentration in foreign countries

The Company leases Digital Systems to AMC (pursuant to its ELA) for theatres located in Canada and receives revenues from CDCP pursuant
to the CDCP MSA. During 2012, AMC sold the majority of its Canadian theatres to Cineplex and Empire, significantly reducing the number of Digital Systems leased by Kasima to AMC in Canada. The revenue
earned from these operations is paid to the Company in U.S. dollars. For the years ended December 31, 2012 and 2011, revenues earned from Canadian sources totaled $2,494,000 and $2,228,000,
respectively. The carrying value of equipment deployed in Canada at December 31, 2012 and 2011, totaled $197,000 and $2,798,000, respectively. The CNI MSA did not produce revenue for the year
ended December 31, 2012.

Fair value and credit risk

All current assets and liabilities are carried at cost, which approximates fair value due to the short-term maturities of
those instruments. The Company's Credit Facility (see Note 7) is comprised of floating rate instruments and management believes fair value approximates carrying value. The Note Facility (see
Note 7) is a fixed rate instrument for which the Company estimates fair value at approximately $172.8 million, a premium of $37.8 million to its carrying value. This estimate is
based on the present value of the cash flows discounted at an estimated market interest rate. This rate was estimated based on the change in interest rates for risk free treasury bonds from the
inception of the Note Facility to December 31, 2012 and was further adjusted based on management's assessment of business risk for the current operating entity contrasted to the
development-stage entity at the inception of the Note Facility.

Property and equipment, net

Property and equipment, net, is stated at cost, less accumulated depreciation and amortization. Depreciation is calculated using the
straight-line method over the estimated useful lives of the respective assets as follows:

Computer equipment and software

3 - 5 yearsLeasehold improvements

5 yearsDigital cinema projection equipment

17.5 yearsFurniture and fixtures

7 years


Leasehold
improvements are amortized over the shorter of the lease term or the estimated useful life of the assets. Certain costs of computer software developed or obtained for internal
use are capitalized and amortized on a straight-line basis over three to five years. Costs for general and administrative expenses, overhead, maintenance and training, as well as the cost
of software coding that does not add functionality to existing systems, are expensed as incurred. Upon the sale or other disposition of any property and equipment, the cost and related accumulated
depreciation and amortization are removed from the accounts and the gain or loss on disposal is included in the statements of operations.

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DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2Summary of Significant Accounting Policies (Continued)

Deferred financing costs, net

Deferred financing costs are amortized on a straight-line basis by a charge to interest expense over the terms of the
respective financing agreements. Accumulated amortization of deferred financing costs at December 31, 2012 and 2011 totaled $19,228,000 and $12,029,000, respectively.

Fair value measurements

The Company accounts for and reports the fair value of certain assets and liabilities. The Company applies fair value accounting for
financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements.

The
Company utilizes valuation techniques that maximize the use of observable inputs (Levels 1 and 2) and minimize the use of unobservable inputs (Level 3) within
the fair value hierarchy established by the Financial Accounting Standards Board Accounting Standards Codification ("ASC"):

Level 1:

Quoted market prices in active markets for identical assets or liabilities.Level 2:

Observable market-based inputs or unobservable inputs that are corroborated by market data.Level 3:

Unobservable inputs reflecting the reporting entity's own assumptions.


The
following table sets forth, by level, the fair value measurements of the Company's consolidated financial liabilities ($ in thousands):

Fair Value Measurements

December 31,
2012

Level 1

Level 2

Level 3Fair value of Interest Rate Swap

$
(29,725
)(1)
$


$
(29,725
)
$
Fair value of Interest Rate Cap


306
(1)




306


$
(29,419
)(1)
$


$
(29,419
)
$



(1)Reported
in derivative liabilities on the consolidated balance sheets.


The
fair value of the Company's obligation under its Interest Rate Swap and Interest Rate Cap (each as defined below) is based upon observable market-based inputs that reflect the
present values of the difference between estimated future fixed rate payments and future variable receipts and, therefore, is classified within Level 2. The Level 2 fair value of the
Interest Rate Swap and Interest Rate Cap at December 31, 2011 was $(35,800) and $1,220, respectively.

Accounting for derivatives

In March 2010, the Company executed (and in March 2011 amended) an interest rate swap agreement (as amended, the "Interest Rate Swap")
and an interest rate cap agreement (the "Interest Rate Cap") to limit the Company's exposure to changes in interest rates. Derivative financial instruments such as the Interest Rate Swap and Interest
Rate Cap are recorded at fair value. Changes

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Table of Contents

DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2Summary of Significant Accounting Policies (Continued)

in
the fair value of derivative financial instruments are either recognized in accumulated other comprehensive income (a component of Member's equity) or in the consolidated statements of operations
depending on whether the derivative is being used to hedge changes in cash flows or fair value. The Company has determined that the Interest Rate Swap and Interest Rate Cap are not effective hedging
transactions; therefore, the changes in market value of the Interest Rate Swap and Interest Rate Cap are recorded as interest expense in the consolidated statements of operations.

