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

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FORM 10-K/A(AMENDMENT NO. 1)

(Mark One)

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

For the fiscal year ended April 1, 2004
OR

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from
 to

Commission file number 1-8747

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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

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

Title of each class

Name of each exchange
on which registeredCommon Stock, 662/3¢ par value

American Stock Exchange, Inc.


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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of 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. o

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

The approximate aggregate market value of the registrant's common stock held by non-affiliates as of October 2, 2003 based on the closing sale
price on the American Stock Exchange on October 2, 2003 was approximately $454,974,674.

Title of each class of common stock

Number of shares
Outstanding as of May 7, 2004Common Stock, 662/3¢ par value

33,811,756Class B Stock, 662/3¢ par value

3,051,597


AMC Entertainment Inc., hereby amends Parts II, III and IV of its Annual Report on Form 10-K for the year ended April 1, 2004
to include the amended Item 8. Financial Statements and Supplementary Data which removed the cautionary language regarding our consultation with the Securities and Exchange Commission,
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure, the amended Item 9A. Controls and Procedures, Item 10. Directors and Executive
Officers of the Registrant, Item 11. Executive Compensation, Item 12. Security Ownership of Beneficial Owners and Management and Related Stockholder Matters, Item 13. Certain
Relationships and Related Transactions and Item 14. Principal Accountant Fees and Services and the amended Item 15. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.



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Item 8. Financial Statements and Supplementary Data.

RESPONSIBILITY FOR PREPARATION OF FINANCIAL STATEMENTS
AMC Entertainment Inc.

TO THE STOCKHOLDERS OF AMC ENTERTAINMENT INC.

The
accompanying consolidated financial statements and related notes of AMC Entertainment Inc. and subsidiaries were prepared by management in conformity with accounting principles generally
accepted in the United States of America appropriate in the circumstances. In preparing the financial statements, management has made judgments and estimates based on currently available information.
Management is responsible for the information; representations contained elsewhere in this Annual Report are consistent with the financial statements.

The
Company has a formalized system of internal accounting controls designed to provide reasonable assurance that assets are safeguarded and that its financial records are reliable. Management
monitors the system for compliance to measure its effectiveness and recommends possible improvements. The Company has a formalized system of internal accounting controls designed to provide reasonable
assurance that assets are safeguarded and that its financial records are reliable. Management monitors the system for compliance to measure its effectiveness and recommends possible improvements.

The
Audit Committee of the Board of Directors (consisting solely of Directors from outside the Company) reviews the process involved in the preparation of the Company's annual audited financial
statements, and in this regard meets (jointly and separately) with the independent registered public accounting firm, management and internal auditors to review matters relating to financial reporting
and accounting procedures and policies, the adequacy of internal controls and the scope and results of the audit performed by the independent accountants.

/s/
Peter C. Brown

Chairman
of the Board, Chief Executive Officer
and President

/s/
Craig R. Ramsey

Executive
Vice President and
Chief Financial Officer

2

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF AMC ENTERTAINMENT INC.
KANSAS CITY, MISSOURI

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of stockholders' equity (deficit) and of cash flows present
fairly, in all material respects, the financial position of AMC Entertainment Inc. and subsidiaries (the "Company") at April 1, 2004 and April 3, 2003, and the results of their
operations and their cash flows for each of the three fiscal years in the period ended April 1, 2004 in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

As
discussed in Note 1, the Company restated its financial statements for its fiscal years ended April 3, 2003 and March 28, 2002.

PricewaterhouseCoopers
LLP

Kansas
City, Missouri
June 21, 2004, except for Note 17 as to which the date is July 30, 2004

3

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AMC Entertainment Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS

|(In thousands, except per share data)                          |                                       | 52 Weeks Ended
April 1, 2004            |         | 53 Weeks Ended
April 3, 2003
(restated) |           | 52 Weeks Ended
March 28, 2002
(restated) |          
|-------------------------------------------------------------- | ------------------------------------- | --------------------------------------- | ------- | --------------------------------------- | --------- | ---------------------------------------- | ---------
|Revenues                                                       |                                       |                                         |         |                                         |           |                                          |          
|                                                               | Admissions                            |                                         | $       | 1,219,393                               |           | $                                        | 1,212,204
|                                                               | Concessions                           |                                         |         | 456,990                                 |           |                                          | 468,578  
|                                                               | Other theatre                         |                                         |         | 53,983                                  |           |                                          | 48,600   
|                                                               | NCN and other                         |                                         |         | 52,454                                  |           |                                          | 55,693   
|                                                               |                                       |                                         |         |                                         |           |                                          |          
|                                                               |                                       | Total revenues                          |         |                                         | 1,782,820 |                                          |          
|Costs and Expenses                                             |                                       |                                         |         |                                         |           |                                          |          
|                                                               | Film exhibition costs                 |                                         |         | 649,380                                 |           |                                          | 660,982  
|                                                               | Concession costs                      |                                         |         | 51,259                                  |           |                                          | 54,912   
|                                                               | Theatre operating expense             |                                         |         | 419,619                                 |           |                                          | 438,605  
|                                                               | Rent                                  |                                         |         | 314,024                                 |           |                                          | 300,377  
|                                                               | NCN and other                         |                                         |         | 46,847                                  |           |                                          | 52,444   
|                                                               | General and administrative:           |                                         |         |                                         |           |                                          |          
|                                                               |                                       | Stock based compensation                |         |                                         | 8,727     |                                          |          
|                                                               |                                       | Other                                   |         |                                         | 53,864    |                                          |          
|                                                               | Preopening expense                    |                                         |         | 3,858                                   |           |                                          | 3,227    
|                                                               | Theatre and other closure expense     |                                         |         | 4,068                                   |           |                                          | 5,416    
|                                                               | Depreciation and amortization         |                                         |         | 124,572                                 |           |                                          | 126,994  
|                                                               | Impairment of long-lived assets       |                                         |         | 16,272                                  |           |                                          | 19,563   
|                                                               | Disposition of assets and other gains |                                         |         | (2,590                                  | )         |                                          | (1,385   
|                                                               |                                       |                                         |         |                                         |           |                                          |          
|                                                               |                                       | Total costs and expenses                |         |                                         | 1,689,900 |                                          |          
|                                                               |                                       |                                         |         |                                         |           |                                          |          
|Other expense (income)                                         |                                       |                                         |         |                                         |           |                                          |          
|                                                               | Other expense                         |                                         |         | 13,947                                  |           |                                          |         
|                                                               | Interest expense                      |                                         |         |                                         |           |                                          |          
|                                                               |                                       | Corporate borrowings                    |         |                                         | 66,963    |                                          |          
|                                                               |                                       | Capital and financing lease obligations |         |                                         | 10,754    |                                          |          
|                                                               | Investment income                     |                                         |         | (2,861                                  | )         |                                          | (3,502   
|                                                               |                                       |                                         |         |                                         |           |                                          |          
|Total other expense                                            |                                       |                                         | 88,803  |                                         |           | 74,298                                   |          
|                                                               |                                       |                                         |         |                                         |           |                                          |          
|Earnings (loss) from continuing operations before income taxes |                                       |                                         | 4,117   |                                         |           | (18,462                                  | )        
|Income tax provision                                           |                                       |                                         | 11,000  |                                         |           | 10,000                                   |          
|                                                               |                                       |                                         |         |                                         |           |                                          |          
|Loss from continuing operations                                |                                       |                                         | (6,883  | )                                       |           | (28,462                                  | )        
|Loss from discontinued operations, net of income tax benefit   |                                       |                                         | (3,831  | )                                       |           | (1,084                                   | )        
|                                                               |                                       |                                         |         |                                         |           |                                          |          
|Net loss                                                       |                                       | $                                       | (10,714 | )                                       | $         | (29,546                                  | )        
|                                                               |                                       |                                         |         |                                         |           |                                          |          
|Preferred dividends                                            |                                       |                                         | 40,277  |                                         |           | 27,165                                   |          
|                                                               |                                       |                                         |         |                                         |           |                                          |          
|Net loss for shares of common stock                            |                                       | $                                       | (50,991 | )                                       | $         | (56,711                                  | )        
|                                                               |                                       |                                         |         |                                         |           |                                          |          
|Basic and diluted loss per share of common stock:              |                                       |                                         |         |                                         |           |                                          |          
|                                                               |                                       | Loss from continuing operations         |         | $                                       | (1.28     | )                                        | $        
|                                                               |                                       |                                         |         |                                         |           |                                          |          
|                                                               |                                       | Loss from discontinued operations       |         | $                                       | (0.11     | )                                        | $        
|                                                               |                                       |                                         |         |                                         |           |                                          |          
|                                                               |                                       | Loss per share                          |         | $                                       | (1.39     | )                                        | $        
|                                                               |                                       |                                         |         |                                         |           |                                          |          

See Notes to Consolidated Financial Statements.

4

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AMC Entertainment Inc.
CONSOLIDATED BALANCE SHEETS

|(In thousands, except share data)                                                                                            |                                                                                                                                                                                                                                                                               | April 1, 2004 |                                            | April 3, 2003
(restated) |  
|---------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | ------------------------------------------ | ------------------------ | -
|Assets                                                                                                                       |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|Current assets:                                                                                                              |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|Cash and equivalents                                                                                                         |                                                                                                                                                                                                                                                                               | $             | 333,248                                    |                          | $
|Receivables, net of allowance for doubtful accounts of $1,118 and $1,581 as of April 1, 2004 and April 3, 2003, respectively |                                                                                                                                                                                                                                                                               |               | 39,812                                     |                          |  
|Other current assets                                                                                                         |                                                                                                                                                                                                                                                                               |               | 62,676                                     |                          |  
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               | Total current assets                       |                          |  
|Property, net                                                                                                                |                                                                                                                                                                                                                                                                               |               | 777,277                                    |                          |  
|Intangible assets, net                                                                                                       |                                                                                                                                                                                                                                                                               |               | 23,918                                     |                          |  
|Goodwill                                                                                                                     |                                                                                                                                                                                                                                                                               |               | 71,727                                     |                          |  
|Deferred income taxes                                                                                                        |                                                                                                                                                                                                                                                                               |               | 143,944                                    |                          |  
|Other long-term assets                                                                                                       |                                                                                                                                                                                                                                                                               |               | 53,932                                     |                          |  
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               | Total assets                               |                          | $
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|Liabilities and Stockholders' Equity                                                                                         |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|Current liabilities:                                                                                                         |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|                                                                                                                             | Accounts payable                                                                                                                                                                                                                                                              |               | $                                          | 107,234                  |  
|                                                                                                                             | Accrued expenses and other liabilities                                                                                                                                                                                                                                        |               |                                            | 112,386                  |  
|                                                                                                                             | Deferred revenues and income                                                                                                                                                                                                                                                  |               |                                            | 76,131                   |  
|                                                                                                                             | Current maturities of corporate borrowings and capital and financing lease obligations                                                                                                                                                                                        |               |                                            | 2,748                    |  
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               | Total current liabilities                  |                          |  
|Corporate borrowings                                                                                                         |                                                                                                                                                                                                                                                                               |               | 686,431                                    |                          |  
|Capital and financing lease obligations                                                                                      |                                                                                                                                                                                                                                                                               |               | 58,533                                     |                          |  
|Other long-term liabilities                                                                                                  |                                                                                                                                                                                                                                                                               |               | 182,467                                    |                          |  
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               | Total liabilities                          |                          |  
|Commitments and contingencies                                                                                                |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|Stockholders' equity:                                                                                                        |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|                                                                                                                             | Series A Convertible Preferred Stock, 662/3¢ par value; 299,477 and 280,107 shares issued and outstanding as of April 1, 2004 and April 3, 2003, respectively (aggregate liquidation
preference of $304,525 and $284,828 as of April 1, 2004 and April 3, 2003, respectively) |               |                                            | 200                      |  
|                                                                                                                             | Common Stock, 662/3¢ par value; 33,889,753 and 33,286,173 shares issued as of April 1, 2004 and April 3, 2003, respectively                                                                                                                                                   |               |                                            | 22,593                   |  
|                                                                                                                             | Convertible Class B Stock, 662/3¢ par value; 3,051,597 shares issued and outstanding as of April 1, 2004 and April 3, 2003                                                                                                                                                    |               |                                            | 2,035                    |  
|                                                                                                                             | Additional paid-in capital                                                                                                                                                                                                                                                    |               |                                            | 469,498                  |  
|                                                                                                                             | Accumulated other comprehensive loss                                                                                                                                                                                                                                          |               |                                            | (1,993                   | )
|                                                                                                                             | Accumulated deficit                                                                                                                                                                                                                                                           |               |                                            | (210,716                 | )
|                                                                                                                             | Common Stock in treasury, at cost, 77,997 and 35,387 shares as of April 1, 2004 and April 3, 2003, respectively                                                                                                                                                               |               |                                            | (1,013                   | )
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               | Total stockholders' equity                 |                          |  
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               |                                            |                          |  
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               | Total liabilities and stockholders' equity |                          | $
|                                                                                                                             |                                                                                                                                                                                                                                                                               |               |                                            |                          |  

See Notes to Consolidated Financial Statements.

5

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AMC Entertainment Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS

|(In thousands)                                           |                                                                                                                        | 52 Weeks Ended
April 1, 2004 |                                        | 53 Weeks Ended
April 3, 2003
(restated) |   | 52 Weeks Ended
March 28, 2002
(restated) |         
|-------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------- | ---------------------------- | -------------------------------------- | --------------------------------------- | - | ---------------------------------------- | --------
|INCREASE (DECREASE) IN CASH AND EQUIVALENTS              |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|Cash flows from operating activities:                    |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|                                                         | Net loss                                                                                                               |                              | $                                      | (10,714                                 | ) | $                                        | (29,546 
|                                                         | Adjustments to reconcile net loss to net cash provided by operating activities:                                        |                              |                                        |                                         |   |                                          |         
|                                                         | Depreciation and amortization                                                                                          |                              |                                        | 124,572                                 |   |                                          | 126,994 
|                                                         | Non-cash portion of special and stock-based compensation                                                               |                              |                                        | 8,727                                   |   |                                          | 12,549  
|                                                         | Non-cash portion of pension and postretirement expense                                                                 |                              |                                        | 6,029                                   |   |                                          | 3,526   
|                                                         | Impairment of long-lived assets                                                                                        |                              |                                        | 16,272                                  |   |                                          | 19,563  
|                                                         | Impairment of long-lived assets from discontinued operations                                                           |                              |                                        |                                        |   |                                          |        
|                                                         | Deferred income taxes                                                                                                  |                              |                                        | 14,547                                  |   |                                          | (1,286  
|                                                         | Disposition of assets and other gains                                                                                  |                              |                                        | (2,590                                  | ) |                                          | (1,385  
|                                                         | Loss on salediscontinued operations                                                                                   |                              |                                        | 5,591                                   |   |                                          |        
|                                                         | Loss on repurchase of Notes due 2009 and 2011                                                                          |                              |                                        | 13,947                                  |   |                                          |        
|                                                         | Change in assets and liabilities, net of effects from acquisition of GC Companies Inc.:                                |                              |                                        |                                         |   |                                          |         
|                                                         |                                                                                                                        |                              | Receivables                            |                                         |   | (5,388                                   | )       
|                                                         |                                                                                                                        |                              | Other assets                           |                                         |   | (9,525                                   | )       
|                                                         |                                                                                                                        |                              | Accounts payable                       |                                         |   | 13,971                                   |         
|                                                         |                                                                                                                        |                              | Accrued expenses and other liabilities |                                         |   | 3,565                                    |         
|                                                         | Other, net                                                                                                             |                              |                                        | 4,274                                   |   |                                          | (6,712  
|                                                         |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|                                                         | Net cash provided by operating activities                                                                              |                              |                                        | 183,278                                 |   |                                          | 128,747 
|                                                         |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|Cash flows from investing activities:                    |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|                                                         | Capital expenditures                                                                                                   |                              |                                        | (95,011                                 | ) |                                          | (100,932
|                                                         | Proceeds from sale/leasebacks                                                                                          |                              |                                        | 63,911                                  |   |                                          | 43,665  
|                                                         | Construction project costs:                                                                                            |                              |                                        |                                         |   |                                          |         
|                                                         |                                                                                                                        | Reimbursable by landlord     |                                        |                                         |  |                                          |         
|                                                         |                                                                                                                        | Reimbursed by landlord       |                                        |                                         |  |                                          |         
|                                                         | Acquisition of MegaStar Cinemas, L.L.C., net of cash acquired                                                          |                              |                                        | (13,374                                 | ) |                                          |        
|                                                         | Acquisition of GC Companies, Inc., net of cash acquired and proceeds from sale of venture capital investments          |                              |                                        | (2,075                                  | ) |                                          | (47,314 
|                                                         | Acquisition of Gulf States Theatres                                                                                    |                              |                                        |                                        |   |                                          | (752    
|                                                         | Purchase of leased furniture, fixtures and equipment                                                                   |                              |                                        | (15,812                                 | ) |                                          | (7,052  
|                                                         | Payment on disposaldiscontinued operations                                                                            |                              |                                        | (5,252                                  | ) |                                          |        
|                                                         | Proceeds from disposition of long-term assets                                                                          |                              |                                        | 9,289                                   |   |                                          | 5,494   
|                                                         | Other, net                                                                                                             |                              |                                        | (11,054                                 | ) |                                          | (4,983  
|                                                         |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|                                                         | Net cash used in investing activities                                                                                  |                              |                                        | (69,378                                 | ) |                                          | (137,201
|                                                         |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|Cash flows from financing activities:                    |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|                                                         | Repayments under Credit Facility                                                                                       |                              |                                        |                                        |   |                                          |        
|                                                         | Proceeds from issuance of 8% Senior Subordinated Notes due 2014                                                        |                              |                                        | 294,000                                 |   |                                          |        
|                                                         | Proceeds from issuance of 97/8% Senior Subordinated Notes due 2012                                                     |                              |                                        |                                        |   |                                          |        
|                                                         | Repurchase of Notes due 2009 and 2011                                                                                  |                              |                                        | (292,117                                | ) |                                          |        
|                                                         | Net proceeds from sale of Common Stock                                                                                 |                              |                                        |                                        |   |                                          |        
|                                                         | Net proceeds from sale of Preferred Stock                                                                              |                              |                                        |                                        |   |                                          |        
|                                                         | Construction project costs reimbursed by landlord                                                                      |                              |                                        |                                        |   |                                          | 29,612  
|                                                         | Principal payments under capital and financing lease obligations                                                       |                              |                                        | (2,574                                  | ) |                                          | (2,580  
|                                                         | Deferred financing costs on credit facility due 2009                                                                   |                              |                                        | (3,725                                  | ) |                                          |        
|                                                         | Change in cash overdrafts                                                                                              |                              |                                        | (19,339                                 | ) |                                          | 7,325   
|                                                         | Change in construction payables                                                                                        |                              |                                        | (4,307                                  | ) |                                          | (528    
|                                                         | Proceeds from exercise of stock options                                                                                |                              |                                        | 3,894                                   |   |                                          |        
|                                                         | Treasury Stock purchases and other                                                                                     |                              |                                        | (445                                    | ) |                                          | (392    
|                                                         |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|                                                         | Net cash provided by (used in) financing activities                                                                    |                              |                                        | (24,613                                 | ) |                                          | 33,437  
|                                                         | Effect of exchange rate changes on cash and equivalents                                                                |                              |                                        | (451                                    | ) |                                          | (3      
|                                                         |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|Net increase in cash and equivalents                     |                                                                                                                        |                              | 88,836                                 |                                         |   | 24,980                                   |         
|Cash and equivalents at beginning of year                |                                                                                                                        |                              | 244,412                                |                                         |   | 219,432                                  |         
|                                                         |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|Cash and equivalents at end of year                      |                                                                                                                        | $                            | 333,248                                |                                         | $ | 244,412                                  |         
|                                                         |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:       |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|Cash paid (refunded) during the period for:              |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|                                                         | Interest (including amounts capitalized of $2,658, $4,095, and $2,677 during fiscal 2004, 2003 and 2002, respectively) |                              | $                                      | 78,479                                  |   | $                                        | 78,677  
|                                                         | Income taxes, net                                                                                                      |                              |                                        | 3,880                                   |   |                                          | (9,757  
|Schedule of non-cash investing and financing activities: |                                                                                                                        |                              |                                        |                                         |   |                                          |         
|                                                         | Preferred dividends                                                                                                    |                              | $                                      | 40,277                                  |   | $                                        | 27,165  
|                                                         | See Note 2Acquisitions for information about the non-cash components of the acquisition of GC Companies, Inc.         |                              |                                        |                                         |   |                                          |         

See Notes to Consolidated Financial Statements.

6

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7

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AMC Entertainment Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

|                                                                      
|----------------------------------------------------------------------
|
|
|
|
|
|Balance, March 30, 2001 (as previously reported)                      
|Adjustment for cumulative effect of restatements                      
|                                                                      
|Balance, March 30, 2001(restated)                                     
|Comprehensive Loss:(restated)                                         
|Net loss                                                              
|Foreign currency translation adjustment                               
|Additional minimum pension liability                                  
|                                                                      
|Comprehensive Loss                                                    
|Sale of Common Stock                                                  
|Sale of Preferred Stock                                               
|Conversion of Class B Stock                                           
|Preferred Stock for dividends                                         
|Preferred Stock dividends                                             
|Preferred Stock accretion                                             
|Deferred compensationrestricted stock awards                         
|Unissued restricted stock awards                                      
|Accrued interest on employee notes for Common Stock purchases         
|                                                                      
|Balance, March 28, 2002                                               
|Comprehensive Loss:(restated)                                         
|Net loss                                                              
|Foreign currency translation adjustment                               
|Additional minimum pension liability                                  
|Unrealized loss on marketable securities                              
|                                                                      
|Comprehensive Loss                                                    
|Stock issued in connection with acquisition of GC                     
|Conversion of Class B Stock                                           
|Preferred Stock for dividends                                         
|Preferred Stock dividends                                             
|Preferred Stock accretion                                             
|Stock awards, options exercised and other                             
|Deferred compensationrestricted stock awards                         
|Unissued restricted stock awards                                      
|Accrued interest on employee notes for Common Stock purchases         
|Forgiveness of employee notes                                         
|Treasury stock purchase                                               
|                                                                      
|Balance, April 3, 2003                                                
|Comprehensive Loss:                                                   
|Net loss                                                              
|Foreign currency translation adjustment                               
|Additional minimum pension liability                                  
|Unrealized gain on marketable securities                              
|                                                                      
|Comprehensive Loss                                                    
|Preferred Stock for dividends                                         
|Preferred Stock dividends                                             
|Preferred Stock accretion                                             
|Stock awards, options exercised and other (net of tax benefit of $664)
|Deferred compensationrestricted stock awards                         
|Unissued restricted stock awards                                      
|Treasury stock purchase                                               
|                                                                      
|Balance, April 1, 2004                                                
|                                                                      

See Notes to Consolidated Financial Statements

8

---



|                                                                       | 
|---------------------------------------------------------------------- | 
|
|
|
|
|Balance, March 30, 2001 (as previously reported)                       | 
|Adjustment for cumulative effect of restatements                       | 
|                                                                       | 
|Balance, March 30, 2001(restated)                                      | 
|Comprehensive Loss:(restated)                                          | 
|Net loss                                                               | 
|Foreign currency translation adjustment                                | 
|Additional minimum pension liability                                   | 
|                                                                       | 
|Comprehensive Loss                                                     | 
|Sale of Common Stock                                                   | 
|Sale of Preferred Stock                                                | 
|Conversion of Class B Stock                                            | 
|Preferred Stock for dividends                                          | 
|Preferred Stock dividends                                              | 
|Preferred Stock accretion                                              | 
|Deferred compensationrestricted stock awards                          | 
|Unissued restricted stock awards                                       | 
|Accrued interest on employee notes for Common Stock purchases          | 
|                                                                       | 
|Balance, March 28, 2002                                                | 
|Comprehensive Loss:(restated)                                          | 
|Net loss                                                               | 
|Foreign currency translation adjustment                                | 
|Additional minimum pension liability                                   | 
|Unrealized loss on marketable securities                               | 
|                                                                       | 
|Comprehensive Loss                                                     | 
|Stock issued in connection with acquisition of GC                      | 
|Conversion of Class B Stock                                            | 
|Preferred Stock for dividends                                          | 
|Preferred Stock dividends                                              | 
|Preferred Stock accretion                                              | 
|Stock awards, options exercised and other                              | 
|Deferred compensationrestricted stock awards                          | 
|Unissued restricted stock awards                                       | 
|Accrued interest on employee notes for Common Stock purchases          | 
|Forgiveness of employee notes                                          | 
|Treasury stock purchase                                                | 
|                                                                       | 
|Balance, April 3, 2003                                                 | 
|Comprehensive Loss:                                                    | 
|Net loss                                                               | 
|Foreign currency translation adjustment                                | 
|Additional minimum pension liability                                   | 
|Unrealized gain on marketable securities                               | 
|                                                                       | 
|Comprehensive Loss                                                     | 
|Preferred Stock for dividends                                          | 
|Preferred Stock dividends                                              | 
|Preferred Stock accretion                                              | 
|Stock awards, options exercised and other (net of tax benefit of $664) | 
|Deferred compensationrestricted stock awards                          | 
|Unissued restricted stock awards                                       | 
|Treasury stock purchase                                                | 
|                                                                       | 
|Balance, April 1, 2004                                                 | 
|                                                                       | 

9

---



AMC Entertainment Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended April 1, 2004, April 3, 2003 and March 28, 2002

NOTE 1THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

AMC Entertainment Inc. ("AMCE") is a holding company which, through its direct and indirect subsidiaries, including American Multi-Cinema, Inc.
("AMC") and its subsidiaries, AMC Entertainment International, Inc. ("AMCEI") and National Cinema Network, Inc. ("NCN") (collectively with AMCE, unless the context otherwise requires,
the "Company"), is principally involved in the theatrical exhibition business throughout North America and in China (Hong Kong), Japan, France, Portugal, Spain and the United Kingdom. The Company's
North American theatrical exhibition business is conducted through AMC and AMCEI. The Company's International theatrical exhibition business is conducted through AMCEI. The Company is also involved in
the business of providing on-screen advertising and other services to AMC and other theatre circuits through a wholly-owned subsidiary, NCN.

Restatements:In connection with the annual audit of the Company's consolidated financial statements,
the Company, with the concurrence of its independent registered public accounting firm, determined that its financial statements for the years ended April 3, 2003 and March 28, 2002 as
previously filed needed to be restated for the following items:

Foreign deferred tax assets:The Company had previously recorded valuation allowances against deferred tax assets in foreign
jurisdictions when it became clear, based on theatre impairments or other factors, that it would not be profitable in those jurisdictions. The Company has now determined that full valuation allowances
should be recorded against deferred tax assets in all foreign jurisdictions when it is more likely than not that the deferred tax assets will not be realized.

Accordingly,
the Company has restated its financial statements for the years ended April 3, 2003 and March 28, 2002 and the balance of retained earnings as of
March 29, 2001 to reflect additional valuation allowances on foreign deferred tax assets. The effects of such adjustments are summarized as follows:

Cumulative decrease to retained earnings at March 29, 2001

$
3,800,000Increase in income tax provision and net loss for the year ended March 28, 2002


800,000Increase in income tax provision and net loss for the year ended April 3, 2003

$
9,000,000


Swedish tax benefits recorded in loss from discontinued operations:In the third quarter of the year ended April 1,
2004, the Company recorded a $2,500,000 U.S. federal income tax benefit generated from a worthless stock deduction relating to the Company's Sweden operations which were sold in that quarter. The
Company subsequently determined that the income tax benefit in the amount of $3,600,000 should have been recorded in the year ended March 28, 2002 (the period in which the Sweden investment was
restructured and became worthless).

Additionally,
in the year ended March 28, 2002, the Company recorded a deferred tax asset of $1,500,000 for asset impairments in Sweden. The Company subsequently determined that
the deferred tax asset should have been reserved with a full valuation allowance.

