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

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FORM 10-K

(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. ý

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


DOCUMENTS INCORPORATED BY REFERENCE

Portions of our Proxy Statement for use in connection with the 2004 Annual Meeting of Stockholders to be filed are incorporated by reference into Part III
of this report, to the extent set forth therein.



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AMC ENTERTAINMENT INC.        FORM 10-K        FOR THE FISCAL YEAR ENDED APRIL 1, 2004        INDEX

|         |  |                                                                                                |  | Page
|-------- |  | ---------------------------------------------------------------------------------------------- |  | ----
|PART I  
|Item 1.  |  | Business                                                                                       |  | 5   
|Item 2.  |  | Properties                                                                                     |  | 14  
|Item 3.  |  | Legal Proceedings                                                                              |  | 14  
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                            |  | 16  
|PART II 
|Item 5.  |  | Market for Registrant's Common Equity and Related Stockholder Matters                          |  | 16  
|Item 6.  |  | Selected Financial Data                                                                        |  | 17  
|Item 7.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations          |  | 21  
|Item 7A. |  | Quantitative and Qualitative Disclosures about Market Risk                                     |  | 42  
|Item 8.  |  | Financial Statements and Supplementary Data                                                    |  | 43  
|Item 9.  |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure           |  | 98  
|Item 9A. |  | Controls and Procedures                                                                        |  | 98  
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                             |  | 99  
|Item 11. |  | Executive Compensation                                                                         |  | 99  
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  | 99  
|Item 13. |  | Certain Relationships and Related Transactions                                                 |  | 99  
|Item 14. |  | Principal Accountant Fees and Services                                                         |  | 99  
|PART IV 
|Item 15. |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K                                |  | 100 
|         |  | Signatures                                                                                     |  | 101 

Forward Looking Statements

This report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements, other than statements of historical facts, included in this Annual Report on Form 10-K regarding the prospects of our industry and our
prospects, plans, financial position and business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "plan," "foresee," "believe" or "continue" or the negatives of these terms or variations of them or similar
terminology. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct.
All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking
statement. Important factors that could cause actual results to differ materially from our expectations include, among others: (i) our ability to enter into various financing programs;
(ii) the cost and availability of films and the performance of films licensed by

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us;
(iii) competition; (iv) construction delays; (v) the ability to open or close theatres and screens as currently planned; (vi) the ability to sub-lease
vacant retail space; (vii) domestic and international political, social and economic conditions; (viii) demographic changes; (ix) increases in the demand for real estate;
(x) changes in real estate, zoning and tax laws; (xi) unforeseen changes in operating requirements; (xii) our ability to identify suitable acquisition candidates and successfully
integrate acquisitions into our operations and (xiii) results of significant litigation. Readers are urged to consider these factors carefully in evaluating the forward-looking statements.

All
subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.
The forward-looking statements included herein are made only as of the date of this Annual Report on Form 10-K, and we do not undertake any obligation to release publicly any
revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Restatement of Financial Statements

In connection with the annual audit of our consolidated financial statements, we, with the concurrence of our independent registered public accounting firm,
determined that our 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:We had previously recorded valuation allowances against deferred tax assets in foreign
jurisdictions when it became clear, based on theatre impairments or other factors, that we would not be profitable in those jurisdictions. We have 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,
we have restated our 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

$3.8 millionIncrease in income tax provision and net loss for the year ended March 28, 2002

$0.8 millionIncrease in income tax provision and net loss for the year ended April 3, 2003

$9.0 million


Swedish tax benefits recorded in loss from discontinued operations:In the third quarter of the year ended April 1,
2004, we recorded a $2.5 million U.S. federal income tax benefit generated from a worthless stock deduction relating to our Sweden operations which were sold in that quarter. We subsequently
determined that the income tax benefit in the amount of $3.6 million 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, we recorded a deferred tax asset of $1.5 million for asset impairments in Sweden. We subsequently determined that the
deferred tax asset should have been reserved with a full valuation allowance.

Accordingly,
we have restated our 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

$2.1 million


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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. We recently determined that we have 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, we have restated our 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

$0.231 millionIncrease in net loss for the year ended March 28, 2002

$0.210 millionIncrease in net loss for the year ended April 3, 2003

$0.244 million


Consultation with Securities & Exchange Commission

On March 24, 2004 we filed a registration statement on Form S-4 (Commission File No. 333-113911) with the Securities
and Exchange Commission (the "SEC"), which was amended on May 7, 2004 and incorporates by reference our Annual Report on Form 10-K for the fiscal year ended April 3,
2003 and Form 8-K filed on February 17, 2004. The SEC Staff determined to review the registration statement and our periodic reports filed with the SEC identified above. As a
result of the review of the periodic reports, the SEC Staff requested that we classify our Series A Convertible Preferred Stock outside of permanent equity into a temporary equity
classification. We are currently engaged in technical discussions with the Office of the Chief Accountant of the SEC regarding the appropriate classification of our outstanding Series A
Convertible Preferred Stock.

In
July 2001, the SEC Staff issued an Announcement which was codified as EITF Topic No. D-98. During fiscal 2002, we adopted Topic No. D-98 Classification and Measurement of Redeemable Securities. Topic No. D-98 provides guidance about determining when an equity security
is redeemable at the option of the holder or upon the occurrence of an event that is solely within the control of the issuer. At the time of adoption of Topic No. D-98, there was no
impact to our consolidated financial position, results of operations or cash flows. Currently, we believe that Topic No. D-98 will not require our outstanding Series A
Convertible Preferred Stock to be classified outside of permanent stockholders' equity until such time, if ever, that (i) the holders of our Preferred Stock either (a) are entitled to
elect a majority of the board of directors or (b) could convert a portion of their Preferred Stock into a sufficient number of shares of common stock to gain control of the board of directors
and (ii) our optional right to redeem the Preferred Stock is unconditional. Such circumstances do not presently exist and we believe should not exist prior to 2006, if ever. This conclusion is currently under discussion
with the Staff of the SEC and is subject to change.

The
possible reclassification of our Series A Convertible Preferred Stock outside of permanent stockholders' equity would not, if made, have an impact on previously reported
earnings, current earnings or related earnings per share.

The
impact to the financial statements if this reclassification were made, is as follows:

Cumulative decrease to stockholders' equity, March 28, 2002

$
259,443,000Cumulative decrease to stockholders' equity, April 3, 2003


286,594,000Cumulative decrease to stockholders' equity, April 1, 2004


326,850,000


See note 7 to the consolidated financial statements.

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PART I

Item 1. Business.

(a)   General Development of Business

We are organized as a holding company. Our principal directly owned subsidiaries are American Multi-Cinema, Inc. ("AMC"), AMC Entertainment
International, Inc. ("AMCEI") and National Cinema Network, Inc. ("NCN"). We conduct our North American theatrical exhibition business through AMC and its subsidiaries and AMCEI. We are
operating theatres outside the United States through AMCEI and its subsidiaries. We engage in advertising services through NCN.

Our
predecessor was founded in Kansas City, Missouri in 1920. We were incorporated under the laws of the state of Delaware on June 13, 1983 and maintain our principal executive
offices at 920 Main, Kansas City, Missouri 64105. Our telephone number at such address is (816) 221-4000.

On
March 15, 2002, we acquired the operations and related assets of Gulf States Theatres for a cash purchase price of approximately $45.8 million. The acquisition included
five theatres with 68 screens in the New Orleans, Louisiana area. Operating results of the acquired theatres are included in our consolidated statements of operations from March 15, 2002.

On
March 29, 2002, we acquired GC Companies, Inc. ("GC Companies"), pursuant to the plan of reorganization of GC Companies which we sponsored, for a purchase price of
approximately $168.9 million (net of $6.5 million from the sale of GC Companies' portfolio of venture capital investments on the effective date of the plan of reorganization). The
acquisition included 66 theatres with
621 screens throughout the United States and a 50% interest in a joint venture that operates 17 theatres with 160 screens in Argentina, Chile, Brazil and Uruguay that is accounted for using the equity
method. Operating results of the acquired theatres are included in our consolidated statements of operations from March 29, 2002.

The
purchase price for GC Companies includes estimated cash payments of $68.5 million, the issuance of $72.9 million of our 91/2% senior subordinated notes
due 2011 with a fair value of $71.8 million and the issuance of $35. 2 million of our common stock, or 2.6 million shares based on a fair value of $13.64 per share (the closing
price per share on the effective date of the plan of reorganization). See Note 2 to our consolidated financial statements for the fiscal year ended April 1, 2004 for additional
information regarding these acquisitions and "Management's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources" for additional
information on payments that we might make under the plan of reorganization.

On
December 4, 2003, we sold our only theatre in Sweden and incurred a loss on sale of approximately $5.6 million, which included a payment of approximately
$5.3 million to the purchaser. We opened our theatre in Sweden during fiscal 2001, and since that time we have incurred pre-tax losses of approximately $17.2 million,
including an impairment charge of approximately $4.7 million in fiscal 2002 and a loss on sale of approximately $5.6 million in fiscal 2004. The operations and cash flows of the Sweden
theatre have been eliminated from our ongoing operations as a result of the disposal transaction, and we do not have any significant continuing involvement in the operations of the Sweden theatre. 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 our International operations segment.

On
December 19, 2003, we acquired certain of the operations and related assets of MegaStar Cinemas, L.L.C. ("MegaStar") for an estimated cash purchase price of approximately
$15.0 million. The acquisition included three theatres with 48 screens in the Minneapolis, Minnesota and Atlanta, Georgia areas. Operating results of the acquired theatres are included in our
consolidated statements of operations from December 19, 2003.

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(b)   Financial Information about Segments

For information about our operating segments, see Note 15 to the Consolidated Financial Statements under Part II Item 8. of this Annual Report on
Form 10-K.

(c)   Narrative Description of Business

We are one of the world's leading theatrical exhibition companies based on revenues. As of April 1, 2004, we operated 232 theatres with a total of 3,544
screens, with 93%, or 3,306, of our screens in North America, and 7%, or 238, of our screens in China (Hong Kong), Japan, France, Portugal, Spain and the United Kingdom. For the 52 weeks ended
April 1, 2004, we had revenues of $1.8 billion, a net loss of $10.7 million and net cash provided by operating activities of $183.3 million.

Our
North American and International theatrical exhibition revenues are generated primarily from box office admissions and theatre concession sales, which represented approximately 68%
and 26%, respectively, of our revenues during the 52 weeks ended April 1, 2004. The balance of our revenues is generated from ancillary sources, including on-screen advertising,
rental of theatre auditoriums, fees and other revenues generated from the sale of gift certificates and theatre tickets and arcade games located in theatre lobbies.

Our Competitive Strengths

Key characteristics of our business that we believe differentiate us from and give us a competitive advantage over many other theatrical exhibition companies are:



Modern Theatre Circuit.We are an industry leader in the development and operation of megaplex
theatres, typically defined as having 14 or more screens and offering amenities to enhance the movie-going experience, such as stadium seating providing unobstructed viewing, digital sound and
enhanced seat design. We believe that the megaplex format provides the operator with enhanced revenue opportunities and better asset utilization while creating convenience for patrons by increasing
film choice and the number of film starting times. We believe that our introduction of the megaplex in 1995 has led to the
current industry replacement cycle, which has accelerated the obsolescence of older, smaller theatres by setting new standards for moviegoers. We continually upgrade the quality of our theatre circuit
by adding new screens through new builds (including expansions) and acquisitions and by disposing of older screens through closures and sales. From April 1995 through April 1, 2004, we
added 111 theatres with 2,343 new screens, acquired 80 theatres with 786 screens and disposed of 191 theatres with 1,215 screens. As of April 1, 2004, approximately 73%, or 2,597, of our
screens were located in megaplex theatres. As of April 1, 2004, our average number of screens per theatre was 15.3, which we believe was the highest among the major North America theatre
exhibitors and indicative of the extent to which we have developed our theatre circuit, compared with 6.2 (according to the National Association of Theatre Operators) for all North America theatrical
exhibition companies.

Highly Productive Theatres.Our theatres are generally among the most productive in the markets in
which they operate. As measured by AC Nielsen EDI, Inc. ("EDI"), we operated 22 of the top 50 theatres in the United States in terms of box office revenues for the 52 weeks ended
April 1, 2004. Our next closest competitor operated nine. Our theatre circuit in North America also produces box office revenues per screen at rates approximately 30% higher than the industry
average, as measured by EDI.

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Broad Major Market Coverage with Prime Theatre Locations.In addition to our asset quality and the
high levels of productivity of our theatres, our theatres are generally located in large, urban markets, giving us a breadth of market coverage that places us in most major markets in the United
States. We operate in 88% of the Top 25 "Designated Market Areas", or "DMAs" (television market areas as defined by EDI). Our theatres are usually located near or within developments that include
retail stores, restaurants and other activities that complement the movie-going experience.

The
following table provides detail with respect to the geographic location of our theatre circuit as of April 1, 2004:

Total
Screens

Total
TheatresNorth AmericaCalifornia

467

30Florida

434

30Texas

399

21Georgia

165

10Illinois

157

8Arizona

148

7Pennsylvania

129

12Ohio

107

8Missouri

103

7Virginia

100

6Maryland

89

9Minnesota

83

7Massachusetts

78

7New Jersey

78

7Colorado

72

4Louisiana

68

5Michigan

66

4New York

58

4Washington

56

6Kansas

55

3North Carolina

46

2Oklahoma

44

2Indiana

38

4South Carolina

28

3Nebraska

24

1Kentucky

20

1Wisconsin

18

1District of Columbia

16

2Total United States

3,146

211Canada

160

7Total North America

3,306

218InternationalChina (Hong Kong)

11

1Japan

79

5France

14

1Portugal

20

1Spain

86

4United Kingdom

28

2Total International

*238

*14Total Theatre Circuit

*3,544

*232


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The following table sets forth information concerning new builds (including expansions), acquisitions and dispositions and end of period theatres
and screens operated.