Income taxes

The Company is a limited liability company and, as such, is treated as a partnership for federal and state income tax purposes.
Accordingly, as a partnership for tax purposes, the Company is not a taxable entity and is not subject to federal or state income taxes. Income or loss of the Company as a limited liability company is
reported to and included in the individual income tax returns of its members. Tax years ended on or about December 31, 2012, 2011, 2010 and 2009 remain
open to examination by federal and state taxing authorities with regard to the allocation of income or losses by the Company to its members.

Impairment of long-lived assets

The Company reviews the recoverability of its long-lived assets when events or conditions exist that indicate a possible
impairment. The assessment for recoverability is based primarily on the Company's ability to recover the carrying value of its long-lived assets from expected future undiscounted net cash
flows. If the total of expected future undiscounted net cash flows is less than the total carrying value of an asset, the asset is deemed not to be recoverable and possibly impaired. The Company then
estimates the fair value of the asset to determine whether an impairment loss should be recognized. An impairment loss will be recognized if the carrying value of the asset exceeds its fair value.
Fair value is determined by computing the expected future discounted cash flows. No impairment charges were recorded for the years ended December 31, 2012 or 2011.

Revenue recognition

The majority of the Company's revenues are VPFs from Major Studios under the DCDAs. The Company earns VPF revenue when movies and
certain other content distributed by Major Studios and other content distributors are booked and exhibited on screens utilizing the Company's Digital Systems. VPFs are earned and payable based on a
fee schedule outlined in the DCDAs and other VPF agreements. The VPF revenue is recognized in the period in which it is earned, generally the first time the content is booked and exhibited in the
theatre auditorium for which a Digital System has been installed.

The
DCDAs with the Major Studios require the payment of VPFs for a period that ends on the earlier to occur of (i) the tenth anniversary of the "mean deployment date" for all
Digital Systems scheduled to be deployed over a period of up to five years, or (ii) the date the Company achieves "cost recoupment", each as defined in the DCDAs. Cost recoupment occurs when
revenues attributable to the Digital Systems exceed the costs associated with their purchase (including financing), deployment, administration and other allowed amounts, all as defined in the DCDAs.

In
addition to VPF revenue, the Company also earns a fee each time certain digital content other than feature films (e.g., concerts, sporting events and opera performances) is
booked and exhibited on

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Table of Contents

DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2Summary of Significant Accounting Policies (Continued)

a
Digital System. The Company refers to fees derived on a per-exhibition basis from these alternative forms of digital content as alternative content fees ("ACFs"). ACFs may be paid by the
distributor of the alternative content pursuant to an agreement with the Company or by the Exhibitor showing the content pursuant to its ELA. ACF revenue is recognized in the period in which the
alternative content is exhibited.

Lease
revenues in respect of the Digital Systems and certain other rental and usage fees are earned by the Company in accordance with the terms of the ELAs. All amounts due to the
Company under these agreements are recognized as revenue when earned and any unearned amounts are recorded as deferred revenue. The initial lease term for each piece of equipment deployed under the
ELAs begins on the date the equipment is placed in service and continues for 12 years, with the first and last month incurring one-half of the monthly lease payment otherwise due.

The
Company generates multiple revenue streams from the leased Digital Systems under the ELAs as follows:



In
accordance with the ELAs the Exhibitors are required to acquire extended warranties with respect to the leased Digital Systems covering the period from the expiration of the initial
included manufacturer's warranty through the date of repayment of the Credit Facility and Note Facility (each as defined in Note 7) (the "Warranty End Date"), but in no event later than
12 years from the effective date of the ELAs. Following the Warranty End Date, the Exhibitors may choose to continue extended warranty coverage through the expiration of the DCDAs (the "DCDA
End Date"). The DCDA End Date will occur on the earlier of (i) the tenth anniversary of the "mean deployment date" of the Digital Systems or (ii) the date the Company achieves "cost
recoupment", each as defined in the DCDAs. The Company expects that the Exhibitors will maintain extended warranty coverage through the DCDA End Date. Pursuant to the ELAs, the Company is required to
reimburse the Exhibitor for the costs of the extended warranties (and/or equipment replacement costs) subject to quarterly caps set

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Table of Contents

DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 2Summary of Significant Accounting Policies (Continued)

forth
in the ELAs. This contractual obligation by the Company to incur costs at a future date for the extended warranties or replacement costs when the leased equipment is purchased creates a
liability at the purchase date and a contra revenue adjustment in respect of revenues derived under the ELAs that is recognized on a straight-line basis over the term of the lease. During
the year ended December 31, 2012, based on deployments to date and revised projections of future deployments, management estimated that the "mean deployment date" has been accelerated by
approximately one year from the date originally projected. As a result, management now estimates that the DCDA End Date will occur and the warranty reimbursement obligation will end during 2021 rather
than 2022. This change in estimate resulted in a $45,481,000 reduction in the overall warranty liability and related warranty asset. The impact of this change on the Company's results of operations
for the year ended December 31, 2012 and subsequent years is not material.