Accordingly,
the Company has restated its financial statements for the year ended March 28, 2002 to record the net effects of such adjustments. The net effects of such adjustments
(which are recorded in loss from discontinued operations) are summarized as follows:

Decrease in loss from discontinued operations and net loss for the year ended March 28, 2002

$
2,100,000


10

---



Straight-line contingent rentals:Rent expense for leases with rent escalation clauses are required to be
recorded on a straight-line method under certain circumstances. The Company recently determined that it has one lease that has a clause for contingent rents in which case the contingency
was virtually certain to occur. Rent expense for this lease should have been recorded on the straight-line method. Accordingly, the Company has restated its financial statements for the
years ended April 3, 2003 and March 28, 2002 and the balance of retained earnings as of March 29, 2001 to reflect the straight-line method of recording the contingent
portion of rent expense for this one lease. The effects of such adjustments are summarized as follows:

Cumulative decrease in retained earnings at March 29, 2001

$
231,000Increase in net loss (net of income tax benefit of $200,000) for the year ended March 28, 2002

$
210,000Increase in net loss (net of income tax benefit of $200,000) for the year ended April 3, 2003

$
244,000


11

---



The
following table sets forth the previously reported amounts and the restated amounts reflected in the accompanying Consolidated Financial Statements:

|                                                    |                                   | Years Ended            |          
|--------------------------------------------------- | --------------------------------- | ---------------------- | ---------
|
|
|Statement of Operations data:                       |                                   |                        |          
|(in thousands except per share data)                |                                   |                        |          
|Rent                                                |                                   | $                      | 299,933  
|Total costs and expenses                            |                                   |                        | 1,728,795
|Loss from continuing operations before income taxes |                                   |                        | (18,018  
|Income tax provision                                |                                   |                        | 1,200    
|Loss from continuing operations                     |                                   |                        | (19,218  
|Loss from discontinued operations                   |                                   |                        | (1,084   
|Net loss                                            |                                   |                        | (20,302  
|Net loss for common shares                          |                                   |                        | (47,467  
|Basic and diluted loss per share of common stock:   |                                   |                        |          
|                                                    | Loss from continuing operations   |                        | $        
|                                                    | Loss from discontinued operations |                        |          
|                                                    |                                   |                        |          
|Net loss per share                                  |                                   | $                      | (1.31    
|                                                    |                                   |                        |          
|Balance Sheet Data (at period end):                 |                                   |                        |          
|(in thousands except per share data)                |                                   |                        |          
|Deferred income taxes (long-term)                   |                                   | $                      | 171,152  
|Total assets                                        |                                   |                        | 1,491,698
|Other long-term liabilities                         |                                   |                        | 176,370  
|Accumulated deficit                                 |                                   |                        | (187,817 
|Stockholders' equity                                |                                   |                        | 291,904  
|
|                                                    |                                   | As Previously
Reported |          
|Consolidated Statements of Stockholders' Equity:    |                                   |                        |          
|(in thousands except per share data)                |                                   |                        |          
|Balance at March 30, 2001                           |                                   | $                      | (156,047 
|Net loss                                            |                                   |                        | (11,468  
|                                                    |                                   |                        |          
|Balance at March 28, 2002                           |                                   |                        | (167,515 
|Net loss                                            |                                   |                        | (20,302  
|                                                    |                                   |                        |          
|Balance at April 3, 2003                            |                                   | $                      | (187,817 
|                                                    |                                   |                        |          

The
accumulated deficit previously reported at March 30, 2001 of $156,047,000 has been restated to a deficit of $160,078,000, which is an increase of $4,031,000, to reflect the
effect of the restatement adjustments for the periods prior to fiscal 2002. Such cumulative adjustments also had the corresponding effect of decreasing deferred income taxes (long-term) by $3,700,000
and increasing other long-term liabilities by $331,000 for deferred rent.

All
previously reported amounts affected by the restatement that appear elsewhere in these footnotes to the consolidated financial statements have also been restated.

12

---



Discontinued Operations:The results of operations for the Company's discontinued operations have
been eliminated from the Company's continuing operations and classified as discontinued operations for each period presented within the Company's Consolidated Statements of Operations. See
Note 3 Discontinued Operations.

Use of Estimates:The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation:The consolidated financial statements include the accounts of AMCE and
all subsidiaries. All significant intercompany balances and transactions have been eliminated.

Fiscal Year:The Company has a 52/53 week fiscal year ending on the Thursday closest to the last day
of March. Fiscal 2004 and 2002 reflect 52 week periods. Fiscal year 2003 reflects a 53 week period.

Revenues:Revenues are recognized when admissions and concessions sales are received at the theatres.
The Company defers 100% of the revenue associated with the sales of discounted theatre tickets and gift certificates (no revenue or income recognition for non-presentment) until such time
as the items are redeemed or the gift certificate liabilities are extinguished and the discounted theatre tickets expire. The Company recognizes revenues related to on-screen advertising
over the period that the related advertising is delivered on-screen or in-theatre pursuant to the specific terms of its agreements with advertisers.

Film Exhibition Costs:Film exhibition costs are accrued based on the applicable box office receipts
and estimates of the final settlement to the film licenses. As of April 1, 2004 and April 3, 2003, the Company recorded film payables of $57,094,000 and $48,879,000, respectively. The
Company recorded film exhibition costs of $649,380,000, $660,982,000 and $485,799,000 in fiscal 2004, 2003 and 2002, respectively.

Concession Costs:Generally, the Company records payments from vendors as a reduction of concession
costs when earned. Revenue is recorded when it is determined that the payment was for the fair value of services provided to the vendor where the benefit to the vendor is sufficiently separable from
the Company's purchase of the vendor's products. If the consideration received is in excess of fair value, then the excess is recorded as a reduction of concession costs. In addition, if the payment
from the vendor is for a reimbursement of expenses, then those expenses are offset.

NCN and Other:The Company recognizes revenues related to on-screen advertising over the
period the related advertising is delivered on-screen or in-theatre pursuant to the specific terms of its agreements with advertisers. Its on-screen advertising
subsidiary (NCN) operates its advertising program through agreements with other theatre circuits. These circuit agreements stipulate the amount of circuit payments a theatre will receive for running
on-screen slides, on-film programs and other related in-theatre products and services. The Company's circuit agreements have terms of 1 to 5 years, with an
annual cancellation provision included in select agreements. Certain circuits have agreements requiring an annual minimum exhibitor share payment. The Company recognizes the minimum exhibitor share
payments as an expense on a straight-line basis over the terms of the agreements and any excess minimum exhibitor share payments are recognized when earned.

Loyalty Program:The Company records the estimated incremental cost of providing free concession
items for awards under itsMoviewatcherloyalty program when the awards are earned.

Cash and Equivalents:Cash and equivalents consist of cash on hand and temporary cash investments
with original maturities of three months or less. The Company invests excess cash in deposits with major banks and in temporary cash investments. Such investments are made only in instruments issued
or

13

---



enhanced
by high quality financial institutions (investment grade or better). Amounts invested in a single institution are limited to minimize risk.

Under
the Company's cash management system, checks issued but not presented to banks frequently result in overdraft balances for accounting purposes and are classified within accounts
payable in the balance sheet. The amount of these checks included in accounts payable as of April 1, 2004 and April 3, 2003 was $19,737,000 and $39,076,000, respectively.

Property:Property is recorded at cost. The Company uses the straight-line method in
computing depreciation and amortization for financial reporting purposes and accelerated methods, with respect to certain assets, for income tax purposes. The estimated useful lives are as follows:

Buildings and improvements

5 to 40 yearsLeasehold improvements

1 to 20 yearsFurniture, fixtures and equipment

1 to 10 years


Expenditures
for additions (including interest during construction), major renewals and betterments are capitalized, and expenditures for maintenance and repairs are charged to expense
as incurred. The cost of assets retired or otherwise disposed of and the related accumulated depreciation and amortization are eliminated from the accounts in the year of disposal. Gains or losses
resulting from property disposals are credited or charged to operations.

Intangible Assets:Intangible assets are recorded at cost and are comprised of lease rights, amounts
assigned to theatre leases acquired under favorable terms, customer lists, non-competition and consulting agreements and trademarks, each of which are being amortized on a
straight-line basis over the estimated remaining useful lives of the assets. The gross carrying amount of intangible assets was $57,719,000 and $64,230,000 as of April 1, 2004 and
April 3, 2003, respectively. Accumulated amortization on intangible assets was $33,801,000 and $34,180,000 as of April 1, 2004 and April 3, 2003, respectively. Amortization
expense was $6,290,000, $7,138,000 and $2,420,000 in fiscal 2004, 2003 and 2002, respectively. The original useful lives of these assets ranged from 1 to 36 years and the remaining useful lives
range from 1 to 9 years.

Investments:We account for investments in non-consolidated entities using the equity
method of accounting. As of April 1, 2004, the Company holds a 50% interest in Hoyts General Cinemas South America ("HGCSA"), a partnership that operates seventeen theatres in South America.
The Company has recorded an investment in HGCSA of $0 as of April 1, 2004 and April 3, 2003. As of April 1, 2004 the amount of underlying deficit in net assets of HGCSA was
$1,988,000. The Company has not recorded its investment in HGCSA below $0 as it is not directly obligated to fund the losses of HGCSA.

Acquisitions:The Company accounts for its acquisitions of theatrical exhibition business using the
purchase method. The purchase method requires that the Company estimates the fair value of the individual assets and liabilities acquired as well as various forms of consideration given including
cash, common stock, senior subordinated notes and bankruptcy related claims. The Company obtained independent third party valuation studies for certain of the assets and liabilities acquired for
assistance in determining fair value. The Company consummated acquisitions in fiscal 2004, 2003 and 2002 as discussed in Note 2Acquisitions.

Goodwill:Goodwill represents the excess of cost over fair value of net tangible and identifiable
intangible assets related to acquisitions of theatre circuits. The Company is not required to amortize goodwill as a charge to earnings; however, the Company is required to conduct an annual review of
goodwill for impairment.

The
Company's recorded goodwill was $71,727,000 as of April 1, 2004. We evaluate goodwill for impairment annually during the fourth fiscal quarter and any time an event occurs or
circumstances change that would more likely than not reduce the fair value for a reporting unit below its carrying amount. We consider our North American theatrical exhibition operating segment to be
the reporting unit for purposes

14

---



of
evaluating recorded goodwill for impairment. If the carrying value of the reporting unit exceeds its fair value we are required to reallocate the fair value of the reporting unit as if the
reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. We determine fair value by considering the market
price of our common stock as well as multiples applied to cash flow estimates less net indebtedness which we believe is an appropriate method to determine fair value. There is considerable management
judgment with respect to cash flow estimates and appropriate multiples to be used in determining fair value and the market value of our common stock could be volatile.

Other Long-term Assets:Other long-term assets are comprised principally of
costs incurred in connection with the issuance of debt securities, which are being amortized over the respective lives of the issuances, and investments in real estate.

Preopening Expense:Preopening expense consists primarily of advertising and other
start-up costs incurred prior to the operation of new theatres and are expensed as incurred.

Theatre and Other Closure Expense:Theatre and other closure expense is primarily related to payments
made or expected to be made to landlords to terminate leases on certain of the Company's closed theatres, other vacant space or theatres where development has been discontinued. Theatre and other
closure expense is recognized at the time the theatre closes, space becomes vacant or development is discontinued. Expected payments to landlords are based on actual or discounted contractual amounts.
Accretion expense for exit activities initiated after December 31, 2002 is included as a component of theatre and other closure expense. The Company recorded theatre and other closure expense
of $4,068,000, $5,416,000 and $2,124,000 in fiscal 2004, 2003 and 2002, respectively. Accrued theatre and other closure expense is generally classified as current based upon management's intention to
negotiate termination of the related lease obligations within one year.

Sale and Leaseback Transactions:The Company accounts for the sale and leaseback of real estate
assets in accordance with Statement of Financial Accounting Standards No. 98Accounting For Leases.Losses on sale leaseback transactions are
recognized at the time of sale if the fair value of the property sold is less than the undepreciated cost of the property. Gains on sale and leaseback transactions are deferred and amortized over the
remaining lease term. A gain of $15,130,000 on sale and leaseback transactions for 13 theatres entered into in fiscal 1998 has been deferred and is being amortized over the remaining lease terms.

Impairment of Long-lived Assets:Management reviews long-lived assets,
including intangibles, for impairment as part of the Company's annual budgeting process and whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully
recoverable. Management reviews internal management reports on a quarterly basis as well as monitors current and potential future competition in the markets where we operate for indicators of
triggering events or circumstances that indicate potential impairment of individual theatre assets. Management evaluates its theatres using historical and projected data of theatre level cash flow as
its primary indicator of potential impairment and considers the seasonality of its business when evaluating theatres for impairment. Because the Christmas and New Years holiday results comprise a
significant portion of the Company's operating cash flow, the actual results from this period, which are available during the fourth quarter of each fiscal year, are an integral part of the Company's
impairment analysis. As a result of these analyses, if the sum of the estimated future cash flows, undiscounted and without interest charges, are less than the carrying amount of the asset, an
impairment loss is recognized in the amount by which the carrying value of the asset exceeds its estimated fair value. Assets are evaluated for impairment on an individual theatre basis, which
management believes is the lowest level for which there are identifiable cash flows. The impairment evaluation is based on the estimated cash flows from continuing use until the expected disposal date
or the fair value of furniture, fixtures and equipment. The expected disposal date does not exceed the remaining lease period and is often less than the remaining lease period when management does not
expect to

15

---



operate
the theatre to the end of its lease term. The fair value of assets is determined as either the expected selling price less selling costs (where appropriate) or the present value of the
estimated future cash flows. Fair value for furniture, fixtures and equipment has been determined using similar asset sales and in some instances independent third party valuation studies. There is
considerable management judgment necessary to determine the future cash flows, fair value and the expected operating period of a theatre, and accordingly, actual results could vary significantly from
such estimates.

If
theatres currently have sufficient estimated future cash flows to realize the related carrying amount of theatre assets, but management believes that it is not likely the theatre will
be operated to the end of its lease term, the estimated economic life of the theatre assets are revised to reflect management's best estimate of the economic life of the theatre assets for purposes of
recording depreciation.

Impairment
losses by operating segment follows:

|Impairment of long-lived assets (In thousands) |  | 2004 |        | 2003 |   | 2002   | 
|---------------------------------------------- |  | ---- | ------ | ---- | - | ------ | 
|North American theatrical exhibition           |  | $    | 12,747 |      | $ | 4,083  | 
|International theatrical exhibition            |  |      | 3,525  |      |   | 15,480 | 
|                                               |  |      |        |      |   |        | 
|Total impairments of long-lived assets         |  | $    | 16,272 |      | $ | 19,563 | 
|                                               |  |      |        |      |   |        | 

---

Foreign Currency Translation:Operations outside the United States are generally measured using the
local currency as the functional currency. Assets and liabilities are translated at the rates of exchange at the balance sheet date. Income and expense items are translated at average rates of
exchange. The resultant translation adjustments are included in foreign currency translation adjustment, a separate component of accumulated other comprehensive income. Gains and losses from foreign
currency transactions, except those intercompany transactions of a long-term investment nature, are included in net earnings and have not been material.

Loss per Share:Basic loss per share is computed by dividing net loss by the weighted-average number
of common shares outstanding. The Company accounts for loss per share in accordance with EITF Topic No. D-95Effect of Participating Convertible Securities
on the Computation of Basic Earnings Per Share. Topic No. D-95 requires the inclusion of participating convertible securities in the computation of basic
earnings per common share. Topic No. D-95 permits the
use of either the "if-converted" or the "two-class" method: the Company has selected the "if-converted" method. The dilutive effect of the Company's Series A
Convertible Preferred Stock is considered in the computation of basic earnings per common share in accordance with Topic No. D-95. Under Topic No. D-95, the
dilutive effect of the Series A Preferred on basic earnings per common share cannot be less than the amount that would result from the application of the "two-class" method of
computing basic earnings per common share. The "two-class" method is an earnings allocation formula that determines earnings per share for the common stock and the participating
Series A Preferred according to dividends declared and participating rights in the undistributed earnings as if all such earnings were distributed. If dividends are paid on the common stock in
any fiscal period, the holders of Series A Preferred shares are entitled to receive dividends on an "as converted" basis, to the extent such dividends are greater than the face amount of
Series A Preferred dividends otherwise payable in such fiscal period. Diluted loss per share includes the effects of outstanding stock options, stock awards and Series A Convertible
Preferred Stock, if dilutive.

Stock-based Compensation:The Company accounts for the stock options, restricted stock awards and
deferred stock units under plans that it sponsors following the recognition and measurement provisions of APB Opinion No. 25,Accounting for Stock issued to
Employees(APB No. 25) and related interpretations. Stock-based employee compensation expense related to restricted stock awards and deferred stock units of $8,727,000,
$2,011,000 and $442,000 was reflected in net loss for fiscal 2004, 2003 and 2002, respectively. No stock-based employee compensation expense for stock options was reflected in net loss for fiscal
2004,

16

---



2003
and 2002, as all stock options granted under those plans had an exercise price equal to the fair market value of the underlying common stock on the date of grant.

The
following table reflects the weighted average fair value per option granted during each year, as well as the significant weighted average assumptions used in determining fair value
using the Black-Scholes option-pricing model:

|                                          |  | 2004 |  | 2003  |  | 2002 
|----------------------------------------- |  | ---- |  | ----- |  | -----
|Weighted average fair value on grant date |  |     |  | $8.82 |  | $4.16
|Risk-free interest rate                   |  |     |  | 2.6%  |  | 4.7% 
|Expected life (years)                     |  |     |  | 5     |  | 5    
|Expected volatility                       |  |     |  | 67.7% |  | 66.8%
|Expected dividend yield                   |  |     |  |      |  |     

The
following table illustrates the effect on net loss and loss per share as if the fair value method had been applied to all stock awards and outstanding and unvested options in each
period:

|(In thousands, except per share data)          |             | 2004                                                                                             |   | 2003
(restated) |        | 2002
(restated) |        
|---------------------------------------------- | ----------- | ------------------------------------------------------------------------------------------------ | - | --------------- | ------ | --------------- | -------
|Net loss:                                      |             |                                                                                                  |   |                 |        |                 |        
|                                               | As reported |                                                                                                  | $ | (10,714         | )      | $               | (29,546
|                                               |             | Add: Stock based compensation expense included in reported net loss, net of related tax effects  |   |                 | 5,236  |                 |        
|                                               |             | Deduct: Total stock-based compensation expense determined under fair value method for all awards |   |                 | (5,930 | )               |        
|                                               |             |                                                                                                  |   |                 |        |                 |        
|                                               | Pro forma   |                                                                                                  | $ | (11,408         | )      | $               | (31,335
|                                               |             |                                                                                                  |   |                 |        |                 |        
|Net loss per common share (basic and diluted): |             |                                                                                                  |   |                 |        |                 |        
|                                               | As reported |                                                                                                  | $ | (1.39           | )      | $               | (1.56  
|                                               | Pro forma   |                                                                                                  | $ | (1.41           | )      | $               | (1.61  

Income Taxes:The Company accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109 ("SFAS 109")Accounting for Income Taxes. Under SFAS 109, deferred income tax effects of transactions
reported in different periods for financial reporting and income tax return purposes are recorded by the liability method. This method gives consideration to the future tax consequences of deferred
income or expense items and immediately recognizes changes in income tax laws upon enactment. The income statement effect is generally derived from changes in deferred income taxes on the balance
sheet.

Casualty Insurance:The Company is self-insured for general liability up to $400,000 per
occurrence and carries a $400,000 deductible limit per occurrence for workers compensation claims. The Company utilizes actuarial projections of its ultimate losses that it will be responsible for
paying. The actuarial method includes an allowance for adverse developments on known claims and an allowance for claims which have been incurred but which have not been reported. As of April 1,
2004 and April 3, 2003, the Company had recorded casualty insurance reserves of $20,479,000 and $19,765,000, respectively. The Company recorded expenses related to general liability and workers
compensation claims of $10,581,000, $6,752,000 and $10,304,000 in fiscal 2004, 2003 and 2002, respectively.

New Accounting Pronouncements:In August 2001, the Financial Accounting Standards Board
("FASB") issued SFAS No. 143Accounting for Asset Retirement Obligations. SFAS No. 143 addresses the recognition and remeasurement of
obligations associated with the retirement of a tangible long-lived asset. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002. SFAS No. 143
became effective for the Company in fiscal 2004. Adoption of SFAS No. 143 did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.

17

---



In
April 2003, the FASB issued SFAS No. 149Amendment of Statement No. 133 on Derivative Instruments and Hedging
Activities. SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other
contracts. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003, except as stated below, and for hedging relationships designated after June 30,
2003. In addition, except as stated below, all provisions of SFAS No. 149 should be applied prospectively. The provisions of SFAS No. 149 relating to SFAS No. 133 Implementation
Issues that have been effective for fiscal quarters beginning prior to June 15, 2003, should continue to be applied in accordance with their respective effective dates. Adoption of SFAS
No. 149 did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.

In
May 2003, the FASB issued SFAS No. 150Accounting for Certain Financial Instruments with Characteristics of both Liabilities and
Equity. SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity.
It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of these instruments were previously classified as
temporary equity. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period
beginning after June 15, 2003. For financial instruments created before the issuance date of SFAS No. 150 and still existing at the beginning of the interim period of adoption,
transition shall be achieved by reporting the cumulative effect of a change in accounting principle by initially measuring the financial instruments at fair value or other measurement attribute
required by SFAS No. 150. On November 5, 2003 the FASB deferred the provisions of SFAS No. 150 as they apply to certain mandatorily redeemable non-controlling
interests. Instruments with characteristics of both liabilities and equity not addressed in SFAS No. 150 may be addressed in Phase 2 of the FASB'sLiabilities and
Equityproject. Adoption of SFAS No. 150 did not have a material impact on the Company's consolidated financial position, results of operations or cash flows.

In
January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),Consolidation of Variable Interest Entities. This
interpretation addresses the consolidation of business enterprises (variable interest entities) to which the usual condition of consolidation does not apply. This interpretation focuses on financial
interests that indicate control. It concludes that in the absence of clear control through voting interests, a company's exposure (variable interest) to the economic risks and potential rewards from
the variable interest entity's assets ("VIE") and activities are the best evidence of control. Variable interests are rights and obligations that convey economic gains or losses from changes in the
values of the VIE's
assets and liabilities. Variable interests may arise from financial instruments, service contracts, nonvoting ownership interests and other arrangements. If an enterprise holds a majority of the
variable interests of an entity, it would be considered the primary beneficiary. The primary beneficiary would be required to include assets, liabilities and the results of operations of the VIE in
its financial statements. This interpretation applies immediately to VIE's that are created, or for which control is obtained after, January 31, 2003.

In
December 2003, the FASB published a revision to FIN 46 to clarify some of the provisions and to exempt certain entities from its requirements. Under the new guidance, special
effective date provisions apply to enterprises that have fully or partially applied FIN 46 prior to issuance of the revised interpretation. Otherwise, application of Interpretation 46R ("FIN 46R") is
required in financial statements of public entities that have interests in structures that are commonly referred to as special-purpose entities ("SPEs") for periods ending after December 15,
2003. Application by public entities, other than business issuers, for all other types of VIEs other than SPEs is required in financial statements for periods ending after March 15, 2004.

The
Company does not have interests in structures commonly referred to as SPEs. The Company applied FIN 46R beginning with our fourth fiscal quarter of 2004. Adoption of FIN 46R did not
have a material impact on the Company's consolidated financial position, results of operations or cash flows.

18

---



In
December 2003, the FASB published a revision to SFAS No. 132Employers' Disclosure about Pensions and Other Postretirement Benefits an amendment
of FASB Statements No. 87, 88 and 106. SFAS No. 132R requires additional disclosures to those in the original SFAS No. 132 about the assets, obligations,
cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The provisions of SFAS No. 132 remained in effect until the provisions
of SFAS No. 132R were adopted. SFAS No. 132R is effective for financial statements with fiscal years ending after December 15, 2003. The interim-period disclosures required by
SFAS No. 132R are effective for interim periods beginning after December 15, 2003. Adoption of SFAS No. 132R did not have a material impact on the Company's consolidated financing
position, results of operations or cash flows.

On
January 12, 2004, the FASB issued FASB Staff Position No. 106-1,Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003, ("FSP No. 106-1") in response to a new law regarding prescription drug benefits under Medicare
("Medicare Part D") as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D.
Currently, SFAS No. 106,Employers' Accounting for Postretirement Benefits Other Than Pensions("SFAS No. 106") requires that changes in
relevant law be considered in current measurement of postretirement benefit costs. However, certain accounting issues related to the federal subsidy remain unclear and significant uncertainties may
exist which impair a plan sponsor's ability to evaluate the direct effects of the new
law and the ancillary effects on plan participants' behavior and healthcare costs. Due to these uncertainties, FSP No. 106-1 provides plan sponsors with an opportunity to elect to
defer recognizing the effects of the new law in the accounting for its retiree health care benefit plans under SFAS No. 106 and to provide related disclosures until authoritative guidance on
the accounting for the federal subsidy is issued and clarification regarding other uncertainties is resolved. The Company has elected to defer recognition while evaluating the new law and the pending
issuance of authoritative guidance and their effect, if any, on the Company's results of operations, financial position and financial statement disclosure. Therefore, any measures of the accumulated
postretirement benefit obligation or the net periodic postretirement benefit cost do not reflect the effects of the new law and issued guidance could require the Company to change previously reported
information. In May 2004, the FASB issued FSP No. 106-2 which provides accounting guidance for this new subsidy. The Company sponsors a postretirement benefit plan which may benefit from
the subsidy and as a result, the Company is currently evaluating the impact of FSP No. 106-2, which the Company is required to adopt in its second quarter of fiscal 2005.

The
Emerging Issues Task Force (EITF) reached a final consensus on Issue 03-06, "Participating Securities and the Two-Class Method under FAS 128", ("Issue 03-06") at its March
2004 meeting. Issue 03-06 addresses a number of questions regarding the computation of earnings per share by companies that have issued securities other than common stock that participate in dividends
and earnings of the issuing entity. Such securities are contractually entitled to receive dividends when and if the entity declares dividends on common stock. The issue also provides further guidance
in applying the two-class method of calculating earnings per share once it is determined that a security is participating. The two-class method is an earnings allocation formula that determines
earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The consensus is
effective for the Company in the first fiscal quarter of 2005 and requires retroactive application. The Company is currently evaluating the effect of Issue 03-06 on its financial statements.

Presentation:Certain amounts have been reclassified from prior period consolidated financial
statements to conform with the current year presentation.

19

---



NOTE 2ACQUISITIONS

On March 15, 2002, the Company acquired the operations and related assets of Gulf States Theatres ("GST") for a cash purchase price of $45,772,000 (see
Note 16Related Party Transactions). In connection with the acquisition, the Company leased five theatres with 68 screens in the New Orleans, Louisiana area. All five of the
theatres feature stadium seating and have been built since 1997 and strengthen the Company's position in the New Orleans market. The following is a summary of the allocation of the purchase price to
the assets acquired from GST, based on an independent third party valuation study:

(In thousands)Property

$
11,396Intangible assets


8,540Goodwill


25,836Total purchase price

$
45,772


Amounts
recorded for goodwill are not subject to amortization, are recorded at the Company's North American theatrical exhibition operating segment (the reporting unit) and are expected
to be deductible for tax purposes.

The
Company will pay $300,000 annually for five years in connection with consulting and non-competition agreements related to the acquisition. The annual payments will be
included within general and administrative expense in the consolidated statements of operations.