New Builds

Acquisitions

Dispositions

Total Theatres OperatedFiscal Year

Number of
Theatres

Number of
Screens

Number of
Theatres

Number of
Screens

Number of
Theatres

Number of
Screens

Number of
Theatres

Number of
Screens1996

7

150





13

61

226

1,7191997

17

314





15

76

228

1,9571998

24

608





23

123

229

2,4421999

17

351

3

29

16

87

233

2,7352000

20

450





42

279

211

2,9062001

6

115





37

250

180

2,7712002

8

146

5

68

12

86

181

2,8992003

5

95

*69

*641

16

111

*239

*3,5242004

7

114

3

48

17

142

*232

*3,544111

2,343

80

786

191

1,215


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Our Strategy

Our strategic plan has three principal elements:



Maximizing Operating Efficiencies.We believe the fundamentals of our business include maximizing
revenues and managing our costs. For example, since fiscal 1999 we have implemented key initiatives in each of these areas, which have resulted in the following:



We
continue to evaluate opportunities for further revenue and cost savings in these and other areas.

Optimizing Our Theatre Portfolio.Asset quality is a function of our selective new build, acquisition
and theatre disposition strategies.

As
a recognized leader in the development and operation of megaplex theatres and based upon our financial resources, we believe that we will continue to have attractive new build
opportunities presented to us by real estate developers and others. We intend to selectively pursue new build opportunities where the characteristics of the location and the overall market meet our
strategic and financial return criteria. As of April 1, 2004, we had three theatres with 44 screens under construction in the United States. Since April 1995, we have added 2,343 screens
in high performing state-of-the-art theatres.

We
believe that a major factor that further differentiates us from our competitors and has contributed to our overall theatre portfolio quality has been our proactive efforts to close
older, underperforming theatres. Since fiscal 1995, our last fiscal year before the first megaplex theatre opened, we have disposed

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of
1,215 screens. In order to maintain a modern, high quality theatre circuit, we will continue to evaluate our theatre portfolio and, where appropriate, dispose of theatres through closures, lease
terminations, lease buyouts, sales or subleases. We have identified 19 multiplex theatres with 162 screens that we may close over the next one to three years due to expiration of leases or early lease
terminations.

There
are approximately 600 theatrical exhibitors in North America, and the top five exhibitors account for approximately 50% of the industry's screens. This statistic is up from 31% in
1999 and evidences that the theatrical exhibition business in North America has been consolidating. We played a key role in this consolidation process in 2002, 2003 and 2004 by acquiring three
domestic theatre operators with a total of 757 screens.

Enhancing and Extending Our Business and Brands.We believe there are opportunities to increase our
core and ancillary revenues and build brand equity through enhancements of our business, new product offerings and strategic marketing. For example:



Film Licensing

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

North
American film distributors typically establish geographic film licensing zones and generally allocate available film to one theatre within that zone. Film zones generally encompass
a radius of three to five miles in metropolitan and suburban markets, depending primarily upon population density. In film zones where we are the sole exhibitor, we obtain film licenses by selecting a
film from among those offered and negotiating directly with the distributor. In film zones where there is competition, a distributor generally will allocate its films among the exhibitors in the zone.
As of April 1, 2004, approximately 82% of our screens in the United States were located in non-competitive film zones.

Licenses
that we enter into typically state that rental fees are based on either firm terms established prior to the opening of the picture or on a mutually agreed settlement upon the
conclusion of the picture

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run.
Under a firm terms formula, we pay the distributor a specified percentage of box office receipts, with the percentages declining over the term of the run. Firm term film rental fees are generally
the greater of (i) 70% of box office admissions, gradually declining to as low as 30% over a period of four to seven weeks versus (ii) a specified percentage
(i.e.90%) of the excess of box office receipts over a negotiated allowance for theatre expenses (commonly known as a 90-10 clause). The
settlement process allows for negotiation based upon how a film actually performs. A firm term agreement could result in lower than anticipated film rent percentage if the film outperforms
expectations, especially in regards to length of run, and, conversely, there is a downside risk when the film underperforms.

There
are several distributors which provide a substantial portion of quality first-run motion pictures to the exhibition industry. These include Buena Vista Pictures
(Disney), Paramount Pictures, Universal Pictures, Warner Bros. Distribution, New Line Cinema, SONY Pictures Releasing, Miramax, MGM, Twentieth Century Fox and DreamWorks. Films licensed from these
distributors accounted for approximately 92% of our North American admissions revenues during fiscal 2004. Our revenues attributable to individual distributors may vary significantly from year to year
depending upon the commercial success of each distributor's motion pictures in any given year. In fiscal 2004, no single distributor accounted for more than 6% of the motion pictures that we licensed
or for more than 15% of our box office admissions.

During
the period from 1990 to 2003, the annual number of first-run motion pictures released by distributors in the United States ranged from a low of 370 in 1995 to a high
of 490 in 1998, according to the Motion Picture Association of America. During 2003, 459 first-run motion pictures were released by distributors in the United States.

Concessions

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

Our
strategy emphasizes prominent and appealing concessions counters designed for rapid service and efficiency. We design our megaplex theatres to have more concessions capacity to make
it easier to serve larger numbers of customers. In addition, our megaplexes generally feature the "pass-through" concept, which enables the concessionist serving patrons to simply sell
concessions items instead of also preparing them, thus providing more rapid service to customers. Strategic placement of large concessions stands within theatres heightens their visibility, aids in
reducing the length of lines, allows flexibility to introduce new concepts and improves traffic flow around the concessions stands.

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

Theatre Management and Support

We use a centralized structure for policy development, strategic planning, asset management, marketing, human resources, finance, accounting and information
systems. These systems are managed at our corporate office located in Kansas City, Missouri.All U.S. film licensing activity occurs in Woodland Hills,
California.

We
staff our theatres with personnel capable of making day-to-day operating decisions. A portion of management's compensation at each theatre is linked to the
operating results of that theatre. All theatre level personnel complete formal training programs to maximize both customer service and the efficiency of our operations. Theatre managers receive
market-based training within their first 18 months with us which focuses on operations administration, marketing and information systems interpretation.

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Theatre staffing varies depending on the size and configuration of the theatre and levels of attendance. For example, a typical 10-screen movie theatre may have four managers
with 50 associates while a megaplex theatre may have eight managers and 125 associates. We are committed to developing the strongest possible management teams and seek college graduates for career
management positions.

Employees

As of April 1, 2004, we had approximately 1,200 full-time and 16,000 part-time employees. Approximately 1.5% of our
part-time employees were minors that were paid the minimum wage.

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

Theatrical Exhibition Industry and Competition

Motion picture theatres are the primary initial distribution channel for new motion picture releases and we believe that the theatrical success of a motion
picture is often the most important factor in establishing its value in the DVD/videocassette, cable television and other ancillary markets. We believe that the emergence of alternative motion picture
distribution channels has not adversely affected attendance at theatres and that these distribution channels do not provide an experience comparable to the out-of-home
entertainment experience offered by moviegoing. We believe that the public will continue to recognize the value of viewing a movie on a large screen with superior audio and visual quality, while
enjoying a variety of concessions and sharing the experience with a larger audience.

Moviegoing
has demonstrated steady growth, with North American box office revenues increasing by a 6% Compound Annual Growth Rate ("CAGR") over the last 30 years. Since the
introduction of the megaplex in 1995, these positive growth trends have become more pronounced, with box office revenues growing by a 7% CAGR from 1995 to 2003. In 2003, industry box office revenues
were $9.5 billion,
a decrease of less than 1% from the prior year, and attendance was 1.57 billion, a decrease of 4% from the prior year but the second highest attendance level in 44 years.

As
a result of the economic appeal of megaplex theatres and exhibitors' development of new megaplexes without a corresponding closure of older multiplexes, from 1995 to 1999 the
industry's indoor screen count grew by a CAGR of 8%, from 27,000 to 36,500 screens. However, attendance per screen declined during this period by a CAGR of 4%. We believe that this decline reflects
the industry's excess screen capacity, in which older multiplexes or less competitively positioned theatres were effectively rendered obsolete by newer megaplexes, resulting in declining
profitability.

In
2003, there were approximately 1,300 fewer screens than in 1999, which had the highest number of screens in the past nine years, as many of our competitors closed older multiplexes.
As a result, from 1999 to 2003 the industry's screen count decreased by a CAGR of 1% and attendance per screen increased during this period by a CAGR of 1%.

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The
following table represents information about the exhibition industry obtained from the National Association of Theatre Owners and Motion Picture Association 2003 MPA Market
Statistics.

Calendar Year

Box Office
Revenues
(In millions)

Attendance
(In millions)

Average
Ticket
Price

Number of
Theaters

Indoor
Screens2003

$
9,488

1,574

$
6.03

5,659

35,1392002


9,520

1,639


5.80

5,712

35,1702001


8,413

1,487


5.65

5,813

34,4902000


7,661

1,421


5.39

6,571

35,5971999


7,448

1,465


5.06

7,031

36,4481998


6,949

1,481


4.69

6,894

33,4181997


6,365

1,388


4.59

6,903

31,0501996


5,911

1,339


4.42

7,215

28,9051995


5,493

1,263


4.35

7,151

26,995


There
are approximately 600 companies competing in the North American theatrical exhibition industry, approximately 300 of which operate four or more screens. Industry
participants vary substantially in size, from small independent operators to large international chains. Based on information obtained from the National Association of Theatre Owners
2003-04 Encyclopedia of Exhibition, we believe that the ten largest exhibitors (in terms of number of screens) operated approximately 62% of the indoor screens in 2003.

Our
theatres are subject to varying degrees of competition in the geographic areas in which they operate. Competition is often intense with respect to attracting patrons, licensing
motion pictures and finding new theatre sites. Where real estate is readily available, there are few barriers preventing another company from opening a theatre near one of our theatres, which may
adversely effect operations at our theatre.

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

Regulatory Environment

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

Our
theatres must comply with Title III of the Americans with Disabilities Act of 1990 (the "ADA"). Compliance with the ADA requires that public accommodations "reasonably accommodate"
individuals with disabilities and that new construction or alterations made to "commercial facilities" conform to accessibility guidelines unless "structurally impracticable" for new construction or
technically infeasible for alterations. Non-compliance with the ADA could result in the imposition of injunctive relief, fines, awards of damages to private litigants or additional capital
expenditures to remedy such noncompliance. Although we believe that our theatres are in substantial compliance with the ADA, in January 1999, the Civil Rights Division of the Department of
Justice filed suit against us alleging that certain of our theatres with stadium-style seating violate the ADA. See "Legal Proceedings" under Part I Item 3. of this Annual Report on
Form 10-K.

As
an employer covered by the ADA, we must make reasonable accommodations to the limitations of employees and qualified applicants with disabilities, provided that such reasonable
accommodations do not

12

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pose
an undue hardship on the operation of our business. In addition, many of our employees are covered by various government employment regulations, including minimum wage, overtime and working
conditions regulations.

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

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

Seasonality

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

(d)   Financial Information About Geographic Areas

For information about the geographic areas in which we operate, see Note 15 to the Consolidated Financial Statements under Part II Item 8. of this
Annual Report on Form 10-K. During fiscal 2004, revenues from our theatre operations outside the United States accounted for 9.5% of our total revenues. Our North American
operations include megaplexes in Canada as well. There are significant differences between the theatrical exhibition industry in the United States and in these international markets. These include:



Other
risks associated with our foreign operations include:



13

---





There
are also other risks that may limit or disrupt motion picture exhibition and markets, restrict the movement of funds or result in the deprivation of contract rights or the taking
of property by nationalization or appropriation without fair compensation. Such differences in industry structure and regulatory and trade practices may adversely affect our ability to expand
internationally or to operate at a profit following such expansion.

(e)   Available Information.

We make available on our web site (www.amctheatres.com) under "Investor ResourcesSEC Filings", free of charge, our annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after
we electronically file or furnish such material with the Securities and Exchange Commission.

Item 2. Properties.

The following table sets forth the general character and ownership classification of our theatre circuit as of April 1, 2004:

Property Holding Classification

Total
Theatres

Total
ScreensOwned

5

48Leased pursuant to ground leases

12

137Leased pursuant to building leases

213

3,344Managed

2

15Total

232

3,544


Our
theatre leases generally have initial terms ranging from 10 to 25 years, with options to extend the lease for up to 20 additional years. The leases typically require
escalating minimum annual rent payments and additional rent payments based on a percentage of the leased theatre's revenue above a base amount and require us to pay for property taxes, maintenance,
insurance and certain other property-related expenses. In some instances our escalating minimum annual rent payments are contingent upon increases in the consumer price index. In some cases, our
rights as tenant are subject and subordinate to the mortgage loans of lenders to our lessors, so that if a mortgage were to be foreclosed, we could lose our lease. Historically, this has never
occurred.

We
lease our corporate headquarters in Kansas City, Missouri, our film licensing office in Woodland Hills, California (Los Angeles) and our administrative offices in Paris, France and
Tokyo, Japan.

The
majority of the concessions, projection, seating and other equipment required for each of our theatres is owned.

Item 3. Legal Proceedings

Jose Vargas and Maria Victoria Vargas v. R.K. Butler and EPT DOWNREIT II and American Multi-Cinema, Inc. d/b/a AMC Theatres Studio
30 and Houston Police Department(No. 2003 - 61045 filed in the District Court of Harris County, Texas). On November 3, 2003, Jose
Vargas and Maria Victoria Vargas as beneficiaries of Jose Vargas, Jr. filed a wrongful death action seeking damages related to the death of their minor son. The case arises from a shooting death that
occurred approximately one and a half blocks away from the premises of the AMC Studio 30 in Houston, Texas on October 31, 2003. The Vargas youth was shot by a Houston Police officer who was
working as an off-duty security officer at the AMC Studio 30. The Vargas youth had been driving around the AMC parking lot with friends in an automobile prior to the shooting. The
plaintiffs are seeking unspecified damages on a variety of legal theories.

14

---



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 our stadium-style
theatres violate the ADA and related regulations. The Department alleges that we have 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 our 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. We filed a request for interlocutory appeal on January 23, 2003. The trial court denied our 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 as early as this summer. The Company's line of sight proceedings are postponed pending Regal's outcome
before the 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 we
have 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, we have agreed to remedy
certain violations at twelve of our stadium-style theatres surveyed by the Department. Additionally, we have agreed to survey and make similar improvements at 101 stadium-style theatres across the
country and at certain theatres we may open or acquire in the future. We estimate 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 the improvements 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.