The
Company also earns revenues in respect of the services DCIP provides under the CDCP MSA. The revenues are earned ratably as the services are performed under the agreement.

Subsequent events

The Company has evaluated subsequent events through February 20, 2013, which is the date the consolidated financial statements
were available to be issued.

Note 3Financing Transactions

On March 10, 2010, the Company completed a financing transaction to enable the purchase, deployment and leasing of Digital Systems for approximately 10,000 movie theatre screens
operated by the Exhibitors in the United States and Canada over the subsequent three to five years. On March 31, 2011, the Company completed an incremental financing transaction to enable the
purchase, deployment and leasing of Digital Systems for approximately 4,700 additional movie theatre screens operated by the Exhibitors in the United States and Canada.

The
financing transaction completed in March 2010 consisted of a $79,472,000 equity contribution to DCIP from the Founding Members (subsequently contributed as equity to Kasima), a
$135,000,000 long-term promissory note commitment (the Note Facility described in Note 7) to Parent from an investor group and a $445,000,000 senior secured loan commitment (also
described in Note 7) to Kasima from a group of commercial banks. The equity contribution from the Founding Members consisted of $50,724,000 of previously installed Digital Systems and
$28,748,000 of cash. The financing transaction completed in March 2011 consisted of a $220,000,000 incremental senior secured term loan (the Incremental Term Loan described in Note 7) to Kasima
from a group of commercial banks and institutional investors.

Note 4Consolidated Balance Sheet Components

Restricted cash

The Company had restricted cash of $11,396,000 and $14,271,000 on hand at December 31, 2012 and 2011, respectively, in the form
of an interest reserve escrow account related to the Credit Facility (see Note 7) and an excess cost escrow account for the funding of Digital Systems in excess of costs caps established in the
related credit agreement.

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Table of Contents

DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 4Consolidated Balance Sheet Components (Continued)

Accounts receivable, net

Accounts receivable, net consists of the following ($ in thousands):

December 31,2012

2011Accounts receivable

$
38,087

$
30,807Accrued revenue


41


129Deferred revenue(1)


(1,175
)

(960
)Total accounts receivable, net

$
36,953

$
29,976


(1)Deferred
revenue consists of unearned amounts billed but not collected at December 31, 2012 and 2011.


Accounts payable and accrued liabilities

Accounts payable and accrued liabilities consists of the following ($ in thousands):

December 31,2012

2011Accounts payable

$
13,257

$
23,814Accrued equipment purchases leased to others


3,533


2,430Accrued bonus and compensation


3,327


721Warranty reimbursement payable


1,361


528Accrued taxes payable


184


306Accrued interest payable


163


288Other accrued liabilities


51


66Accrued equipment purchases, not deployed


579


Total accounts payable and accrued liabilities

$
22,455

$
28,153


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Table of Contents

DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 5Property and Equipment, net

Property and equipment, net consists of the following ($ in thousands):

December 31,2012

2011Equipment leased to others(1)

$
993,648

$
807,696Equipment, not deployed


1,263


10,065Computer equipment and software


4,674


4,599Leasehold improvements


382


298Furniture and fixtures


244


244Total property and equipment


1,000,211


822,902Less accumulated depreciation and amortization


(100,025
)

(46,515
)Property and equipment, net

$
900,186

$
776,387


(1)At
December 31, 2012 and 2011, the approximate cost and carrying value of equipment leased to others was $994,000 and $808,000 and $898,000 and
$764,000, respectively.


Note 6Exhibitor Lease Fees

The Company earns lease revenues and other fees through the lease of Digital Systems to the Exhibitors in accordance with the ELAs described in Note 2. The aggregate future
minimum lease revenues due under non-cancellable equipment lease agreements that have initial or remaining terms in excess of one year as of December 31, 2012 are as follows ($ in
thousands):

Year ending December 31,

Amount2013

$
14,1472014


14,1472015


14,1472016


23,5782017


42,441Thereafter


224,677Total

$
333,137


Revenues
earned under the ELAs for the years ended December 31, 2012 and 2011 totaled $13,649,000 and $9,603,000, respectively.