Amounts
allocated to intangible assets relate to $8,200,000 for a non-competition and consulting agreement and $340,000 for an acquired trademark which are the fair values as
determined by an independent third party valuation study. The valuation of the non-competition agreement was calculated as the present value of expected cash flows that would be lost due
to competition if the agreement was not in place. The valuation of the trademark was based upon the estimated expenditures that a theatre incurs prior to opening in order to build
brand-name awareness. The amortization periods for the non-competition and consulting agreement and trademark are seven years and 20 years, respectively. Amortization
expense and accumulated amortization are as follows:

(In thousands)

2004

2003

2002Amortization expense of non-competition and consulting agreement

$
1,171

$
1,171

$
Amortization expense of trademark


17


17


Total

$
1,188

$
1,188

$



(In thousands)

2004

2003

2002Accumulated amortization of non-competition and consulting agreement

$
2,342

$
1,171

$
Accumulated amortization of trademark


34


17Total

$
2,376

$
1,188

$



Estimated
amortization expense for each of the next five fiscal years is $1,171,000 under the non-competition and consulting agreement and $17,000 for the trademark.

On
March 29, 2002, the Company acquired GC Companies, Inc. ("GC") pursuant to a plan of reorganization sponsored by the Company for a purchase price of $168,931,000 (net of
$6,500,000 from the sale of GC's portfolio of venture capital investments on the effective date), which included anticipated cash

20

---



payments
of $68,472,000, the issuance of $72,880,000 aggregate principal amount of 91/2% Senior Subordinated Notes due 2011 with a fair value of $71,787,000 and the issuance of
2,578,581 shares of common stock, with an aggregate fair value of $35,172,000 based on a fair value of $13.64 per share (the closing price per share on the effective date of the plan). The acquisition
included 66 theatres with 621 screens in the United States, 3 managed theatres with 20 screens in the United States and a 50% interest in Hoyts General Cinemas South America which operates 17 theatres
with 160 screens in Argentina, Chile, Brazil and Uruguay that is accounted for using the equity method.

As
of April 1, 2004, $2,354,000 of the cash portion of the purchase price was unpaid and 148,148 shares of the common stock portion of the purchase price with a fair value of
$2,020,000 were unissued. The
final purchase price for GC Companies was not determinable until all creditor claims disputed by the GC Companies post-confirmation unsecured creditors committee were consensually resolved
or determined by the bankruptcy court. That process was recently completed, and the GC Companies bankruptcy case was closed on May 26, 2004. Through April 1, 2004, we had issued
$72,880,000 aggregate principal amount of our senior subordinated notes due 2011 and 2,430,433 shares of our common stock and paid approximately $66,118,000 in cash to creditors of GC Companies.
Acquisition of GC's theatre circuit expanded the Company's national footprint of industry-leading theatres, especially in key markets in the Northeast and upper Midwest.

The
GC subsidiary which held its interest in the South American theatre joint venture was not subject to the jurisdiction of the bankruptcy court and the joint venture's lenders retain
liens on the Argentine and Chilean entities. Prior to the Company's acquisition of GC, its joint venture defaulted on its Argentine and Chilean loan agreements as the debts thereunder became due in
December 2001 and payment was not made in accordance with the agreements. However, in connection with the plan of reorganization, one of the Company's wholly-owned subsidiaries acquired, at
par, a 25% undivided, non-voting, economic participation interest in the joint venture's loans for an aggregate purchase price of $10.96 million, whereupon the GC guaranties were
released and the lenders agreed to extend the final maturity date of the loans. The joint venture is currently renegotiating payment terms related to these loans. Non-compliance with
covenants applicable to these loans could result in an acceleration of the loan payment terms or default. Because of such considerations the Company attributes no value to its investment in the joint
venture and participation interest in the joint venture's loans. The Company accounted for the payment above as part of the total purchase price for GC. The amount of the purchase price allocated to
the participation interest in the joint venture's loans was estimated to be $0 based on the final valuation study performed by an independent third party, which took into account, among other things,
the effect that the massive devaluation of the Argentine peso would have on the Argentine operating company's ability to repay US dollar denominated debt and continuing defaults under the joint
venture's loans.

21

---



The
following is a summary of the allocation of the purchase price to the assets and liabilities of GC based on estimates of fair value from an independent third party valuation study
and the final settlement of liabilities assumed from GC:

(In thousands)Cash and equivalents

$
10,468Current assets


12,828Property


133,509Intangible assets


23,318Goodwill


34,624Deferred income taxes


35,700Other long-term assets


7,738Current liabilities


(32,113
)Other long-term liabilities


(57,141
)Total purchase price

$
168,931


Amounts
recorded for goodwill are not subject to amortization, are recorded at the Company's North American theatrical exhibition operating segment (the reporting unit) and are not
expected to be deductible for tax purposes.

Amounts
allocated to intangible assets relate to $19,664,000 of favorable leases assumed from GC and gift certificate and discount ticket customer lists of $3,654,000 which are the fair
values as determined by an independent third party valuation study. The weighted average amortization period for favorable leases and customer lists is approximately 10 years and
2 years, respectively. Amortization expense and accumulated amortization are as follows:

(In thousands)

2004

2003

2002Amortization expense of favorable leases

$
2,031

$
2,241

$
Amortization expense of customer lists


1,929


1,725


Total

$
3,960

$
3,966

$



(In thousands)

2004

2003

2002Accumulated amortization of favorable leases

$
4,272

$
2,241

$
Accumulated amortization of customer lists


3,654


1,725


Total

$
7,926

$
3,966

$



Estimated
amortization expense for the next five fiscal years is as follows:

(In thousands)

Favorable
Leases

Customer
Lists

Total2005

$
2,033

$


$
2,0332006


2,033





2,0332007


1,929





1,9292008


1,892





1,8922009


1,873





1,873


On
December 19, 2003, the Company acquired certain of the operations and related assets of MegaStar Cinemas, L.L.C. ("MegaStar") for an estimated cash purchase price of
$14,950,000. In connection with the acquisition, the Company assumed leases on three theatres with 48 screens in Minneapolis and Atlanta. All three of the theatres feature stadium seating, have been
built since 2000 and strengthen

22

---



the
Company's position in the Minneapolis and Atlanta markets. As of April 1, 2004, $1,536,000 of the estimated total purchase price was unpaid. The results of operations are included in the
Consolidated Statements of Operations from December 19, 2003. The Company believes the results of operations of the acquired theatres are not material to the Company's Consolidated Statements
of Operations and pro forma information is not included herein. The following is a summary of the allocation of the purchase price to the assets acquired from MegaStar based on management estimates of
fair value and an independent third party valuation study:

(In thousands)Cash and equivalents

$
40Current assets


94Property


6,946Other long-term assets


84Goodwill


7,786Total purchase price

$
14,950


Amounts
recorded for goodwill are not subject to amortization, were recorded at the Company's North American theatrical exhibition operating segment (the reporting unit) and are expected
to be deductible for tax purposes.

NOTE 3DISCONTINUED OPERATIONS

On December 4, 2003, the Company sold its only theatre in Sweden and incurred a loss on sale of $5,591,000 which included a $5,252,000 payment to the
purchaser to release the Company from future lease obligations related to the theatre. The Company opened its theatre in Sweden during fiscal 2001 and since that time the Company has incurred
pre-tax losses of $17,210,000, including a $4,668,000 impairment charge in fiscal 2002 and a $5,591,000 loss on sale in fiscal 2004.

The
operations and cash flows of the Sweden theatre have been eliminated from the Company's ongoing operations as a result of the disposal transaction and the Company does not have any
significant continuing involvement in the operations of the Sweden theatre after the disposal transaction. The results of operations of the Sweden theatre have been classified as discontinued
operations, and information presented for all periods reflects the new classification. The operations of the Sweden theatre were previously reported in the Company's International operating segment.
Components of amounts reflected

23

---



as
loss from discontinued operations in the Company's Consolidated Statements of Operations are presented in the following table:

Statements of operations data:

|(In thousands)                    |                                          | 52 Weeks Ended
April 1, 2004 |        | 53 Weeks Ended
April 3, 2003
(restated) |        | 52 Weeks Ended
March 28, 2002
(restated) |      
|--------------------------------- | ---------------------------------------- | ---------------------------- | ------ | --------------------------------------- | ------ | ---------------------------------------- | -----
|Revenues                          |                                          |                              |        |                                         |        |                                          |      
|                                  | Admissions                               |                              | $      | 3,378                                   |        | $                                        | 4,879
|                                  | Concessions                              |                              |        | 949                                     |        |                                          | 1,388
|                                  | Other theatre                            |                              |        | 198                                     |        |                                          | 228  
|                                  |                                          |                              |        |                                         |        |                                          |      
|                                  |                                          | Total revenues               |        |                                         | 4,525  |                                          |      
|Expense                           |                                          |                              |        |                                         |        |                                          |      
|                                  | Film exhibition costs                    |                              |        | 1,698                                   |        |                                          | 2,434
|                                  | Concession costs                         |                              |        | 321                                     |        |                                          | 457  
|                                  | Theatre operating expense                |                              |        | 1,572                                   |        |                                          | 2,707
|                                  | Rent                                     |                              |        | 1,678                                   |        |                                          | 2,512
|                                  | General and administrative expenseother |                              |        | 54                                      |        |                                          | 150  
|                                  | Preopening                               |                              |        |                                        |        |                                          |     
|                                  | Depreciation and amortization            |                              |        | 42                                      |        |                                          | 26   
|                                  | Impairment of long-lived assets          |                              |        |                                        |        |                                          |     
|                                  | Disposition of assets and other gains    |                              |        | 5,591                                   |        |                                          |     
|                                  |                                          |                              |        |                                         |        |                                          |      
|                                  |                                          | Total costs and expenses     |        |                                         | 10,956 |                                          |      
|Investment income                 |                                          |                              |       |                                         |        | (7                                       | )    
|                                  |                                          |                              |        |                                         |        |                                          |      
|Loss before income taxes          |                                          |                              | (6,431 | )                                       |        | (1,784                                   | )    
|Income tax benefit                |                                          |                              | (2,600 | )                                       |        | (700                                     | )    
|                                  |                                          |                              |        |                                         |        |                                          |      
|Loss from discontinued operations |                                          | $                            | (3,831 | )                                       | $      | (1,084                                   | )    
|                                  |                                          |                              |        |                                         |        |                                          |      

Amounts
for the Sweden theatre included in the Company's Consolidated Balance Sheets are presented in the following table:

Balance sheet data:

(In thousands)

52 Weeks Ended
April 1, 2004

53 Weeks Ended
April 3, 2003Current assets

$
3

$
661Property, net





54Current liabilities


(16
)

(1,078
)


24

---



NOTE 4PROPERTY

A summary of property is as follows:

(In thousands)

2004

2003Property owned:Land

$
13,698

$
34,563Buildings and improvements


220,340


255,950Leasehold improvements


409,388


399,891Furniture, fixtures and equipment


859,242


799,0821,502,668


1,489,486Less-accumulated depreciation and amortization


732,338


640,709770,330


848,777Property leased under capital leases:Buildings and improvements


28,128


29,119Less-accumulated amortization


21,181


21,4336,947


7,686$
777,277

$
856,463


Included
in property is $15,007,000 and $69,968,000 of construction in progress as of April 1, 2004 and April 3, 2003, respectively.

25

---



NOTE 5SUPPLEMENTAL BALANCE SHEET INFORMATION

Other assets and liabilities consist of the following:

(In thousands)

2004

2003
(restated)Other current assets:Prepaid rent

$
26,591

$
24,847Deferred income taxes


18,118


15,793Income taxes receivable


5,947


Other


12,020


10,092$
62,676

$
50,732Other long-term assets:Investments in real estate

$
10,303

$
11,996Deferred financing costs


18,034


13,093Other


25,595


25,557$
53,932

$
50,646Accrued expenses and other liabilities:Income taxes payable

$


$
4,080Taxes other than income


30,389


29,613Interest


8,869


8,952Payroll and vacation


10,237


10,039Casualty claims and premiums


7,010


7,955Accrued bonus


13,123


14,126Theatre and other closure


16,071


21,011Unpaid acquisition costs


5,910


6,450Other


20,777


9,991$
112,386

$
112,217


(In thousands)

2004

2003
(restated)Other long-term liabilities:Deferred rent and unfavorable leases

$
113,171

$
112,842Casualty claims and premiums


13,469


11,810Pension and other benefits


25,950


20,459Deferred income


11,829


7,185Deferred gain


10,006


11,402Advance sale leaseback proceeds





6,994Theatre and other closure


1,799


1,488Other


6,243


5,375$
182,467

$
177,555


26

---



NOTE 6CORPORATE BORROWINGS AND CAPITAL AND FINANCING LEASE OBLIGATIONS

A summary of the carrying value of corporate borrowings and capital and financing lease obligations is as follows:

(In thousands)

2004

2003Credit Facility due 2009

$


$
Credit Facility due 2004





91/2% Senior Subordinated Notes due 2009





200,00091/2% Senior Subordinated Notes due 2011


214,474


297,88097/8% Senior Subordinated Notes due 2012


175,000


175,0008% Senior Subordinated Notes due 2014


300,000


Discounts on Senior Subordinated Notes


(3,043
)

(4,219
)Capital and financing lease obligations, interest ranging from 71/4% to 20%


61,281


59,101747,712


727,762Less-current maturities


2,748


2,565$
744,964

$
725,197


Minimum
annual payments required under existing capital and financing lease obligations (net present value thereof) and maturities of corporate borrowings as of April 1, 2004 are
as follows:

|           |  | Capital and Financing Lease Obligations |         |  |   |       
|---------- |  | --------------------------------------- | ------- |  | - | ------
|
|2005       |  | $                                       | 10,459  |  | $ | 7,711 
|2006       |  |                                         | 10,279  |  |   | 7,421 
|2007       |  |                                         | 9,910   |  |   | 6,940 
|2008       |  |                                         | 9,170   |  |   | 6,516 
|2009       |  |                                         | 8,646   |  |   | 6,207 
|Thereafter |  |                                         | 92,789  |  |   | 45,177
|           |  |                                         |         |  |   |       
|Total      |  | $                                       | 141,253 |  | $ | 79,972
|           |  |                                         |         |  |   |       

Credit Facility due 2009

On March 26, 2004, the Company entered into the Second Amended and Restated Credit Agreement (the "Credit Facility") with The Bank of Nova Scotia, Citicorp
North America, Inc., General Electric Capital Corporation, Bank of America, N.A. and various other financial institutions. The Credit Facility replaces the Company's previous Amended and
Restated Credit Agreement dated as of April 10, 1997 which was terminated in connection with the execution of the Credit Facility and in any event was scheduled to mature on April 10,
2004.

The
$175,000,000 credit facility permits borrowings at interest rates based on either the bank's base rate or LIBOR plus applicable margins ranging from 1.0% to 2.0% on base rate loans
and from 2.0% to 3.0% on LIBOR loans and requires an annual commitment fee of 0.5% on the unused portion of the commitment. The Credit Facility matures on April 9, 2009. The total commitment
under the Credit Facility as of April 1, 2004 is $175,000,000; however, the Credit Facility contains covenants that limit the Company's ability to incur debt. As of April 1, 2004, the
Company had no outstanding borrowings under the Credit Facility and approximately $163,000,000 was available for borrowing under the Credit Facility.

Covenants
under the Credit Facility impose limitations on indebtedness, creation of liens, change of control, transactions with affiliates, mergers, investments, guaranties, asset sales,
dividends, business

27

---



activities,
repurchase of capital stock or subordinated debt and pledges. In addition, the Credit Facility contains certain financial covenants. As of April 1, 2004, the Company was in
compliance with all financial covenants relating to the Credit Facility.

Costs
related to the establishment of the Credit Facility were capitalized and are charged to interest expense over the life of the Credit Facility. Unamortized issuance costs of
$3,844,000 as of April 1, 2004 are included in other long-term assets.

Notes Due 2009

On March 19, 1997, the Company sold $200,000,000 aggregate principal amount of 91/2% Senior Subordinated Notes due 2009 (the "Notes due
2009"). The Notes due 2009 bear interest at the rate of 91/2% per annum, payable in March and September. The Notes due 2009 are redeemable at the option of the Company, in whole or in
part, at any time on or after March 15, 2002 at 104.75% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after March 15, 2006, plus in
each case interest accrued to the redemption date.

On
March 25, 2004, the Company redeemed the $200,000,000 of the Notes due 2009 for $204,750,000. A loss of $8,590,000 was recognized in connection with the redemption, including a
call premium of $4,750,000, unamortized issue costs of $3,291,000 and unamortized discount of $549,000. The loss is included within other expense in the Consolidated Statements of Operations for the
year ended April 1, 2004.

Notes Due 2011

On January 27, 1999, the Company sold $225,000,000 aggregate principal amount of 91/2% Senior Subordinated Notes due 2011 and on
March 29, 2002, the Company issued an additional $72,880,000 aggregate principal amount of Notes due 2011 in connection with the acquisition of GC (the "Notes due 2011"). The Notes due 2011
bear interest at the rate of 91/2% per annum, payable in February and August. The Notes due 2011 are redeemable at the option of the Company, in whole or in part, at any time on or
after February 1, 2004 at 104.75% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after February 1, 2007, plus in each case interest
accrued to the redemption date. Upon a change of control (as defined in the Indenture), the Company will be required to make an offer to repurchase each holder's notes at a price equal to 101% of the
principal amount thereof plus accrued and unpaid interest to the date of repurchase. The Notes due 2011 are subordinated to all existing and future senior indebtedness of the Company. The Notes due
2011 are unsecured senior subordinated indebtedness of the Company ranking equally with the Company's Notes due 2009 and Notes due 2012.

On
March 25, 2004, the Company redeemed $83,406,000 of its Notes due 2011 for $87,367,000. A loss of $5,357,000 was recognized in connection with the redemption including a call
premium of $3,962,000, unamortized issue costs of $1,125,000 and unamortized discount of $270,000. The loss is included within other expense in the Consolidated Statements of Operations for the year
ended April 1, 2004.

The
Indenture to the Notes due 2011 contains certain covenants that, among other things, limit the ability of the Company and its subsidiaries to incur additional indebtedness and pay
dividends or make distributions in respect of their capital stock. If the Notes due 2011 attain "investment grade status", the covenants in the Indenture limiting the Company's ability to incur
additional indebtedness and pay
dividends will cease to apply. As of April 1, 2004, the Company was in compliance with all financial covenants relating to the Notes due 2011.

The
discount on the Notes due 2011 is being amortized to interest expense following the interest method. Costs related to the issuance of the Notes due 2011 were capitalized and are
charged to interest expense, following the interest method, over the life of the securities. Unamortized issuance costs of $2,800,000 as of April 1, 2004 are included in other
long-term assets.

28

---



Notes Due 2012

On January 16, 2002, the Company sold $175,000,000 aggregate principal amount of 97/8% Senior Subordinated Notes due 2012 (the "Notes due
2012"). The Notes due 2012 bear interest at the rate of 97/8% per annum, payable in February and August. The Notes due 2012 are redeemable at the option of the Company, in whole or in
part, at any time on or after February 1, 2007 at 104.938% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after February 1, 2010, plus
in each case interest accrued to the redemption date. Upon a change of control (as defined in the Indenture), the Company will be required to make an offer to repurchase each holder's notes at a price
equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase. The Notes due 2012 are subordinated to all existing and future senior indebtedness of the
Company. The Notes due 2012 are unsecured senior subordinated indebtedness of the Company ranking equally with the Company's Notes due 2009 and Notes due 2011.

The
Indenture to the Notes due 2012 contains certain covenants that, among other things, limit the ability of the Company and its subsidiaries to incur additional indebtedness and pay
dividends or make distributions in respect of their capital stock. As of April 1, 2004, the Company was in compliance with all financial covenants relating to the Notes due 2012.

The
discount on the Notes due 2012 is being amortized to interest expense following the interest method. Costs related to the issuance of the Notes due 2012 were capitalized and are
charged to interest expense, following the interest method, over the life of the securities. Unamortized issuance costs of $4,579,000 as of April 1, 2004 are included in other
long-term assets.

Notes Due 2014

On February 24, 2004, the Company sold $300,000,000 aggregate principal amount of 8% Senior Subordinated Notes due 2014 (the "Notes due 2014"). The Company
applied the net proceeds from the sale of Notes due 2014, plus cash on hand, to redeem all outstanding $200,000,000 aggregate principal amount of its Notes due 2009 and $83,406,000 aggregate principal
amount of its Notes due 2011. The Notes due 2014 bear interest at the rate of 8% per annum, payable in March and September. The Notes due 2014 are redeemable at the option of the Company, in whole or
in part, at any time on or after March 1, 2009 at 104.000% of the principal amount thereof, declining ratably to 100% of the
principal amount thereof on or after March 1, 2012, plus in each case interest accrued to the redemption date. Upon a change of control (as defined in the Indenture), the Company will be
required to make an offer to repurchase each holder's notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase. The Notes due 2014 are
subordinated to all existing and future senior indebtedness of the Company. The Notes due 2014 are unsecured senior subordinated indebtedness of the Company ranking equally with the Company's Notes
due 2011 and Notes due 2012.

The
Indenture to the Notes due 2014 contains certain covenants that, among other things, limit the ability of the Company and its subsidiaries to incur additional indebtedness and pay
dividends or make distributions in respect of their capital stock. As of April 1, 2004, the Company was in compliance with all financial covenants relating to the Notes due 2014.

Costs
related to the issuance of the Notes due 2014 were capitalized and are charged to interest expense, following the interest method, over the life of the securities. Unamortized
issuance costs of $6,811,000 as of April 1, 2004 are included in other long-term assets.

Capital and Financing Lease Obligations

Occasionally, the Company is responsible for the construction of leased theatres and for paying project costs that are in excess of an agreed upon amount to be
reimbursed from the developer. Emerging Issues Task Force (EITF) Issue No. 97-10The Effect of Lessee Involvement in Asset
Constructionrequires

29

---



the
Company to be considered the owner (for accounting purposes) of these types of projects during the construction period. As a result, the Company has recorded $41,164,000 and $37,632,000 as
financing lease obligations on its Consolidated Balance Sheets related to these types of projects as of April 1, 2004 and April 3, 2003, respectively.

The
Company's lenders issue letters of credit on behalf of the Company in the normal course of its business. The outstanding amount on these letters of credit was $14,068,000 as of
April 1, 2004 with maturity dates ranging from June 2004 to April 2005.

NOTE 7STOCKHOLDERS' EQUITY

The Company has two classes of common stock outstanding, Common Stock and Class B Stock, which do not provide for different dividend rates or other
preferences, other than voting rights, between the two classes of common stock.

Voting Rights

The holders of Common Stock are entitled to one vote per share and, except for the election of directors, vote together as a single class with the holders of the
Company's Class B Stock and holders of the Company's Series A Convertible Preferred Stock who are entitled to vote their shares, on an as-converted basis, subject to the
right to vote as a separate class as required by law and on certain charter amendments affecting the number of authorized shares of Common Stock or the par value or relative powers, preferences or
special rights thereof.

The
holders of Class B Stock are entitled to ten votes per share and, except for the election of directors, vote together as a single class with the holders of Common Stock and
holders of the Company's Series A Convertible Preferred Stock who are entitled to vote their shares, on an as-converted basis, subject to the right to vote as a separate class as
required by law and on certain charter amendments affecting the number of authorized shares of Class B Stock or the par value or relative powers, preferences or special rights thereof.

Under
the Company's investment agreement with the initial purchasers of the Company's Preferred Stock, the Company cannot change the size of the Board of Directors, which presently has
eight members, without the approval of the initial purchasers as long as they continue to own at least 117,500 shares of Preferred Stock. Also, so long as the initial purchasers continue to hold this
and other preferred stock approval rights, the initial purchasers will have the right to elect three directors to the Company's Board of Directors. The remaining members of the board are elected by
the holders of Common Stock and Class B stock. Under the Company's restated and amended certificate of incorporation, presently holders of Common Stock, voting separately as a class, have the
right to elect two directors, and the holders of Common Stock and Class B Stock, voting together as a single class, with each share of Common Stock having one vote per share and each share of
Class B Stock having ten votes per share, have the right to elect three directors. In the event that no shares of Class B Stock remain outstanding, the holders of Common Stock may elect
all of the members of the Board of Directors to be elected by holders other than holders of Preferred Stock, with each share having one vote for such purpose. Holders of Common Stock and
Class B Stock do not have cumulative voting rights in elections of directors.

Upon
transfer of shares of Series A Convertible Preferred Stock to a transferee that is not an affiliate of the initial purchasers, the transferee holder of Series A
Convertible Preferred Stock is entitled to vote on an as-converted basis with the holders of the Company's Common Stock and Class B Stock on all matters except the election of
directors and any matter reserved by law or the Company's restated and amended certificate of incorporation for consideration exclusively by the holders of Common Stock or Class B Stock.
Holders of the Series A Convertible Preferred Stock also have the right to vote as a class on the creation, authorization or issuance of any class, series or shares of senior stock, parity
stock or junior

30

---



stock
(if the junior stock may be redeemed at the option of the holders thereof prior to April 19, 2011) and on any adverse change to the preference, rights and powers of the Series A
Convertible Preferred Stock.

If
an event of default with respect to the Company's Preferred Stock (as defined below) occurs and is not cured or waived within 45 days, then the holders of Preferred Stock will
have the right to elect that number of directors that, when added to those directors already elected by the holders of Series A Convertible Preferred Stock, constitute a majority of the Board
of Directors. An "event of default" is defined as (i) an event of default under the Company's credit facility, the note indentures or any other indebtedness in excess of $10 million,
(ii) the Company's failure to pay cash dividends on the Preferred Stock when required under the terms thereof or (iii) the Company's violation of the provisions of the investment
agreement relating to the preferred stock approval rights.

Equity Securities

The authorized common stock of AMCE consists of two classes of stock: Common Stock (662/3¢ par value; 200,000,000 shares authorized)
and Class B Stock (662/3¢ par value; 30,000,000 shares authorized). Holders of Class B Stock may elect to convert at any time on a
share-for-share basis into Common Stock.

The
Company has authorized 10,000,000 shares of Preferred Stock (662/3¢ par value), of which 2,000,000 shares have been designated under the Company's
Certificate of Designations as Series A Convertible Preferred Stock ("Series A Preferred") and 2,000,000 shares have been designated as Series B Exchangeable Preferred Stock
("Series B Preferred", and collectively with the Series A Preferred, the "Preferred Stock"). As of April 1, 2004, 299,477 Series A Preferred shares were issued and
outstanding.

On
March 29, 2002, the Company acquired GC pursuant to a plan of reorganization sponsored by the Company for purchase price of $168,931,000 (net of $6,500,000 from the sale of
GC's portfolio of venture capital investments on the effective date), which includes the issuance of 2,578,581 shares of
Common Stock, with an aggregate fair value of $35,172,000 based on a fair value of $13.64 per share (the closing price per share on the effective date of the plan).

On
March 19, 2002, the Company completed a public offering of 9,000,000 shares of Common Stock at a public offering price of $10.50 per share and granted the underwriters a
30 day option to purchase an additional 1,350,000 shares of Common Stock at $10.50 per share to cover over-allotments. On March 28, 2002, the underwriters exercised their
option to purchase these shares. Net proceeds from the offering of the shares of Common Stock of $100,800,000 were used to fund the acquisition of GC and will be used to pursue the Company's current
business strategy including acquisitions of other theatres and theatre circuits.

On
April 19, 2001, the Company issued 92,000 shares of Series A Preferred and 158,000 shares of Series B Preferred at a price of $1,000 per share. Net proceeds from
the issuance of approximately $225,000,000 were used to repay borrowings under the Credit Facility. On September 13, 2001, all shares of Series B Preferred were exchanged for an equal
number of shares of Series A Preferred. The Preferred Stock has preference in liquidation equal to the greater of $1,000 per share plus accrued and unpaid dividends, or the amount that would
have been payable if the Preferred Stock were converted into Common Stock.

The
Series A Preferred is convertible at the option of the holder into shares of Common Stock at a conversion price of $7.15 per Common Stock share (as adjusted, the "Conversion
Price") resulting in a current conversion rate of 139.86 shares of Common Stock for each share of Series A Preferred.