Kevin Ball, et al. v. AMC Entertainment Inc. and Loews Cineplex Entertainment Corp.(Case No. 1:00CV00867, U.S. District
Court for the District of Columbia), was a purported class action lawsuit on behalf of hearing impaired persons that involves theatres only in the District of Columbia area. The Ball suit sought to
have AMC install closed-captioning in several screens at several theatres in the D.C. area, which we estimate would cost approximately $96,000 in the aggregate. AMC and Loews have each agreed to a
settlement that would require the installation of closed-captioning in six theatre screens in the D.C. area and the payment by each of AMC and Loews of approximately $130,000 for plaintiff's legal
fees. The Court approved the settlement on April 30, 2004.

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). We are plaintiffs 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

15

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defective
application of certain fireproofing materials at 23 theatres. We currently estimate our claim for repair costs at these theatres will aggregate approximately $36.1 million, of which
we have expended approximately $23.4 million through the end of fiscal 2004. The remainder is for projected costs of repairs yet to be performed. We also are seeking additional damages for lost
profits, interest and legal and other expenses incurred.

Certain
parties to the Missouri litigation have filed counterclaims against us, 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. We currently estimate that our claim against Ammon is for approximately
$6.0 million. Based on presently available information, we do not believe such matters will have a material adverse effect on our results of operations, financial condition or liquidity. During
the fifty-two weeks ended April 1, 2004 we received settlement payments of $925,000 related to two theatres from various parties in connection with this matter. On May 18,
2004, we received additional settlement payments of $2,310,020 from various parties in connection with this matter.

We
are a party to various other legal proceedings in the ordinary course of business, none of which is expected to have a material adverse effect on us.

Item 4. Submission of Matters to a Vote of Security Holders.

There has been no submission of matters to a vote of security holders during the thirteen weeks ended April 1, 2004.

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.

Our common equity consists of Common Stock and Class B Stock. Our Common Stock is traded on the American Stock Exchange under the symbol AEN. There is no
established public trading market for Class B Stock.

The
table below sets forth, for the periods indicated, the high and low closing prices of our Common Stock as reported on the American Stock Exchange composite tape.

Fiscal 2004

Fiscal 2003High

Low

High

LowFirst Quarter

$
11.44

$
9.01

$
15.80

$
13.07Second Quarter


13.85


10.00


14.20


7.40Third Quarter


15.60


13.55


9.93


6.11Fourth Quarter


16.05


13.90


9.90


7.91


Common Stock

On May 7, 2004, there were 2,572 stockholders of record of Common Stock and one stockholder of record (the 1992 Durwood, Inc. Voting Trust dated
December 12, 1992) of Class B Stock.

Our
Certificate of Incorporation provides that holders of Common Stock and Class B Stock shall receive, pro rata per share, such cash dividends as may be declared from time to
time by the Board of Directors. Under an Investment Agreement dated April 19, 2001 (the "Investment Agreement") with the initial purchasers of our Preferred Stock, we may not pay dividends on
Common Stock except with the consent of the initial purchasers for so long as they continue to beneficially own 50% of the aggregate number of shares of Preferred Stock issued pursuant to the
Investment Agreement, subject to certain limited exceptions.

We
have not declared a dividend on shares of Common Stock or Class B Stock since fiscal 1989. Any payment of cash dividends on Common Stock or Class B Stock in the future
will be at the discretion of the

16

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Board
and subject to the consent of the initial purchasers of our preferred stock and will also depend upon such factors as compliance with debt covenants, earnings levels, capital requirements, our
financial condition and other factors deemed relevant by the Board.

Issuer Purchase of Equity Securities

The following table provides repurchases of the Company's stock by month during fiscal 2004:

|Period                        |  | Total Number
of Shares
(or Units)
Purchased |        | Average Price
Paid per
Share
(or Unit) |       | Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs |   | Maximum Number (or
Approximate Dollar
Value) of Shares (or
Units) that May Yet Be
Purchased Under the
Plans or Programs |  
|----------------------------- |  | ------------------------------------------- | ------ | -------------------------------------- | ----- | ------------------------------------------------------------------------------------------- | - | ----------------------------------------------------------------------------------------------------------------------- | -
|April 4, 2003  May 1, 2003   |  |                                            |        |                                        |      |                                                                                             |  |                                                                                                                         | 
|May 2, 2003  June 5, 2003    |  | 114                                         | (a)    | $                                      | 13.64 |                                                                                             |  | (a)                                                                                                                     | 
|June 6, 2003  July 3, 2003   |  |                                            |        |                                        |      |                                                                                             |  |                                                                                                                         | 
|July 4, 2003  July 31, 2003  |  | 37,396                                      | (b)    |                                        | 10.10 |                                                                                             |  | (b)                                                                                                                     | 
|Aug. 1, 2003  Sept. 4, 2003  |  | 277                                         | (a)(b) |                                        | 6.79  |                                                                                             |  | (a)(b)                                                                                                                  | 
|Sept. 5, 2003  Oct. 2, 2003  |  | 4,709                                       | (b)    |                                        | 10.69 |                                                                                             |  | (b)                                                                                                                     | 
|Oct. 3, 2003  Oct. 30, 2003  |  |                                            |        |                                        |      |                                                                                             |  |                                                                                                                         | 
|Oct. 31, 2003  Dec. 4, 2003  |  |                                            |        |                                        |      |                                                                                             |  |                                                                                                                         | 
|Dec. 5, 2003  Jan. 1, 2004   |  |                                            |        |                                        |      |                                                                                             |  |                                                                                                                         | 
|Jan. 2, 2004  Jan. 29, 2004  |  |                                            |        |                                        |      |                                                                                             |  |                                                                                                                         | 
|Jan. 30, 2004  March 4, 2004 |  |                                            |        |                                        |      |                                                                                             |  |                                                                                                                         | 
|March 5, 2004  April 1, 2004 |  | 114                                         | (a)    |                                        |      |                                                                                             |  | (a)                                                                                                                     | 
|                              |  |                                             |        |                                        |       |                                                                                             |   |                                                                                                                         |  
|                              |  | 42,610                                      |        | $                                      | 10.13 |                                                                                             |  |                                                                                                                         | 
|                              |  |                                             |        |                                        |       |                                                                                             |   |                                                                                                                         |  

---

Item 6. Selected Financial Data.

We have restated our consolidated financial statements for foreign deferred tax assets, Swedish tax benefits recorded in loss from discontinued operations and
straight-line contingent rentals. See Note 1 to the consolidated financial statements.

17

---



The following summary of selected financial data has been revised to reflect the restatements. See Note 1 to the consolidated financial statements under Restatements, included under Part II Item 8. of this Annual Report on Form 10-K, for a complete discussion of the restatement and
the restatement adjustments for fiscal years 2003 and 2002. See note (7) below for a complete discussion of the restatement and the restatement adjustments for fiscal years 2001 and 2000.

|                                                                                            |                                                             | Years Ended(1)           |          
|------------------------------------------------------------------------------------------- | ----------------------------------------------------------- | ------------------------ | ---------
|
|Statement of Operations Data:                                                               |                                                             |                          |          
|Revenues                                                                                    |                                                             |                          |          
|                                                                                            | Admissions                                                  |                          | $        
|                                                                                            | Concessions                                                 |                          |          
|                                                                                            | Other theatre                                               |                          |          
|                                                                                            | NCN and other                                               |                          |          
|                                                                                            |                                                             |                          |          
|Total revenues                                                                              |                                                             |                          | 1,782,820
|                                                                                            |                                                             |                          |          
|Costs and Expenses                                                                          |                                                             |                          |          
|                                                                                            | Film exhibition costs                                       |                          |          
|                                                                                            | Concession costs                                            |                          |          
|                                                                                            | Theatre operating expense                                   |                          |          
|                                                                                            | Rent                                                        |                          |          
|                                                                                            | NCN and other                                               |                          |          
|                                                                                            | General and administrative:                                 |                          |          
|                                                                                            |                                                             | Stock-based compensation |          
|                                                                                            |                                                             | Other                    |          
|                                                                                            | Preopening expense                                          |                          |          
|                                                                                            | Theatre and other closure expense                           |                          |          
|                                                                                            | Restructuring charge                                        |                          |          
|                                                                                            | Depreciation and amortization                               |                          |          
|                                                                                            | Impairment of long-lived assets                             |                          |          
|                                                                                            | Disposition of assets and other gains                       |                          |          
|                                                                                            |                                                             |                          |          
|Total costs and expenses                                                                    |                                                             |                          | 1,689,900
|Other expense (income)(6)                                                                   |                                                             |                          | 13,947   
|Interest expense                                                                            |                                                             |                          | 77,717   
|Investment income                                                                           |                                                             |                          | 2,861    
|                                                                                            |                                                             |                          |          
|Earnings (loss) from continuing operations before income taxes                              |                                                             |                          | 4,117    
|Income tax provision                                                                        |                                                             |                          | 11,000   
|                                                                                            |                                                             |                          |          
|Loss from continuing operations                                                             |                                                             |                          | (6,883   
|Loss from discontinued operations, net of income tax benefit(2)                             |                                                             |                          | (3,831   
|Cumulative effect of accounting changes(3)                                                  |                                                             |                          |         
|                                                                                            |                                                             |                          |          
|Net loss                                                                                    |                                                             | $                        | (10,714  
|                                                                                            |                                                             |                          |          
|Preferred dividends                                                                         |                                                             |                          | 40,277   
|                                                                                            |                                                             |                          |          
|Net loss for shares of common stock                                                         |                                                             | $                        | (50,991  
|                                                                                            |                                                             |                          |          
|Basic and diluted loss per share of common stock:                                           |                                                             |                          |          
|                                                                                            | Loss from continuing operations                             |                          | $        
|                                                                                            | Loss from discontinued operations(2)                        |                          |          
|                                                                                            | Cumulative effect of accounting change(3)                   |                          |          
|                                                                                            |                                                             |                          |          
|Net loss per share:                                                                         |                                                             | $                        | (1.39    
|                                                                                            |                                                             |                          |          
|Pro forma amounts assuming SAB No. 101 accounting change had been in effect in fiscal 2000: |                                                             |                          |          
|                                                                                            | Loss from continuing operations                             |                          |          
|                                                                                            | Basic and diluted loss per share from continuing operations |                          |          
|Net loss for shares of common stock:                                                        |                                                             |                          |          
|                                                                                            | Basic and diluted net loss per share                        |                          |          
|Average shares outstanding:                                                                 |                                                             |                          |          
|                                                                                            | Basic and diluted                                           |                          |          

18

---



|                                                    |  | Years Ended(1) |          
|--------------------------------------------------- |  | -------------- | ---------
|
|Balance Sheet Data (at period end):                 |  |                |          
|Cash and equivalents                                |  | $              | 333,248  
|Deferred income taxes (long-term)                   |  |                | 143,944  
|Total assets                                        |  |                | 1,506,534
|Corporate borrowings                                |  |                | 686,431  
|Other long-term liabilities                         |  |                | 182,467  
|Capital and financing lease obligations             |  |                | 61,281   
|Stockholders' equity (deficit)                      |  |                | 280,604  
|Cash Flow Data:                                     |  |                |          
|Net cash provided by operating activities           |  | $              | 183,278  
|Net cash used in investing activities               |  |                | (69,378  
|Net cash provided by (used in) financing activities |  |                | (24,613  
|Other Data:                                         |  |                |          
|Capital expenditures                                |  |                | (95,011  
|Proceeds from sale/leasebacks                       |  |                | 63,911   
|Operating Data (at period end):                     |  |                |          
|Screen additions                                    |  |                | 114      
|Screen acquisitions                                 |  |                | 48       
|Screen dispositions                                 |  |                | 142      
|Average screens                                     |  |                | 3,494    
|Attendance (in thousands)                           |  |                | 186,989  
|Number of screens operated                          |  |                | 3,544    
|Number of theatres operated                         |  |                | 232      
|Screens per theatre                                 |  |                | 15.3     

---

19

---



Cumulative decrease to retained earnings at April 1, 1999

$
1,600Increase in income tax provision and net loss for the year ended March 30, 2000

$
2,400Decrease in income tax provision and net loss for the year ended March 29, 2001

$
200


Cumulative decrease in retained earnings at April 1, 1999

$
Increase in net loss for the year ended March 30, 2000

$
Increase in net loss for the year ended March 29, 2001

$
231


The restatement adjustments affecting the Statement of Operations Data for fiscal years 2001 and 2000 are
set forth in the following table (in thousands):

|                                                    |                                        | Years Ended |          
|--------------------------------------------------- | -------------------------------------- | ----------- | ---------
|
|
|Statement of Operations data:                       |                                        |             |          
|Rent                                                |                                        | $           | 228,929  
|Total costs and expenses                            |                                        |             | 1,284,610
|Loss from continuing operations before income taxes |                                        |             | (134,756 
|Income tax provision                                |                                        |             | (45,700  
|Loss from continuing operations                     |                                        |             | (89,056  
|Net loss                                            |                                        |             | (105,886 
|Net loss for common shares                          |                                        |             | (105,886 
|Basic and diluted loss per share of common stock:   |                                        |             |          
|                                                    | Loss from continuing operations        |             | $        
|                                                    | Loss from discontinued operations      |             |          
|                                                    | Cumulative effect of accounting change |             |          
|                                                    |                                        |             |          
|Net loss per share                                  |                                        | $           | (4.51    
|                                                    |                                        |             |          

The restatement adjustments affecting the Balance Sheet Data for fiscal years 2002, 2001 and 2000 are set
forth in the following table (in thousands):

|                                   |  | Years Ended |          
|---------------------------------- |  | ----------- | ---------
|
|
|Balance Sheet Data (at period end) |  |             |          
|Deferred income taxes (long-term)  |  | $           | 127,115  
|Total assets                       |  |             | 1,279,170
|Other long-term liabilities        |  |             | 120,029  
|Stockholders' equity (deficit)     |  |             | 258,356  

---

20

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Overview

We are one of the world's leading theatrical exhibition companies based on revenues. As of April 1, 2004, we operated 232 theatres with a total of 3,544
screens, with 93%, or 3,306, of our screens in North America, and 7%, or 238, of our screens in China (Hong Kong), Japan, France, Portugal, Spain and the United Kingdom.

We
are organized as a holding company. Our principal directly owned subsidiaries are American Multi-Cinema, Inc., AMC Entertainment International, Inc. ("AMCEI") and
National Cinema Network, Inc. ("NCN"). We conduct our North American theatrical exhibition business through AMC and its subsidiaries and AMCEI. We are operating theatres outside the United
States through AMCEI and its subsidiaries. We engage in advertising services through NCN.