Note 7Long-term Debt

Credit facility

On March 10, 2010, DCIP, Holdings and Kasima entered into a Credit Agreement with JPMorgan Chase Bank, N.A. as Administrative
Agent and a group of lenders which agreed to provide Kasima a $110 million revolving line of credit ("Revolver") and a $335 million delayed draw term loan ("Term Loan"). On
March 31, 2011 the Credit Agreement was amended and restated to include a $220 million incremental term loan (the "Incremental Term Loan" and together with the Revolver and the Term
Loan, the "Credit Facility"). Borrowings under the Credit Facility are being used (i) to fund the purchase and installation of Digital Systems by Kasima, (ii) to reimburse the Company
for its permitted operating expenses associated with management services it provides to Kasima and Holdings pursuant

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Table of Contents

DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7Long-term Debt (Continued)

to
a management services agreement (the "MSA"), (iii) to fund payment of fees, interest and expenses payable under the Credit Facility, (iv) to fund distributions in respect of the Note
Facility as permitted by the Credit Facility and (v) for other permitted operating expenses of Kasima and Holdings including interest reserve requirements, closing costs and upfront fees,
associated with the Credit Facility. All costs of the Digital Systems exceeding established caps are funded by capital contributions from the Founding Members. Each borrowing under the Credit Facility
must be at least $20 million and in $5 million increments.

The
net proceeds from the Incremental Term Loan ($205 million) were used to prepay a portion of the Company's then outstanding delayed draw Term Loans and the Company's existing
lenders agreed to increase their lending commitments by the amount prepaid and to extend the date of their Term Loan commitments from March 10, 2012 to September 30, 2012. The
Incremental Term Loan was fully drawn at closing on March 31, 2011. The Revolver is available following the availability of the Term Loan and subject to certain conditions through
March 10, 2015, the maturity date (the "Original Maturity Date") of the Term Loan and Revolver. The maturity date of the Incremental Term Loan is March 31, 2017 (the "Incremental
Maturity Date"). At December 31, 2012, the Revolver was fully drawn, subject to hold-back provisions contained in the Credit Facility. Each Term Loan, Incremental Term Loan and
Revolver borrowing bears interest, at the option of Kasima, at either the Adjusted LIBO Rate or the Alternate Base Rate, each as defined in the Credit Facility, plus the defined Applicable Rate, which
is 2.75% in the case of borrowings based on the Alternate Base Rate and 3.75% for borrowings based on the Adjusted LIBO Rate. The Incremental Term Loan is further subject to an Adjusted LIBO Rate
floor of 1.25%. The commitment fee on undrawn amounts in respect of the Term Loan is 1.25% per annum and in respect of the Revolver is 0.50% per annum.

The
Incremental Term Loan amortizes at a rate of 1.00% of its original principal amount per annum, payable in quarterly increments of $550,000 that commenced on June 30, 2011,
with the remaining balance, including any unpaid interest and fees, payable on the Incremental Maturity Date. Beginning September 30, 2013, in addition to interest in respect of all of its
borrowings under the Credit Facility and undrawn commitment fees in respect of the Term Loan and Revolver, the Company must repay a principal amount of the Term Loan equal to $78.5 million in
installments over a six quarter period ending December 31, 2014, with the balance of the Term Loan and Revolver, including any unpaid interest and fees outstanding, due on the Original Maturity
Date. Kasima may at any time terminate or permanently reduce commitments under the Credit Facility without premium or penalty in $5 million increments of not less than $20 million.
Following the first four quarter period for which Cash Flow from Operations exceeds Consolidated Fixed Charges (each as defined), the Credit Facility will be permanently reduced by quarterly
prepayments required to be made by Kasima based on defined Excess Cash Flow.

The
"Borrower" under the Credit Facility is Kasima and the Credit Facility is guaranteed by Holdings and each direct or indirect subsidiary of Holdings other than the Borrower. The
Credit Facility is secured by a first priority lien on all of the assets of the Company (with certain negotiated exclusions), including contract rights, cash and securities accounts and the Digital
Systems on Exhibitors' premises. Company assets excluded from the Credit Facility collateral package include, but are not limited to the rights to receivables under the MSA and the membership interest
in Holdings, which is pledged in support of the Note Facility.

Under
the Credit Facility, the Borrower is required to maintain compliance with certain financial covenants. Material covenants include an interest coverage ratio beginning
June 30, 2013, average

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Table of Contents

DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7Long-term Debt (Continued)

revenues
and bookings per screen performance measures, a minimum liquidity of $25 million comprised of undrawn Revolver balance, cash balances and interest reserve, and capital expenditure
limitations. At December 31, 2012, the Borrower was in compliance with all of its Credit Facility covenants.