Dividends
on the Series A Preferred accumulate at an annual rate of 6.75% and are payable when, as and if declared by the Company's Board of Directors. Dividends on the
Series A Preferred must be paid with additional Series A Preferred shares for the first three years from April 19, 2001. Between April 20, 2004 and April 19, 2008,
dividends may be paid in either additional Series A Preferred shares or cash, at

31

---



the
Company's option, and must be paid in cash after April 19, 2008, unless prohibited by the Indentures for the Notes due 2011, in which case such dividends are payable in additional
Series A Preferred shares.

Preferred
Stock dividends paid in shares of Preferred Stock are recorded at their estimated fair value on the date of declaration. The carrying value of Series A Preferred is
accreted to its redemption price (including any accrued and unpaid dividends) over ten years (the period from initial issuance until redemption first becomes available to the holder of the security)
using the interest method. During fiscal 2004, the Company recorded dividends of 19,697 shares of Series A Preferred valued at $40,277,000. During fiscal 2003, the Company recorded dividends of
18,422 shares of Series A Preferred valued at $27,165,000.

The
holders of Series A Preferred shares are also entitled to a special dividend of additional Series A Preferred shares if a Change of Control (as defined in the
Certificate of Designations) of the Company occurs prior to April 19, 2006 equal to the dividends that they would have received through April 19, 2006 if the Change of Control had not
occurred. If dividends are paid on the Common Stock in any fiscal period, the holders of Series A Preferred shares are entitled to receive dividends on an "as converted" basis to the extent
such dividends are greater than the Series A Preferred dividends otherwise payable in such fiscal period.

The
Preferred Stock may be redeemed in whole and not in part by the Company at the Company's option at any time after April 19, 2006 for cash equal to the liquidation preference,
provided that the average Common Stock closing price for the 20 trading days preceding the notice of redemption exceeds 150% of the Conversion Price. The Series A Preferred must be redeemed by
the Company at the option of a holder at any time after April 19, 2011 for cash or Common Stock, at the Company's option, at a price equal to the Series A Preferred liquidation
preference.

The
initial purchasers of the Preferred Stock have the right to approve the payment of dividends on the Company's other capital stock.

In
addition, during the period that they are entitled to elect three Directors, the initial purchasers of the Company's Preferred Stock must approve certain corporate actions before the
Company may take them. These Preferred Stock Approval Rights include but are not limited to, limitations on the Company's ability to:



During
fiscal 1999, the Company loaned one of its executive officers $5,625,000 to purchase 375,000 shares of Common Stock of the Company in a secondary offering. During fiscal
1999, the Company also loaned $3,765,000 to another of its executive officers to purchase 250,000 shares of Common Stock of the Company. The 250,000 shares were purchased in the open
market and unused proceeds of $811,000 were repaid to the Company leaving a remaining unpaid principal balance of $2,954,000. The loans were unsecured and were due in August and September of 2003,
respectively, could be prepaid in part or full without penalty and were represented by promissory notes which bore interest at a rate (6% per annum) at least equal to the applicable federal
rate prescribed by Section 1274 (d) of the Internal Revenue Code in effect on the date of such loans, payable at maturity. Based on the recommendation of the Compensation Committee, on
May 13, 2002 the Company's Board of Directors approved the forgiveness of $10,538,000 of principal and accrued interest on the loans to the two executive officers together with the payment of
$8,712,000 of federal, state and payroll related taxes on behalf of the

32

---



executive
officers in connection with the loan forgiveness and recorded these amounts as general and administrative expense. Such loan forgiveness was effective as of June 6, 2002 pursuant to
agreements between the Company and each of the executive officers in which the officers agreed not to sell shares of Common Stock purchased in fiscal 1999 with proceeds of the loans for
18 months.

Stock-Based Compensation

In November 1994, AMCE adopted a stock option and incentive plan (the "1994 Plan"). This plan expired in fiscal 1999 except as to outstanding
non-qualified stock options. The 1994 Plan provided that the option exercise price for stock options may not have been less than the fair market value of the stock at the date of grant and
unexercised options expire no later than ten years after date of grant. Options issued under the 1994 Plan during fiscal 2000 vested 50% at issuance and 50% one year from issuance; options issued
under the 1994 Plan during fiscal 1999 vested immediately; and all other options issued under the 1994 Plan vested two years from the date of issuance.

In
December 1999, AMCE adopted a stock option and incentive plan for Outside Directors (the "1999 Outside Directors Plan"). This plan, which was terminated in fiscal 2004 except
as to outstanding awards, provided for a one-time grant to outside directors of non-qualified stock options and permitted directors to receive up to all of their annual cash
retainer in options in lieu of cash. The 1999 Outside Directors Plan provided that the option exercise price for stock options be equal to the fair market value of the stock at the date of grant and
unexercised options expire no later than ten years after date of grant. Options issued under the 1999 Outside Directors Plan during fiscal 2002 and 2001 vest one year from the date of issuance.

In
December 1999, AMCE adopted a stock option and incentive plan (the "1999 Plan"). This plan expired in fiscal 2003 except as to outstanding non-qualified stock
options and grants of restricted stock awards. The 1999 Plan provided that the option exercise price for stock options may not be less than the fair market value of the stock at the date of grant and
unexercised options expire no later than ten years after date of grant. Options issued under the 1999 Plan during fiscal 2003 and 2002 vest 50% one year from issuance and 50% two years from issuance.

During
the second quarter of fiscal 2004 the Company's Shareholders approved and the Company adopted the 2003 AMC Entertainment Inc. Long-Term Incentive Plan (the
"2003 LTIP"). The 2003 LTIP provides for five basic types of awards: (i) grants of stock options which are either incentive or non-qualified stock options, (ii) grants of
restricted stock awards, (iii) grants of deferred stock units, (iv) grants of deferred cash awards and (v) performance grants which may be settled in stock options, shares of
common stock, restricted stock, deferred stock units, deferred cash awards, or cash, or any combination thereof. The number of shares of Common Stock which may be sold or granted under the plan may
not exceed 6,500,000 shares. The 2003 LTIP provides that the option exercise price for stock options may not be less than the fair market value of stock at the date of grant, options may not be
repriced and unexercised options expire no later than ten years after date of grant. No options have been issued under the 2003 LTIP as of April 1, 2004.

On
September 18, 2003, the Board of Directors made performance grants with award opportunities having an aggregate value of $10,124,000. These grants are subject to the
satisfaction of performance measures during fiscal 2004 and/or the exercise of discretion by the Compensation Committee of the Board of Directors. Performance grants will be settled with up to
$1,657,000 in deferred cash awards and the balance (up to $8,467,000) in deferred stock units, which will entitle the holder to one share of Common Stock for each deferred stock unit at the end of a
deferral period. The number of deferred stock units issuable in connection with these performance grants will be based on the average closing prices of the Company's common stock over the ten trading
days ending on the last day of the fiscal year. With an average price of $15.12, the average closing stock price over the ten trading days ending on April 1, 2004, up to 559,987 deferred stock
units could be issuable with respect to fiscal 2004 if all performance measures

33

---



are
met and all discretionary awards are made. The deferred stock units will be subject to three-year vesting and deferral periods which will run concurrently. Participants may elect to
further defer receipt for specified periods after the end of the initial three year deferral period. Expenses related to the awards will be recognized over the service period in fiscal 2004.

The
Company has recorded $8,021,000 and $1,605,000 in accrued expenses and other liabilities related to grants of deferred stock units and deferred cash awards, respectively, under the
2003 LTIP as of April 1, 2004. On June 11, 2004, the Compensation Committee of the Board of Directors approved the accrued distributions under the 2003 LTIP.

On
May 13, 2002, the Company granted stock awards on 170,710 shares of Common Stock with a fair value of $2,593,000 which vest 50% one year from issuance and 50% two years from
issuance. As of April 1, 2004, 11,497 of these shares were forfeited prior to vesting.

The
Company recognized $706,000 and $2,011,000 of compensation expense during fiscal 2004 and 2003, respectively, related to stock awards.

A
summary of stock option activity under all plans is as follows:

|                                   |  | 2004      |   | 2003 |       | 2002
|---------------------------------- |  | --------- | - | ---- | ----- | ----
|
|Outstanding at beginning of year   |  | 1,978,165 |   | $    | 12.98 |     
|Granted                            |  |          |   |      |      |     
|Canceled                           |  | (20,940   | ) |      | 13.09 |     
|Exercised                          |  | (456,585  | ) |      | 8.54  |     
|                                   |  |           |   |      |       |     
|Outstanding at end of year         |  | 1,500,640 |   | $    | 14.32 |     
|                                   |  |           |   |      |       |     
|Exercisable at end of year         |  | 1,292,650 |   | $    | 14.19 |     
|                                   |  |           |   |      |       |     
|Available for grant at end of year |  | 5,969,497 |   |      |       |     
|                                   |  |           |   |      |       |     

The
following table summarizes information about stock options as of April 1, 2004:

|                 |  | Outstanding Stock Options |  | Exercisable Stock Options
|---------------- |  | ------------------------- |  | -------------------------
|
|$2.38            |  | 14,010                    |  | 6.7 years                
|$6.74 to $6.98   |  | 347,640                   |  | 7.0 years                
|$9.25 to $12.50  |  | 55,010                    |  | 4.8 years                
|$14.50 to $20.75 |  | 1,061,480                 |  | 6.1 years                
|$26.38           |  | 22,500                    |  | 2.1 years                
|                 |  |                           |  |                          
|$2.38 to $26.38  |  | 1,500,640                 |  | 6.2 years                
|                 |  |                           |  |                          

34

---



NOTE 8LOSS PER SHARE

The following table sets forth the computation of basic and diluted loss from continuing operations per common share:

|(In thousands, except per share data)                              |                                                                                                | 2004 |        | 2003
(restated) |   | 2002
(restated) |        
|------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------- | ---- | ------ | --------------- | - | --------------- | -------
|Numerator:                                                         |                                                                                                |      |        |                 |   |                 |        
|                                                                   | Loss from continuing operations                                                                |      | $      | (6,883          | ) | $               | (28,462
|                                                                   | Dividends on Series A Preferred                                                                |      |        | 40,277          |   |                 | 27,165 
|                                                                   |                                                                                                |      |        |                 |   |                 |        
|                                                                   | Loss for common shares from continuing operations and assumed conversion of Series A Preferred |      | $      | (47,160         | ) | $               | (55,627
|                                                                   |                                                                                                |      |        |                 |   |                 |        
|Denominator:                                                       |                                                                                                |      |        |                 |   |                 |        
|                                                                   | Average common shares outstanding                                                              |      |        | 36,715          |   |                 | 36,296 
|                                                                   | Series A Preferred                                                                             |      |        |                |   |                 |       
|                                                                   |                                                                                                |      |        |                 |   |                 |        
|                                                                   | Shares for basic earnings per common share                                                     |      |        | 36,715          |   |                 | 36,296 
|                                                                   | Stock options                                                                                  |      |        |                |   |                 |       
|                                                                   | Stock awards                                                                                   |      |        |                |   |                 |       
|                                                                   |                                                                                                |      |        |                 |   |                 |        
|Shares for diluted earnings per common share                       |                                                                                                |      | 36,715 |                 |   | 36,296          |        
|                                                                   |                                                                                                |      |        |                 |   |                 |        
|Loss from continuing operations per common share                   |                                                                                                | $    | (1.28  | )               | $ | (1.53           | )      
|Further dilution from applying the "two-class" method              |                                                                                                |      |       |                 |   |                |        
|                                                                   |                                                                                                |      |        |                 |   |                 |        
|Basic and diluted loss from continuing operations per common share |                                                                                                | $    | (1.28  | )               | $ | (1.53           | )      
|                                                                   |                                                                                                |      |        |                 |   |                 |        

During
2004, 40,812,000 shares of Common Stock and $40,277,000 of dividends from the assumed conversion of Series A Preferred were excluded from the computation of diluted loss
per common share because they were anti-dilutive. During 2003, 38,212,000 shares of Common Stock and $27,165,000 of dividends from the assumed conversion of Series A Preferred were
excluded from the computation of diluted loss per common share because they were anti-dilutive. During 2002, 33,839,611 shares of Common Stock and $29,421,000 of dividends from the assumed
conversion of Series A Preferred were excluded from the computation of diluted loss per common share because they were anti-dilutive.

In
2004, 2003 and 2002, incremental shares from stock options and stock awards of 191,339, 433,292 and 370,490, respectively, were excluded from the computation of diluted earnings per
share because they were anti-dilutive.

During
2004, contingently issuable deferred stock units of 530,503 were excluded from the computation of diluted loss per common share because they were anti-dilutive.

35

---



NOTE 9INCOME TAXES

Income tax provision reflected in the Consolidated Statements of Operations for the three years ended April 1, 2004 consists of the following components:

(In thousands)

2004

2003
(restated)

2002
(restated)Current:Federal

$
(6,130
)
$
6,995

$
(8,615
)Foreign








State


(17
)

3,591


189Total current


(6,147
)

10,586


(8,426
)Deferred:Federal


11,635


(1,556
)

11,932Foreign


1,619


787


(4,440
)State


1,293


(517
)

34Total deferred


14,547


(1,286
)

7,526Total provision


8,400


9,300


(900
)Tax benefit of discontinued operations


2,600


700


3,600Total provision from continuing operations

$
11,000

$
10,000

$
2,700


The
difference between the effective tax rate on income (loss) before income taxes and the U.S. federal income tax statutory rate is as follows:

2004

2003
(restated)

2002
(restated)Federal statutory rate

35.0
%
35.0
%
35.0
%State income taxes, net of federal tax benefit

(35.8
)
(5.5
)
(1.5
)Valuation allowance

(358.3
)
(50.4
)
(6.4
)Deductible portion of GC Companies, Inc. purchase price



11.8

Special compensation



(34.0
)
Preferred stock issuance expense





(11.1
)Other, net

(3.9
)
(2.8
)
(8.0
)Effective tax rate

(363.0
)%
(45.9
)%
8.0
%


36

---



The significant components of deferred income tax assets and liabilities as of April 1, 2004 and April 3, 2003 are as follows:

2004

2003Deferred Income Tax

Deferred Income Tax(In thousands)

Assets

Liabilities

Assets
(restated)

Liabilities
(restated)Property

$
25,817

$
(7,463
)
$
46,324

$
(9,003
)Capital lease obligations


3,438





5,544


Accrued reserves and liabilities


57,003





51,260


Deferred rents


36,825





40,627


Alternative minimum tax credit carryover


10,095





9,412


Net operating loss carryforward


36,945





33,264


Other


26,071


(184
)

19,298


(189
)Total


196,194


(7,647
)

205,729


(9,192
)Less: Valuation allowance


(26,485
)




(20,592
)

Net


169,709


(7,647
)

185,137


(9,192
)Less: Current deferred income taxes


18,118





15,793


Total noncurrent deferred income taxes

$
151,591

$
(7,647
)
$
169,344

$
(9,192
)Net noncurrent deferred income taxes

$
143,944




$
160,152


The
Company's federal income tax loss carryforward of $97,500,000 will begin to expire in 2019 and will completely expire in 2022 and will be limited to approximately $17,800,000
annually due to the sale of Preferred Stock and the acquisition of GC. The Company's state income tax loss carryforwards of $38,800,000 may be used over various periods ranging from 5 to
20 years.

The
Company's foreign subsidiaries had losses before income taxes of $20,900,000, $30,000,000 and $17,500,000 during fiscal 2004, 2003 and 2002, respectively.

As
of April 1, 2004, management believed it was more likely than not that certain deferred tax assets related to non-current state and foreign tax net operating loss carryforwards
and non-current foreign temporary differences would not be realized due to uncertainties as to the timing and amounts of future taxable income. The Company has recorded a full valuation allowance
against its deferred tax assets in foreign jurisdictions of $25,947,000 and a partial valuation allowance of $538,000 related to state net operating loss carryforwards as of April 1, 2004.

The
Company recorded a valuation allowance of $26,485,000, $20,592,000, $10,254,000, $9,361,000 and $4,330,000 as of April 1, 2004, April 3, 2003, March 28, 2002,
March 29, 2001 and March 30, 2000, respectively. All changes in the valuation allowance were recorded in the income tax provision except for $2,600,000 which was recorded in loss from
discontinued operations in the year ended March 28, 2002.

Management
believes it is more likely than not that the Company will generate future taxable income to realize its recorded deferred tax assets. However, the amount of the deferred tax
asset considered realizable could be reduced in the future if estimates of future taxable income during the carryforward period are reduced.

NOTE 10LEASES

The majority of the Company's operations are conducted in premises occupied under lease agreements with initial base terms ranging generally from 10 to
25 years, with certain leases containing options to extend the leases for up to an additional 20 years (see Note 16Related Party Transactions). The leases provide for
fixed rentals and/or rentals based on revenues with a guaranteed minimum. The majority of the leases provide that the Company will pay all, or substantially all, taxes, maintenance, insurance and
certain other operating expenses. Assets held under capital lease obligations are included in property.

37

---



During
fiscal 1998, the Company sold the real estate assets associated with 13 theatres to Entertainment Properties Trust ("EPT") for an aggregate purchase price of $283,800,000 (the
"Sale and Lease Back Transaction"). The Company leased the real estate assets associated with the theatres from EPT pursuant to non-cancelable operating leases with terms ranging from 13
to 15 years at an
initial lease rate of 10.5% with options to extend for up to an additional 20 years. The leases are triple net leases that require the Company to pay substantially all expenses associated with
the operation of the theatres, such as taxes and other governmental charges, insurance, utilities, service, maintenance and any ground lease payments. The Company has accounted for this transaction as
a sale and leaseback in accordance with Statement of Financial Accounting Standards No. 98Accounting for Leases. The land and building
improvements have been removed from the Consolidated Balance Sheets and a gain of $15,130,000 on the sales has been deferred and is being amortized to rent expense over the life of the leases. During
fiscal 2000, the Company sold the building and improvements associated with one of the Company's theatres to EPT for proceeds of $17,600,000 under terms similar to the above Sale and Leaseback
Transaction. During fiscal 2002, the Company sold the land at this theatre to EPT for proceeds of $7,500,000 under terms similar to the above Sale and Leaseback Transaction and at an initial lease
rate of 10.75%. During fiscal 2003, the Company sold the real estate assets associated with 2 theatres to EPT for proceeds of $43,665,000 and then leased the real estate assets associated with these
theatres pursuant to non-cancelable operating leases with terms of 20 years at an initial lease rate of 11% with options to extend for up to an additional 15 years. On
March 30, 2004, the Company sold the real estate assets associated with 3 theatres to EPT for proceeds of $63,911,000 and then leased the real estate assets associated with these theatres
pursuant to non-cancelable operating leases with terms of 20 years at an initial lease rate of 9.5% with options to extend for up to 15 additional years. The Company currently has 2
theatre locations that it believes could be sold and leased back for estimated proceeds of $52,000,000 should the Company elect to do so, and if allowed under the financial covenants of its existing
debt instruments.

Following
is a schedule, by year, of future minimum rental payments required under existing operating leases that have initial or remaining non-cancelable terms in excess of
one year and provisions to repurchase certain theatre equipment and leasehold improvements as of April 1, 2004:

(In thousands)

Minimum operating
lease payments

FF&E and
Leasehold
Repurchase
Provisions

Total2005

$
305,627

$
25,292

$
330,9192006


303,732





303,7322007


302,262





302,2622008


298,658





298,6582009


295,537





295,537Thereafter


2,588,636





2,588,636Total minimum payments required

$
4,094,452

$
25,292

$
4,119,744


The
Company has also entered into agreements to lease space for the operation of theatres not yet fully constructed. The future minimum rental payments required under the terms of these
leases included above total approximately $89,000,000. The Company records rent expense on a straight-line basis over the term of the lease. Included in long-term liabilities
as of April 1, 2004 and April 3, 2003 is $113,171,000 and $112,842,000, respectively, of deferred rent representing pro rata future minimum rental payments for leases with scheduled rent
increases and unfavorable lease liabilities acquired from GC.

38

---



Rent
expense is summarized as follows:

(In thousands)

2004

2003
(restated)

2002
(restated)Minimum rentals

$
276,608

$
263,469

$
206,920Common area expenses


30,300


29,601


20,760Percentage rentals based on revenues


5,020


5,034


3,166Furniture, fixtures and equipment rentals


6,432


8,758


9,032$
318,360

$
306,862

$
239,878


NOTE 11EMPLOYEE BENEFIT PLANS

The Company sponsors a non-contributory qualified defined benefit pension plan generally covering all employees age 21 or older who have completed at
least 1,000 hours of service in their first twelve months of employment, or in a calendar year ending thereafter, and who are not covered by a collective bargaining agreement.

Under
the plan, benefits are integrated with Social Security and paid to participants at retirement based primarily upon years of credited service with the Company (not exceeding
thirty-five) and the employee's highest five year average compensation. Contributions to
the plan reflect benefits attributed to employees' services to date, as well as services expected to be earned in the future. The Company expects to contribute $1,541,000 to the defined benefit
pension plan during fiscal 2005. Plan assets are invested in pooled separate accounts with an insurance company pursuant to which the plan's benefits are paid to retired and terminated employees and
the beneficiaries of deceased employees. The Company also sponsors two non-contributory nonqualified deferred compensation plans which provide additional pension benefits to certain
eligible employees.

The
Company currently offers eligible retirees the opportunity to participate in a health plan (medical and dental) and a life insurance plan. Employees may become eligible for these
benefits at retirement provided the employee is at least age 55 and has at least 15 years of credited service after age 40. The health plan is contributory, with retiree contributions adjusted
annually; the life insurance plan is noncontributory. The accounting for the health plan currently anticipates future modifications to the cost-sharing provisions to provide for retiree
premium contributions of approximately 20% of total premiums, increases in deductibles and co-insurance at the medical inflation rate and coordination with Medicare. The retiree health
plan is not funded. The Company is amortizing the transition obligation on the straight-line method over a period of 20 years.

During
fiscal 2003, the Company acquired GC including its defined benefit pension plan (See Note 2Acquisition). The fair value of plan assets acquired was $21,488,000
and the benefit obligation assumed was $15,550,000.

During
fiscal 2003, the Company recorded postretirement obligations of $6,676,000 related to the GC acquisition.

The
measurement date used to determine pension and other postretirement benefits is January 1 of the fiscal year for which measurements are made. The assumptions to determine
benefit obligations and net periodic benefit cost are as follows:

Pension Benefits

Other BenefitsApril 1, 2004

April 3, 2003

April 1, 2004

April 3, 2003Weighted-average assumptions used to determine benefit obligations atDiscount rate

6.25
%
6.75
%
6.25
%
6.75
%Rate of compensation increase

5.97
%
5.97
%
5.00
%
6.50
%


39

---



Pension Benefits

Other BenefitsApril 1, 2004

April 3,
2003

March 28,
2002

April 1, 2004

April 3,
2003

March 28, 2002Weighted-average assumptions used to determine net periodic benefic cost for years endingDiscount rate

6.75
%
7.25
%
7.25
%
6.25
%
6.75
%
7.50
%Expected long-term return on plan assets

8.50
%
8.50
%
8.50
%
n/a

n/a

n/aRate of compensation increase

5.97
%
6.00
%
6.00
%
5.00
%
6.50
%
6.50
%


Net
periodic benefit cost for the three plans consists of the following:

Pension Benefits

Other Benefits(In thousands)2004

2003

2002

2004

2003

2002Components of net periodic benefit cost:Service cost

$
2,574

$
2,027

$
1,557

$
605

$
406

$
295Interest cost


3,641


3,124


1,862


1,042


887


370Expected return on plan assets


(2,985
)

(3,263
)

(1,264
)







Recognized net actuarial (gain) loss


691


23


(52
)

111





Amortization of unrecognized transition obligation


176


182


176


50


50


50Amortization of prior service cost


95


90


55


29





Net periodic benefit cost

$
4,192

$
2,183

$
2,334

$
1,837

$
1,343

$
715


The
following tables set forth the plans' change in benefit obligations and plan assets and the accrued liability for benefit costs included in the Consolidated Balance Sheets for the
years ended April 1, 2004 and April 3, 2003:

Pension Benefits

Other Benefits(In thousands)2004

2003

2004

2003Change in benefit obligation:Benefit obligation at beginning of year

$
54,297

$
28,689

$
19,187

$
5,076Benefit obligation related to acquisition of GC





15,550





6,676Service cost


2,574


2,027


605


406Interest cost


3,641


3,124


1,042


887Plan participants' contributions








161


106Actuarial (gain) loss


9,085


8,009


(3,197
)

6,240Benefits paid


(2,120
)

(2,246
)

(654
)

(464
)Other





(856
)




260Benefit obligation at end of year

$
67,477

$
54,297

$
17,144

$
19,187


40

---



Pension Benefits

Other Benefits(In thousands)2004

2003

2004

2003Change in plan assets:Fair value of plan assets at beginning of year

$
34,251

$
16,195

$


$
Fair value of plan assets related to acquisition of GC Companies, Inc.





21,488





Actual return on plan assets


6,750


(3,621
)




Employer contribution


952


2,435


493


358Plan participants' contributions








161


106Benefits paid


(2,120
)

(2,246
)

(654
)

(464
)Fair value of plan assets at end of year

$
39,833

$
34,251

$


$
Net liability for benefit cost:Funded status

$
(27,644
)
$
(20,046
)
$
(17,144
)
$
(19,187
)Unrecognized net actuarial (gain) loss


16,331


11,702


2,768


6,076Unrecognized transition obligation


176


399


347


397Unrecognized prior service cost


842


891


231


260Net liability recognized

$
(10,295
)
$
(7,054
)
$
(13,798
)
$
(12,454
)


Pension Benefits

Other Benefits(In thousands)2004

2003

2004

2003Amounts recognized in the balance sheet:Accrued benefit liability

$
(12,122
)
$
(8,005
)
$
(13,798
)
$
(12,454
)Accumulated other comprehensive income


1,123


501





Intangible asset


704


450





Net liability recognized

$
(10,295
)
$
(7,054
)
$
(13,798
)
$
(12,454
)


The
projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the one qualified and two nonqualified pension plans with accumulated benefit
obligations in excess of plan assets were $67,477,000, $51,421,000 and $39,833,000, respectively, as of April 1, 2004; and $54,297,000, $41,533,000 and $34,251,000, respectively, as of
April 3, 2003.

For
its Defined Benefit Pension Plan investments, the Company employs a long-term risk-controlled approach using diversified investment options with minimal
exposure to volatile investment options like derivatives. The Company uses a diversified allocation of equity, debt, and real estate exposures that are customized to the Plan's cash flow benefit needs
with a current
target asset allocation of 60% equity securities, 32% debt securities and 8% real estate investments. The percentage of plan assets by category for fiscal 2004 and 2003 are as follows:

April 1, 2004

April 3, 2003Equity Securities

62%

62%Debt Securities

30%

30%Real Estate Investments

8%

8%100%

100%


The
expected rate of return on plan assets was 8.50% for fiscal 2004 and 2003. The rate used is based upon analysis of actual returns on plan assets in prior years including analysis
provided by the Plan Administrator.

41

---



The
following table provides investments of the defined benefit pension plan by security type:

Pension Assets(In thousands)2004

2003Plan asset information:Government Securities

$
1,369

$
1,558Bond and Mortgage


9,448


7,774Real Estate


3,069


2,723Large Company Equity


18,631


13,947Small Company Equity


2,096


3,393International Equity


4,044


3,825Preferred Securities


1,176


1,031Fair value of plan assets

$
39,833

$
34,251


For
measurement purposes, the annual rate of increase in the per capita cost of covered health care benefits assumed for 2004 was 11.0% for medical and 4.0% for dental. The rates were
assumed to decrease gradually to 5.0% for medical in 2009 and 3.0% for dental in 2013 and remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the
amounts reported. Increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of April 1, 2004
by $2,686,000 and the aggregate of the service and interest cost components of postretirement expense for fiscal 2004 by $322,000. Decreasing the assumed health care cost trend rates by one percentage
point in each year would decrease the accumulated postretirement obligation for fiscal 2004 by $2,206,000 and the aggregate service and interest cost components of postretirement expense for fiscal
2004 by $260,000.