For
financial reporting purposes we have three segments, North American theatrical exhibition, International theatrical exhibition and NCN and other.

Our
North American and International theatrical exhibition revenues are generated primarily from box office admissions and theatre concession sales. The balance of our revenues are
generated from ancillary sources, including on-screen advertising, rental of theatre auditoriums, fees and other revenues generated from the sale of gift certificates and theatre tickets
and arcade games located in theatre lobbies.

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

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

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

Fiscal
year 2003 includes 53 weeks. Fiscal years 2004 and 2002 include 52 weeks.

During
fiscal 2004, films licensed from our ten largest distributors based on revenues accounted for approximately 92% of our North American admissions revenues. Our revenues
attributable to individual distributors may vary significantly from year to year depending upon the commercial success of each distributor's motion pictures in any given year.

During
the period from 1990 to 2003, the annual number of first-run motion pictures released by distributors in the United States ranged from a low of 370 in 1995 to a high
of 490 in 1998, according to the Motion Picture Association of America. During 2003, 459 first-run motion pictures were released by distributors in the United States.

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We
continually upgrade the quality of our theatre circuit by adding new screens through new builds (including expansions) and acquisitions and by disposing of older screens through
closures and sales. We believe our introduction of the megaplex concept in 1995 has led to the current industry replacement cycle, which has accelerated the obsolescence of older, smaller theatres by
setting new standards for moviegoers. From 1995 through April 1, 2004, we added 111 theatres with 2,343 new screens, acquired 80 theatres with 786 screens and disposed of 191 theatres with
1,215 screens. As of April 1, 2004, approximately 73%, or 2,597, of our screens were located in megaplex theatres.

We
acquired Gulf States Theatres on March 15, 2002 and GC Companies, Inc. on March 29, 2002 (collectively, the "Acquisitions"), which significantly increased our
size. In the Gulf States Theatres acquisition, we acquired 5 theatres with 68 screens in the New Orleans area. In the GC Companies acquisition, we acquired 66 theatres with 621 screens throughout the
United States. Accordingly, results of operations for the fifty-two/fifty-three weeks ended April 1, 2004 and April 3, 2003, which include a full
fifty-two/fifty-three weeks of operations of the businesses we acquired, are not comparable to our results for the fifty-two weeks ended March 28, 2002. For further
information about the Acquisitions, see Note 2 to our consolidated financial statements.

CRITICAL ACCOUNTING POLICIES

The accounting policies identified below are critical to our business operations and the understanding of our results of operations. The impact of, and any
associated risks related to, these policies on our business operations are discussed throughout Management's Discussion and Analysis of Financial Condition and Results of Operations where such
policies affect our reported and expected financial results. For a detailed discussion on the application of these and other accounting policies, see Notes to the Consolidated Financial Statements
under Part II Item 8. of this Annual Report on Form 10-K. The methods, estimates and judgments we use in applying our accounting policies have a significant impact on the
results we report in our financial statements. Some of our accounting policies require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters that
are inherently uncertain. Our most critical accounting estimates include the assessment of recoverability of long-lived assets, including intangibles, which impacts impairment of
long-lived assets when we impair assets or accelerate their depreciation; recoverability of goodwill, which creates the potential for write-offs of goodwill; recognition and
measurement of current and deferred income tax assets and liabilities, which impact our tax provision; recognition and measurement of our remaining lease obligations to landlords on our closed
theatres and other vacant space, which impacts theatre and other closure expense; estimation of self-insurance reserves which impacts theatre operating and general and administrative
expenses; recognition and measurement of net periodic benefit costs for our pension and other defined benefit programs, which impacts general and administrative expense; estimation of film settlement
terms and measurement of film rental fees which impacts film exhibition costs and estimation of the fair value of assets acquired, liabilities assumed; and consideration paid for acquisitions which
impacts the measurement of assets acquired (including goodwill) and liabilities assumed in a business combination. Below, we discuss these policies further, as well as the estimates and judgments
involved.

Impairments.We review long-lived assets, including intangibles, for impairment as part of our annual budgeting
process and whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. We review internal management reports on a quarterly basis as well
as monitor current and potential future competition in the markets where we operate for indicators of triggering events or circumstances that indicate impairment of individual theatre assets. We
evaluate theatres using historical and projected data of theatre level cash flow as our primary indicator of potential impairment and consider the seasonality of our business when evaluating theatres
for impairment. Because Christmas and New Years holiday results comprise a significant portion of our 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 our impairment analysis. As a result of these analyses, if the sum of the estimated future

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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 we believe 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 we do not expect to operate the theatre to the end of its lease term. The fair value of assets is determined as either
the expected selling price less selling costs (where appropriate) or the present value of the estimated future cash flows. The fair value of furniture, fixtures and equipment has been determined using
similar asset sales and in some instances independent third party valuation studies. The discount rate used in determining the present value of the estimated future cash flows was 20% and was based on
management's expected return on assets during fiscal 2004, 2003 and 2002. 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. We have recorded impairments of long-lived assets of $16.3 million,
$19.6 million and $4.7 million during fiscal 2004, 2003 and 2002, respectively. The impairment of long-lived assets recorded in fiscal 2002 is included as a component of discontinued
operations.

Goodwill.Our recorded goodwill was $71.7 million 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 of evaluating our 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 using an enterprise valuation methodology determined by
applying multiples to cash flow estimates less net indebtedness which we believe is an appropriate method to determine fair value. There is considerable management judgment with respect to cash flow
estimates and appropriate multiples to be used in determining fair value and the market value of our common stock could be volatile.

Income taxes.In determining income for financial statement purposes, we must make certain estimates and judgments. These
estimates and judgments occur in the calculation of certain tax liabilities and in the determination of the recoverability of certain of the deferred tax assets, which arise from temporary differences
between the tax and financial statement recognition of revenue and expense as well as operating loss carryforwards. We must assess the likelihood that we will be able to recover our deferred tax
assets in each domestic and foreign tax jurisdictions in which we operate. If recovery is not more likely than not, we must record a valuation allowance for the deferred tax assets that we estimate
are more likely than not unrealizable. In 2004, we determined that full valuation allowances should have been recorded against deferred tax assets in all foreign tax jurisdictions until the related
operations became profitable. Accordingly, we restated 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. As of April 1, 2004, we had recorded approximately $162 million of deferred tax assets
(net of valuation allowances of $26.5 million) related to the estimated future tax benefits of temporary differences between the tax bases of assets and liabilities and amounts reported in the
accompanying consolidated balance sheets, as well as operating loss carryforwards. The recoverability of these deferred income tax assets is dependent upon our ability to generate future taxable
income in the relevant taxing jurisdictions. Projections of future taxable income require considerable management judgment about future attendance levels, revenues and expenses. See "Liquidity and
Capital Resources- Deferred Tax Assets" for additional information about our income taxes.

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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 our closed theatres, other vacant space and 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. We estimate theatre closure expense
based on contractual lease terms and our estimates of taxes and utilities. The discount rate we use to estimate theatre and other closure expense is based on estimates of our borrowing costs at the
time of closing. Our discount rates range from 6.6% to 21.0%. We have recorded theatre and other closure expense of $4.1 million, $5.4 million and $2.1 million in fiscal 2004,
2003 and 2002, respectively. Accretion expense for exit activities initiated after December 31, 2002 is included as a component of theatre and other closure expense.

Casualty Insurance.We are self-insured for general liability up to $400,000 per occurrence and carry a $400,000
deductible limit per occurrence for workers compensation claims. We utilize actuarial projections of our ultimate losses that we will be responsible for paying and as a result there is considerable
judgment necessary to determine our casualty insurance reserves. The actuarial method that we use 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, we had recorded casualty insurance reserves of $20.5 million and $19.8 million,
respectively. We have recorded expense related to general liability and workers compensation claims of $10.6 million, $6.8 million and $10.3 million in fiscal 2004, 2003 and 2002,
respectively.

Pension and Postretirement Assumptions.Pension and postretirement benefit obligations and the related effects on operations
are calculated using actuarial models. Two critical assumptions, discount rate and expected return on assets, are important elements of plan expense and/or liability measurement. We evaluate these
critical assumptions at least annually. Other assumptions involve demographic factors such as retirement, expected increases in compensation, mortality and turnover. These assumptions are evaluated
periodically and are updated to reflect our experience. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors.

The
discount rate enables us to state expected future cash flows at a present value on the measurement date. We have little latitude in selecting this rate, as it is required to
represent the market rate for high-quality fixed income investments. A lower discount rate increases the present value of benefit obligations and increases pension and postretirement
expense. For our principal pension plans, a 50 basis point decrease in the discount rate would increase pension expense by approximately $1 million. For our postretirement plan, a 50 basis
point decrease in the discount rate would increase postretirement expense by approximately $186,000. We reduced our discount rate from 63/4% to 61/4% for fiscal 2005 to
reflect market interest rate conditions. We have recorded expenses for our pension and postretirement plans of $6.0 million, $3.5 million and $3.0 million in fiscal 2004, 2003 and
2002, respectively. We expect that our total pension and postretirement expense will increase by approximately $1.2 million from fiscal 2004 to fiscal 2005. Our unrecognized net actuarial loss
for pension and postretirement plans was $19.1 million as of April 1, 2004.

To
determine the expected long-term rate of return on pension plan assets, we consider the current and expected asset allocations, as well as historical and expected returns
on various categories of plan assets obtained from our investment portfolio manager. A 50 basis point decrease in the expected return on assets of our qualified defined benefit pension plan would
increase pension expense on our principal plans by approximately $200,000 per year. Note 11 to the Consolidated Financial Statements under Part II Item 8. of this Annual Report on
Form 10-K includes disclosure of our pension plan and postretirement plan assumptions and information about our pension plan assets.

24

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

Licenses
that we enter into typically are based on either firm terms established prior to the opening of the picture or on a mutually agreed settlement upon the conclusion of the picture
run. Under a firm terms formula, we pay the distributor a specified percentage of box office receipts, with the percentages
declining over the term of the run. The settlement process allows for negotiation based upon how a film actually performs.

We
accrue film exhibition costs based on the applicable box office receipts and estimates of the final settlement pursuant to the film licenses entered into with our distributors.
Generally, less than one third of our quarterly film exhibition cost is estimated at period-end. The length of time until these costs are known with certainty depends on the ultimate
duration of the film play, but is typically "settled" within two to three months of a particular film's opening release. Upon settlement with our film distributors, film cost expense and the related
film cost payable are adjusted to the final film settlement. Such adjustments have been historically insignificant. However, actual film costs and film costs payable could differ materially from those
estimates. For fiscal years 2004, 2003 and 2002 there were no significant changes in our film cost estimation and settlement procedures.

As
of April 1, 2004 and April 3, 2003, we had recorded film payables of $57 million and $49 million, respectively. We have recorded film exhibition costs of
$649 million, $661 million and $486 million in fiscal 2004, 2003 and 2002, respectively.

Acquisitions.We account for our acquisitions of theatrical exhibition businesses using the purchase method. The purchase
method requires that we estimate 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. We have obtained independent third party valuation studies for certain of the assets and liabilities acquired to assist us in determining fair value. The
estimation of the fair value of the assets and liabilities acquired including deferred tax assets and liabilities related to such amounts and consideration given involves a number of judgments and
estimates that could differ materially from the actual amounts.

We
have consummated acquisitions in fiscal 2004, 2003 and 2002 as discussed in Note 2Acquisitions to our consolidated financial statements. During fiscal 2002 we
acquired the assets of Gulf States Theatres for a cash purchase price of $46 million, during fiscal 2003 we acquired GC Companies pursuant to the plan of reorganization of GC Companies which we
sponsored for a purchase price of approximately $169 million including cash payments, issuance of senior subordinated notes and the issuance of shares of our common stock. During fiscal 2004 we
acquired the assets of Megastar for a cash purchase price of $15 million.

Consultation with Securities & Exchange Commission

On March 24, 2004 we filed a registration statement on Form S-4 (Commission File No. 333-113911) with the Securities
and Exchange Commission (the "SEC"), which was amended on May 7, 2004 and incorporates by reference our Annual Report on Form 10-K for the fiscal year ended April 3,
2003 and Form 8-K filed on February 17, 2004. The SEC Staff determined to review the registration statement and our periodic reports filed with the SEC identified above. As a
result of the review of the periodic reports, the SEC Staff requested that we classify our Series A Convertible Preferred Stock outside of permanent equity into a temporary equity
classification. We are currently engaged in technical discussions with the Office of the Chief Accountant of the SEC regarding the appropriate classification of our outstanding Series A
Convertible Preferred Stock.

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In
July 2001, the SEC Staff issued an Announcement which was codified as EITF Topic No. D-98. During fiscal 2002, we adopted Topic No. D-98 Classification and Measurement of Redeemable Securities. Topic No. D-98 provides guidance about determining when an equity security
is redeemable at the option of the holder or upon the occurrence of an event that is solely within the control of the issuer. At the time of adoption of Topic No. D-98, there was no
impact to our consolidated financial position, results of operations or cash flows. Currently, we believe that Topic No. D-98 will not require our outstanding Series A
Convertible Preferred Stock to be classified outside of permanent stockholders' equity until such time, if ever, that (i) the holders of our Preferred Stock either (a) are entitled to
elect a majority of the board of directors or (b) could convert a portion of their Preferred Stock into a sufficient number of shares of common stock to gain control of the board of directors
and (ii) our optional right to redeem the Preferred Stock is unconditional. Such circumstances do not presently exist and we believe should not exist prior to 2006, if ever. This conclusion is currently under discussion
with the Staff of the SEC and is subject to change.

The
possible reclassification of our Series A Convertible Preferred Stock outside of permanent stockholders' equity would not, if made, have an impact on previously reported
earnings, current earnings or related earnings per share.

The
impact to the financial statements if this reclassification were made, is as follows:

Cumulative decrease to stockholders' equity, March 28, 2002

$
259,443,000Cumulative decrease to stockholders' equity, April 3, 2003


286,594,000Cumulative decrease to stockholders' equity, April 1, 2004


326,850,000


See note 7 to the consolidated financial statements.