Note purchase agreement

On March 10, 2010, Parent entered into a Note Purchase Agreement with Wilmington Trust Company as Parent Note Agent pursuant to
which a group of mezzanine debt funds (the "Noteholders") affiliated with Highbridge Mezzanine Partners agreed to purchase, subject to certain conditions, notes (the "Parent Notes") issued by Parent
due March 10, 2025 (the "Note Maturity Date") totaling $135 million (the "Note Facility"). The first purchase of Parent Notes occurred on March 10, 2010 in the amount of
$52.5 million. The second purchase of Parent Notes occurred on May 14, 2010 in the amount of $28.8 million. The final purchase of Parent Notes occurred on April 6, 2011 in
the amount of $53.7 million. The proceeds of the Note Facility are being and will be used for the purposes described for the Credit Facility above. The Company provides management services to
Parent and is reimbursed for its out-of-pocket expenses up to a cap set forth in a management services agreement between the Company and Parent. All net proceeds of the Note
Facility are being and will be contributed as equity to Holdings and then to Kasima, by each of Parent and Holdings, respectively. The Parent Notes issued bear interest at 15.12% per annum, of which
12.0% (the "Current Yield") is paid in cash quarterly subject to restrictions set forth in the Credit Facility. Accrued and unpaid interest ("PIK Interest") is added to the outstanding principal
balance of Parent Notes on each Current Yield payment date. All outstanding Parent Notes together with any PIK Interest are due on the Note Maturity Date. The Company may at any time prepay the Parent
Notes in increments of $1 million, subject to restrictions, on or after March 10, 2014 as set forth in the Note Facility.

The
Company's long-term debt at December 31, 2012 and 2011 consisted of the following ($ in thousands):

Carrying AmountInterest Rate(2)Instrument

Maturity Date

2012

2011Term Loan


03/10/2015


4.07
%
$
335,000

$
335,000Incremental Term Loan


03/31/2017


5.00
%

216,150


218,350Revolver


03/10/2015


4.07
%

90,000


Parent Notes(1)


03/10/2025


15.12
%

146,726


141,266Total Long-term Debt







$
787,876

$
694,616


(1)Parent
Notes include PIK Interest of $11,726 and $6,266 at December 31, 2012 and 2011, respectively.(2)Interest
rates in effect at December 31, 2012. At December 31, 2011, Term Loan, Incremental Term Loan and Parent Notes interest rates were
4.33%, 5.00% and 15.12% respectfully.


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Table of Contents

DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 7Long-term Debt (Continued)

The
Company's aggregate maturities of long-term debt are as follows ($ in thousands):

Years Ending December 31,

Amount2013

$
24,7002014


58,2002015


348,7002016


2,2002017


207,3502018 to 2024


2025


146,726Total

$
787,876


Interest
expense on long-term debt was $64,033,000 and $48,204,000 for the years ended December 31, 2012 and 2011, respectively, consisting of cash
interest of $58,574,000 and $43,918,000, respectively, and PIK Interest of $5,460,000 and $4,286,000, respectively.

Derivatives

The Interest Rate Swap and Interest Rate Cap contracts were entered into for interest expense cost protection from rising variable
interest rates and are currently associated with the Company's Term Loan and Revolver, which mature on March 10, 2015, and its Incremental Term Loan, which matures on March 31, 2017.
Under the Interest Rate Swap contracts, the Company receives current market LIBOR interest rate payments, subject to an interest rate floor for the Incremental Term Loan of 1.25%, and pays a fixed
rate of 3.71% for the Term Loan and Revolver and 2.93% for the Incremental Term Loan per annum, each calculated on the same notional principal
amount which changes for each fiscal quarterly period commencing as of the quarter ended September 30, 2010 and terminating on the contract expiration dates of March 31, 2015 and 2017,
respectively. The Interest Rate Swap contracts in effect for the quarterly period ended December 31, 2012 required the Company to pay a fixed rate of 3.71% per annum on a notional contract
amount of $334,075,000 (Term Loan) and 2.93% per annum on a notional contract amount of $172,920,000 (Incremental Term Loan). The Company received an interest payment based on the same notional
contract value and calculated at a LIBOR interest rate of 0.32% per annum (Term Loan) and 1.25% per annum (Incremental Term Loan), as in effect for the quarter ended December 31, 2012. This
protection against rising market interest rates extends until March 31, 2015 in respect of the Term Loan and Revolver and March 31, 2017 in respect of the Incremental Term Loan and is
based on notional amounts as determined by the Interest Rate Swap contracts which increased quarterly up to a maximum of $509,800,000 at March 31, 2012 and then decline to $55,479,000 for the
quarter ended March 31, 2017.

The
Interest Rate Cap protects the Company from rising quarterly LIBOR market interest rates that exceed 3.71% based on a notional contract schedule of $222,998,000 beginning for the
quarter ended March 31, 2015 then decline to a notional contract value of $13,043,000 for the quarterly period ended December 31, 2015. The Company expects to have LIBOR based bank
borrowings during this term and will receive an interest rate payment in the event that quarterly LIBOR interest rates then in effect exceed 3.71%. These payments, if any are based on an interest rate
equal to the rate by which the LIBOR rate exceeds 3.71% per annum and are calculated on the applicable notional contract value in effect for each quarterly contract period.

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Table of Contents

DIGITAL CINEMA IMPLEMENTATION PARTNERS, LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Note 8Retirement Plan

The Company maintains a defined contribution plan for eligible employees under Section 401(k) of the
Internal Revenue Code. The Company's plan provides for eligible employees to contribute up to 80% of eligible compensation with a Company match of 50% of the first 6% of employee contributions. All
employees are eligible to participate in the plan upon hire. The Company's contributions to the plan totaled $48,000 and $34,000 for the years ended December 31, 2012 and 2011, respectively.