See
Note 1New Accounting Pronouncementsto the Notes to Consolidated Financial Statements for information regarding the Medicare
Prescription Drug, Improvement and Modernization Act of 2003.

The
Company sponsors a voluntary 401(k) savings plan covering eligible employees after one year of service and age 21. From the inception of the savings plan and until
December 31, 2001, the Company matched 50% of each eligible employee's elective contributions up to 6% of the employee's pay (i.e., a maximum match of 3%). Effective January 1, 2002, the
Company began matching 100% of each eligible employee's elective contributions up to 3% of the employee's compensation and 50% of each eligible employee's elective contributions on the next 2% of the
employees pay. The Company's expense under the 401(k) savings plan was $2,175,000, $2,007,000 and $1,591,000 for fiscal 2004, 2003 and 2002, respectively.

NOTE 12COMMITMENTS AND CONTINGENCIES

The Company's on-screen advertising subsidiary (NCN) operates its advertising program through agreements with theatre circuits. These circuit
agreements stipulate the amount of circuit payments a theatre will receive for running on-screen slides, on-film programs and other related in-theatre products and
services. The Company's circuit agreements have terms of 1 to 5 years, with an annual cancellation provision included in select agreements. Certain circuits have agreements requiring an annual
minimum exhibitor share payment. The Company recognizes the minimum exhibitor share payments as an expense on a straight line basis over the terms of the agreements. NCN's total future exhibitor share
commitment as of April 1, 2004, totals $17,682,000, which will be paid over the next 3 years.

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

United States of America v. AMC Entertainment Inc. and American Multi-Cinema, Inc.(No. 99-01034 FMC
(SHx), filed in the U.S. District Court for the Central District of California). On January 29, 1999 the Department of Justice (the "Department") filed suit alleging that the Company's
stadium-style theatres

42

---



violate
the ADA and related regulations. The Department alleges that the Company has failed to provide persons in wheelchairs seating arrangements with lines of sight comparable to the general public.
The Department alleges various non-line of sight violations as well. The Department seeks declaratory and injunctive relief regarding existing and future theatres with stadium-style
seating, compensatory damages in the approximate amount of $75,000 and a civil penalty of $110,000.

On
November 20, 2002, the trial court entered summary judgment in favor of the Department on the line of sight aspects of the case. The trial court ruled that wheelchair spaces
located solely on the sloped floor portion of the stadium-style auditoriums fail to provide lines of sight comparable to the general public. The trial court did not address specific changes that might
be required of the Company's existing stadium-style auditoriums, holding thatper serules are simply not possible because the requirements of
comparable lines of sight will vary based on theatre layout. The Company filed a request for interlocutory appeal on January 23, 2003. The trial court denied the Company's request but postponed
any further line of sight proceedings pending the Ninth Circuit Court of Appeals' ruling in a case with similar facts and issues,Oregon Paralyzed Veterans of America v. Regal
Cinemas, Inc.InRegal, the Oregon District Court held that the exhibitor had provided comparable lines of sight to its
wheelchair-bound patrons. On August 13, 2003, the Ninth Circuit Court of Appeals reversed the decision of the Oregon District Court. Regal filed its Petition for Certiorari to the U.S. Supreme
Court on October 27, 2003. The Supreme Court is expected to grant or deny certiorari this fall. The Company's line of sight proceedings are postponed pending Regal's outcome before the Supreme
Court.

The
Company has recorded a liability related to estimated losses for the Department of Justice line-of-sight aspect of the case in the amount of $179,350
(comprised primarily of compensatory damages and the civil penalty) and estimates the range of loss to be between $179,350 and $273,938 at this time. An estimate of the cost of any betterments that
might be required related to the line-of-sight aspect of the case cannot be made at this time and will depend on Regal's petition for certiorari to the United States Supreme
Court.

On
January 21, 2003, the trial court entered summary judgment in favor of the Department on non-line of sight aspects of the case, which involve such matters as
parking areas, signage, ramps, location of toilets, counter heights, ramp slopes, companion seating and the location and size of handrails. In its non-line of sight decision, the trial
court concluded that the Company has violated numerous sections of the ADA and engaged in a pattern and practice of violating the ADA.

On
December 5, 2003 a consent order and final judgment on non-line of sight issues was entered by the U.S. District Court for the Central District of California. The
consent order and final judgment resolves matters regarding the non-line of sight aspects of the case. Under the terms of the consent order and final judgment, the Company agreed to remedy
certain violations at twelve stadium-style theatres surveyed by the Department. Additionally, the Company has agreed to survey and make required betterments for its patrons with disabilities at 101
stadium-style theatres across the country and at certain theatres it may open or acquire in the future. The Company has not recorded any losses for the consent order and final judgment related to the
non-line of sight aspects of the case. The Company estimates that the cost of these betterments will be $21.0 million, which is expected to be incurred over the term of the consent
order of five years. The estimate is based on deviations at the twelve theatres surveyed by the Department. The actual cost of betterments may vary based on the results of surveys of the remaining
theatres.

Conrad Grant v. American Multi-Cinema, Inc. and DOES 1 to 100;Orange County California Superior Court, Case No: 03CC00429. On
September 26, 2003, plaintiff filed this suit as a proported class action on behalf of himself and other current and former "senior managers", "salary operations managers" and persons holding
similar positions who claim that they were improperly classified by the Company as exempt employees over the prior four years. Plaintiff alleges violations of the California Labor Code and unfair
business practices and seeks (i) overtime pay, (ii) pay for meal and rest periods, (iii) statutory penalties, including (a) penalties of up to $100 per underpaid employee
per pay period in which he or she

43

---



was
underpaid or any other violation and (b) waiting time penalties of up to 30 days wages for former employees, (iv) prejudgment interest, (v) attorneys fees and
(vi) costs. Plaintiff also seeks declaratory and injunctive relief.

In
addition to the cases noted above, the Company, is also currently a party to various ordinary course claims from vendors (including concession suppliers and motion picture
distributors), landlords and suppliers and other legal proceedings. If management believes that a loss arising from these actions is probable and can reasonably be estimated, the Company records the
amount of the loss, or the minimum estimated liability when the loss is estimated using a range and no point is more probable than another. As additional information becomes available, any potential
liability related to these actions is assessed and the estimates are revised, if necessary. Except as described above, management believes that the ultimate outcome of such other matters, individually
and in the aggregate, will not have a material adverse effect on the Company's financial position or overall trends in results of operations. However, litigation and claims are subject to inherent
uncertainties and unfavorable outcomes could occur. An unfavorable outcome could include monetary damages. If an unfavorable outcome were to occur, there exists the possibility of a material adverse
impact on the results of operations in the period in which the outcome occurs or in future periods.

American Multi-Cinema, Inc. v. Midwest Drywall Company, Inc., Haskell Constructors, Ltd. et al.(Case
No. 00CV84908, Circuit Court of Platte County, Missouri) andAmerican Multi-Cinema, Inc. v. Bovis Construction Corp. et al.(Civil Action
No. 0207139, Court of Common Pleas of Bucks County, Pennsylvania). The Company is the plaintiff in these and related suits in which we seek to recover damages from the construction manager, the
architect, certain fireproofing applicators and other parties to correct the defective application of certain fireproofing materials at 23 theatres. The Company currently estimates its claim for
repair costs at these theatres will aggregate approximately $36,100,000, of which it has expended approximately $23,400,000 through the end of fiscal 2004. The remainder is for projected costs of
repairs yet to be performed. The Company also is seeking additional damages for lost profits, interest and legal and other expenses incurred.

Certain
parties to the Missouri litigation have filed counterclaims against the Company, including Ammon Painting Company, Inc. which asserts claims to recover monies for services
provided in an amount not specified in the pleadings but which it has expressed in discovery to aggregate to approximately $950,000. The Company currently estimates that its claim against Ammon is for
approximately $6,000,000. Based on presently available information, the Company does not believe such matters will have a material adverse effect on its results of operations, financial condition or
liquidity. During the
fifty-two weeks ended April 1, 2004 the Company received settlement payments of $925,000 related to two theatres from various parties in connection with this matter. On
May 18, 2004 the Company received additional settlement payments of $2,310,020 from various parties in connection with this matter.

NOTE 13THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS

The Company has provided reserves for estimated losses from theatres which have been closed and from terminating the operation of fast food and other restaurants
operated adjacent to certain of the Company's theatres. During fiscal 2004, the Company terminated operation of 16 North American theatres with 124 screens. As of April 1, 2004, the Company has
reserved $17,870,000 for lease terminations which have either not been consummated or paid, related primarily to three of these North American theatres with 20 screens and vacant restaurant space. The
Company is obligated under long-term lease commitments with remaining terms of up to 16 years for theatres which have been closed. As of April 1, 2004, base rents aggregated
approximately $8,096,000 annually and $23,270,000 over the remaining terms

44

---



of
the leases. A rollforward of reserves for theatre and other closure and the discontinuing operation of fast food restaurants is as follows:

(In thousands)

2004

2003

2002Beginning Balance

$
22,499

$
24,140

$
32,092Theatre and other closure expense


4,068


5,416


2,124Interest expense


2,736


3,656


4,617General and administrative expense


50


99


125Gain on capital lease termination








(1,682
)Payments


(17,497
)

(11,570
)

(19,373
)Transfer of deferred rent and capital lease obligations


6,014


758


6,237Ending balance

$
17,870

$
22,499

$
24,140


Theatre
and other closure reserves for leases that have not been terminated are recorded at the present value of the future contractual commitments for the base rents, taxes and
maintenance.

NOTE 14FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it was practicable to estimate that
value.

The
carrying value of cash and equivalents approximates fair value because of the short duration of those instruments. The fair value of publicly held corporate borrowings was based upon
quoted market prices. For other corporate borrowings, the fair value was based upon rates available to the Company from bank loan agreements or rates based upon the estimated premium over U.S.
treasury notes with similar average maturities.

The
estimated fair values of the Company's financial instruments are as follows:

2004

2003(In thousands)

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
ValueFinancial assets:Cash and equivalents

$
333,248

$
333,248

$
244,412

$
244,412Financial liabilities:Cash overdrafts

$
19,737

$
19,737

$
39,076

$
39,076Corporate borrowings


686,431


711,339


668,661


676,744


NOTE 15OPERATING SEGMENTS

The Company has identified three reportable segments around differences in products and services and geographical areas. North American and International
theatrical exhibition operations are identified as separate segments based on dissimilarities in international markets from North America. NCN and other is identified as a separate segment due to
differences in products and services offered.

The
Company evaluates the performance of its segments and allocates resources based on several factors, of which the primary measure is Adjusted EBITDA. The Company defines Adjusted
EBITDA as earnings (loss) from continuing operations before interest expense, income taxes and depreciation and amortization and adjusted for preopening expense, theatre and other closure expense,
disposition of assets and other gains, investment income, other expense, stock-based compensation expense, impairment of long-lived assets and special compensation expense. The Company evaluates
Adjusted EBITDA generated by its segments in a number of manners, of which the primary measure is a comparison of segment Adjusted EBITDA to segment property, intangibles and goodwill.

45

---



The Company's segments follow the same accounting policies as discussed in Note 1 to the Consolidated Financial Statements.

Information
about the Company's operations by operating segment is as follows:

|Revenues (In thousands)              |  | 2004 |           | 2003 |   | 2002      |  
|------------------------------------ |  | ---- | --------- | ---- | - | --------- | -
|North American theatrical exhibition |  | $    | 1,609,187 |      | $ | 1,628,140 |  
|International theatrical exhibition  |  |      | 121,179   |      |   | 101,242   |  
|NCN and other                        |  |      | 71,476    |      |   | 70,602    |  
|Intersegment elimination             |  |      | (19,022   | )    |   | (14,909   | )
|                                     |  |      |           |      |   |           |  
|Total revenues                       |  | $    | 1,782,820 |      | $ | 1,785,075 |  
|                                     |  |      |           |      |   |           |  
|
|North American theatrical exhibition |  | $    | 296,001   |      | $ | 278,160   |  
|International theatrical exhibition  |  |      | 83        |      |   | (3,654    | )
|NCN and other                        |  |      | 5,607     |      |   | 3,249     |  
|                                     |  |      |           |      |   |           |  
|Total segment Adjusted EBITDA        |  | $    | 301,691   |      | $ | 277,755   |  
|                                     |  |      |           |      |   |           |  

A
reconciliation of earnings (loss) from continuing operations before income taxes to segment Adjusted EBITDA is as follows:

|(In thousands)                                                 |                                                 | 2004                     |         | 2003
(restated) |        | 2002
(restated) |        
|-------------------------------------------------------------- | ----------------------------------------------- | ------------------------ | ------- | --------------- | ------ | --------------- | -------
|Earnings (loss) from continuing operations before income taxes |                                                 | $                        | 4,117   |                 | $      | (18,462         | )      
|Plus:                                                          |                                                 |                          |         |                 |        |                 |        
|                                                               | Interest expense                                |                          |         | 77,717          |        |                 | 77,800 
|                                                               | Depreciation and amortization                   |                          |         | 124,572         |        |                 | 126,994
|                                                               | Impairment of long-lived assets                 |                          |         | 16,272          |        |                 | 19,563 
|                                                               | Preopening expense                              |                          |         | 3,858           |        |                 | 3,227  
|                                                               | Theatre and other closure expense               |                          |         | 4,068           |        |                 | 5,416  
|                                                               | Disposition of assets and other gains           |                          |         | (2,590          | )      |                 | (1,385 
|                                                               | Investment income                               |                          |         | (2,861          | )      |                 | (3,502 
|                                                               | Other                                           |                          |         | 13,947          |        |                 |       
|                                                               | General and administrative expenseunallocated: |                          |         |                 |        |                 |        
|                                                               |                                                 | Stock-based compensation |         |                 | 8,727  |                 |        
|                                                               |                                                 | Other(1)                 |         |                 | 53,864 |                 |        
|                                                               |                                                 |                          |         |                 |        |                 |        
|Total segment Adjusted EBITDA                                  |                                                 | $                        | 301,691 |                 | $      | 277,755         |        
|                                                               |                                                 |                          |         |                 |        |                 |        

46

---



|Long-term Assets (In thousands)                 |  | 2004 |           | 2003
(restated) |   | 2002
(restated) |  
|----------------------------------------------- |  | ---- | --------- | --------------- | - | --------------- | -
|North American theatrical exhibition            |  | $    | 1,431,036 |                 | $ | 1,372,974       |  
|International theatrical exhibition             |  |      | 147,009   |                 |   | 132,834         |  
|NCN and other                                   |  |      | 14,869    |                 |   | 22,148          |  
|                                                |  |      |           |                 |   |                 |  
|Total segment long-term assets                  |  |      | 1,592,914 |                 |   | 1,527,956       |  
|Construction in progress                        |  |      | 15,007    |                 |   | 69,968          |  
|Corporate                                       |  |      | 283,647   |                 |   | 286,782         |  
|Accumulated depreciationproperty               |  |      | (753,523  | )               |   | (662,142        | )
|Accumulated amortizationintangible assets      |  |      | (33,801   | )               |   | (34,180         | )
|Accumulated amortizationother long-term assets |  |      | (33,446   | )               |   | (30,375         | )
|                                                |  |      |           |                 |   |                 |  
|Consolidated long-term assets, net(2)           |  | $    | 1,070,798 |                 | $ | 1,158,009       |  
|                                                |  |      |           |                 |   |                 |  

|Long-term Assets, net of accumulated depreciation and amortization
(In thousands) |  | 2004 |           | 2003
(restated) |   | 2002
(restated)
|--------------------------------------------------------------------------------- |  | ---- | --------- | --------------- | - | ---------------
|North American theatrical exhibition                                              |  | $    | 766,929   |                 | $ | 781,150        
|International theatrical exhibition                                               |  |      | 68,232    |                 |   | 68,123         
|NCN and other                                                                     |  |      | 2,868     |                 |   | 11,244         
|                                                                                  |  |      |           |                 |   |                
|Total segment long-term assets                                                    |  |      | 838,029   |                 |   | 860,517        
|Construction in progress                                                          |  |      | 15,007    |                 |   | 69,968         
|Corporate                                                                         |  |      | 217,762   |                 |   | 227,524        
|                                                                                  |  |      |           |                 |   |                
|Consolidated long-term assets, net(2)                                             |  | $    | 1,070,798 |                 | $ | 1,158,009      
|                                                                                  |  |      |           |                 |   |                

A
reconciliation of the reportable segments' long-term assets to long-term assets presented in the Consolidated Balance Sheet are as follows:

|Consolidated Balance Sheet (In thousands) |  | 2004 |           | 2003
(restated) |   | 2002
(restated)
|----------------------------------------- |  | ---- | --------- | --------------- | - | ---------------
|Property, net                             |  | $    | 777,277   |                 | $ | 856,463        
|Intangible assets, net                    |  |      | 23,918    |                 |   | 30,050         
|Goodwill                                  |  |      | 71,727    |                 |   | 60,698         
|Deferred income taxes                     |  |      | 143,944   |                 |   | 160,152        
|Other long-term assets                    |  |      | 53,932    |                 |   | 50,646         
|                                          |  |      |           |                 |   |                
|Consolidated long-term assets             |  | $    | 1,070,798 |                 | $ | 1,158,009      
|                                          |  |      |           |                 |   |                

|Additions to long-term assets, net of acquisitions (In thousands) |  | 2004 |         | 2003 |   | 2002   
|----------------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|North American theatrical exhibition                              |  | $    | 96,467  |      | $ | 63,473 
|International theatrical exhibition                               |  |      | 1,524   |      |   | 23,029 
|NCN and other                                                     |  |      | 7,510   |      |   | 8,423  
|                                                                  |  |      |         |      |   |        
|Total segment capital expenditures                                |  |      | 105,501 |      |   | 94,925 
|Construction in progress                                          |  |      | 5,312   |      |   | 44,752 
|Corporate                                                         |  |      | 10      |      |   | 6,893  
|                                                                  |  |      |         |      |   |        
|Total additions to long-term assets, net of acquisitions(3)       |  | $    | 110,823 |      | $ | 146,570
|                                                                  |  |      |         |      |   |        

47

---



A
reconciliation of the reportable segments' additions to net assets to the Consolidated Statements of Cash Flow is as follows:

|Consolidated Statements of Cash Flows (In thousands)     |                                                      | 2004 |         | 2003   |   | 2002   
|-------------------------------------------------------- | ---------------------------------------------------- | ---- | ------- | ------ | - | -------
|Cash Flows from investing activities:                    |                                                      |      |         |        |   |        
|Capital expenditures                                     |                                                      | $    | 95,011  |        | $ | 100,932
|Construction project costs:                              |                                                      |      |         |        |   |        
|                                                         | Reimbursable by landlord                             |      |         |       |   |        
|                                                         | Purchase of leased furniture, fixtures and equipment |      |         | 15,812 |   |        
|                                                         |                                                      |      |         |        |   |        
|Total additions to long-term assets, net of acquisitions |                                                      | $    | 110,823 |        | $ | 146,570
|                                                         |                                                      |      |         |        |   |        

Information
about the Company's revenues and assets by geographic area is as follows:

|Revenues (In thousands) |  | 2004 |           | 2003 |   | 2002     
|----------------------- |  | ---- | --------- | ---- | - | ---------
|United States           |  | $    | 1,612,663 |      | $ | 1,640,278
|Canada                  |  |      | 48,964    |      |   | 43,555   
|China (Hong Kong)       |  |      | 8,166     |      |   | 8,868    
|Japan                   |  |      | 60,382    |      |   | 51,476   
|France                  |  |      | 3,813     |      |   | 3,681    
|Portugal                |  |      | 10,475    |      |   | 9,744    
|Spain                   |  |      | 33,732    |      |   | 25,063   
|United Kingdom          |  |      | 4,625     |      |   | 2,410    
|                        |  |      |           |      |   |          
|Total revenues          |  | $    | 1,782,820 |      | $ | 1,785,075
|                        |  |      |           |      |   |          

|Long-term assets (In thousands) |  | 2004 |           | 2003
(restated) |   | 2002
(restated)
|------------------------------- |  | ---- | --------- | --------------- | - | ---------------
|United States                   |  | $    | 1,651,506 |                 | $ | 1,668,389      
|Canada                          |  |      | 91,900    |                 |   | 69,535         
|China (Hong Kong)               |  |      | 11,282    |                 |   | 11,269         
|Japan                           |  |      | 40,158    |                 |   | 35,015         
|France                          |  |      | 7,825     |                 |   | 7,143          
|Portugal                        |  |      | 14,729    |                 |   | 13,183         
|Spain                           |  |      | 61,738    |                 |   | 53,940         
|United Kingdom                  |  |      | 12,430    |                 |   | 19,636         
|Sweden                          |  |      |          |                 |   | 6,596          
|                                |  |      |           |                 |   |                
|Total long-term assets(2)       |  | $    | 1,891,568 |                 | $ | 1,884,706      
|                                |  |      |           |                 |   |                

---

NOTE 16RELATED PARTY TRANSACTIONS

Prior to his resignation on October 30, 2002 as successor co-trustee with shared voting powers over shares held in the Durwood Voting Trust
(the "Voting Trust"), Mr. Raymond F. Beagle, Jr. may be deemed to have been a related party to the Company. He became successor co-trustee on July 14, 1999 as a result of the
death of Stanley H. Durwood.

48

---



Mr. Beagle
provided legal services to the Company for more than 30 years and served as general counsel under a series of retainer agreements dating back to 1986. In these
agreements, the Company agreed to pay Mr. Beagle an annual retainer and to make deferred compensation payments to him over a period of years. In 1997, Mr. Beagle's retainer agreement was
amended to provide for the deferral of any annual bonus paid to him, which amount was added to his deferred compensation account. The Company also agreed to annually credit Mr. Beagle's
deferred compensation account with interest in an amount equal to the prime rate plus 1%. In 1997, the Company also determined to fund its deferred payment obligations to Mr. Beagle through the
creation of a rabbi trust, the assets of which remain
subject to the claims of the Company's creditors in the event of its insolvency. When Mr. Beagle became a voting trustee of the Durwood Voting Trust in 1999, the amount of his deferred
compensation account was approximately $2,400,000. Mr. Beagle retired as General Counsel on March 31, 2003, at which time the amount of his deferred compensation account was
approximately $3,800,000. Mr. Beagle began receiving payments from his compensation account of approximately $41,255 per month (for a period of twelve years) upon retirement as general counsel
on March 31, 2003. The monthly payments are based on estimates of the prime interest rate over twelve years and could increase or decrease depending on changes in that rate.

Amounts
paid by the Company to Mr. Beagle as a retainer for serving as General Counsel were $0 in fiscal 2004, $450,000 in fiscal 2003 and $400,000 in fiscal 2002. Deferred
bonuses awarded to Mr. Beagle, which awards were made in the first quarter of each fiscal year, were $0 in fiscal 2004, $350,000 in fiscal 2003 and $150,000 in fiscal 2002.

Lathrop &
Gage L.C., a law firm of which Mr. Beagle is a member, renders legal services to the Company and its subsidiaries. The Company paid Lathrop & Gage L.C.
$6,872,000 for its services in fiscal 2003 and $4,058,000 in fiscal 2002.

During
fiscal 2003, the Company reimbursed the initial purchasers of Preferred Stock approximately $650,000 for expenses related to the acquisitions of GC Companies, Inc. and Gulf
States Theatres, the issuance of the Notes due 2012 and the issuance of Common Stock and other business matters related to the Company. During fiscal 2002, the Company reimbursed the initial
purchasers of Preferred Stock $3,754,000 for their issuance costs related to the Preferred Stock offering.

On
December 23, 2003 the Company's Board of Directors approved payment by the Company of legal fees in the amount of $590,000 and reimbursement of other
out-of-pocket expenses in the amount of $170,000 on behalf of the initial purchasers of Preferred Stock. On November 18, 2003 and December 23, 2003 the Company's
Board of Directors approved payment by the Company of legal fees in the amount of $190,000 on behalf of the Company's Class B Stockholder. The costs were incurred in connection with the
consideration of a possible business combination between the Company and Loews Cineplex Entertainment Corporation.

On
January 22, 2004 the Company announced that its previously announced discussions with Loews Cineplex Entertainment Corporation relating to a possible business combination have
been terminated.

The
Company leases certain of its theatres from Entertainment Properties Trust ("EPT"). The Chairman of the Board, Chief Executive Officer and President of AMCE was also the Chairman of
the Board of Trustees of EPT until May of 2003 at which time his term expired and he did not stand for reelection to the Board of Trustees of EPT. Payments to EPT for rent were approximately
$65,000,000, $61,000,000 and $52,000,000 in fiscal 2004, 2003 and 2002, respectively.

In
connection with the acquisition of GST, the Company entered into leases with EPT for the real estate assets associated with the five theatres with EPT, for a term of 20 years.
Of the $45,772,000 purchase price, approximately $5,800,000 was paid to EPT for specified non-real estate assets which EPT acquired from GST and resold to the Company at cost.

49

---



NOTE 17SUBSEQUENT EVENTS (Unaudited)

On July 29, 2004, the Company entered into an Agreement and Consent with the holders of its Series A Convertible Preferred Stock (the "Preferred
Stock") pursuant to which the Company has agreed to relinquish its right to redeem the Preferred Stock during such time as an "Event of Default" (as such term is defined in the Certificate of
Designations for the Preferred Stock) exists and remains uncured and the holders of the Preferred Stock have exercised their right to elect a majority of the board of directors of the Company pursuant
to the rights granted by the Certificate of Designations.

As
a result, the Company believes that there are no circumstances that would require the Preferred Stock to be redeemed for cash or other assets upon the occurrence of an event that is
outside the control of the Company. The Company will continue to classify its Preferred Stock within permanent stockholders' equity in its Consolidated Financial Statements.

50

---



(This
page has been left blank intentionally.)