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OPERATING RESULTS

|(Dollars in thousands)                            |                                   | 52 Weeks Ended
April 1, 2004 |           | 53 Weeks Ended
April 3, 2003
(restated)* |           | 52 Weeks Ended
March 28, 2002
(restated)* |          
|------------------------------------------------- | --------------------------------- | ---------------------------- | --------- | ---------------------------------------- | --------- | ----------------------------------------- | ---------
|Revenues                                          |                                   |                              |           |                                          |           |                                           |          
|North American theatrical exhibition              |                                   |                              |           |                                          |           |                                           |          
|                                                  | Admissions                        |                              | $         | 1,125,922                                |           | $                                         | 1,133,477
|                                                  | Concessions                       |                              |           | 434,024                                  |           |                                           | 448,896  
|                                                  | Other theatre                     |                              |           | 49,241                                   |           |                                           | 45,767   
|                                                  |                                   |                              |           |                                          |           |                                           |          
|                                                  |                                   |                              | 1,609,187 |                                          |           | 1,628,140                                 |          
|International theatrical exhibition               |                                   |                              |           |                                          |           |                                           |          
|                                                  | Admissions                        |                              |           | 93,471                                   |           |                                           | 78,727   
|                                                  | Concessions                       |                              |           | 22,966                                   |           |                                           | 19,682   
|                                                  | Other theatre                     |                              |           | 4,742                                    |           |                                           | 2,833    
|                                                  |                                   |                              |           |                                          |           |                                           |          
|                                                  |                                   |                              | 121,179   |                                          |           | 101,242                                   |          
|NCN and other                                     |                                   |                              | 52,454    |                                          |           | 55,693                                    |          
|                                                  |                                   |                              |           |                                          |           |                                           |          
|                                                  |                                   | Total revenues               |           | $                                        | 1,782,820 |                                           | $        
|                                                  |                                   |                              |           |                                          |           |                                           |          
|Costs and Expenses                                |                                   |                              |           |                                          |           |                                           |          
|North American theatrical exhibition              |                                   |                              |           |                                          |           |                                           |          
|                                                  | Film exhibition costs             |                              | $         | 599,746                                  |           | $                                         | 619,949  
|                                                  | Concession costs                  |                              |           | 46,191                                   |           |                                           | 49,496   
|                                                  | Theatre operating expense         |                              |           | 389,665                                  |           |                                           | 411,840  
|                                                  | Rent                              |                              |           | 277,584                                  |           |                                           | 268,695  
|                                                  | Preopening expense                |                              |           | 2,921                                    |           |                                           | 2,430    
|                                                  | Theatre and other closure expense |                              |           | 3,570                                    |           |                                           | 1,968    
|                                                  |                                   |                              |           |                                          |           |                                           |          
|                                                  |                                   |                              | 1,319,677 |                                          |           | 1,354,378                                 |          
|International theatrical exhibition               |                                   |                              |           |                                          |           |                                           |          
|                                                  | Film exhibition costs             |                              |           | 49,634                                   |           |                                           | 41,033   
|                                                  | Concession costs                  |                              |           | 5,068                                    |           |                                           | 5,416    
|                                                  | Theatre operating                 |                              |           | 29,954                                   |           |                                           | 26,765   
|                                                  | Rent                              |                              |           | 36,440                                   |           |                                           | 31,682   
|                                                  | Preopening expense                |                              |           | 937                                      |           |                                           | 797      
|                                                  | Theatre and other closure expense |                              |           |                                         |           |                                           | 3,405    
|                                                  |                                   |                              |           |                                          |           |                                           |          
|                                                  |                                   |                              | 122,033   |                                          |           | 109,098                                   |          
|NCN and other                                     |                                   |                              | 46,847    |                                          |           | 52,444                                    |          
|Theatre and other closure expense (NCN and other) |                                   |                              | 498       |                                          |           | 43                                        |          
|General and administrative expense:               |                                   |                              |           |                                          |           |                                           |          
|                                                  | Stock-based compensation          |                              |           | 8,727                                    |           |                                           | 2,011    
|                                                  | Other                             |                              |           | 53,864                                   |           |                                           | 66,093   
|Depreciation and amortization                     |                                   |                              | 124,572   |                                          |           | 126,994                                   |          
|Impairment of long-lived assets                   |                                   |                              | 16,272    |                                          |           | 19,563                                    |          
|Gain on disposition of assets                     |                                   |                              | (2,590    | )                                        |           | (1,385                                    | )        
|                                                  |                                   |                              |           |                                          |           |                                           |          
|                                                  |                                   | Total costs and expenses     |           | $                                        | 1,689,900 |                                           | $        
|                                                  |                                   |                              |           |                                          |           |                                           |          

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Years Ended April 1, 2004 and April 3, 2003

Revenues.Total revenues decreased 0.1%, or $2,255,000, during the year ended April 1, 2004 compared to the year ended
April 3, 2003.

North
American theatrical exhibition revenues decreased 1.2% from the prior year. Admissions revenues decreased 0.7% due to a 5.9% decrease in attendance partially offset by a 5.6%
increase in average ticket price. Attendance decreased primarily due to a 7.2% decrease in attendance at comparable theatres (theatres opened on or before March 29, 2002) related to overall
popularity and mix of film product and a decrease in attendance due to theatre closures, partially offset by an increase in attendance at new theatres. We closed 16 theatres with 124 screens, opened
six theatres with 102 screens and acquired three theatres with 48 screens since fiscal 2003. The increase in average ticket prices was primarily due to our practice of periodically reviewing ticket
prices and the discounts we offer and making selective adjustments based upon such factors as general inflationary trends and conditions in local markets. Concessions revenues decreased 3.3% due to
the decrease in attendance partially offset by a 2.7% increase in average concessions per patron.

International
theatrical exhibition revenues increased 19.7%. Admissions revenues increased 18.7% due to a 13.9% increase in average ticket price and a 4.2% increase in attendance.
Attendance at comparable theatres decreased 1.9%, primarily in Europe due to a decline in the popularity of local language film product. We opened one theatre with 12 screens in the United Kingdom
since fiscal 2003. Concession revenues increased 16.7% due to a 12.0% increase in concessions per patron resulting from a weaker U.S. dollar and in part from a local currency price increase and
the increase in total attendance. International revenues increased by approximately $12,100,000 due to a weaker U.S. dollar.

Revenues
from NCN and other decreased 5.8% from the prior year due to a decrease in advertising revenues resulting from a reduction in screens served by NCN. This resulted from an
initiative to improve profitability by eliminating marginally profitable contracts with certain theatre circuits.

Costs and expenses.Total costs and expenses decreased 2.3%, or $39,339,000, during the year ended April 1, 2004
compared to the year ended April 3, 2003.

North
American theatrical exhibition costs and expenses decreased 2.6% from the prior year. Film exhibition costs decreased 3.3% due to the decrease in admissions revenues and a decrease
in the percentage of admissions paid to film distributors. As a percentage of admissions revenues, film exhibition costs were 53.3% in the current year as compared with 54.7% in the prior year. Film
exhibition costs for the fifty-three weeks ended April 3, 2003 were impacted byStar Wars Episode II: Attack of the Clonesand Spider-man,films whose
audience appeal led to higher than normal film rental terms during the period. Concession costs decreased 6.7% due
to the decrease in concession revenues and a decrease in concession costs as a percentage of concessions revenues. As a percentage of concessions revenues, concession costs were 10.6% in the current
year compared with 11.0% in the prior year. As a percentage of revenues, theatre operating expense was 24.2% in the current year as compared to 25.3% in the prior year. Rent expense increased 3.3% due
primarily to the opening of theatres and screens since April 3, 2003 due primarily to the successful implementation of cost savings initiatives. During fiscal 2004, we recognized $3,570,000 of
theatre and other closure expense related primarily to a payment to a landlord to terminate a lease on a theatre closed during the current period and due to accruals for future minimum rentals on
three theatres with 20 screens closed during the current period. During fiscal 2003, we incurred $1,968,000 of theatre and other closure expense related primarily to the closure of seven theatres with
50 screens. We have currently identified 19 multiplex theatres with 162 screens that we may close over the next one to three years due to expiration of leases or early lease terminations. Theatres
closed prior to their lease expiration may require payments to the landlords to terminate the leases, which we estimate could approximate $7,730,000, in the aggregate over the next three years.

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International
theatrical exhibition costs and expenses increased 11.9%. Film exhibition costs increased 21.0% due to the increase in admissions revenues and the increase in the
percentage of admissions paid to film distributors. As a percentage of admissions revenues, film exhibition costs were 53.1% in the current period as compared with 52.1% in the prior period.
Concession costs decreased 6.4% due to improvement in purchasing terms under vendor agreements, partially offset by the increase in concession revenues. Theatre operating expense increased 11.9% and
rent expense increased 15.0%. We continually monitor the performance of our international theatres, and factors such as our ability to obtain film product, changing consumer preferences for filmed
entertainment in international markets and our ability to sublease vacant retail space could negatively impact operating results and result in future closures, sales, dispositions and theatre closure
charges prior to expiration of underlying lease agreements. International theatrical exhibition costs and expenses were negatively impacted by a weaker U.S. dollar and together with the positive
impact on revenues had the effect of reducing earnings from continuing operations by approximately $2,100,000.

Costs
and expenses from NCN and other decreased 10.7% due primarily to the reduction in overhead costs associated with the integration of NCN's administrative functions into our home
office location.



Depreciation and Amortization.Depreciation and amortization decreased 1.9%, or $2,422,000, due primarily to decreases at
theatres where certain assets have become fully depreciated partially offset by increased depreciation at new theatres.

Impairment of Long-Lived Assets.During fiscal 2004, we recognized a non-cash impairment loss of
$16,272,000 on 10 theatres with 176 screens. We recognized an impairment loss of $9,866,000 on seven U.S. theatres with 114 screens (in Texas, Maryland, California, Illinois, Wisconsin and Minnesota),
$3,525,000 on one theatre in the United Kingdom with 12 screens and $2,881,000 on two Canadian theatres with 50 screens. Our impairment loss included $16,209,000 related to property and $63,000
related to intangible assets. Included in these losses is an impairment of $3,482,000 on 3 theatres with 70 screens that were included in impairment losses recognized in previous periods. The
estimated future cash flows of these theatres, undiscounted and without interest charges, were less than the carrying value of the theatre assets. We are evaluating the future plans for certain of our
theatres, which may include selling theatres or closing theatres and terminating the leases. We have identified 19 multiplex theatres with 162 screens that we may close over the next one to three
years due to expiration of leases or early lease terminations. Prior to and including fiscal 2004, $6,302,000 of impairment charges have been taken on these theatre assets and the economic lives of
these theatre assets have been revised to reflect management's best estimate of the economic lives of the theatre assets for purposes of recording depreciation. During fiscal 2003, we recognized a
non-cash impairment loss of $19,563,000 on five theatres with 77 screens including vacant retail space adjacent to one of the theatres. We recognized an impairment loss of $5,522,000 on
one theatre in China (Hong Kong) with 11 screens, $4,998,000 on one theatre in Japan with 16 screens, $4,960,000 on one theatre in the United Kingdom with 16 screens including vacant retail space
adjacent to

29

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the
theatre, $3,195,000 on one Canadian theatre with 22 screens and $888,000 on one U.S. theatre with 12 screens. Our impairment loss included $19,402,000 of property and $161,000 of intangible
assets. The estimated future cash flows of these theatres, undiscounted and without interest charges, were less than the carrying value of the theatre assets.

Disposition of Assets and Other Gains.Disposition of assets and other gains increased from a gain of $1,385,000 during the
prior year to a gain of $2,590,000 during the current year. The current period includes a $1,298,000 gain on the disposition of three theatres and two parcels of real estate held for sale, settlements
of $925,000 received related to various fireproofing claims at two theatres (See Legal Proceedings under Part I Item 3 of this Annual Report on Form 10-K) and $367,000
related to a settlement with a construction contractor at one theatre. Prior period results include gains on the sale of certain real estate held for investment.

Other Expense.On March 25, 2004, we redeemed $200,000,000 of our 91/2% Senior Subordinated 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. On March 25, 2004, we redeemed $83,406,000 or our 91/2 Senior Subordinated 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 $3,961,000, unamortized issue costs of $1,126,000 and unamortized discount of $270,000. The losses are included within other expense in the Consolidated
Statements of Operations for the year ended April 1, 2004.

Interest Expense.Interest expense decreased 0.1%, or $83,000.

Income Tax Provision.The provision for income taxes from continuing operations was $11,000,000 in fiscal 2004 and
$10,000,000 in fiscal 2003. The effective tax rate was 267.2% for fiscal 2004 compared to (54.2)% for fiscal 2003. The difference in effective rate from the statutory rate of 35% during fiscal 2004
was primarily due to foreign deferred tax assets (primarily in Spain, the United Kingdom, France and Japan) for which we provided a $6,681,000 valuation allowance. The difference in effective rate
from the statutory rate of 35% during fiscal 2003 was primarily due to $19,250,000 of non-deductible special compensation expense and foreign deferred tax assets (primarily in Spain, the
United Kingdom, France and Japan) for which we provided a $10,300,000 valuation allowance.

Loss From Discontinued Operations, Net.On December 4, 2003 we sold one theatre in Sweden with 18 screens and incurred
a loss on sale of $5,591,000. The results of operations of the Sweden theatre have been classified as discontinued operations and information presented for all periods reflects the new classification.
See Note 3 to the Consolidated Financial Statements for the components of the loss from discontinued operations.

Net Loss for Shares of Common Stock.Net loss for shares of common stock decreased during the year ended April 1, 2004
to a loss of $50,991,000 from a loss of $56,711,000 in the prior year. Basic and diluted loss from continuing operations per share of common stock was $1.28 compared to a loss of $1.53 in the prior
period. Basic and diluted loss per share of common stock was $1.39 compared to a loss of $1.56 in the prior period. Preferred Stock dividends of 19,697 shares of Preferred Stock valued at $40,277,000
were recorded in fiscal 2004 compared to Preferred Stock dividends of 18,422 shares of Preferred Stock valued at $27,165,000 in fiscal 2003.

Years Ended April 3, 2003 and March 28, 2002

Revenues.Total revenues increased 33.4%, or $447,188,000, during the year ended April 3, 2003 compared to the year
ended March 28, 2002. Of this increase approximately $338,000,000 resulted from the Acquisitions and the opening of five new theatres and 95 screens since March 28, 2002.