Note 9Commitments

Operating leases

The Company has leased facilities in the states of New Jersey, Colorado and Minnesota. The aggregate future minimum lease payments
under non-cancellable operating leases that have initial or remaining terms in excess of one year as of December 31, 2012 are as follows ($ in thousands):

Year Ending December 31,

Amount2013

$
1652014


1382015


1562016


1602017


120Total

$
739


Rent
expense for operating leases for the years ended December 31, 2012 and 2011 totaled $213,000 and $183,000, respectively.

Employment agreements

The Company has employment agreements with two of its key executives setting forth key compensation terms (generally annual salary plus
a defined bonus) and providing each executive with a severance benefit in the case the executive's employment is terminated without cause or the executive resigns with good reason, each as defined.

Note 10Related Party Transactions

At December 31, 2012, all of the Company's Digital Systems are leased to the Exhibitors under the ELAs. For the fiscal years ended December 31, 2012 and 2011, revenues
earned from the Exhibitors totaled $13,649,000 and $9,603,000, respectively. Net accounts receivable due from the Exhibitors totaled $1,629,000 and $1,951,000, respectively, and will be settled in
cash. Payments under the ELAs are generally due on the fifth day of the month after billing. At times, the Company purchases digital equipment from the Exhibitors at cost subject to caps established
in the ELAs. At December 31, 2012 and 2011, the Company had liabilities for reimbursement of equipment purchases due to the Exhibitors of $4,871,000 and zero, respectively. The $230,520,000
warranty reimbursement liability represents a liability to reimburse the Exhibitors for the extended equipment warranty and other replacement costs (as defined in the ELAs) as cash payments beginning
in 2011 and continuing through the DCDA End Date (see Note 2). Warranty reimbursements earned in 2012 and 2011 totaled $3,789,000 and $1,261,000, respectively, consisting of reimbursement
payments of $2,956,000 and $733,000, respectively and payables of $1,361,000 and $528,000, respectively.

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Table of Contents

Independent Auditors' Report

The
Board of Directors
Open Road Releasing, LLC:

We
have audited the accompanying consolidated financial statements of Open Road Releasing, LLC and its subsidiary, which comprise the consolidated balance sheet as of
December 31, 2012, and the related consolidated statements of operations, changes in members' equity, and cash flows for the year then ended, and the related notes to the consolidated financial
statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S.
generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial
statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free from material misstatement.

An
audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the
auditors' judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the
auditor considers internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements.

We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

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Table of Contents

Opinion

In our opinion, the consolidated financial statements referred to above present fairly in all material respects, the financial position
of Open Road Releasing, LLC and its subsidiary as of December 31, 2012, and the results of their operations and their cash flows for the year then ended in accordance with U.S. generally
accepted accounting principles.

/s/
KPMG LLP

Los
Angeles, California
February 6, 2013

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Table of Contents



OPEN ROAD RELEASING, LLC        Consolidated Balance Sheet        December 31, 2012        (Dollar amounts in thousands)

2012AssetsCurrent assets:Cash and cash equivalents

$
9,418Restricted cash


21,090Accounts receivable, net of allowance for doubtful accounts


12,051Prepaid expenses and other


153Total current assets


42,712Property and equipment, net


487Film costs


4,132Other assets


167Deferred financing cost, net


2,566Total assets

$
50,064Liabilities and Members' EquityCurrent liabilities:Accounts payable

$
5,213Accrued expenses


42,097Notes payable


20,000Capital lease obligation, current portion


92Total current liabilities


67,402Long term liabilities:Accrued residuals and participationslong term


5,133Deferred compensation


1,883Capital lease obligation, net of current portion


44Total liabilities


74,462Members' equity


(24,398
)Total liabilities and members' equity

$
50,064




See accompanying notes to consolidated financial statements.

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Table of Contents



OPEN ROAD RELEASING, LLC        Consolidated Statement of Operations        Year ended December 31, 2012        (Dollar amounts in thousands)

2012Revenues

$
117,960Direct costs:Distribution and marketing costs


117,466Participations, residuals, and other costs


22,884Total direct costs


140,350Gross profit


(22,390
)Operating expenses:General and administrative


10,054Depreciation and amortization


147Total operating expenses


10,201Interest expense


2,143Net loss

$
(34,734
)




See accompanying notes to consolidated financial statements.

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Table of Contents



OPEN ROAD RELEASING, LLC        Consolidated Statement of Changes in Members' Equity        Year ended December 31, 2012        (Dollar amounts
in thousands)

Balance as of December 31, 2011

$
10,336Capital contributions


Net loss


(34,734
)Balance as of December 31, 2012

$
(24,398
)




See accompanying notes to consolidated financial statements.