51

---



AMC Entertainment Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS BY QUARTER (UNAUDITED)

|                                                               | 
|-------------------------------------------------------------- | 
|
|
|Admissions                                                     | 
|Concessions                                                    | 
|Other theatre                                                  | 
|NCN and other                                                  | 
|                                                               | 
|Total revenues                                                 | 
|Film exhibition costs                                          | 
|Concession costs                                               | 
|Theatre operating expense                                      | 
|Rent                                                           | 
|Other                                                          | 
|General and administrative:                                    | 
|Stock-based compensation(6)                                    | 
|Other(5)                                                       | 
|Preopening expense                                             | 
|Theatre and other closure expense                              | 
|Depreciation and amortization                                  | 
|Impairment of long-lived assets(3)                             | 
|Disposition of assets and other (gains) losses                 | 
|                                                               | 
|Total costs and expenses                                       | 
|Other expense(4)                                               | 
|Interest expense                                               | 
|Investment income                                              | 
|                                                               | 
|Total other expense                                            | 
|                                                               | 
|Earnings (loss) from continuing operations before income taxes | 
|Income tax provision                                           | 
|                                                               | 
|Net earnings (loss) from continuing operations                 | 
|                                                               | 
|Loss from discontinued operations, net of income tax benefit   | 
|                                                               | 
|Net earnings (loss)                                            | 
|                                                               | 
|Less: Preferred dividends                                      | 
|                                                               | 
|Net earnings (loss) for shares of common stock                 | 
|                                                               | 
|Basic and diluted earnings (loss) per share of common stock:   | 
|Earnings (loss) from continuing operations                     | 
|                                                               | 
|Loss from discontinued operations                              | 
|                                                               | 
|Earnings (loss) per share                                      | 
|                                                               | 

---

52

---



|                                                               |  
|-------------------------------------------------------------- | -
|
|
|Admissions                                                     | $
|Concessions                                                    |  
|Other theatre                                                  |  
|NCN and other                                                  |  
|                                                               |  
|Total revenues                                                 |  
|Film exhibition costs                                          |  
|Concession costs                                               |  
|Theatre operating expense                                      |  
|Rent                                                           |  
|Other                                                          |  
|General and administrative:                                    |  
|Stock-based compensation(6)                                    |  
|Other(5)                                                       |  
|Preopening expense                                             |  
|Theatre and other closure expense                              |  
|Depreciation and amortization                                  |  
|Impairment of long-lived assets(3)                             |  
|Disposition of assets and other (gains) losses                 |  
|                                                               |  
|Total costs and expenses                                       |  
|Other expense(4)                                               |  
|Interest expense                                               |  
|Investment income                                              |  
|                                                               |  
|Total other expense                                            |  
|                                                               |  
|Earnings (loss) from continuing operations before income taxes |  
|Income tax provision                                           |  
|                                                               |  
|Net earnings (loss) from continuing operations                 |  
|                                                               |  
|Loss from discontinued operations, net of income tax benefit   |  
|                                                               |  
|Net earnings (loss)                                            | $
|                                                               |  
|Less: Preferred dividends                                      |  
|                                                               |  
|Net earnings (loss) for shares of common stock                 | $
|                                                               |  
|Basic and diluted earnings (loss) per share of common stock:   |  
|Earnings (loss) from continuing operations                     | $
|                                                               |  
|Loss from discontinued operations                              | $
|                                                               |  
|Earnings (loss) per share                                      | $
|                                                               |  

53

---



AMC Entertainment Inc.
RECONCILIATION OF SUMMARY QUARTERLY DATA (UNAUDITED)
AS PREVIOUSLY REPORTED IN FORM 10-Q AS RESTATED IN FORM 10-K

|                                                             | 
|------------------------------------------------------------ | 
|
|
|Admissions                                                   | 
|Concessions                                                  | 
|Other theatre                                                | 
|NCN and other                                                | 
|                                                             | 
|Total revenues                                               | 
|Film exhibition costs                                        | 
|Concession costs                                             | 
|Theatre operating expense                                    | 
|Rent                                                         | 
|Other                                                        | 
|General and administrative:                                  | 
|Stock-based compensation                                     | 
|Other                                                        | 
|Preopening expense                                           | 
|Theatre and other closure expense                            | 
|Depreciation and amortization                                | 
|Impairment of long-lived assets                              | 
|Disposition of assets and other (gains) losses               | 
|                                                             | 
|Total costs and expenses                                     | 
|Other expense                                                | 
|Interest expense                                             | 
|Investment income                                            | 
|                                                             | 
|Total other expense                                          | 
|                                                             | 
|Earnings from continuing operations before income taxes      | 
|Income tax provision                                         | 
|                                                             | 
|Net earnings from continuing operations                      | 
|                                                             | 
|Loss from discontinued operations, net of income tax benefit | 
|                                                             | 
|Net earnings                                                 | 
|                                                             | 
|Less: Preferred dividends                                    | 
|                                                             | 
|Net earnings (loss) for shares of common stock               | 
|                                                             | 
|Basic and diluted earnings (loss) per share of common stock: | 
|Earnings (loss) from continuing operations                   | 
|                                                             | 
|Loss from discontinued operations                            | 
|                                                             | 
|Earnings (loss) per share                                    | 
|                                                             | 

---

54

---



|                                                             | 
|------------------------------------------------------------ | 
|
|Admissions                                                   | 
|Concessions                                                  | 
|Other theatre                                                | 
|NCN and other                                                | 
|                                                             | 
|Total revenues                                               | 
|Film exhibition costs                                        | 
|Concession costs                                             | 
|Theatre operating expense                                    | 
|Rent                                                         | 
|Other                                                        | 
|General and administrative:                                  | 
|Stock-based compensation                                     | 
|Other                                                        | 
|Preopening expense                                           | 
|Theatre and other closure expense                            | 
|Depreciation and amortization                                | 
|Impairment of long-lived assets                              | 
|Disposition of assets and other (gains) losses               | 
|                                                             | 
|Total costs and expenses                                     | 
|Other expense                                                | 
|Interest expense                                             | 
|Investment income                                            | 
|                                                             | 
|Total other expense                                          | 
|                                                             | 
|Earnings from continuing operations before income taxes      | 
|Income tax provision                                         | 
|                                                             | 
|Net earnings from continuing operations                      | 
|                                                             | 
|Loss from discontinued operations, net of income tax benefit | 
|                                                             | 
|Net earnings                                                 | 
|                                                             | 
|Less: Preferred dividends                                    | 
|                                                             | 
|Net earnings (loss) for shares of common stock               | 
|                                                             | 
|Basic and diluted earnings (loss) per share of common stock: | 
|Earnings (loss) from continuing operations                   | 
|                                                             | 
|Loss from discontinued operations                            | 
|                                                             | 
|Earnings (loss) per share                                    | 
|                                                             | 

55

---



AMC Entertainment Inc.
RECONCILIATION OF SUMMARY QUARTERLY DATA (UNAUDITED)
AS PREVIOUSLY REPORTED IN FORM 10-Q AS RESTATED IN FORM 10-K

|                                                               | 
|-------------------------------------------------------------- | 
|
|
|Admissions                                                     | 
|Concessions                                                    | 
|Other theatre                                                  | 
|NCN and other                                                  | 
|                                                               | 
|Total revenues                                                 | 
|Film exhibition costs                                          | 
|Concession costs                                               | 
|Theatre operating expense                                      | 
|Rent                                                           | 
|Other                                                          | 
|General and administrative:                                    | 
|Stock-based compensation                                       | 
|Other                                                          | 
|Preopening expense                                             | 
|Theatre and other closure expense                              | 
|Depreciation and amortization                                  | 
|Impairment of long-lived assets                                | 
|Disposition of assets and other (gains) losses                 | 
|                                                               | 
|Total costs and expenses                                       | 
|Other expense                                                  | 
|Interest expense                                               | 
|Investment income                                              | 
|                                                               | 
|Total other expense                                            | 
|                                                               | 
|Earnings (loss) from continuing operations before income taxes | 
|Income tax provision                                           | 
|                                                               | 
|Net earnings (loss) from continuing operations                 | 
|                                                               | 
|Loss from discontinued operations, net of income tax benefit   | 
|                                                               | 
|Net earnings (loss)                                            | 
|                                                               | 
|Less: Preferred dividends                                      | 
|                                                               | 
|Net earnings (loss) for shares of common stock                 | 
|                                                               | 
|Basic and diluted earnings (loss) per share of common stock:   | 
|Earnings (loss) from continuing operations                     | 
|                                                               | 
|Loss from discontinued operations                              | 
|                                                               | 
|Earnings (loss) per share                                      | 
|                                                               | 

---

56

---



|                                                               |  
|-------------------------------------------------------------- | -
|
|Admissions                                                     | $
|Concessions                                                    |  
|Other theatre                                                  |  
|NCN and other                                                  |  
|                                                               |  
|Total revenues                                                 |  
|Film exhibition costs                                          |  
|Concession costs                                               |  
|Theatre operating expense                                      |  
|Rent                                                           |  
|Other                                                          |  
|General and administrative:                                    |  
|Stock-based compensation                                       |  
|Other                                                          |  
|Preopening expense                                             |  
|Theatre and other closure expense                              |  
|Depreciation and amortization                                  |  
|Impairment of long-lived assets                                |  
|Disposition of assets and other (gains) losses                 |  
|                                                               |  
|Total costs and expenses                                       |  
|Other expense                                                  |  
|Interest expense                                               |  
|Investment income                                              |  
|                                                               |  
|Total other expense                                            |  
|                                                               |  
|Earnings (loss) from continuing operations before income taxes |  
|Income tax provision                                           |  
|                                                               |  
|Net earnings (loss) from continuing operations                 |  
|                                                               |  
|Loss from discontinued operations, net of income tax benefit   |  
|                                                               |  
|Net earnings (loss)                                            |  
|                                                               |  
|Less: Preferred dividends                                      |  
|                                                               |  
|Net earnings (loss) for shares of common stock                 | $
|                                                               |  
|Basic and diluted earnings (loss) per share of common stock:   |  
|Earnings (loss) from continuing operations                     | $
|                                                               |  
|Loss from discontinued operations                              | $
|                                                               |  
|Earnings (loss) per share                                      | $
|                                                               |  

57

---



Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.



The
Company maintains a set of disclosure controls and procedures designed to ensure that material information required to be disclosed in its filings under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. The Company's Chief Executive Officer and Chief
Financial Officer have evaluated these disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K/A and have determined that such
disclosure controls and procedures were adequately designed and operating effectively at such time.

In
reaching the conclusion set forth above, the Company's Chief Executive Officer and Chief Financial Officer considered the restatement of the Company's financial statements for certain
prior periods, as discussed elsewhere in this Form 10-K/A. The Company's Chief Executive Officer and Chief Financial Officer have concluded that the circumstances giving rise to the
restatements were not reflective of any material weakness in the Company's disclosure controls and procedures, and that such disclosure controls and procedures were operating effectively throughout
the period covered by this Annual Report on Form 10-K/A.



There
has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

58

---





PART III

Item 10. Directors and Executive Officers of the Registrant.

The Company has adopted a Code of Ethics for its Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer as well as its directors, officers
and other associates. The Company's Code of Ethics has been filed as Exhibit 14 to its Form 10-K for the fiscal year ended April 1, 2004.

The
Company's and its subsidiaries' Directors and Executive Officers are as follows:

|Name                     |  | Age(1) |  | Positions                                                                                   
|------------------------ |  | ------ |  | --------------------------------------------------------------------------------------------
|Peter C. Brown(2)        |  | 45     |  | Chairman of the Board, Chief Executive Officer and Director (AMCE and AMC); President (AMCE)
|Mr. Charles J. Egan, Jr. |  | 71     |  | Director (the Company)                                                                      
|Mr. Charles S. Sosland   |  | 49     |  | Director (the Company)                                                                      
|Mr. Paul E. Vardeman     |  | 74     |  | Director (the Company)                                                                      
|Mr. Michael N. Garin     |  | 57     |  | Director (the Company)                                                                      
|Mr. Leon D. Black        |  | 52     |  | Director (the Company)                                                                      
|Mr. Marc J. Rowan        |  | 41     |  | Director (the Company)                                                                      
|Mr. Laurence M. Berg     |  | 38     |  | Director (the Company)                                                                      
|Philip M. Singleton      |  | 57     |  | Executive Vice President (AMCE); President, Chief Operating Officer and Director (AMC)      
|Richard T. Walsh         |  | 50     |  | Executive Vice President (AMCE); Chairman (AMC Film, a division of AMC)                     
|Craig R. Ramsey          |  | 52     |  | Executive Vice President and Chief Financial Officer (AMCE and AMC); Director (AMC)         
|John D. McDonald         |  | 47     |  | Executive Vice President, North America Operations (AMC)                                    
|Richard M. Fay           |  | 54     |  | President (AMC Film, a division of AMC)                                                     
|James V. Beynon          |  | 56     |  | Senior Vice President and Treasurer (AMCE and AMC)                                          
|Mark A. McDonald         |  | 45     |  | Executive Vice President, International Operations (AMC Entertainment International, Inc.)  
|Rolando B. Rodriguez     |  | 44     |  | Executive Vice President, North America Operations Services (AMC)                           
|Kevin M. Connor          |  | 41     |  | Senior Vice President, General Counsel and Secretary (AMCE and AMC)                         
|Chris A. Cox             |  | 38     |  | Vice President and Chief Accounting Officer (AMCE and AMC)                                  

---

All
the Company's current executive officers hold their offices at the pleasure of the Company's board of directors, subject to rights under their respective employment agreements. There
are no family

59

---



relationships
between or among any directors and executive officers, except that Messrs. John D. McDonald and Mark A. McDonald are brothers.

Mr. Peter C.
Brown has served as a Director of AMCE and AMC since November 12, 1992, as Chairman of the Board and Chief Executive Officer of AMCE since
July 1999 and as President of AMCE since January 1997. Mr. Brown served as Co-Chairman of the Board of AMCE from May 1998 through July 1999 and as
Executive Vice President of AMCE from August 1994 to January 1997. Mr. Brown is also Chairman of the Board, Chief Executive Officer and a Director of AMC. Mr. Brown is a
graduate of the University of Kansas.

Mr. Charles J.
Egan, Jr. has served as a Director of AMCE since October 30, 1986. Mr. Egan is retired Vice President of Hallmark Cards, Incorporated.
Hallmark Cards, Incorporated is primarily engaged in the business of greeting cards and related social expressions products, Crayola crayons and the production of movies for television.
Mr. Egan is sole Trustee of the Durwood Voting Trust and the Stanley H. Durwood Foundation, established under that certain 1992 Durwood, Inc. Voting Trust Agreement dated
December 12, 1992, as amended and restated as of August 12, 1997. Mr. Egan also serves as a member of the Board of Trustees, Treasurer and Chairman of the Finance Committee of the
Kansas City Art Institute and past Co-Chair of the Harvard College Fund and past-president of the Harvard Alumni Association. Mr. Egan holds an A.B. degree from Harvard University
and an LL.B. degree from Columbia University.

Mr. Charles S.
Sosland has served as a director of AMCE since September 18, 2003. Mr. Sosland serves as President and Chief Executive Officer of Sosland
Companies, Inc. of Kansas City, Missouri, a family owned holding company with interests mainly in publishing magazines serving American and global food and agricultural businesses, and has held
this position since 1993. Mr. Sosland is Chairman of Sosland Publishing Company and Group Publisher of its international magazine, World Grain, and of Meat and Poultry magazine and has held
this position since 1989. Mr. Sosland is an advisory board member of the Commerce Bank of Kansas City, N.A., and director of Canadean Ltd., a U.K.-based consulting firm for the
international beverage industry. He also serves as an honorary member of the board of directors of the Boys and Girls Clubs of Greater Kansas City and is past-president of the board of
trustees of Pembroke Hill School, past-chairman of the board of trustees of the Kansas City Art Institute, a member of the Civic Council of Greater Kansas City and is a director of the Sosland
Foundation. A native of Kansas City, Mr. Sosland graduated from the College of Basic Studies at Boston University in 1975.

Mr. Paul E.
Vardeman has served as a director of AMCE since June 14, 1983. Mr. Vardeman was a director, officer and shareholder of the law firm of Polsinelli,
White, Vardeman & Shalton, P.C. (now Polsinelli, Shalton and Welte, P.C.), Kansas City, Missouri, from 1982 until his retirement from such firm in November 1997. Prior
thereto, Mr. Vardeman served as a Judge of the Circuit Court of Jackson County, Missouri. Mr. Vardeman holds undergraduate and J.D. degrees from the University of Missouri-Kansas City.

Mr. Michael N.
Garin has served as a director of AMCE since September 18, 2003. Mr. Garin is the Chief Executive Officer of Central European Media
Enterprises, which operates the leading group of TV networks and stations across Central and Eastern Europe. He is a director and member of the Audit Committee of American Media, Inc., a
director and member of the Audit Committee of Cablecom (Switzerland), and a director of Canal+ Nordic (Scandinavia). He also acts as an independent strategic and financial advisor to MortgageIT. From
1999 to 2001, Mr. Garin was President and Chief Operating Officer of Digital Convergence Corporation, an Internet technology company. In March 2002, digital Convergence filed a voluntary
petition for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code. Previously, Mr. Garin spent 11 years as the Global Head of Media, Telecommunications and Information Services
Investment Banking at ING Barings, LLC. Mr. Garin co-founded Lorimar Telepictures Corporation in 1978 and served as a Director until 1988. He also worked in numerous roles
for Time Inc. Mr. Garin received an A.B. in Economics from Harvard University in 1968 and a Masters Degree in Philosophy and the Arts from the New School for Social Research in 1973.

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Mr. Leon D.
Black has served as a Director of AMCE since April 19, 2001. Mr. Black is one of the founding principals of Apollo Advisors, L.P., which,
together with its affiliates, acts as the managing general partner of the Apollo Investment Funds, private securities investment funds, and Apollo Real Estate Advisors, L.P. which, together
with its affiliates, acts as the managing general partner of the Apollo Real Estate Investment Funds, private real estate investment funds. Mr. Black also serves on the Boards of Directors of
Wyndham International, Inc., Allied Waste Industries, Inc., Sirius Satellite Radio, Inc. and United Rentals, Inc. Mr. Black also serves as a Trustee of Dartmouth
College, The Museum of
Modern Art, Mount Sinai-NYU Medical Center, Lincoln Center for the Performing Arts, the Metropolitan Museum of Art, Prep for Prep and The Asia Society. Mr. Black holds a B.A. degree
from Dartmouth College and an M.B.A. degree from Harvard University.

Mr. Marc J.
Rowan has served as a Director of AMCE since April 19, 2001. Mr. Rowan is one of the founding principals of Apollo Management, L.P. which,
together with its affiliates, acts as the managing general partner of the Apollo Investment Funds, private securities investment funds. Mr. Rowan is also a director of Wyndham
International, Inc., National Financial Partners, Inc., Quality Distribution, Inc., Cablecom GmbH, iesy Hessen GmbH & Co., KG and Skyterra Communications Inc.
Mr. Rowan also serves on the executive committee of the Youth Renewal Fund and is a member of the Board of Directors of National Jewish Outreach Program, the Riverdale Country School and the
Undergraduate Executive Board of The Wharton School of Business. Mr. Rowan holds a B.S. degree and an M.B.A. degree from The Wharton School of Business at the University of Pennsylvania.

Mr. Laurence M.
Berg has served as a Director of AMCE since April 19, 2001. Mr. Berg is a Senior Partner with Apollo Management, L.P. which, together
with its affiliates, serves as managing general partner of the Apollo Investment Funds. Mr. Berg serves on the Board of Directors of Sylvan Learning Systems, Inc. Resolution Performance
Products, Inc., Hayes Lemmerz International, Inc., Rent-A-Center, Inc. and Educate Inc. Mr. Berg holds a B.S. degree from The Wharton School
of Business at the University of Pennsylvania and an M.B.A. degree from Harvard University.

Mr. Philip M.
Singleton was elected President of AMC on January 10, 1997 and has served as Chief Operating Officer of AMC since November 14, 1991.
Mr. Singleton has served as Executive Vice President of AMCE since August 3, 1994. Mr. Singleton has served as a director of AMC since November 12, 1992.

Mr. Richard T.
Walsh has served as Executive Vice President of AMCE and Chairman, AMC Film, a division of AMC, since November 9, 2001. Prior thereto,
Mr. Walsh served as Executive Vice President, Film Operations, AMC Film, from September 29, 1999 to November 9, 2001 and as Senior Vice President in charge of operations for the
West Division of AMC from July 1, 1994 to September 29, 1999.

Mr. Craig R.
Ramsey has served as Executive Vice President and Chief Financial Officer of AMCE and AMC since April 3, 2003. Prior thereto, Mr. Ramsey served
as Executive Vice President, Chief Financial Officer and Secretary of AMCE and AMC effective April 19, 2002. Mr. Ramsey served as Senior Vice President, Finance, Chief Financial Officer
and Chief Accounting Officer, of AMCE and AMC from August 20, 1998 until May 13, 2002. Mr. Ramsey has served as a director of AMC since September 28, 1999.
Mr. Ramsey was elected Chief Accounting Officer of AMCE and AMC effective October 15, 1999. Mr. Ramsey served as Vice President, Finance from January 17, 1997 to
October 15, 1999 and prior thereto served as Director of Information Systems and Director of Financial Reporting since joining AMC on February 1, 1995.

Mr. John D.
McDonald has served as Executive Vice President, North America Operations of AMC since October 1, 1998. Prior thereto, Mr. McDonald served as
Senior Vice President, Corporate Operations from November 9, 1995 until his promotion to Executive Vice President on October 1, 1998.

Mr. Richard M.
Fay has served as President, AMC Film, since September 8, 1995.

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Mr. James V.
Beynon has served as Senior Vice President of AMCE and AMC since September 29, 1999. Prior thereto, Mr. Beynon served as Vice President of AMCE
and AMC from September 19, 1994. Mr. Beynon has served as Treasurer of AMCE and AMC since September 19, 1994.

Mr. Mark A.
McDonald has served as Executive Vice President, International Operations of AMC Entertainment International, Inc., a subsidiary of AMCE, since
December 7, 1998. Prior thereto, Mr. McDonald served as Senior Vice President, Asia Operations from November 9, 1995 until his appointment as Executive Vice President in
December 1998.

Mr. Rolando B.
Rodriguez has served as Executive Vice President, North America Operations Services of AMC since February 14, 2002. Prior thereto,
Mr. Rodriguez served as Senior Vice President, Food and Beverage Group of AMC from May 2000 until his promotion to Executive Vice President on February 14, 2002.
Mr. Rodriguez served as Senior Vice President, North America Field Operations of AMC from November 1999 until May 2000. Prior thereto, Mr. Rodriguez served as Senior Vice
President, Operations, South Division from March 1996.

Mr. Kevin M.
Connor has served as Senior Vice President, General Counsel and Secretary of AMCE and AMC since April 3, 2003. Prior thereto, Mr. Connor served
as Senior Vice President, Legal of AMCE and AMC beginning November 6, 2002. Prior thereto, Mr. Connor was in private practice in Kansas City, Missouri as a partner with the firm
Seigfreid, Bingham, Levy, Selzer and Gee from October 1, 1995.

Mr. Chris A.
Cox has served as Vice President and Chief Accounting Officer of AMCE and AMC since May 13, 2002. Prior thereto, Mr. Cox served as Vice President
and Controller of AMC from November 28, 2000. Previously, Mr. Cox served as Director of Corporate Accounting for the Dial Corporation from December of 1999 until November 2000 and
as Senior Manager in Assurance and Business Advisory Services at PricewaterhouseCoopers LLP from January 1997 to December 1999.

Audit Committee Members.The Company has a separately designated standing audit committee established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934 as amended. During the last fiscal year the Audit Committee members were Mr. Egan (Chairman), Mr. Rowan,
Mr. Vardeman, Mr. Garin and Mr. Sosland. Since July 19, 2004 the members of the Audit Committee have been Mr. Garin (Chairman), Mr. Vardeman and
Mr. Sosland.

The
Board also has determined that Mr. Garin is an "audit committee financial expert" as such term is defined by the Securities and Exchange Commission in Item 401(h) of
Regulation S-K. The Board has determined that Mr. Garin is independent, as independence for audit committee members is defined in the American Stock Exchange listing
standards applicable to audit committees. Under SEC regulations, a person who is determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without
limitation for purposes of section 11 of the Securities Act of 1933. Further, the designation or identification of a person as an audit committee financial expert does not impose any duties,
obligations or liability on such person that are greater than the duties, obligations and liability imposed on such person as a member of the audit committee and board of directors in the absence of
such designation or identification and does not affect the duties, obligations or liability of any other member of the audit committee or board of directors.

Procedures for stockholders to follow when making nominations

The Board of Directors has two nominating committees, one to nominate directors elected by holders of common stock, voting as a class, and one to nominate
directors elected by holders of Common Stock and Class B Stock, voting as a class. If there is an annual meeting in 2005, stockholders who wish to recommend candidates for consideration by a
nominating committee in connection with such annual meeting should submit the candidate's name and related information in writing to the chairperson of the nominating committee in care of Kevin
Connor, Secretary and General Counsel by April 19, 2005. In addition to the name of the candidate, a stockholder should submit:

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pertinent
information concerning the candidate's background and experience, including information regarding such person required to be disclosed in solicitations of proxies for election of directors
under Regulation 14A of the Securities Exchange Act of 1934, as amended.

Candidates
for the Board should be a person known for his or her integrity and honesty and should have, by education or experience, knowledge or skills which may be helpful to the Board
in exercising its oversight responsibilities. A sufficient number of Board members must meet the tests for independence set forth in applicable rules of the American Stock Exchange and
Section 10A of the Securities Exchange Act of 1934 to permit the Company to satisfy applicable stock exchange and legal requirements. The Board believes it is desirable for a least one Board
member to be an "audit committee financial expert", as defined in Rule 401(h) of SEC Regulation S-K.

Nominees
for election by the holders of Common Stock, voing as a class, must satisfy the requirements of an "Independent Director" as defined in Regulation 14A of the Securities
Exchange Act of 1934, as amended, and may not be or have been an officer or employee of any of the Company, Apollo, the Apollo Purchasers or any of their affiliates or any entity which derived
substantial revenues from any such person. Further, such nominees may have no relationship or affiliation or compensation, consulting or contracting arrangement with the Company, Apollo, the Apollo
Purchasers, the Trustees of the Durwood Voting Trust, the Stanley H. Durwood Foundation or any other entity that a reasonable person could regard as likely to be unduly influenced by any such
persons.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's Executive Officers and Directors, and persons who own more than 10% of the
Company's Common Stock, to file reports of ownership and changes in ownership with the SEC and the American Stock Exchange. Executive Officers, Directors and greater-than-10%
beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms furnished to the
Company, or written representations that no Forms 5 were required, the Company believes that during fiscal 2004 its Executive Officers, Directors and greater-than-10%
beneficial owners complied with all Section 16(a) filing requirements except that Mr. Richard M. Fay (an Executive officer) failed to timely report on
Form 4 one transaction attributable to him. Mr. Fay's spouse purchased 200 shares of the Company's Common Stock in fiscal 1999. This transaction was reported on a Form 5,
which was filed on April 15, 2004.

Item 11. Executive Compensation.

Compensation of Management

The following table provides certain summary information concerning compensation that the Company paid to or accrued on behalf of the Company's Chief Executive
Officer and each of the Company's four other most highly compensated executive officers (determined as of the end of fiscal 2004 and

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hereafter
referred to collectively as the "Named Executive Officers") for the last three fiscal years ended April 1, 2004, April 3, 2003 and March 28, 2002, respectively.

Summary Compensation Table

|                                                                              |  | Annual Compensation |  | Long-Term(2)
Compensation Awards
|----------------------------------------------------------------------------- |  | ------------------- |  | --------------------------------
|
|Peter C. Brown
Chairman of the Board,
Chief Executive Officer and President   |  | 2004
2003
2002      |  | $                               
|Philip M. Singleton
Executive Vice President and
Chief Operating Officer      |  | 2004
2003
2002      |  |                                 
|Richard T. Walsh
Executive Vice President,
Film Operations,
Chairman AMC Film |  | 2004
2003
2002      |  |                                 
|Craig R. Ramsey
Executive Vice President and
Chief Financial Officer          |  | 2004
2003
2002      |  |                                 
|John D. McDonald
Executive Vice President,
North American Operations          |  | 2004
2003
2002      |  |                                 

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Option Grants

There were no grants of stock options made during the last fiscal year to the Named Executive Officers.

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Option Exercises and Holdings

The following table provides information with respect to the Named Executive Officers concerning the exercise of options during the last fiscal year and
unexercised options held as of April 1, 2004.

Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year End Option/SAR Values

|                    |  |         |  |         |  | Number of Securities
Underlying Unexercised
Options/SARs at FY-End |  | Value of Unexercised
In-The-Money Options
/SARs at FY-End(1)
|------------------- |  | ------- |  | ------- |  | ------------------------------------------------------------------ |  | ------------------------------------------------------------
|
|
|Peter C. Brown      |  | 150,000 |  | 174,000 |  | 294,485                                                            |  | 53,495                                                      
|Philip M. Singleton |  | 124,600 |  | 183,162 |  | 173,470                                                            |  | 21,490                                                      
|Richard T. Walsh    |  | 25,000  |  | 38,125  |  | 34,325                                                             |  | 7,165                                                       
|Craig R. Ramsey     |  |        |  |        |  | 49,325                                                             |  | 7,165                                                       
|John D. McDonald    |  |        |  |        |  | 76,495                                                             |  | 7,165                                                       

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Defined Benefit Retirement and Supplemental Executive Retirement Plans

The Company sponsors a defined benefit retirement plan which provides benefits to certain of the Company's employees based upon years of credited service and the
highest consecutive five-year average annual remuneration for each participant. For purposes of calculating benefits, average annual compensation is limited by Section 401(a)(17) of
the Internal Revenue Code, and is based upon wages, salaries and other amounts paid to the employee for personal services, excluding certain special compensation. A participant earns a vested right to
an accrued benefit upon completion of five years of vesting service.