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North American theatrical exhibition revenues increased 35.4% from the prior year. Admissions revenues increased 37.7% due to a 26.4% increase in attendance and a 9.0% increase in
average ticket price. Attendance increased due to the addition of 75 new theatres with 764 screens since March 28, 2002, including the Acquisitions. Attendance at comparable theatres (theatres
opened before fiscal 2002) was essentially unchanged from the prior year. The increase in average ticket prices was due to our practice of periodically reviewing ticket prices and the discounts we
offer and making selective adjustments based upon such factors as general inflationary trends and conditions in local markets. Concessions revenues increased 31.6% due to the increase in attendance
and a 4.1% increase in average concessions per patron.

International
theatrical exhibition revenues increased 8.1% from the prior year. Admissions revenues increased 5.3% due to a 4.5% increase in attendance and a 0.7% increase in average
ticket price. The increase in attendance was due to the addition of a new theatre in Spain with 20 screens since March 28, 2002. Attendance at comparable theatres decreased 7.8%, primarily at
our theatres in China (Hong Kong) and Japan due to a decline in the popularity of local language film product. Concession revenues increased 16.6% due to the increase in total attendance and a 11.6%
increase in concessions per patron. International revenues were positively impacted by a weaker U.S. dollar, although this did not contribute materially to consolidated net loss.

Revenues
from NCN and other increased 33.3% from the prior year due to an increase in advertising revenues at NCN. We believe the increase is related to conditions in the general economy
that have lead to an increase in spending by advertisers.

Costs and expenses.Total costs and expenses increased 35.2%, or $450,440,000, during the year ended April 3, 2003
compared to the year ended March 28, 2002. Of this increase, approximately $306,000,000 resulted from the Acquisitions and the opening of five new theatres and 95 screens since March 28,
2002.

North
American theatrical exhibition costs and expenses increased 34.7% from the prior year. Film exhibition costs increased 39.0% due to the increase in admissions revenues and an
increase in the percentage of admissions paid to film distributors. As a percentage of admissions revenues, film exhibition costs were 54.7% in the current year as compared with 54.2% in the prior
year. The increase in film exhibition costs as a percentage of admissions revenues was impacted primarily byStar Wars Episode II: Attack of the ClonesandSpider-man, films whose audience appeal led to higher than normal film rental terms. Concession costs increased 33.1% due to the
increase in concession revenues. As a percentage of concessions revenues, concession costs were 11.0% in the current year compared with 10.9% in the prior year. As a percentage of revenues, theatre
operating expense was 25.3% in the current year as compared to 25.6% in the prior year. Rent expense increased 28.6%
due to the Acquisitions and the opening of theatres and screens since March 28, 2002. During fiscal 2003, we recognized $1,968,000 of theatre and other closure expense related primarily to the
closure of seven theatres with 50 screens. During fiscal 2002, we incurred $2,124,000 of theatre and other closure expense related primarily to the closure of 10 theatres with 74 screens, offset by a
favorable lease renegotiation for vacant restaurant space related to a terminated joint venture and the favorable settlement of lease obligations on two closed theatres.

International
theatrical exhibition costs and expenses increased 16.8% from the prior year. Film exhibition costs increased 3.0% due to higher admission revenues. Concession costs
increased 7.8% due to the increase in concessions revenues. Theatre operating expense increased 25.5% and rent expense increased 22.7% due primarily to the addition of one new theatre in the United
Kingdom, which was opened during the fourth quarter of fiscal 2002, and one new theatre in Spain, which was opened during the third quarter of fiscal 2003. During fiscal 2003, we ceased operating six
of the existing 20 screens at our theatre in France and negotiated a lease modification with the landlord at this theatre, which is expected to reduce our rent and operating costs. The terms of the
modification included a payment to the landlord of approximately $8,000,000 and a reduction in future minimum rentals of approximately $1,200,000 annually over the remaining term of the lease
(17 years). We recorded a charge for theatre closure of $3,405,000 during fiscal 2003 related to the lease renegotiation and screen closures. To date we have incurred costs related to the
closure of six screens at one of our international theatres in France. We continually monitor

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the
performance of our international theatres and factors such as an inability to obtain film product, changing consumer preferences for filmed entertainment in international markets and an inability
to sublease vacant retail space could negatively impact operating results and result in future closures, dispositions and charges prior to expiration of underlying lease agreements. International
theatrical exhibition costs and expenses were negatively impacted by a weaker U.S. dollar, although this did not contribute materially to consolidated net loss.

Costs
and expenses from NCN and other increased 15.9% due to an increase in advertising revenues at NCN.



Depreciation and Amortization.Depreciation and amortization increased 28.2%, or $27,972,000. The increase was primarily
caused by an increase in depreciation of $18,874,000 related to the Acquisitions and new theatres that we have opened and increased amortization of intangible assets of $4,719,000 related primarily to
the Acquisitions.

Impairment of Long-Lived Assets.During fiscal 2003, we recognized a non-cash impairment loss of
$19,563,000 on five theatres with 77 screens, including vacant retail space adjacent to one of the theatres. We recognized an impairment loss of $5,522,000 on one theatre in China (Hong Kong) with 11
screens, $4,998,000 on one theatre in Japan with 16 screens, $4,960,000 on one theatre in the United Kingdom with 16 screens, including vacant retail space adjacent to the theatre, $3,195,000 on one
Canadian theatre with 22 screens and $888,000 on one U.S. theatre with 12 screens. Our impairment loss included $19,402,000 of property and $161,000 of intangible assets. The estimated future cash
flows of these theatres, undiscounted and without interest charges, were less than the carrying value of the theatre assets. Prior to and including fiscal 2003, $13,314,000 of impairment charges have
been taken on these theatre assets and the economic life of these theatre assets have been revised to reflect management's best estimate of the economic life of the theatre assets for purposes of
recording depreciation.

Disposition of Assets and Other Gains.Disposition of assets and other gains decreased from a gain of $1,821,000 during the
prior year to a gain of $1,385,000 during the current year. The current and prior year results include gains of $1,420,000 and $1,682,000, respectively, on the favorable settlements of capital lease
obligations and gains related to the sales of real estate held for investment.

Interest Expense.Interest expense increased 28.0% during the year ended April 3, 2003 compared to the prior year due
to an increase in average outstanding borrowings and interest rates. We issued $175,000,000 of 97/8% of senior subordinated notes due 2012 on January 16, 2002 and $72,880,000 of
91/2% senior subordinated notes due 2011 on March 29, 2002.

Income Tax Provision.The provision for income taxes from continuing operations was $10,000,000 in fiscal 2003 and $2,700,000
in fiscal 2002. The effective tax rate was (54.2)% for fiscal 2003 compared to (80.5)% for fiscal 2002. The difference in effective rate from the statutory rate of 35% during fiscal 2003 was primarily
due to $19,250,000 of non-deductible special compensation expense and foreign deferred tax assets (primarily in Spain, the United Kingdom, France and Japan) for which we have provided a
valuation allowance of $10,300,000, partially offset by $6,660,000 of deductible costs related to the Acquisitions. The difference in effective rate from the statutory rate of 35% during fiscal 2002
was primarily due to foreign

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deferred
tax assets (primarily in Spain, the United Kingdom, Sweden, France and Japan) for which we provided a valuation allowance of $5,653,000 and non-deductible preferred stock issuance
costs.

Loss From Discontinued Operations, Net.On December 4, 2003, we sold one theatre in Sweden with 18 screens. The
results of operations of the Sweden theatre have been classified as discontinued operations and information presented for all periods reflects the new classification. See Note 3 to our
consolidated financial statements for the fiscal year ended April 1, 2004 for the components of the loss from discontinued operations.

Net Loss for Shares of Common Stock.Net loss for shares of common stock increased during the year ended April 3, 2003
to a loss of $56,711,000 from a loss of $39,799,000 in the prior year. Basic and diluted loss per share of common stock from continuing operations was $1.53 compared to a loss of $1.50 in the prior
year. Basic and diluted loss per share of common stock was $1.56 compared to a loss of $1.68 per share of common stock in the prior year. Preferred stock dividends of 18,422 shares of preferred stock
valued at $27,165,000 were recorded in fiscal 2003 compared to preferred stock dividends of 16,406 shares of preferred stock valued at $29,421,000 in fiscal 2002.

LIQUIDITY AND CAPITAL RESOURCES

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

Cash
flows from operating activities, as reflected in the Consolidated Statements of Cash Flows, were $183,278,000, $128,747,000 and $101,091,000 in fiscal years 2004, 2003 and 2002,
respectively. The
increase in operating cash flows from the fifty-three weeks ended April 3, 2003 to the fifty-two weeks ended April 1, 2004 is primarily due to increases in earnings from
continuing operations before taxes which includes a $13,947,000 charge against earnings from continuing operations before taxes related to the $292,117,000 repurchase of notes due 2009 and 2011
included in financing activities. We had working capital as of April 1, 2004 and April 3, 2003 of $137,237,000 and $24,462,000, respectively. We entered into a new credit facility (due
in 2009) on March 26, 2004 that replaced our previous credit facility (due in 2004). We have the ability to borrow against our credit facility to meet obligations as they come due and had
approximately $163,000,000 and $263,000,000 available on our credit facility to meet these obligations as of April 1, 2004 and April 3, 2003, respectively.

We
continue to expand our North American and international theatre circuits. During fiscal 2004, we opened seven theatres with 114 screens, acquired three theatres with 48 screens and
closed 17 theatres with 142 screens resulting in a circuit total of 232 theatres with 3,544 screens as of April 1, 2004.

We
fund the costs of constructing new theatres through existing cash balances, cash generated from operations or borrowed funds, as necessary. We generally lease our theatres pursuant to
long-term non-cancelable operating leases which may require the developer, who owns the property, to reimburse us for a portion of the construction costs. We may decide to own
the real estate assets of new theatres and, following construction, sell and leaseback the real estate assets pursuant to long-term non-cancelable operating leases. During
fiscal 2004, we leased seven new theatres with 114 screens from developers, sold and leased back three theatres with 78 screens and assumed the leases of three theatres with 48 screens in connection
with an acquisition.

We
lease certain of our theatre properties from Entertainment Properties Trust. Mr. Peter C. Brown, Chairman of the Board, Chief Executive Officer and President of AMCE, served as
Chairman of the Board of Trustees of Entertainment Properties Trust until May 2003, at which time his term expired and he

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did
not stand for reelection to the Board of Trustees of Entertainment Properties Trust. Because of the various agreements between Entertainment Properties Trust and us, situations may have arisen
where we had differing interests from Entertainment Properties Trust. For information about related party transactions see Note 16 Related Party Transactions included under Item II,
Part 8 of this Annual Report on Form 10-K to the Consolidated Financial Statements included elsewhere herein.

During
fiscal 1998, we sold the real estate assets associated with 13 theatres to EPT for an aggregate purchase price of $283,800,000 (the "Sale and Lease Back Transaction"). We 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 us 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. During fiscal 2000, we sold the building and improvements associated with one of our theatres to EPT for proceeds of
$17,600,000 under terms similar to the above Sale and Leaseback Transaction. During fiscal 2002, we sold the land at this theatre to EPT for proceeds of $7,486,000 under terms similar to the above
Sale and Leaseback Transaction and at an initial lease rate of 10.75%. During fiscal 2003, we 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, we 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. We currently have 2 theatre locations that we believe could be sold and leased back for estimated proceeds of $52,000,000 should we elect to do so, and if allowed under the financial covenants
of our existing debt instruments.

Historically,
we have either paid for or leased the equipment used in a theatre. We may purchase leased equipment from lessors if prevailing market conditions are favorable. During
fiscal 2004 we purchased certain leased furniture, fixtures and equipment at five Canadian theatres for $15,812,000. During fiscal 2003, we purchased certain leased furniture, fixtures and equipment
for a total of $7,052,000. We expect to repurchase $25,292,000 of certain leased property and furniture, fixtures and equipment at two theatres during fiscal 2005 commensurate with the expiration of
the underlying property and equipment lease terms.

As
of April 1, 2004, we had construction in progress of $15,007,000. We had three theatres in the United States with a total of 44 screens under construction as of April 1,
2004. During fiscal years 2004, 2003 and 2002, we incurred cash outflows for investing activities of $69,378,000, $137,201,000 and $144,510,000, respectively. Included in cash outflows for investing
activities were capital expenditures of $95,011,000, $100,932,000 and $82,762,000 during fiscal years ended 2004, 2003 and 2002, respectively, and proceeds from sale/leasebacks of $63,911,000,
$43,665,000 and $7,486,000 during fiscal years 2004, 2003 and 2002, respectively. We expect that our gross capital expenditures in fiscal 2005 will be approximately $110,000,000 and our proceeds from
sale/leasebacks will be approximately $40,000,000.

On
March 26, 2004, we 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 our 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.

Our
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 is

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$175,000,000,
subject to covenants that limit our ability to incur debt (whether under the Credit Facility or from other sources). We currently have no outstanding loans under the Credit Facility but
have issued $12,268,000 in letters of credit, leaving borrowing capacity under the Credit Facility of $162,732,000.

The
Credit Facility includes several financial covenants. We are required to maintain (i) a maximum net indebtedness to annualized EBITDA ratio, as defined in the Credit Facility
(generally, the ratio of the principal amount of outstanding indebtedness (less cash and equivalents) as of the last day of the most recent quarter to earnings for the most recent four quarters before
interest, taxes, depreciation, amortization, any call premium (or original issue discount) expenses and other noncash charges, theatre closing or disposition costs, theatre opening costs, and gains or
losses from asset sales, and including an adjustment for any permanently closed, disposed of or acquired theatre on a pro forma basis as if such closure, disposition or acquisition occurred on the
first day of the calculation period), of 4.0 to 1, (ii) a minimum interest coverage ratio, as defined in the Credit Facility (generally, the ratio of annualized EBITDA for the most recent four
quarters to consolidated interest expense for such period) of 1.75 to 1, and (iii) a ratio of maximum net senior indebtedness to annualized EBITDA for the most recent four quarters, as defined
in the Credit Facility, of 2.75 to 1. The Credit Facility also generally imposes limitations on investments, the incurrence of additional indebtedness, creation of liens, changes of control,
transactions with affiliates, dividends, repurchase of capital stock or subordinated debt, mergers, investments, guarantees, asset sales and business activities.

The
Credit Facility allows us to incur any amount of debt that qualifies as subordinated debt thereunder, and also permits $125,000,000 of new debt plus capital lease obligations,
subject to meeting our financial covenants.