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Table of Contents



OPEN ROAD RELEASING, LLC        Consolidated Statement of Cash Flows        Year ended December 31, 2012        (Dollar amounts in thousands)

2012Cash flows from operating activities:Net loss

$
(34,734
)Adjustments to reconcile net loss to net cash provided by (used in) operating activities:Depreciation and amortization


147Amortization of minimum guarantees


6,847Amortization of deferred financing cost


1,062Amortization on administration agent fees


125Changes in operating assets and liabilities:Accounts receivable


(11,799
)Deposits and other


35Prepaid expenses and other


(76
)Minimum guarantees on films


(10,279
)Accounts payable


4,197Accrued expenses


43,168Deferred compensation


1,883Net cash provided by (used in) operating activities


576Cash flows from investing activity:Purchase of property and equipment


(34
)Net cash used in investing activity


(34
)Cash flows from financing activities:Borrowing from credit facility


31,700Repayments to credit facility


(11,700
)Principal payments under capital lease obligation


(86
)Administrative agent fees


(125
)Increase in restricted cash


(20,904
)Net cash provided by (used in) financing activities


(1,115
)Net increase (decrease) in cash and cash equivalents


(573
)Cash and cash equivalents at beginning of year


9,991Cash and cash equivalents at end of year

$
9,418Supplemental disclosure of cash flow information:Cash paid during the period for interest, excluding deferred financing costs

$
903




See accompanying notes to consolidated financial statements.

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Table of Contents



OPEN ROAD RELEASING, LLC        Notes to Consolidated Financial Statements        December 31, 2012

(1) Organization and Operations

The accompanying financial statements include the consolidated accounts of Open Road Releasing, LLC (the Company), formerly REGAMC, LLC, and its wholly owned subsidiary
Open Road Films, LLC (Open Road Films), formerly REGAMC, LLC.

The
Company was incorporated on December 20, 2010 in the state of Delaware as a limited liability company (LLC). The Company is governed by the terms of its Limited Liability
Company Agreement (the Operating Agreement). The Company is an independent distributor of motion pictures to exhibitors in the United States and certain territories. The Company licenses motion
pictures in ancillary markets, principally to home entertainment, subscription and transactional video on demand, free television, and non-theatrical.

(2) Summary of Significant Accounting Policies



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Table of Contents

OPEN ROAD RELEASING, LLC

Notes to Consolidated Financial Statements (Continued)

December 31, 2012

(2) Summary of Significant Accounting Policies (Continued)



F-58

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Table of Contents

OPEN ROAD RELEASING, LLC

Notes to Consolidated Financial Statements (Continued)

December 31, 2012

(2) Summary of Significant Accounting Policies (Continued)



(3) Film Costs

Film costs, at December 31, 2012, consist of the following (in thousands):

2012Minimum guarantees:Released films

$
10,600Films not released


379Total film costs


10,979Accumulated amortization


(6,847
)Total minimum guarantees, net

$
4,132


Amortization
of minimum guarantees is included in participations, residuals, and other costs on the consolidated statement of operations. The Company expects approximately 42% of
unamortized minimum guarantees will be amortized during 2013 and 83% of unamortized minimum guarantees for released films will be amortized within 3 years from the date of the balance sheet.

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Table of Contents

OPEN ROAD RELEASING, LLC

Notes to Consolidated Financial Statements (Continued)

December 31, 2012

(4) Property and Equipment

Property and equipment at December 31, 2012 consist of the following (in thousands):

2012Furniture and office equipment

$
135Computer software and equipment


468Leasehold improvements


51654Accumulated depreciation


(167
)$
487


(5) Senior Revolving Credit Facility

On June 3, 2011, the Company entered into a four-year senior secured revolving credit facility (the Credit Facility) with a syndicate of four banks permitting
borrowings at closing up to $100,000,000. Amounts borrowed under the Credit Facility either carry interest at one-, two-, three-, or six-month LIBOR plus 3.75%, or
are base rate loans, which bear fluctuating interest rates per annum equal to the highest of the federal funds rate plus 0.5%, the Bank of America prime rate, or the Eurodollar rate plus 1.0%. The
Credit Facility also
carries a fee of 0.75% per annum on the unused borrowings, which are calculated and payable quarterly. The Company may borrow against the Credit Facility to the extent of the available borrowing base,
as defined. The borrowing base primarily comprises seven-year remaining ultimate revenue and expense estimates, based on contracted distribution rights to motion pictures. Additionally, as
part of the borrowing base calculation, there is a discounting calculation and tiered advance rates applied to future net remaining cash flows. There was approximately $16,989,000 available under the
Credit Facility at December 31, 2012.

On
December 31, 2012, there were two outstanding obligations under the Credit Facility totaling $20,000,000. Both obligations carry interest at 3.9617% and mature
January 31, 2013. The maturity dates may be converted to new obligations for similar or longer maturity periods. The amounts outstanding under the Credit Facility are secured by substantially
all of the Company's assets.