The
Company also sponsors a supplemental executive retirement plan to provide the same level of retirement benefits that would have been provided under the retirement plan had the
federal tax law not been changed in the Omnibus Budget Reconciliation Act of 1993, which reduced the amount of compensation which can be taken into account in a qualified retirement plan from $235,840
(in 1993), the old limit, to $205,000 (in 2004).

The
following table shows the total estimated annual pension benefits (without regard to minimum benefits) payable to a covered participant under the Company's retirement plan and the
supplemental executive retirement plan, assuming retirement in calendar 2003 at age 65, payable in the form of a single

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life
annuity. The benefits are not subject to any deduction for social security or other offset amounts. The following table assumes the old limit would have been increased to $300,000 in 2004.

|         |  | Years of Credited Service
|-------- |  | -------------------------
|
|
|$125,000 |  | $                        
|150,000  |  |                          
|175,000  |  |                          
|200,000  |  |                          
|225,000  |  |                          
|250,000  |  |                          
|275,000  |  |                          
|295,000  |  |                          
|300,000  |  |                          

As of April 1, 2004, the years of credited service under the retirement plan for each of the Named Executive Officers were: Mr. Peter C.
Brown, 13 years; Mr. Philip M. Singleton30 years; Mr. Richard T. Walsh29 years; Mr. John D.
McDonald29 years; and Mr. Craig R. Ramsey9 years.

The
Company has established a retirement enhancement plan for the benefit of officers who from time to time may be designated as eligible participants therein by the board of directors.
The retirement enhancement plan is a non-qualified deferred compensation plan designed to provide an unfunded retirement benefit to an eligible participant in an amount equal to
(i) sixty percent (60%) of his or her average compensation (including paid and deferred incentive compensation) during the last three full years of employment, less (ii) the sum of
(A) such participant's benefits under the retirement plan and social security, and (B) the amount of a straight life annuity commencing at the participant's normal retirement date
attributable to the Company's contributions under the supplemental executive retirement plan, the 401(k) savings plan and the non-qualified deferred compensation plan. The Executive
Savings Plan was terminated as of January 1, 2002 and therefore is no longer included in the computation of the retirement enhancement plan benefit. The base amount in clause (i) will be
reduced on a pro rata basis if the participant completes fewer than 25 years of service. The retirement enhancement plan benefit vests upon the participant's attainment of age 55 or completion
of
15 years of service, whichever is later, and may commence to a vested participant retiring on or after age 55 (who has participated in the plan for at least five years) on an actuarially
reduced basis (62/3% for each of the first five years by which commencement precedes age 65 and an additional 31/3% for each year by which commencement precedes age 60).
Benefits commence at a participant's normal retirement date (i.e., the later of age 65 or the participant's completion of five years of service) whether or not the participant continues to be employed
by the Company. The accrued benefit payable upon total and permanent disability is not reduced by reason of early commencement. Participants become fully vested in their rights under the retirement
enhancement plan if their employment is terminated without cause or as a result of a change of control, as defined in the retirement enhancement plan. No death, disability or retirement benefit is
payable prior to a participant's early retirement date or prior to the date any severance payments to which the participant is entitled cease.

Mr. Peter C.
Brown and Mr. Philip M. Singleton have been designated as eligible to participate in the retirement enhancement plan. The estimated monthly
amounts that Mr. Brown and Mr. Singleton will be eligible to receive under the retirement enhancement plan at age 65 are $88,346 and $31,995, respectively. These amounts are based on
certain assumptions respecting their future compensation amounts and the amounts of the Company's contributions under other plans. Actual amounts received by such individuals under the retirement
enhancement plan may be different than those estimated.

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Employment Contracts, Termination of Employment and Change of Control Arrangements

The Company has entered into employment agreements with Messrs. Peter C. Brown, Philip M. Singleton, Richard T. Walsh, John D.
McDonald and Craig R. Ramsey each dated as of July 1, 2001. The employment agreements provide for annual base salaries of no less than the following amounts:
Mr. Brown$728,300; Mr. Singleton$468,200; Mr. Walsh$338,200; Mr. Ramsey$331,500; and
Mr. McDonald$312,200. The employment agreements also provide for discretionary bonuses, an automobile allowance, reimbursement of reasonable travel and entertainment expenses and
other benefits offered from time to time to other executive officers. The employment agreement of Mr. Brown has a term of five years, that of Mr. Singleton has a term of three years and
those of Mr. Walsh, Mr. Ramsey and Mr. McDonald have terms of two years. On the anniversary date of each employment agreement, one year is added to its term, so that each
employment agreement always has a five year, three year or two year term, as the case may be, as of each anniversary date. Each employment agreement terminates generally without severance if such
employee is terminated for cause or upon such employee's resignation, each as defined in his employment agreement. The Company will pay the employee a pro rata portion of the bonus he would otherwise
be eligible to receive upon termination by reason of the employee's retirement. If any of Messrs. Walsh, McDonald or Ramsey dies or is terminated without cause or following his disability or
terminates his agreement subsequent to specified changes in his responsibilities, annual base salary or benefits following a change of control, each as defined in the agreement, he will be entitled to
receive a lump sum cash payment equal to two years annual base salary. If either Mr. Brown or Mr. Singleton dies or is terminated without cause or following his disability or terminates
his agreement for good reason or following a change of control,
each as defined in the agreement, he will be entitled to receive (i) a lump sum cash payment equal to such employee's then annual base salary for the remainder of the term of the agreement plus
the bonus such employee would be entitled to receive as if the target level had been obtained multiplied by the number of years remaining in the term of the employment agreement and (ii) a cash
payment equal to the difference between (a) the value of all vested and unvested stock options granted to the employee which have an exercise price per share less than the closing price per
share of the Company's Common Stock on the date of termination and (b) the exercise price of such options. The amounts payable to the Named Executive Officers under these employment agreements,
assuming termination by reason of a change of control as of July 1, 2004, were as follows: Mr. Brown$6,091,500; Mr. Singleton$2,340,600,
Mr. Walsh$676,400, Mr. Ramsey$663,000; and Mr. McDonald$624,400. The values of outstanding employee stock options that would be payable to
the Named Executive Officers under these employment agreements, assuming termination by reason of a change of control as of July 1, 2004, were as follows: Mr. Brown$809,000
and Mr. Singleton$333,000. Mr. Brown and Mr. Singleton have each waived their right to termination payments that would otherwise be payable in connection with a
change of control as a result of the Merger, subject to (i) our adoption within 60 days following the consummation of the Merger of a new management stock option plan for approximately
6% of the number of fully-diluted shares of our Common Stock outstanding as of the date of the Merger and (ii) the opportunity to directly purchase our shares at or around the time of the
consummation of the Merger. Mr. Brown and Mr. Singleton will be granted options to purchase approximately 1/3 and 1/6, respectively, of the shares initially
reserved under the new option plan, at an exercise price equal to the effective per share price paid by the sponsors in the Merger. Such options will vest 20% per year subject to the executive's
continued employment and will vest in full upon consummation of a change of control of us or Marquee Holdings Inc.

As
permitted by the AMC Entertainment Inc. 1994 and 1999 stock option and incentive plans, stock options granted to participants thereunder provide for acceleration upon the
termination of employment within one year after the occurrence of certain change of control events, whether such termination is voluntary or involuntary, or with or without cause. In addition, the
compensation committee may permit acceleration upon the occurrence of certain extraordinary transactions which may not constitute a change of control.

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The
Company maintains a severance pay plan for full-time salaried nonbargaining employees with at least 90 days of service. For an eligible employee who is subject to
the Fair Labor Standards Act overtime pay requirements, referred to as a "nonexempt eligible employee", the plan provides for severance pay in the case of involuntary termination of employment due to
layoff of the greater of two week's basic pay or one week's basic pay multiplied by the employee's full years of service up to no more than twelve weeks' basic pay. There is no severance pay for a
voluntary termination, unless up to two weeks' pay is authorized in lieu of notice. There is no severance pay for an involuntary termination due to an employee's misconduct. Only two weeks' severance
pay is paid for an involuntary termination due to substandard performance. For an eligible employee who is exempt from the overtime pay requirements, severance pay is discretionary (at the department
head/supervisor level), but will not be less than the amount that would be paid to a nonexempt eligible employee.

Compensation of Directors

The Company pays each non-employee director $65,000 annually for service on the board of directors and, in addition, $1,500 for each board meeting and
$1,000 for each board committee meeting which he attends. Each director is eligible to participate in the Company's matching gift program with an annual cap of $12,000 in matching gifts per director.
Directors elected by the Apollo Purchasers could elect not to receive their fees but instead could designate charitable purposes to which such fees would be applied until January 1, 2004.
Subsequent to January 1, 2004, directors fees are paid in cash.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Security Ownership of Beneficial Owners, Directors and Officers

The following table sets forth certain information regarding beneficial ownership of the Company's capital stock as of July 1, 2004, with respect to:



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The
number of shares set forth in the table below refer to beneficial ownership and are not indicative of the voting power with respect to such shares. Each share of Class B stock
has ten votes per share.

|Title of class       |  | Beneficial owner                                                                                    |  | Number of shares
beneficially owned |              | Percent of
class as of
July 1, 2004 |  
|-------------------- |  | --------------------------------------------------------------------------------------------------- |  | ----------------------------------- | ------------ | ----------------------------------- | -
|Class B Stock        |  | Charles J. Egan, Jr.(1)                                                                             |  | 3,051,597                           | (1)          | 100                                 | %
|Series A Convertible |  | Apollo Group(2)(3)                                                                                  |  | 287,478                             | (3)          | 94.1                                | %
|Preferred Stock      |  | Leon D. Black(2)(3)                                                                                 |  | 287,478                             | (3)          | 94.1                                | %
|                     |  | Marc J. Rowan(2)(3)                                                                                 |  | 287,478                             | (3)          | 94.1                                | %
|                     |  | Laurence M. Berg(2)(3)                                                                              |  | 287,478                             | (3)          | 94.1                                | %
|                     |  | Sandler Capital Management and group(4)                                                             |  | 18,070                              | (4)          | 5.9                                 | %
|Common Stock         |  | Wellington Management Company, LLP(5)                                                               |  | 2,687,400                           | (5)          | 7.9                                 | %
|                     |  | TimesSquare Capital Management, Inc.(6)                                                             |  | 2,824,915                           | (6)          | 8.3                                 | %
|                     |  | Onex Corporation(7)                                                                                 |  | 2,336,900                           | (7)          | 6.9                                 | %
|                     |  | Sandler Capital Management and group(4)                                                             |  | 4,414,394                           | (4)          | 12.1                                | %
|                     |  | John Kornreich(4)                                                                                   |  | 4,454,394                           | (8)          | 12.2                                | %
|                     |  | Apollo Group(3)                                                                                     |  | 40,372,971                          | (10)         | 54.4                                | %
|                     |  | Leon D. Black(3)                                                                                    |  | 40,379,911                          | (11)         | 54.4                                | %
|                     |  | Marc J. Rowan(3)                                                                                    |  | 40,379,911                          | (11)         | 54.4                                | %
|                     |  | Laurence M. Berg(3)                                                                                 |  | 40,379,911                          | (11)         | 54.4                                | %
|                     |  | Peter C. Brown                                                                                      |  | 775,960                             | (12)         | 2.3                                 | %
|                     |  | Philip M. Singleton                                                                                 |  | 487,719                             | (12)         | 1.4                                 | %
|                     |  | Richard T. Walsh                                                                                    |  | 50,318                              | (12)         | *                                   |  
|                     |  | Craig R. Ramsey                                                                                     |  | 66,520                              | (12)         | *                                   |  
|                     |  | John D. McDonald                                                                                    |  | 93,553                              | (12)         | *                                   |  
|                     |  | Paul E. Vardeman                                                                                    |  | 25,650                              | (13)         | *                                   |  
|                     |  | Charles J. Egan, Jr.                                                                                |  | 3,056,267                           | (9)(13)      | 8.2                                 | %
|                     |  | Charles S. Sosland                                                                                  |  |                                    |              | *                                   |  
|                     |  | Michael N. Garin                                                                                    |  |                                    |              | *                                   |  
|                     |  | All Directors and Executive Officers as a group (20 persons, including the individuals named above) |  | 45,059,484                          | (12)(13)(14) | 57.6                                | %

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Proposed Change in Control

On July 22, 2004, Marquee Holdings Inc. and its wholly-owned subsidiary, Marquee Inc., which are newly-formed corporations organized by certain entities
controlled by Apollo and J.P. Morgan Partners, LLC, entered into the Merger Agreement with the Company pursuant to which: (i) Marquee Inc. will merge with and into the Company, with the
Company remaining as the surviving entity and a wholly-owned subsidiary of Marquee Holdings Inc. following the Merger and (ii) the common stockholders of the Company (including, on an
as-converted basis, the holders of the Company's preferred stock and Class B Stock) will receive $19.50 per share in cash in exchange for their shares in the Company. Following the consummation
of the Merger, entities controlled by Apollo and J.P. Morgan Partners LLC will own substantially all of the outstanding stock of Marquee Holdings Inc. and will control the boards of directors
of Marquee Holdings Inc. and the Company.

The
Merger Agreement contains customary representations, warranties and covenants by the Company, Marquee Holdings Inc. and Marquee Inc. The consummation of the Merger is subject to the
prior satisfaction or waiver (to the extent permitted by applicable law) by the Company, Marquee Holdings Inc. or Marquee Inc., as the case may be, of the following conditions, in addition to other
customary conditions:

73

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In
addition, under separate agreements and subject to the terms and conditions contained therein, the Apollo Group and the Durwood Voting Trust, two significant shareholders of the
Company, have agreed to vote in favor of the Merger. The Merger Agreement may be terminated by the parties for various reasons set forth therein, including if the Merger is not consummated prior to
January 31, 2005.

If
the proposed merger is consummated, it will result in a change of control for purposes of beneficial ownership.

Equity Compensation Plan Information

The following is a summary of securities authorized for issuance under equity compensation plans as of April 1, 2004:

|                                                           |  | Number of shares to be issued upon exercise of outstanding options, warrants and rights
(a) |  | Weighted average of exercise price of outstanding options, warrants and rights
(b) |       | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c) |          
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------- | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------- | ---------
|Equity compensation plans approved by security holders     |  | 1,500,640                                                                                   |  | $                                                                                  | 14.32 |                                                                                                                                                 | 6,500,000
|Equity compensation plans not approved by security holders |  |                                                                                            |  |                                                                                    |      |                                                                                                                                                 |         
|                                                           |  |                                                                                             |  |                                                                                    |       |                                                                                                                                                 |          
|Total                                                      |  | 1,500,640                                                                                   |  | $                                                                                  | 14.32 |                                                                                                                                                 | 6,500,000
|                                                           |  |                                                                                             |  |                                                                                    |       |                                                                                                                                                 |          

---

Item 13. Certain Relationships and Related Transactions.

Certain Relationships and Related Transactions

The Company seeks to ensure that all transactions with related parties are fair, reasonable and in its best interest. In this regard, generally the Company's
board of directors or one of its committees reviews material transactions between the Company and related parties to determine that, in their best business judgment, such transactions meet that
standard. The Company believes that each of these transactions was on terms at least as favorable to the Company as could have been obtained from an unaffiliated third party. Set forth below is a
description of significant transactions which have occurred since April 4, 2003 or which involve obligations that remain outstanding as of April 1, 2004.

74

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In
connection with the Company's 1997 merger with Durwood, Inc., the Company agreed to pay Mr. Stanley H. Durwood's estate any credit amounts arising after
March 31, 2000 that result from net tax
benefits that the Company realizes from the utilization of alternative minimum tax credit carry-forwards and Missouri operating loss carry-forwards of Durwood, Inc. The maximum amount of credit
amounts that could be paid to Mr. Durwood's estate is approximately $1.1 million. As of April 1, 2004, the Company has not realized any of Durwood, Inc.'s net tax benefits
on the tax returns it has filed since 1998.

The
Company leases certain of its theatres from Entertainment Properties Trust ("EPT"). Mr. Peter C. Brown, Chairman of the Board, Chief Executive Officer and President of
AMCE was also the Chairman of the Board of Trustees of EPT until May of 2003 at which time his term expired and he did not stand for reelection to the Board of Trustees of EPT. Payments to EPT for
rent were approximately $65,000,000 in fiscal 2004.

During
fiscal 2004, the Company sold the real estate assets associated with 3 theatres to EPT for an aggregate purchase price of $63,911,000 (the "Sale and Lease Back Transaction") and
then leased the real estate assets associated with the theatres from EPT pursuant to non-cancelable operating leases with terms of 20 years at an initial lease rate of 9.5% with
options to extend for up to an additional 15 years. The leases are triple net leases that require the Company to pay substantially all expenses associated with the operation of the theatres,
such as taxes and other governmental charges, insurance, utilities, service, maintenance and any ground lease payments.

On
December 23, 2003 and January 29, 2004 the Company's Board of Directors approved payment by the Company of legal fees in the amount of $590,000 and reimbursement of
other out-of-pocket expenses in the amount of $170,000 on behalf of the Apollo Purchasers. On November 18, 2003, December 23, 2003 and May 25, 2004 the
Company's Board of Directors approved payment by the Company of legal fees in the aggregate amount of $235,000 on behalf of the Company's Class B Stockholder. The costs were incurred in
connection with the consideration of a possible business combination between the Company and Loews Cineplex Entertainment Corporation.

For
a description of certain employment agreements between the Company and Messrs. Peter C. Brown, Philip M. Singleton, John D. McDonald, Richard T.
Walsh and Craig R. Ramsey, see "Employment Contracts, Termination of Employment and Change of Control Arrangements."

On
April 19, 2001, we entered into an investment agreement and certain related agreements with certain affiliates of the Apollo Group. Pursuant to that agreement, we sold the
Apollo Group an aggregate of 92,000 shares of Series A convertible preferred stock and 158,000 shares of Series B exchangeable preferred stock. All outstanding Series B
exchangeable preferred stock was subsequently exchanged for Series A convertible preferred stock. As of July 1, 2004, the Apollo Group owned 94.1% of our Series A convertible
preferred stock. Pursuant to our agreements with the Apollo Group, we may not take certain corporate actions, including the consummation of the Merger and the issuance of these notes, without the
prior consent of the Apollo Group. We refer to these approval rights granted to the Apollo Group as the "preferred stock approval rights."

On
July 22, 2004, Marquee Holdings Inc. and its wholly-owned subsidiary, Marquee Inc., which are newly-formed corporations organized by entities controlled by Apollo and J.P. Morgan
Partners, LLC, entered into the Merger Agreement with the Company pursuant to which: (i) Marquee Inc. will merge with and into the Company, with the Company remaining as the surviving
entity and a wholly-owned subsidiary of Marquee Holdings Inc. following the Merger and (ii) the common stockholders of the Company (including, on an as-converted basis, the holders of the
Company's preferred stock and Class B Stock) will receive $19.50 per share in cash in exchange for their shares in the Company. Following the consummation of the Merger, entities controlled by
Apollo and J.P. Morgan Partners LLC will own substantially all of the outstanding stock of Marquee Holdings Inc. and will control the boards of directors of Marquee Holdings Inc. and the
Company.

75

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The
Apollo Group has consented to the Merger for purposes of its preferred stock approval rights. See "Apollo and Durwood voting agreements" below. In connection with the Merger,
stockholders affiliated with Apollo will receive up to an aggregate amount of cash proceeds for their AMCE shares of approximately (i) $869.8 million if the Merger is consummated on or
after October 1, 2004 up to and including December 31, 2004, including $85.7 million attributable to one-time "in-kind" distributions payable to such stockholders pursuant to the
terms of the Series A convertible preferred stock, and (ii) due to the timing of dividend payments at the end of each calendar quarter for the Series A convertible preferred
stock, $855.3 million if the Merger is consummated on or after January 1, 2005 up to and including January 31, 2005, including $71.3 million attributable to one-time
"in-kind" distributions payable to Apollo pursuant to the terms of the Series A convertible preferred stock. Additionally, Apollo and JPMorgan Partners, as sponsors of the transaction, will
receive $20.0 million in the aggregate in payment of transaction fees in connection with the transactions. Upon consummation of the Merger, J.P. Morgan Partners, LLC and Apollo
will own a majority, and certain members of management will own a portion, of the voting stock of Marquee Holdings Inc., and Marquee Holdings Inc. will own all of our common stock.

Apollo and Durwood voting agreements

In
connection with the Merger and related financing transactions, we entered into voting agreements with the Apollo Group and certain of its affiliates as well as the Durwood Voting
Trust. Under each of their respective agreements, the Apollo Group and the Durwood Voting Trust each agreed to vote, with respect to the Apollo Group and its affiliates, their respective shares of
common stock, including any common stock received upon the conversion of preferred stock and, with respect to the Durwood Voting Trust, its shares of Class B common stock, in favor of the
Merger and related transactions and against any action that the Apollo Group or the Durwood Voting Trust, as the case may be, is aware would result in a breach of the Merger Agreement or would
reasonably be expected to result in a
failure of a condition to the Merger Agreement. The Company also granted a waiver of certain restrictions under existing agreements, allowing the Apollo Group to convert their shares of preferred
stock into common stock immediately prior to the Merger in accordance with the Company's certificate of designations relating to the preferred stock. In addition, pursuant to the Apollo Group voting
agreement, the Apollo Group has consented to the Merger for purposes of its "preferred stock approval rights" granted to it pursuant to the April 2001 investment agreement. Both of the Apollo Group
and Durwood voting agreements terminate in the event the Company's Independent Committee or Board of Directors changes its recommendation of the Merger to the shareholders or in the event the Merger
Agreement terminates in accordance with its terms.

Tax sharing agreement

The Company will enter into a tax sharing agreement with Marquee Holdings Inc. under which it will make cash payments to Marquee Holdings Inc. to enable it to pay
any (i) Federal, state or local income taxes to the extent that such income taxes are directly attributable to the Company's or its subsidiaries' income and (ii) franchise taxes and
other fees required to maintain Holdings' legal existence as well as up to $3.5 million in any fiscal year to permit Marquee Holdings Inc. to pay its corporate overhead expenses incurred in the
ordinary course of business and salaries or other compensation of employees who perform services for both the Company and Marquee Holdings Inc.

Item 14. Principal Accountant Fees and Services.

Audit And Certain Other Fees Paid To Accountants

The following table shows the fees that the Company was billed for the audit and other services provided by PricewaterhouseCoopers LLP for fiscal years
2004 and 2003. The Audit Committee has considered whether the provision of such services is compatible with maintaining the independence of PricewaterhouseCoopers LLP and determined they were
compatible. The Audit Committee has the sole

76

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right
to engage and terminate the Company's independent registered public accounting firm, to pre-approve their performance of audit services and permitted non-audit services,
and to approve all audit and non-audit fees.

Type of Fee

2004

2003Audit Fees

$
499,426

$
443,244Audit-Related Fees


749,096


195,736Tax Fees


906,942


648,032All Other Fees


447,130


903,988Total

$
2,602,594

$
2,191,000


The Audit Committee has adopted policies and procedures for the pre-approval of audit services and permitted non-audit services to be performed by its independent
registered public accounting firm in order to assure that the provision of such services does not impair the independent registered public accounting firm's independence. The policies provide general
pre-approval for certain types of services, as well as approved costs for those services. The term of any general pre-approval is 12 months from the date of pre-approval unless the Audit
Committee specifies otherwise. Any costs or services that are not given general pre-approval require specific pre-approval by the Audit Committee. The policy directs that, if management must make a
judgment as to whether a proposed service is a pre-approved service, management should seek approval of the Audit Committee before such service is performed.

Requests
to provide services that requires specific approval by the Audit Committee must be submitted to the Audit Committee by both the independent auditor and management, and must
include a joint statement as to whether, in their view, the request or application is consistent with the SEC's rules on auditor independence.

The
policies provide that de minimis services, consisting of audit-related, tax and other services, which were not recognized by the Company to be non-audit services at the time the
outside auditor was engaged to perform them are permitted. However, the aggregate amount of all such services may not exceed more than the lesser of 5% of annual fees paid to the outside auditor or
$50,000, for a
particular engagement. These de minimis services may be performed without pre-approval, provided that they are approved by the Audit Committee or delegated member prior to completion of the engagement
and are otherwise provided in accordance with regulations issued pursuant to the Sarbanes-Oxley Act of 2002. There were no fees that related to audit-related, tax and other services for which the
pre-approval requirement was waived under the de minimis exception for fiscal year 2004.

Audit Fees

This category includes the audit of the Company's annual financial statements, review of financial statements included in the Company's
Form 10-Q Quarterly Reports and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or
engagements for the fiscal years.

Audit-Related Fees

This category consists of assurance and related services by PricewaterhouseCoopers LLP that are reasonably related to the performance of the audit or
review of the Company's financial statements and are not reported above under "Audit Fees". The services for the fees disclosed under this category include other accounting, consulting and employee
benefit plan audits.

Tax Fees

This category consists of professional services rendered by PricewaterhouseCoopers LLP for tax preparation and tax compliance.

All Other Fees

This category consists of services rendered by PricewaterhouseCoopers LLP for technical tax advice.

77

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PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

(a)(1)  The
following financial statements and summary quarterly data are included in Part II, Item 8.:

PageReport of Independent Registered Public Accounting Firm

3Consolidated Statements of OperationsFiscal years (52/53 weeks) ended April 1, 2004, April 3, 2003 and March 28, 2002

4Consolidated Balance SheetsApril 1, 2004 and April 3, 2003

5Consolidated Statements of Cash FlowsFiscal years (52/53 weeks) ended April 1, 2004, April 3, 2003 and March 28, 2002

6Consolidated Statements of Stockholders' Equity (Deficit)Fiscal years (52/53 weeks) ended April 1, 2004, April 3, 2003 and March 28, 2002

8Notes to Consolidated Financial StatementsFiscal years (52/53 weeks) ended April 1, 2004, April 3, 2003 and March 28, 2002

10Statements of Operations By Quarter (Unaudited)Fiscal years (52/53 weeks) ended April 1, 2004 and April 3, 2003

52Reconciliation of Summary Quarterly Data (unaudited) as previously reported in Form 10-Q as restated in Form 10-K for fiscal 2004

54Reconciliation of Summary Quarterly Data (unaudited) as previously reported in Form 10-Q as restated in Form 10-K for fiscal 2003

56


(a)(2)  Financial Statement SchedulesAll schedules have been omitted because the necessary information is included in the Notes to the
Consolidated Financial Statements.



Our current report on Form 8-K filed February 17, 2004, reporting under Items 5 and 7, the reclassification of the results of operations for certain assets.Our current report on Form 8-K furnished February 18, 2004, reporting under Items 7 and 9, a press release announcing the offering of Senior Subordinated Notes due 2014.Our current report on Form 8-K filed February 20, 2004, reporting under Items 5 and 7, a press release announcing the pricing of the Senior Subordinated Notes due 2014.Our current report on Form 8-K furnished February 20, 2004, reporting under Items 7 and 9, excerpts from the confidential offering memorandum.Our current report on Form 8-K furnished February 25, 2004, reporting under Items 7 and 9, a press release announcing the completion of the offering of Senior Subordinated Notes due 2014.Our current report on Form 8-K furnished April 13, 2004, reporting under Items 7 and 9, the reclassification of the results of operations for certain assets.Our current report on Form 8-K filed April 14, 2004, reporting under Items 5 and 7, the Second Restated and Amended Credit Agreement dated March 26, 2004.