Each
of our domestic significant subsidiaries (American Multi-Cinema, Inc., AMC-GCT, Inc. and AMC Entertainment International, Inc.) has guaranteed the
Credit Facility. The Credit Facility is secured by substantially all of the tangible and intangible personal property located in the United States that we or such significant subsidiaries own, which
includes all the outstanding stock of American Multi-Cinema, Inc., AMC-GCT, Inc. and AMC Entertainment International, Inc., as well as accounts, deposit accounts,
general intangibles (including patents, trademarks and other intellectual property), commercial tort claims, goods and instruments, among other types of personal property.

Amounts
outstanding under the Credit Facility may become payable prior to the maturity date in part upon the occurrence of certain asset sales, or in whole upon the occurrence of
specified events of
default. In addition to the non-payment of amounts due to lenders or non- performance of covenants, among other matters an event of default will occur upon (i) the
failure to pay other indebtedness, or the acceleration of the maturity or redemption of other indebtedness or preferred stock, in either case exceeding $5,000,000, (ii) the occurrence of any
default which enables holders of any preferred stock to appoint additional members to the board and the occurrence of a change in control, as defined in the Credit Facility and (iii) any
default under the terms applicable to any of our leases with aggregate remaining lease payments exceeding $13,000,000 which results in the loss of use of the property subject to such lease or any
default (that is not cured or waived or if cured or waived involved the payment of an amount in excess of $13,000,000) under the terms applicable to any such leases with aggregate remaining lease
payments exceeding $50,000,000.

On
March 19, 1997, we sold $200,000,000 aggregate principal amount of our 91/2% Senior Subordinated notes due 2009 (the "2009 notes"). We used the net proceeds from
the issuance of the 2009 notes (approximately $194,000,000) to reduce borrowings under our credit facility. The 2009 notes were redeemed on March 25, 2004 for $204,750,000. A loss on redemption
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 on the Consolidated Statements of Operations.

On
January 27, 1999, we sold $225,000,000 aggregate principal amount of our 91/2% Senior Subordinated notes due 2011 (the "2011 notes"). Net proceeds from the
issuance of the 2011 notes (approximately

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$219,000,000)
were used to reduce borrowings under our credit facility. On March 29, 2002, we issued an additional $72,880,000 aggregate principal amount of 2011 notes (with a fair value of
$71,787,000) as part of our acquisition of GC Companies, Inc. The 2011 notes bear interest at the rate of 91/2% per annum, payable February 1 and August 1 of each
year. The 2011 notes are redeemable at our option, 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. The 2011 notes are unsecured and are subordinated to all our existing and
future senior indebtedness (as defined in the indenture governing the 2011 notes). On March 25, 2004, we redeemed $83,406,000 of our 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 on the Consolidated Statements of Operations.

On
January 16, 2002, we sold $175,000,000 aggregate principal amount of our 97/8% Senior Subordinated notes due 2012 (the "2012 notes"). Net proceeds from the
issuance of the 2012 notes (approximately $168,000,000) were used to reduce borrowings under our credit facility, to pursue our current business strategy, including the acquisition of GC Companies,
and for general corporate purposes. The 2012 notes bear interest at the rate of 97/8% per annum, payable February 1 and August 1 of each year. The 2012 notes are
redeemable at our option, 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. The 2012 notes are unsecured and are subordinated to all our existing and future senior indebtedness (as
defined in
the indenture governing the 2012 notes). The 2012 notes rank equally with our 2009 notes and 2011 notes.

On
February 24, 2004, we sold $300,000,000 aggregate principal amount of 8% Senior Subordinated notes due 2014 (the "2014 notes"). We used the net proceeds (approximately
$294,000,000) to redeem our notes due 2009 and a portion of our notes due 2011. The 2014 notes bear interest at the rate of 8% per annum, payable in March and September. The 2014 notes are redeemable
at our option, in whole or in part, at any time on or after March 1, 2009 at 104.000% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after
March 1, 2012, plus in each case interest accrued to the redemption date. The 2014 notes are unsecured and are subordinated to all our existing and future senior indebtedness (as defined in the
indenture governing the 2014 notes). The 2014 notes rank equally with our 2011 notes and 2012 notes.

The
indentures relating to our outstanding notes allow us to incur all permitted indebtedness (as defined therein) without restriction, which includes all amounts borrowed under our
credit facility. The indentures also allow us to incur any amount of additional debt as long as we can satisfy the coverage ratio of each indenture, both at the time of the event (under the indenture
for the 2011 notes) and after giving effect thereto on a pro forma basis (under the indenture). Under the indenture relating to the 2012 and 2014 notes, the most restrictive of the indentures, we
could borrow approximately $525.0 million as of April 1, 2004 in addition to permitted indebtedness (assuming an interest rate of 10% per annum on the additional borrowings). If we
cannot satisfy the coverage ratios of the indentures, generally we can incur, in addition to amounts borrowed under the credit facility, no more than $100.0 million of new "permitted
indebtedness" under the terms of the indenture relating to the 2011, 2012 and 2014 notes.

The
indentures relating to the notes also contain covenants limiting dividends, purchases or redemptions of stock, transactions with affiliates, and mergers and sales of assets, and
require us to make an offer to purchase the notes upon the occurrence of a change in control, as defined in the indentures. Upon a change of control (as defined in the indentures), we would be
required to make an offer to repurchase all of the outstanding 2011 notes, 2012 notes and 2014 notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the
date of repurchase. For additional information relating to covenants contained in the indentures governing the notes, see Note 6 Corporate Borrowings and Capital and Financing Lease Obligations
included under Part II, Item 8 on this Annual Report on Form 10-K to our consolidated financial statements for the fiscal year ended April 1, 2004.

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As
of April 1, 2004, we were in compliance with all financial covenants relating to the Credit Facility, the 2011 notes, the 2012 notes and the 2014 notes.

On
April 19, 2001, we issued shares of Series A convertible preferred stock and Series B exchangeable preferred stock for an aggregate purchase price of
$250,000,000. Net proceeds from the sale (including transaction expenses) of approximately $225,000,000 were used to reduce outstanding indebtedness under our credit facility. On September 13,
2001, pursuant to the certificate of designations relating to the preferred stock, all shares of Series B exchangeable preferred stock were exchanged for an equal number of shares of
Series A convertible preferred stock. Dividends on the Series A convertible preferred stock accumulate at an annual rate of 6.75% and are payable in additional shares of Series A
convertible preferred stock until April 2004. At our option, dividends on Series A convertible preferred stock may be paid in cash or additional shares of Series A convertible
preferred stock from April 2004 until April 2008. We currently anticipate that we will elect to pay cash dividends on Series A convertible preferred stock of approximately
$5,156,000 per quarter after April 19, 2004. Thereafter, dividends must be paid in cash unless prohibited by the indentures related to the 2009 notes and the 2011 notes, in which case such
dividends are payable in additional Series A convertible preferred stock. Reference is made to Note 7 to our consolidated financial statements for the fiscal year ended April 1,
2004 included elsewhere in this Annual Report on Form 10-K for information describing circumstances in which holders of Series A convertible preferred stock may be entitled
to special in-kind dividends and other circumstances under which holders of Series A convertible preferred stock may be required to receive payments-in-kind
in lieu of cash and Series B exchangeable preferred stock instead of Series A convertible preferred stock. Our investment agreement with the Apollo Purchasers generally requires that we
obtain their consent before we issue stock, pay cash dividends or incur indebtedness (other than ordinary course borrowings under our credit facility and certain other permitted debt) as long as they
continue to hold a majority of the shares of preferred stock that they purchased. In addition, the certificate of designations for our preferred stock prohibits us from incurring any debt that would
restrict our ability to pay dividends on the preferred stock in the manner required under the certificate of designations without the consent of the holder or holders of a majority of the shares of
outstanding preferred stock (currently the Apollo Purchasers).

On
December 19, 2003, we acquired certain of the operations and related assets of MegaStar Cinemas, L.L.C. for an estimated cash purchase price of $14,950,000. In connection with
the acquisition, we assumed leases on three theatres with 48 screens in Minneapolis and Atlanta. All three of the theatres feature stadium seating and have been built since 2000. As of April 1,
2004, $1,536,000 of the estimated total purchase price was unpaid.

On
March 19, 2002, we 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 Companies.

On
March 29, 2002, we acquired GC Companies pursuant to a stock purchase agreement and a plan of reorganization that was confirmed by the bankruptcy court on March 18,
2002. Our purchase price of $168,931,000 (net of $6.5 million from the sale of GC Companies' portfolio of venture capital investments on the effective date) included anticipated cash payments
of $68,472,000, the issuance of $72,880,000 aggregate principal amount of our 2011 notes 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). We used available cash for the cash payments under the plan of reorganization.

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

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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.

On
March 15, 2002, we acquired the operations and related assets of Gulf States Theatres for a cash purchase price of approximately $45,000,000. The acquisition includes 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 our position in the New Orleans market.
Operating results of the acquired theatres are included in the Consolidated Statements of Operations from March 15, 2002.

In
connection with the acquisition, we entered into leases of the real estate assets associated with the five theatres with Entertainment Properties Trust for a term of 20 years
with an initial annual base rent of $7.2 million. Of the Company's $45,000,000 purchase price, $5,800,000 was paid to Entertainment Properties Trust for specified non-real estate
assets which Entertainment Properties Trust acquired from Gulf States Theatres and resold to us at cost. We will pay $300,000 annually for five years in connection with consulting and
non-competition agreements related to the acquisition.

Minimum
annual cash payments required under existing capital and financing lease obligations, maturities of corporate borrowings, future minimum rental payments under existing operating
leases, FF&E and leasehold purchase provisions, and National Cinema Network ("NCN") exhibitor share commitments, ADA related betterments and pension funding that have initial or remaining
non-cancelable terms in excess of one year as of April 1, 2004 are as follows:

|(In thousands) |  | Minimum
Capital and
Financing
Lease
Payments |         | Principal
Amount of
Corporate
Borrowings |   | Minimum
Operating
Lease
Payments |  | FF&E and
Leasehold
Purchase
Provisions |           | NCN
Exhibitor
Share and
Other Purchase
Commitments |   | ADA
Related
Betterments |  | Pension
Funding(1) |        | Total
Commitments
|-------------- |  | -------------------------------------------- | ------- | ---------------------------------------- | - | -------------------------------- |  | -------------------------------------- | --------- | -------------------------------------------------- | - | ----------------------- |  | ------------------ | ------ | -----------------
|2005           |  | $                                            | 10,459  |                                          | $ |                                 |  | $                                      | 305,627   |                                                    | $ | 25,292                  |  | $                  | 31,921 |                  
|2006           |  |                                              | 10,279  |                                          |   |                                 |  |                                        | 303,732   |                                                    |   |                        |  |                    | 8,080  |                  
|2007           |  |                                              | 9,910   |                                          |   |                                 |  |                                        | 302,262   |                                                    |   |                        |  |                    | 1,792  |                  
|2008           |  |                                              | 9,170   |                                          |   |                                 |  |                                        | 298,658   |                                                    |   |                        |  |                    |       |                  
|2009           |  |                                              | 8,646   |                                          |   |                                 |  |                                        | 295,537   |                                                    |   |                        |  |                    |       |                  
|Thereafter     |  |                                              | 92,789  |                                          |   | 689,474                          |  |                                        | 2,588,636 |                                                    |   |                        |  |                    |       |                  
|               |  |                                              |         |                                          |   |                                  |  |                                        |           |                                                    |   |                         |  |                    |        |                  
|Total          |  | $                                            | 141,253 |                                          | $ | 689,474                          |  | $                                      | 4,094,452 |                                                    | $ | 25,292                  |  | $                  | 41,793 |                  
|               |  |                                              |         |                                          |   |                                  |  |                                        |           |                                                    |   |                         |  |                    |        |                  

---

We believe that cash generated from operations and existing cash and equivalents will be sufficient to fund operations and planned capital
expenditures currently and for at least the next 12 months and enable us to maintain compliance with covenants related to the credit facility and the notes. We are considering various options
with respect to the utilization of cash and equivalents in excess of our anticipated operating needs. Such options might include, but are not limited to, acquisitions of theatres or theatre companies,
repayment of corporate borrowings, purchase of our Common Stock or payments of dividends on our common stock.

Deferred Tax Assets

We have recorded net current and non-current deferred tax assets in the United States in accordance with Statement of Financial Accounting Standards
No. 109,Accounting for Income Taxes, of approximately $162 million as of April 1, 2004, and estimate that we must generate at
least $415 million of future taxable income in the United States to realize those deferred tax assets. To achieve this level of future taxable income, we intend to pursue our current business
strategy that includes expansion of our theatre circuit through selective new builds and acquisitions, closure of underperforming theatres and implementation of initiatives to increase revenues and
control costs. The theatrical exhibition industry is cyclical, and we believe that we are capable of generating sufficient future taxable income to utilize our deferred tax assets.

38

---



We
have made estimates of our future taxable income in the United States based on expected increases in attendance and ticket and concession prices. We had reported taxable income (loss) in the United
States of $(5.1) million in fiscal 2003 and $7.3 million in fiscal 2002. We currently estimate taxable income of $31.1 million in fiscal 2004. Based on expected future reversals
of our temporary differences and estimates of future taxable income, we believe it is more likely than not that we will have generated sufficient taxable income by the end of fiscal year 2011 to
enable us to realize our deferred tax assets recorded as of April 1, 2004. Our estimates of future taxable income require significant amounts of management judgment and estimation and actual
results could differ from estimated amounts. See "Forward-Looking Statements" for factors which may cause actual results to differ from our expectations. Accordingly, while we believe it is more
likely than not that we will realize future taxable income sufficient to realize our net current and non-current deferred tax asset of $162 million, it is possible that these
deferred taxes may not be realized in the future.