Deferred
financing costs represent costs incurred in connection with the establishment of the Company's Credit Facility. Deferred financing costs are amortized using the
straight-line method over the expected term of the facility of four years. Deferred financing costs were $2,566,000, net of accumulated amortization of $1,681,000 as of December 31,
2012. Amortization of deferred financing cost of $1,062,000 for the year ended December 31, 2012, is included in interest expense in the accompanying consolidated statement of operations.

The
Credit Facility agreement includes covenants that the Company must comply with on a quarterly or annual basis, including a film performance test and annual limits on selling,
general, and administrative expenses. The Company was in compliance with all covenants as of December 31, 2012.

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Table of Contents

OPEN ROAD RELEASING, LLC

Notes to Consolidated Financial Statements (Continued)

December 31, 2012

(6) Commitments and Contingencies

At December 31, 2012, the Company had outstanding commitments to pay minimum guarantees and advances on films in the amount of $6,621,000 in 2013.

The
Company leases corporate offices in Los Angeles, California, under a seven-year operating lease expiring in 2018. The Company has the onetime right to terminate the lease
at the end of the fifth year.

Total
rental expense from the operating lease was $311,000 for the year ended December 31, 2012.

In
August 2011, the Company entered into a three-year capital lease for the acquisition of its theatrical distribution software system.

The
total future minimum annual payments under noncancelable operating leases (with initial or remaining lease terms in excess of one year) and capital leases at December 31, 2012
are presented below (in thousands):

Capital lease
obligation

Operating
leases2013

$
92


3262014


53


3362015





3462016





3572017





367Thereafter





218Total minimum payments


145

$
1,950Less imputed interest at 4%


(9
)Present value of minimum lease payments


136Less current portion


(92
)Long-term capital lease obligation

$
44


(7) Members' Equity

In December 2010, the members of the Company made a contribution of $500,000. During 2011, the Company received capital contributions from the members of $39,500,000. Accordingly, the
members have effectively contributed $40,000,000 to the Company.

The
members will not be personally liable for any debt, obligation, or liability of the Company solely by reason of being members of the Company.

(8) Deferred Compensation

The Company has a deferred compensation plan with key executives. Amounts will be paid in the years 2015 and 2016 based on the Company's performance, as defined in the agreements. During
the year ended December 31, 2012, the Company recorded expense of $1,834,000 and has a liability of

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Table of Contents

OPEN ROAD RELEASING, LLC

Notes to Consolidated Financial Statements (Continued)

December 31, 2012

(8) Deferred Compensation (Continued)

$1,883,000
at December 31, 2012. The Company will continue to estimate the liability and compensation expense through settlement.

(9) Related-Party Transactions

The Company recognized revenue in the amount of $24,880,000 from its members for the year ended December 31, 2012. The Company had $583,000 in outstanding accounts receivable at
December 31, 2012, from its members. At December 31, 2012, the Company has recorded direct costs of $4,173,000 and a $4,147,000 liability to its members related to a promoted content
distribution obligation as defined in the Company's Operating Agreement. The Company paid $222,000 in 2012 under that agreement. Furthermore, the Company paid $520,000 in marketing costs to its
members for the year ended December 31, 2012.

(10) Subsequent Events

The Company has evaluated subsequent events and transactions for potential recognition or disclosure through February 6, 2013, the date the accompanying financial statements were
available to be issued.

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Table of Contents

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.

AMC ENTERTAINMENT INC.By:

/s/ CHRIS A. COX Chris A. Cox Senior Vice President and
Chief Accounting OfficerDate: March 29, 2013


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.

/s/ LIN ZHANG Lin Zhang

Chairman of the Board

March 29, 2013/s/ GERARDO I. LOPEZ Gerardo I. Lopez

Chief Executive Officer, Director and President

March 29, 2013/s/ ANTHONY J. SAICH Anthony J. Saich

Director

March 29, 2013/s/ CHAOHUI LIU Chaohui Liu

Director

March 29, 2013/s/ NING YE Ning Ye

Director

March 29, 2013/s/ CRAIG R. RAMSEY Craig R. Ramsey

Executive Vice President and Chief Financial Officer

March 29, 2013/s/ KEVIN M. CONNOR Kevin M. Connor

Senior Vice President, General Counsel and Secretary

March 29, 2013/s/ CHRIS A. COX Chris A. Cox

Senior Vice President and Chief Accounting Officer

March 29, 2013


3

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Table of Contents

EXHIBIT INDEX

Exhibit
Number

Description*31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Acts of 2002.*31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Acts of 2002.*32.1

Section 906 Certifications of Gerardo I. Lopez (Chief Executive Officer) and Craig R. Ramsey (Chief Financial Officer) furnished in accordance with Securities Act Release 33-8212.


*Filed
herewith.


4

---