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

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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:                   
| |  | Date:                 

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EXHIBIT INDEX

|EXHIBIT NUMBER |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                   
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1(a)(1)      |  | Interim Operating Agreement dated December 6, 2001 by and among AMC Entertainment Inc. and GC Companies, Inc. (incorporated by reference from Exhibit 10.1 to the Company's Form 8-K (File No. 001-08747)
filed on December 12, 2001).                                                                                                                                                        
|2.1(a)(2)      |  | Amendment dated January 28, 2002 to Interim Operating Agreement dated December 6, 2001 between GC Companies, Inc. and AMC Entertainment Inc. (Incorporated by reference from Exhibit 2.2 to Form 10-Q for the thirty-nine weeks ended
December 27, 2001.                                                                                                                                      
|2.1(b)(1)      |  | Letter of Intent dated December 6, 2001 by and among AMC Entertainment Inc. and GC Companies, Inc. (incorporated by reference from Exhibit 10.2 to the Company's Form 8-K (File No. 001-08747) filed on December 12,
2001).                                                                                                                                                                   
|2.1(b)(2)      |  | Letter of Intent, amended as of January 15, 2002, by and among AMC Entertainment Inc. and GC Companies, Inc. (incorporated by reference from Exhibit 2.5(b)(2) to Amendment No. 1 to the Company's Registration Statement on Form S-3
(File No. 333-75208) filed on January 25, 2002).                                                                                                        
|2.1(b)(3)      |  | Letter of Intent dated December 6, 2001, amended and restated as of January 28, 2002, between GC Companies, Inc. and AMC Entertainment Inc. (incorporated by reference from Exhibit 2.3 to Form 10-Q for the thirty-nine weeks ended
December 27, 2001).                                                                                                                                      
|2.1(c)(1)      |  | Support Agreement dated December 6, 2001, by and among AMC Entertainment Inc., the Official Committee of Unsecured Creditors in the Chapter 11 Cases of the GCX Debtors, General Electric Capital Corporation and Harcourt General, Inc.
(incorporated by reference from Exhibit 10.3 to the Company's Form 8-K (File No. 001-08747) filed on December 11, 2001).                             
|2.1(c)(2)      |  | Support Agreement dated December 6, 2001, amended and restated as of January 28, 2002, between AMC Entertainment Inc., General Electric Capital Corporation, Harcourt General, Inc. and the Official Committee of Unsecured Creditors in the
Chapter 11 Case of the GCX Debtors (incorporated by reference from Exhibit 2.4 to Form 10-Q for the thirty-nine weeks ended December 27, 2001).  
|2.1(c)(3)      |  | Support Agreement dated February 27, 2002, by and among AMC Entertainment Inc., GC Companies, Inc. ("GCX," and together with its Chapter 11 debtor affiliated entities, the "GCX Debtors"), the Official Committee of Unsecured Creditors in the
Chapter 11 Cases of the GCX Debtors and The Bank of Nova Scotia (incorporated by reference from Exhibit 2.1 to Form 8-K filed March 7, 2002).
|2.1(d)(1)      |  | Joint Plan of Reorganization of Debtors and Official Committee of Unsecured Creditors for GC Companies, Inc. and its jointly administered subsidiaries (incorporated by reference from Exhibit 2 to the Company's Form 8-K (File
No. 001-05747) filed on December 28, 2001.                                                                                                                   
|2.1(d)(2)      |  | First Amended Joint Plan of Reorganization of Debtors and Official Committee of Unsecured Creditors for GC Companies, Inc. and its Jointly Administered Subsidiaries filed on January 30, 2002 with the United States Bankruptcy Court for the
District of Delaware. (Incorporated by reference from Exhibit 2.5 to Form 10-Q for the thirty-nine weeks ended December 27, 2001).             
|               |  |                                                                                                                                                                                                                                                                                                                                                                                               

80

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|2.1(d)(3) |  | Modified First Amended Joint Plan of Reorganization of Debtors and Official Committee of Unsecured Creditors for GC Companies, Inc. and its Jointly Administered Subsidiaries filed on March 1, 2002 with the United States Bankruptcy Court for the
District of Delaware (incorporated by reference from Exhibit 2.2 to Form 8-K filed March 7, 2002).                                                                                                                                                                                                                           
|--------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1(d)(4) |  | Support Agreement dated February 14, 2002, by and among GC Companies, Inc., the Official Committee of Unsecured Creditors in the Chapter 11 Cases of GCC Debtors, AMC Entertainment Inc., Fleet National Bank and Bank of America, N.A. (incorporated
by reference from Exhibit 2.5(c)(3) to Amendment No. 3 to the Company's Registration Statement on Form S-3 (File No. 333-75208) filed on February 22, 2002).                                                                                                                                                                
|2.1(e)    |  | Stock Purchase Agreement dated January 15, 2002 among GC Companies, Inc., AMC Entertainment Inc., American Multi-Cinema, Inc. and Centertainment Development, Inc. (incorporated by reference from Exhibit 2.5(e) to Amendment No. 1 to the
Company's Registration Statement on Form S-3 (File No. 333-75208) filed on January 25, 2002).                                                                                                                                                                                                                                         
|2.1(f)    |  | Joint Commitment Agreement dated as of February 1, 2002 among AMC Entertainment Inc., Chestnut Hill Investments LLC, Richard A. Smith, John Berylson, and Demos Kouvaris. (Incorporated by reference from Exhibit 2.5(f) to the Amendment
No. 2 to the Company's Registration Statement on Form S-3 (File No. 333- 75208) filed on February 8, 2002).                                                                                                                                                                                                                             
|2.2       |  | Purchase and Sale Agreement, dated as of March 9, 2002, by and among G.S. Theaters, L.L.C., a Louisiana limited liability Company, Westbank Theatres, L.L.C., a Louisiana limited liability company, Clearview Theatres, L.L.C., a Louisiana limited
liability company, Houma Theater, L.L.C., a Louisiana limited liability company, Hammond Theatres, L.L.C., a Louisiana limited liability company, and American Multi-Cinema, Inc. together with Form of Indemnification Agreement (Appendix J)
(incorporated by reference from Exhibit 2.1 to Form 8-K filed March 13, 2002).
|2.3       |  | Agreement and Plan of Merger, dated as of July 22, 2004, by and among Marquee Holdings Inc., Marquee Inc. and AMC Entertainment Inc. (incorporated by reference from Exhibit 2.1 to the Company's Form 8-K (File No. 1-8747) filed on July 23,
2004).                                                                                                                                                                                                                                                                                                                             
|3.1(a)    |  | Restated and Amended Certificate of Incorporation of AMC Entertainment Inc. (as amended on December 2, 1997 and September 18, 2001) (Incorporated by Reference from Exhibit 3.1 to the Company's Form 8-K (File No. 1-8747) filed
February 15, 2002).                                                                                                                                                                                                                                                                                                                             
|3.1(b)    |  | Certificate of Designations of Series A Convertible Preferred Stock and Series B Exchangeable Preferred Stock of AMC Entertainment Inc. (restated for filing purposes in accordance with Rule 102(c) of Regulation S-T.) (Incorporated by reference from
Exhibit 3.1(b) to the Company's Form 10-Q (File No. 1-8747) for the quarter ended June 27, 2002.                                                                                                                                                                                                                         
|3.2       |  | Bylaws of AMC Entertainment Inc. (Incorporated by Reference from Exhibit 3.2 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended July 3, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                    
|          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

81

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|4.1(a) |  | Restated and Amended Credit Agreement dated as of April 10, 1997, among AMC Entertainment Inc., as the Borrower, The Bank of Nova Scotia, as Administrative Agent, and Bank of America National Trust and Savings Association, as Documentation Agent, and
Various Financial Institutions, as Lenders, together with the following exhibits thereto: significant subsidiary guarantee, form of notes, form of pledge agreement and form of subsidiary pledge agreement (Incorporated by reference from
Exhibit 4.3 to the Company's Registration Statement on Form S-4 (File No. 333-25755) filed April 24, 1997).                   
|------ |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1(b) |  | Second Amendment, dated January 16, 1998, to Amended and Restated Credit Agreement dated as of April 10, 1997 (Incorporated by Reference from Exhibit 4.2 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended January 1,
 1998).                                                                                                                                                                                                                                                                                                                                                                                      
|4.1(c) |  | Third Amendment, dated March 15, 1999, to Amended and Restated Credit Agreement dated as of April 10, 1997 (Incorporated by reference from Exhibit 4 to the Company's Form 8-K (File No. 1-8747) dated March 25,
1999).                                                                                                                                                                                                                                                                                                                                                                                                              
|4.1(d) |  | Fourth Amendment, dated March 29, 2000, to Amended and Restated Credit Agreement dated as of April 10, 1997. (Incorporated by reference from Exhibit 4.1(d) to the Company's Form 10-K (File No. 1-8747) for the year ended March 30,
2000).                                                                                                                                                                                                                                                                                                                                                                                         
|4.1(e) |  | Fifth Amendment, dated April 10, 2001, to Amended and Restated Credit Agreement dated as of April 10, 1997. (Incorporated by reference from Exhibit 4.1(e) to the Company's Form 8-K (File No. 1-8747) dated May 7, 2001).                                                                                                                                                                                                                                                                                                                                                                                                           
|4.1(f) |  | Second Restated and Amended Credit Agreement dated as of March 25, 2004, among AMC Entertainment In., as the Borrower, The Bank of Nova Scotia, as Administrative Agent and Sole Book Runner, Citicorp North America, Inc. and General Electric
Capital Corporation, as Co-Documentation Agents, bank of America, N.A. as Syndication Agent and Various Financial Institutions, as Lenders, together with the following exhibits thereto: form of note and form of pledge and security agreement.
(Incorporated by reference from Exhibit 4.1 to the Company's current report on Form 8-K (File No. 1-8747) dated February 14, 2004).
|4.2(a) |  | Indenture dated March 19, 1997, respecting AMC Entertainment Inc.'s 91/2% senior subordinated notes due 2009 (Incorporated by reference from Exhibit 4.1 to the Company's Form 8-K (File No. 1-8747) dated
March 19, 1997).                                                                                                                                                                                                                                                                                                                                                                                                          
|4.2(b) |  | First Supplemental Indenture respecting AMC Entertainment Inc.'s 91/2% senior subordinated notes due 2009 (Incorporated by reference from Exhibit 4.4(b) to Amendment No. 2. to the Company's Registration Statement
on Form S-4 (File No. 333-29155) filed August 4, 1997).                                                                                                                                                                                                                                                                                                                                                         
|4.2(c) |  | Agreement of Resignation, Appointment and Acceptance, dated August 30, 2000, among the Company, The Bank of New York and HSBC Bank USA respecting AMC Entertainment Inc.'s 91/2% senior subordinated notes due 2009.
(Incorporated by reference from Exhibit 4.2(c) to the Company's Form 10-Q (File No. 1-8747) for the quarter ended September 28, 2000).                                                                                                                                                                                                                                                                          
|4.3(a) |  | Indenture, dated January 27, 1999, respecting AMC Entertainment Inc.'s 91/2% senior subordinated notes due 2011. (Incorporated by reference from Exhibit 4.3 to the Company's Form 10-Q (File No. 1-8747)
for the quarter ended December 31, 1998).                                                                                                                                                                                                                                                                                                                                                                                  
|4.3(b) |  | First Supplemental Indenture dated March 29, 2002 respecting AMC Entertainment Inc.'s 91/2% senior subordinated notes due 2011. (Incorporated by reference from Exhibit 4 to Form 8-K (File No. 1-8747)
dated April 10, 2002).                                                                                                                                                                                                                                                                                                                                                                                                       
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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|4.3(c)  |  | Agreement of Resignation, Appointment and Acceptance, dated August 30, 2000, among the Company, The Bank of New York and HSBC Bank USA respecting AMC Entertainment Inc.'s 91/2% senior subordinated notes due 2011.
(Incorporated by reference from Exhibit 4.3(a) to the Company's Form 10-Q (File No. 1-8747) for the quarter ended September 28, 2000).
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.4     |  | Registration Rights Agreement, dated January 27, 1999, respecting AMC Entertainment Inc.'s 91/2% senior subordinated notes due 2011 (Incorporated by reference from Exhibit 4.4 to the Company's Form 10-Q (File
No. 1-8747) for the quarter ended December 31, 1998).                                                                                     
|4.5     |  | Indenture, dated January 16, 2002, respecting AMC Entertainment Inc.'s 97/8% Senior Subordinated Notes due 2012 (incorporated by reference from Exhibit 4.5 to Amendment No. 1 to the Company's Registration
Statement on Form S-3 (File No. 333-75208) filed on January 25, 2002).                                                                        
|4.6     |  | Registration Rights Agreement, dated January 16, 2002, respecting AMC Entertainment Inc.'s 97/8% Senior Subordinated Notes (incorporated by reference from Exhibit 4.6 to Amendment No. 1 to the Company's
Registration Statement on Form S-3 (File No. 333-75208) filed on January 25, 2002).                                                             
|4.7     |  | Indenture, dated February 24, 2004, respecting AMC Entertainment Inc.'s 8% senior subordinated notes due 2014. (Incorporated by reference from Exhibit 4.7 to the Company's Registration Statement on Form S-4 (File No. 333-113911)
filed on March 24, 2004.)                                                                                             
|4.8     |  | Registration Rights Agreement, dated February 24, 2004, respecting AMC Entertainment Inc.'s 8% senior subordinated notes due 2014. (Incorporated by reference from Exhibit 4.8 to the Company's Registration Statement on Form S-4 (File
No. 333-113911) filed on March 24, 2004.)                                                                         
|4.9     |  | In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K, certain instruments respecting long-term debt of the Registrant have been omitted but will be furnished to the Commission upon request.                                                                                                                                                       
|9.1     |  | Durwood Voting Trust (Amended and Restated 1992 Durwood, Inc. voting Trust Agreement dated August 12, 1998). (Incorporated by reference from exhibit 99.2 to the Company's Schedule 13D (File No. 5-34911) filed July 22, 1999).                                                                                                                           
|9.2     |  | First Amendment to Durwood Voting Trust (Amended and Restated 1992 Durwood, Inc. Voting Trust Agreement dated August 12, 1997) dated October 29, 2002). (Incorporated by reference from Exhibit 9.1 to AMCE's Form 10-Q for the quarter ended
September 26, 2002).                                                                                         
|10.1    |  | AMC Entertainment Inc. 1983 Stock Option Plan (Incorporated by reference from Exhibit 10.1 to AMCE's Form S-1 (File No. 2-84675) filed June 22, 1983).                                                                                                                                                                                                     
|10.2    |  | AMC Entertainment Inc. 1984 Employee Stock Purchase Plan (Incorporated by reference from Exhibit 28.1 to AMCE's Form S-8 (File No. 2-97523) filed July 3, 1984).                                                                                                                                                                                           
|10.3(a) |  | AMC Entertainment Inc. 1984 Employee Stock Option Plan (Incorporated by reference from Exhibit 28.1 to AMCE's Form S-8 and Form S-3 (File No. 2-97522) filed July 3, 1984).                                                                                                                                                                                
|10.3(b) |  | AMC Entertainment Inc. 1994 Stock Option and Incentive Plan, as amended (Incorporated by reference from Exhibit 10.5 to AMCE's Form 10-Q (File No. 1-8747) for the quarter ended December 31, 1998).                                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                            

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|10.3(c) |  | Form of Non-Qualified (NON-ISO) Stock Option Agreement (Incorporated by reference from Exhibit 10.2 to AMCE's Form 10-Q (File No. 0-12429) for the quarter ended December 26, 1996).                                                                                                      
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.3(d) |  | AMC Entertainment Inc. 1999 Stock Option and Incentive Plan, as amended. (Incorporated by reference from Exhibit 4.3 to the Company's Registration Statement on Form S-8 (File No. 333-92615) filed December 13, 1999).                                                                   
|10.3(e) |  | AMC Entertainment Inc. 1999 Stock Option Plan for Outside Directors (Incorporated by reference from Exhibit 4.3 to the Company's Registration Statement on Form S-8 (File No. 333-92617) filed December 13, 1999.                                                                         
|10.4    |  | American Multi-Cinema, Inc. Savings Plan, a defined contribution 401(k) plan, restated January 1, 1989, as amended (Incorporated by reference from Exhibit 10.6 to AMCE's Form S-1 (File No. 33-48586) filed June 12, 1992, as
amended).                                                  
|10.5(a) |  | Defined Benefit Retirement Income Plan for Certain Employees of American Multi-Cinema, Inc. dated January 1, 1989, as amended (Incorporated by reference from Exhibit 10.7 to AMCE's Form S-1 (File No. 33-48586) filed June 12, 1992,
as amended).                                       
|10.5(b) |  | AMC Supplemental Executive Retirement Plan dated January 1,1994 (Incorporated by reference from Exhibit 10.7(b) to AMCE's Form 10-K (File No. 0-12429) for the fiscal year ended March 30, 1995).                                                                                         
|10.6    |  | Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and Philip M. Singleton which commenced on July 1, 2001. (Incorporated by Reference from Exhibit 10.6 to Amendment No. 1 to the Company's Form 10-K (File
No. 1-8747) for the year ended March 29, 2001).
|10.7    |  | Employment Agreement between AMC Entertainment Inc. and Peter C. Brown which commenced on July 1, 2001. (Incorporated by Reference from Exhibit 10.7 to Amendment No. 1 to the Company's Form 10-K (File No. 1-8747) for the year
ended March 29, 2001).                                  
|10.8    |  | Executive Medical Expense Reimbursement and Supplemental Accidental Death or Dismemberment Insurance Plan, as restated effective as of February 1, 1991 (Incorporated by reference from Exhibit 10.13 to AMCE's Form S-1 (File
No. 33-48586) filed June 12, 1992, as amended).            
|10.9    |  | Division Operations Incentive Program (Incorporated by reference from Exhibit 10.15 to AMCE's Form S-1 (File No. 33-48586) filed June 12, 1992, as amended).                                                                                                                              
|10.10   |  | Summary of American Multi-Cinema, Inc. Executive Incentive Program (Incorporated by reference from Exhibit 10.36 to AMCE's Registration Statement on Form S-2 (File No. 33-51693) filed December 23, 1993).                                                                               
|10.11   |  | American Multi-Cinema, Inc. Retirement Enhancement Plan (Incorporated by reference from Exhibit 10.26 to AMCE's Registration Statement on Form S-4 (File No. 333-25755) filed April 24, 1997).                                                                                            
|10.12   |  | First Amended and Restated American Multi-Cinema, Inc. Retirement Enhancement Plan effective July 31, 2003 (incorporated by reference from Exhibit 10.1 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended October 2,
2003).                                              
|        |  |                                                                                                                                                                                                                                                                                           

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|10.13 |  | Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and Richard M. Fay which commenced on July 1, 2001. (Incorporated by Reference from Exhibit 10.15 to Amendment No. 1 to the Company's Form 10-K (File
No. 1-8747) for the year ended March 29, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|----- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.14 |  | AMC Non-Qualified Deferred Compensation Plans (Incorporated by reference from Exhibit 10.37 to Amendment No. 2 to AMCE's Registration Statement on Form S-2 (File No. 33-51693) filed February 18, 1994.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10.15 |  | American Multi-Cinema, Inc. Executive Savings Plan (Incorporated by reference from Exhibit 10.28 to AMCE's Registration Statement on Form S-4 (File No. 333-25755) filed April 24, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.16 |  | Agreement of Sale and Purchase dated November 21, 1997 among American Multi-Cinema, Inc. and AMC Realty, Inc., as Seller, and Entertainment Properties Trust, as Purchaser (Incorporated by reference from Exhibit 10.1 of the Company's Current
Report on Form 8-K (File No. 1-8747) filed December 9, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.17 |  | Option Agreement dated November 21, 1997 among American Multi-Cinema, Inc. and AMC Realty, Inc., as Seller, and Entertainment Properties Trust, as Purchaser (Incorporated by reference from Exhibit 10.2 of the Company's Current Report on
Form 8-K (File No. 1-8747) filed December 9, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.18 |  | Right to Purchase Agreement dated November 21, 1997, between AMC Entertainment Inc., as Grantor, and Entertainment Properties Trust as Offeree (Incorporated by reference from Exhibit 10.3 of the Company's Current Report on Form 8-K (File
No. 1-8747) filed December 9, 1997.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|10.19 |  | Lease dated November 21, 1997 between Entertainment Properties Trust, as Landlord, and American Multi-Cinema, Inc., as Tenant (Incorporated by reference from Exhibit 10.4 of the Company's Current Report on Form 8-K (File No. 1-8747)
filed December 9, 1997). (Similar leases have been entered into with respect to the following theatres: Mission Valley 20, Promenade 16, Ontario Mills 30, Lennox 24, West Olive 16, Studio 30 (Houston), Huebner Oaks 24, First Colony 24,
Oak View 24, Leawood Town Center 20, South Barrington 30, Gulf Pointe 30, Cantera 30, Mesquite 30, Hampton Town Center 24, Palm Promenade 24, Westminster Promenade 24, Hoffman Center 22, Elmwood Palace 20, Westbank
Palace 16, Clearview Palace 12, Hammond Palace 10, Houma Palace 10, Livonia 20, Forum 30 and Studio 24 (Olathe), Hamilton 24, Deer Valley 30 and Mesa Grand 24.        
|10.20 |  | Guaranty of Lease dated November 21, 1997 between AMC Entertainment, Inc., as Guarantor, and Entertainment Properties Trust, as Owner (Incorporated by reference from Exhibit 10.5 of the Company's Current Report on Form 8-K (File
No. 1-8747) filed December 9, 1997, (Similar guaranties have been entered into with respect to the following theatres: Mission Valley 20, Promenade 16, Ontario Mills 30, Lennox 24, West Olive 16, Studio 30 (Houston), Huebner Oaks
24, First Colony 24, Oak View 24, Leawood Town Center 20, South Barrington 30, Gulf Pointe 30, Cantera 30, Mesquite 30, Hampton Town Center 24, Palm Promenade 24, Westminster Promenade 24, Hoffman Center 22, Elmwood
Palace 20, Westbank Palace 16, Clearview Palace 12, Hammond Palace 10, Houma Palace 10, Livonia 20, Forum 30, Studio 24 (Olathe), Hamilton 24, Deer Valley 30 and Mesa Grand 24.
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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|10.21 |  | Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and Richard T. Walsh which commenced July 1, 2001. (Incorporated by Reference from Exhibit 10.25 to the Company's Form 10-K (File No. 1-8747) for the year
ended March 29, 2001).                                                                                  
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.22 |  | Form of Non-Qualified (Non-ISO) Stock Option Agreement used in November 13, 1998 option grants to Mr. Peter C. Brown and Mr. Philip M. Singleton (Incorporated by reference from Exhibit 10.6 to the Company's Form 10-Q (File
No. 1-8747) for the quarter ended December 31, 1998).                                                                
|10.23 |  | Retainer agreement with Raymond F. Beagle, Jr. dated October 1, 2002. (Incorporated by Reference from Exhibit 10.27 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended September 26, 2002).                                                                                                                                         
|10.24 |  | Non-Qualified (Non-ISO) Stock Option Agreement used in June 18, 1999 option grants to Mr. Richard M. Fay and Mr. Richard T. Walsh. (Incorporated by reference from exhibit 10.1 to the Company's Form 10-Q (File No. 1-8747) for the
quarter ended July 1, 1999).                                                                                   
|10.25 |  | Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and John D. McDonald which commenced July 1, 2001. (Incorporated by Reference from Exhibit 10.29 to Amendment No. 1 to the Company's Form 10-K (File
No. 1-8747) for the year ended March 29, 2001).                                                               
|10.26 |  | Form of Option Agreement under 1999 Stock Option Plan for Outside Directors used in December 3, 1999 option grants to Mr. Chares J. Egan, Jr., Mr. W. Thomas Grant, II, Mr. Charles S. Paul and Mr. Paul E. Vardeman.
(Incorporated by reference from Exhibit 10.37 to the Company's Form 10-K (File No. 1-8747) for the year ended March 30, 2000).
|10.27 |  | Non-Qualified (Non-ISO) Stock Option Agreement used in June 18, 1999 option grant to Mr. John D. McDonald. (Incorporated by reference from Exhibit 10.37 to the Company's Form 10-K (File No. 1-8747) for the year ended March 30,
2000).                                                                                                           
|10.28 |  | Form of Non-Qualified (Non-ISO) Stock Option Agreement used in April 17, 2001 grants to Mr. Peter C. Brown, Mr. Philip M. Singleton, Mr. Richard M. Fay, Mr. Richard T. Walsh and Mr. John D. McDonald. (Incorporated by
Reference from Exhibit 10.32 to the Company's Form 10-K (File No. 1-8747) for the year ended March 29, 2001).              
|10.29 |  | Form of Restricted Stock Award Agreement used in April 17, 2001 awards to Mr. Peter C. Brown, Mr. Philip M. Singleton, Mr. Richard M. Fay, Mr. Richard T. Walsh and Mr. John D. McDonald. (Incorporated by Reference from
Exhibit 10.33 to the Company's Form 10-K (File No. 1-8747) for the year ended March 29, 2001).                            
|10.30 |  | Forgiveness of Debt Agreement between AMC Entertainment Inc. and Peter C. Brown dated June 6, 2002. (Incorporated by Reference from Exhibit 10.34 to the Company's Form 10-K (File No. 1-8747) for the year ended March 28,
2002).                                                                                                                  
|10.31 |  | Forgiveness of Debt Agreement between AMC Entertainment Inc. and Philip M. Singleton dated June 6, 2002. (Incorporated by Reference from Exhibit 10.35 to the Company's Form 10-K (File No. 1-8747) for the year ended March 28,
2002).                                                                                                             
|10.32 |  | Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and Craig R. Ramsey which commenced on July 1, 2001. (Incorporated by Reference from Exhibit 10.36 to the Company's Form 10-Q (File No. 1-8747) for the
quarter ended June 27, 2002).                                                                              
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|10.33 |  | Investment Agreement entered into April 19, 2001 by and among AMC Entertainment Inc. and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Management IV, L.P.
and Apollo Management V, L.P. (Incorporated by reference from Exhibit 4.7 to the Company's Form 8-K (File No. 1-8747) filed on April 20, 2001).                                                                                                                              
|----- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.34 |  | Standstill Agreement by and among AMC Entertainment Inc., and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Management IV, L.P. and Apollo Management V,
L.P., dated as of April 19, 2001. (Incorporated by reference from Exhibit 4.8 to the Company's Form 8-K (File No. 1-8747) filed on April 20, 2001).                                                                                                                            
|10.35 |  | Registration Rights Agreement dated April 19, 2001 by and among AMC Entertainment Inc. and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P. (Incorporated by reference
from Exhibit 4.9 to the Company's Form 8-K (File No. 1-8747) filed on April 20, 2001).                                                                                                                                                                                      
|10.36 |  | Securities Purchase Agreement dated June 29, 2001 by and among Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo Management IV, L.P., Apollo Management V, L.P.,
 AMC Entertainment Inc., Sandler Capital Partners V, L.P., Sandler Capital Partners V FTE, L.P. and Sandler Capital Partners V Germany, L.P. (Incorporated by reference from Exhibit 4.6 to the Company's Form 10-Q (File No. 1-8747) for
the quarter ended June 28, 2001).
|10.37 |  | Form of Indemnification Agreement dated September 18, 2003 between the Company and Peter C. Brown, Charles S. Sosland, Charles J. Egan, Jr., Michael N. Garin, Marc J. Rowan, Paul e. Vardeman, Leon D. Black and Laurence M. Berg (incorporated
by reference from Exhibit 10.1 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended January 1, 2004).                                                                                                                                                                   
|10.38 |  | 2003 AMC Entertainment Inc. Long-Term Incentive Plan (incorporated by reference from Exhibit 10.2 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended October 2, 2003).                                                                                                                                                                                                                                                                                                                                                 
|10.39 |  | Description of 2004 Grant under the 2003 AMC Entertainment Inc. Long-Term Incentive Plan (incorporated by reference from Exhibit 10.3 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended October 2, 2003).                                                                                                                                                                                                                                                                                                             
|**14  |  | Code of Ethics                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|**21. |  | Subsidiaries of AMC Entertainment Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|*23.  |  | Consent of independent registered public accounting firm.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|*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 Peter C. Brown (Chief Executive Officer) and Craig R. Ramsey (Chief Financial Officer) furnished in accordance with Securities Act Release 33-8212.                                                                                                                                                                                                                                                                                                                                                      

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