The
table below reconciles loss before income taxes and cumulative effect of an accounting change for financial statement purposes with taxable income (loss) for income tax purposes in
the United States tax jurisdiction.

|(Dollars in thousands)                                                            |  | (estimated)
52 Weeks Ended
April 1,
2004 |        | 53 Weeks Ended
April 3,
2003
(restated) |   | 52 Weeks Ended
March 28,
2002
(restated) |  
|--------------------------------------------------------------------------------- |  | ---------------------------------------- | ------ | --------------------------------------- | - | ---------------------------------------- | -
|Earnings (loss) from continuing operations before income taxes                    |  | $                                        | 4,117  |                                         | $ | (18,462                                  | )
|Reserve for future dispositions                                                   |  |                                          | 210    |                                         |   | (8,626                                   | )
|Depreciation and amortization                                                     |  |                                          | 611    |                                         |   | (882                                     | )
|Gain on disposition of assets                                                     |  |                                          | 1,443  |                                         |   | 1,443                                    |  
|Impairment of long-lived assets                                                   |  |                                          | 5,965  |                                         |   | 4,822                                    |  
|Foreign corporation activity                                                      |  |                                          | 13,193 |                                         |   | 50,521                                   |  
|Other                                                                             |  |                                          | 5,568  |                                         |   | (33,952                                  | )
|                                                                                  |  |                                          |        |                                         |   |                                          |  
|Taxable income (loss) before special deductions and net operating loss carrybacks |  | $                                        | 31,107 |                                         | $ | (5,136                                   | )
|                                                                                  |  |                                          |        |                                         |   |                                          |  

As
of April 1, 2004, we believe it is more likely than not that deferred tax assets related to certain state tax net operating loss carryforwards and certain deferred tax assets
of foreign subsidiaries in the amount of approximately $538,000 and $25.9 million, respectively, will not be realized due to uncertainties as to the timing and amounts of related future taxable
income. Accordingly, a valuation allowance of $26.5 million is recorded as of April 1, 2004. We intend to record full valuation allowances against deferred tax assets in foreign tax
jurisdictions until we have established profitability in those foreign tax jurisdictions.

Our
federal income tax loss carryforward of $97.5 million will begin expiring in 2019 and will completely expire in 2022 and will be limited to approximately $17.8 million
annually due to the sale of Preferred Stock and the acquisition of GC Companies, Inc. State net operating loss carryforwards of approximately $38.8 million may be used over various
periods ranging from 5 to 20 years. Our foreign deferred tax assets total $71.3 million, and of this total $39.7 million will begin expiring in 2009 and will completely expire in
2019. The remaining $31.6 million of foreign deferred tax assets can be carried forward indefinitely. We have recorded a full valuation allowance against deferred tax assets in foreign
jurisdictions.

39

---



We anticipate that net temporary differences should reverse and become available as tax deductions as follows:

2005

$
79,377,0002006


35,161,0002007


34,317,0002008


29,032,0002009


12,847,000Thereafter


127,266,000Total

$
318,000,000


Impact of Inflation

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

New Accounting Pronouncements

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 us in fiscal 2004. Adoption of SFAS No. 143 did not have a material
impact on our consolidated financial position, results of operations or cash flows.

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 our 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's

40

---



Liabilities and Equityproject. Adoption of SFAS No. 150 did not have a material impact on our 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 applied 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.

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

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 our 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. We have
elected to defer recognition while evaluating the new law and the pending issuance of authoritative guidance and their effect, if any, on our results of operations, financial position and financial
statement

41

---



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 us to change previously reported information. In May 2004, the FASB issued FSP No. 106-2 which provides accounting guidance for this subsidy. We sponsor a postretirement benefit
plan which may benefit from the subsidy and as a result, we are currently evaluating the impact of FSP No. 106-2, which we are required to adopt in our 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 us in the first fiscal quarter of 2005 and requires retroactive application. We are currently evaluating the effect of Issue 03-06 on our financial statements.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to various market risks including interest rate risk and foreign currency exchange rate risk. We do not hold any significant derivative financial
instruments.

Market risk on variable-rate financial instruments.We maintain a $175,000,000 credit facility, which permits
borrowings at interest rates based on either the bank's base rate or LIBOR. Increases in market interest rates would cause interest expense to increase and earnings before income taxes to decrease.
The change in interest expense and earnings before income taxes would be dependent upon the weighted average outstanding borrowings during the reporting period following an increase in market interest
rates. Because we had no borrowings on our credit facility as of April 1, 2004, a 100 basis point increase in market interest rates would have no effect on annual interest expense or earnings
before income taxes.

Market risk on fixed-rate financial instruments.Included in long-term debt are $214,474,000 of
91/2% Senior Subordinated Notes due 2011, $175,000,000 of 97/8% Senior Subordinated Notes due 2012, and $300,000,000 of 8% Senior Subordinated Notes due 2014. Increases
in market interest rates would generally cause a decrease in the fair value of the notes due 2011, 2012 and 2014 and a decrease in market interest rates would generally cause an increase in fair value
of the Notes due 2011, 2012 and 2014.

Foreign currency exchange rates.We currently operate theatres in China (Hong Kong), Japan, France, Portugal, Spain, the
United Kingdom and Canada. As a result of these operations, we have assets, liabilities, revenues and expenses denominated in foreign currencies. The strengthening of the U.S. dollar against the
respective currencies causes a decrease in the carrying values of assets, liabilities, revenues and expenses denominated in such foreign currencies and the weakening of the U.S. dollar against the
respective currencies causes an increase in the carrying values of these items. The increases and decreases in assets, liabilities, revenues and expenses are included in accumulated other
comprehensive income. Changes in foreign currency exchange rates also impact the comparability of earnings in these countries on a year-to-year basis. As the U.S. dollar
strengthens, comparative translated earnings decrease, and as the U.S. dollar weakens comparative translated earnings from foreign operations increase. Although we do not currently hedge against
foreign currency exchange rate risk, we do not intend to repatriate funds from the operations of our international theatres but instead intend to use them to fund current and future operations. A 10%
fluctuation in the value of the U.S. dollar against all foreign currencies of countries where we currently operate theatres would either increase or decrease loss before income taxes and accumulated
other comprehensive loss by approximately $3.1 million and $17.8 million, respectively.

42

---



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

43

---



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

44

---



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.

45

---



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.

46

---



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.

47

---



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

48

---



|                                                                       | 
|---------------------------------------------------------------------- | 
|
|
|
|
|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                                                 | 
|                                                                       | 

49

---



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


50

---



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


51

---



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.

52

---



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

53

---



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

54

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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

55

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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,

56

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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.

57

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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.

58

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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.

59

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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

60

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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.

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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

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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

63

---



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
)


64

---



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.

65

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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


66

---



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

67

---



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.

68

---





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

69

---



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

70

---



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

71

---



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:



Consultation with Securities & Exchange Commission

On March 24, 2004 the Company filed a registration statement on Form S-4 (Commission File No. 333-113911) with the
Securities and Exchange Commission (the "SEC"), which was amended on May 7, 2004 and incorporates by reference the Company's Annual Report on Form 10-K for the fiscal year
ended April 3, 2003 and Form 8-K filed on February 17, 2004. The SEC Staff determined to review the registration statement and the Company's periodic reports filed
with the SEC identified above. As a result of the review of the periodic reports, the SEC Staff requested that the Company classify its Series A Convertible Preferred Stock outside of permanent
equity into a temporary equity classification. The Company is currently engaged in technical discussions with the Office of the Chief Accountant of the SEC regarding the appropriate classification of
its outstanding Series A Convertible Preferred Stock.

72

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In
July 2001, the SEC Staff issued an Announcement which was codified as EITF Topic No. D-98. During fiscal 2002, the Company adopted Topic
No. D-98Classification and Measurement of Redeemable Securities. Topic No. D-98 provides guidance about
determining when an equity security is redeemable at the option of the holder or upon the occurrence of an event that is solely within the control of the issuer. At the time of adoption of Topic
No. D-98, there was no impact to the Company's consolidated financial position, results of operations or cash flows. Currently, the Company believes that Topic
No. D-98 will not require its outstanding Series A Convertible Preferred Stock to be classified outside of permanent stockholders' equity until such time, if ever, that
(i) the holders of its Preferred Stock either (a) are entitled to elect a majority of the board of directors or (b) could convert a portion of their Preferred Stock into a
sufficient number of shares of common stock to gain control of the board of directors and (ii) the Company's optional right to redeem the Preferred Stock is unconditional. Such circumstances do
not presently exist and the Company believes should not exist prior to 2006, if ever.This conclusion is currently under discussion with the Staff of the SEC and is subject to
change.

The
possible reclassification of the Company's Series A Convertible Preferred Stock outside of permanent stockholders' equity would not, if made, have an impact on previously
reported earnings, current earnings or related earnings per share.

The
impact to the financial statements if this reclassification were made, is as follows:

Cumulative decrease to stockholders' equity, March 28, 2002

$
259,443,000Cumulative decrease to stockholders' equity, April 3, 2003


286,594,000Cumulative decrease to stockholders' equity, April 1, 2004


326,850,000


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 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

73

---



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 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.

74

---



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                
|                 |  |                           |  |                          

75

---



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.

76

---



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
%


77

---



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.

78

---



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.

79

---



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
%


80

---



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


81

---



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.

82

---



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

83

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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

84

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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

85

---



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.

86

---



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         |        
|                                                               |                                                 |                          |         |                 |        |                 |        

87

---



|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
|                                                                  |  |      |         |      |   |        

88

---



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.

89

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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.

90

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page has been left blank intentionally.)

91

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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                                      | 
|                                                               | 

---

92

---



|                                                               |  
|-------------------------------------------------------------- | -
|
|
|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                                      | $
|                                                               |  

93

---



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                                    | 
|                                                             | 

---

94

---



|                                                             | 
|------------------------------------------------------------ | 
|
|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                                    | 
|                                                             | 

95

---



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                                      | 
|                                                               | 

---

96

---



|                                                               |  
|-------------------------------------------------------------- | -
|
|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                                      | $
|                                                               |  

97

---





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 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. 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.



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.

98

---



PART III

Item 10. Directors and Executive Officers of the Registrant.

Information concerning the Company's Directors and Executive Officers is incorporated herein by reference to "Nominees for Directors", "Executive Officers",
"Audit Committee Members" and "Section 16(a) Beneficial Ownership Reporting Compliance" in the Proxy Statement relating to the 2004 Annual Meeting of Stockholders scheduled to be held on
September 16, 2004 (the "Proxy Statement"), which is incorporated by reference into this Form 10-K and is expected to be filed before July 30, 2004. With the exception
of this foregoing information and other information specifically incorporated by reference into this Form 10-K, the Proxy Statement is not being filed as a part hereof.

The
Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer or persons performing similar
functions, a copy of which is filed with this report as an exhibit.

Item 11. Executive Compensation.

Information concerning executive compensation matters is incorporated herein by reference to "Compensation of Management", "Option Grants", "Option Exercises and
Holdings", "Defined Benefit Retirement and Supplemental Executive Retirement Plans", "Long-Term Incentive Plan", "Compensation of Directors", "Employment Contracts, Termination of Employment and
Change in Control
Arrangements" and "Compensation Committee Interlocks and Insider Participation" in the Proxy Statement; provided, however, that the "Report of the Compensation Committee on Executive Compensation",
and "Stock Performance Graph" are not incorporated by reference herein.

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

Information concerning equity compensation plans and the voting securities beneficially owned by each Director of the Company, by all Executive Officers and
Directors of the Company as a group and by each stockholder known by the Company to be the beneficial owner of more than 5% of the outstanding voting securities is incorporated herein by reference to
"Equity Compensation Plan Information", "Security Ownership of Beneficial Owners", and "Beneficial Ownership by Directors and Officers" in the Proxy Statement.

Item 13. Certain Relationships and Related Transactions.

Information concerning relationships and related transactions is incorporated herein by reference to "Certain Relationships and Related Transactions" in the Proxy
Statement.

Item 14. Principal Accountant Fees and Services.

Information concerning principal accountant fees and services is incorporated herein by reference to "Audit and Certain Other Fees Paid to Accountants" in the
Proxy Statement.

99

---



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

44Consolidated Statements of OperationsFiscal years (52/53 weeks) ended April 1, 2004, April 3, 2003 and March 28, 2002

45Consolidated Balance SheetsApril 1, 2004 and April 3, 2003

46Consolidated Statements of Cash FlowsFiscal years (52/53 weeks) ended April 1, 2004, April 3, 2003 and March 28, 2002

47Consolidated Statements of Stockholders' Equity (Deficit)Fiscal years (52/53 weeks) ended April 1, 2004, April 3, 2003 and March 28, 2002

48Notes to Consolidated Financial StatementsFiscal years (52/53 weeks) ended April 1, 2004, April 3, 2003 and March 28, 2002

50Statements of Operations By Quarter (Unaudited)Fiscal years (52/53 weeks) ended April 1, 2004 and April 3, 2003

92Reconciliation of Summary Quarterly Data (unaudited) as previously reported in Form 10-Q as restated in Form 10-K for fiscal 2004

94Reconciliation of Summary Quarterly Data (unaudited) as previously reported in Form 10-Q as restated in Form 10-K for fiscal 2003

96


(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.

100

---





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:                 

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

|/s/PETER C. BROWNPeter C. Brown             |  | Chairman of the Board, Chief Executive Officer and President |  | 
|------------------------------------------- |  | ------------------------------------------------------------ |  | 
|/s/CHARLES J. EGAN, JR.Charles J. Egan, Jr. |  | Director                                                     |  | 
|/s/PAUL E. VARDEMANPaul E. Vardeman         |  | Director                                                     |  | 
|/s/LEON D. BLACKLeon D. Black               |  | Director                                                     |  | 
|/s/MARC J. ROWANMarc J. Rowan               |  | Director                                                     |  | 
|/s/LAURENCE M. BERGLaurence M. Berg         |  | Director                                                     |  | 
|/s/CHARLES S. SOSLANDCharles S. Sosland     |  | Director                                                     |  | 
|/s/MICHAEL N. GARINMichael N. Garin         |  | Director                                                     |  | 
|/s/CRAIG R. RAMSEYCraig R. Ramsey           |  | Executive Vice President and Chief Financial Officer         |  | 
|/s/KEVIN M. CONNORKevin M. Connor           |  | Senior Vice President, General Counsel and Secretary         |  | 
|/s/CHRIS A. COXChris A. Cox                 |  | Vice President and Chief Accounting Officer                  |  | 

101

---



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).             
|               |  |                                                                                                                                                                                                                                                                                                                                                                                               

102

---



|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).                                
|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).                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|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).
|          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

103

---



|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).                                                                                                                                                                                                                                                                                                                                                                                                       
|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).                                                                                                                                                                                                                                                                          
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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|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).                                                                                          
|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).                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                               

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|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).                                              
|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).    
|        |  |                                                                                                                                                                                                                                                                                           

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|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.
|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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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|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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