<PAGE> 1
                        AMC ENTERTAINMENT INC. 
                         1997 ANNUAL REPORT  

                               [PHOTO]

                                   Where boundaries are erased, vision grows... 
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AMC ENTERTAINMENT INC.

CORPORATE PROFILE 

AMC Entertainment Inc. is an entertainment company principally involved in
motion picture exhibition in the U.S. through its largest operating subsidiary,
American Multi-Cinema, Inc. The company is also involved in exhibition in select
international markets.

As of April 3, 1997, the company owned or operated 228 theatres with 1,957
screens in 23 states, the District of Columbia, Japan and Portugal.

*     90 percent of AMC's screens have the #1 or #2 market
      share in their markets, in terms of box office gross. 

*     73 percent of AMC screens are located in the top 20 U.S.
      markets. 

*     AMC's average screen count per theatre is 8.6 compared 
      to the industry average of 5.2. 

*     Almost 30 percent of AMC's screens are in theatres 
      with 14 or more screens. 

AMC common stock trades on the American and Pacific Stock Exchanges under the 
symbol AEN. The preferred stock is traded on the American Stock Exchange under 
the symbol AEN Pr. The company is headquartered in Kansas City, Missouri. 

ABOUT THE COVER 

[PHOTO] 

AMC reaches beyond traditional boundaries and standard approaches to broaden 
vision, excite imagination and provide a total entertainment experience. 

TABLE OF CONTENTS 

Financial and Operating Highlights            1 
Questions and Answers                         4
Beyond Boundaries                             6
Innovation                                    8
Expansion                                    14
AMC Theatre Locations                        18
Financial Information                        20
Investor Information                         64
Corporate Officers and Directors             65

                              
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FINANCIAL AND OPERATING HIGHLIGHTS 

<TABLE> 

<CAPTION> 
(In thousands, except number            April 3,          March 28,         March 30,         March 31,          April 1,
   of theatres and screens)             1997<F1>          1996<F1>          1995<F1>          1994<F1>           1993<F1>  
------------------------------------------------------------------------------------------------------------------------- 
<S>                                     <C>               <C>               <C>               <C>               <C> 
Total revenues                          $749,597          $655,972          $563,344          $586,300          $403,775 
EBITDA<F2>                              $112,948          $112,555          $ 88,942          $ 98,784          $ 57,345 
Earnings before income taxes<F3>        $ 31,895          $ 46,671          $ 24,978          $ 27,412          $ 13,146
Number of patrons<F4>                    122,252           114,506           103,148           107,710            99,957
Number of theatres operated<F4>              228               226               232               236               243
Number of screens operated<F4>             1,957             1,719             1,630             1,603             1,617
Screens per theatre<F4>                      8.6               7.6               7.0               6.8               6.7

<CAPTION> 
Total Revenues              EBITDA<F2>                  Earnings
in millions                 in millions                 Before Income Taxes<F3>  
     in millions      
<S>                         <S>                         <S>
[GRAPH]                     [GRAPH]                     [GRAPH]

<FN>
<F1> Fiscal year ending April 3, 1997 consists of 53 weeks. All other fiscal
     years have 52 weeks.       
<F2> Represents operating income plus depreciation and amortization plus       
     estimated loss on future disposition of assets.       
<F3> Before extraordinary item.      
<F4> Includes managed and owned theatres.      
</TABLE>
                              
      AMC ENTERTAINMENT INC.
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FROM THE CHAIRMAN 

To Our Shareholders

The company achieved
the highest revenues and
cash flow in its history 
while opening a record 
314 screens in 17 loca-
tions, including two
international theatres. 

Fiscal 1997 proved to be a significant year for AMC. The company achieved the 
highest revenues and cash flow in its history while opening a record 314 
screens in 17 locations, including two international theatres. Thanks to the 
strength of our new megaplexes, we are now firmly positioned as a leading 
exhibitor in the United States with a growing international presence.

Financial Highlights 
 
      Total revenues increased 14.3 percent to a record $749.6 million from 
$656.0 million last year. Earnings before interest, taxes, depreciation and
amortization (EBITDA) increased to a record $112.9 million. 

      On a per share basis, earnings before extraordinary item, after
deducting preferred dividends, were $0.74 in fiscal 1997, compared to $1.21 in
fiscal 1996. After extraordinary item and preferred dividends, net earnings  
per share were $0.74, compared to net earnings of $0.06 per share last year.
         
   Our earnings this fiscal year were impacted by three factors. First, 
during the first nine months of the fiscal year, product from the company's 
key suppliers failed to deliver the box office results achieved in the prior 
year. Second, the company experienced expected start-up costs associated with 
the opening of 314 new AMC screens, including 268 megaplex screens. Third,  
general and administrative expenses increased, as anticipated, partially due 
to the company's strategic growth initiative in the United States and 
internationally. Looking ahead, we are encouraged by the potential of 
fiscal 1998, both in terms of the number of new AMC megaplexes coming on line 
and favorable product forecasts from our key film suppliers. 

Industry Highlights 

   The continued success of the AMC megaplex concept has inspired an   
industry-wide movement to build larger theatres. Additionally, the supply of   
film product remains strong in response to the increasing worldwide demand for 
filmed entertainment. The recent success of the re-release of the Star Wars   
Trilogy underscores the importance of the theatrical window in creating a  
film's value and the brand awareness necessary for its success in ancillary   
markets.       
         
Growth Plan       
         
   Our growth plan -- to build megaplexes in major U.S. markets and select  
international markets -- is on target. The success of the AMC megaplexes that we
have opened validates our  
         
         
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  SHAREHOLDERS' REPORT  
         
direction and strategy. As we continue to increase the number of megaplexes in 
our circuit, we increase our ability to deliver the finest moviegoing  
experience possible and attract more customers in more markets worldwide. 
         
   Included in our fiscal 1997 theatre openings was the record-breaking AMC 
Ontario Mills 30 in Ontario, California, the largest theatre in the world in   
terms of screen count. In addition, we opened two international theatres, the  
AMC Canal City 13 in Fukuoka, Japan, and the AMC Arrabida       
20 in Porto, Portugal. Both of these theatres are the largest and among the 
most luxurious theatres in their countries.         
         
The Strength Of Our People 
         
   This year we further strengthened our executive management team by  
expanding the leadership roles of Peter C. Brown and Philip M. Singleton.   
Peter Brown was elevated to president of AMC Entertainment Inc. In addition to
his duties as AMCE president, Peter will continue to act as chief financial   
officer of the company and all subsidiaries. Phil Singleton was promoted to 
president of American Multi-Cinema, Inc., the theatrical exhibition arm and  
largest operating subsidiary. Both Peter and Phil will continue to report   
directly to me.      
         
   The strength of any company rests in the talent and dedication of its  
people. Our growth would not be possible without the support of the entire AMC
family, which now numbers more than 10,000 associates worldwide. I am   
confident in the strong leadership and immense talent of our worldwide team.   
Together, we create the finest moviegoing experience available anywhere in the
world.      
         
   AMC is well-positioned for continued growth and success. Our constant 
focus on the customer inspires us to challenge traditional approaches and to   
develop new industry standards. Where boundaries are erased, vision grows. We
remain committed to changing the way the world sees movies(TM).      
         
         
Stanley H. Durwood   
Chairman of the Board and  
Chief Executive Officer    
         
         
[PHOTO]        
         
Stanley H. Durwood   
         
Our constant focus   
on the customer inspires   
us to challenge      
traditional approaches     
and to develop new            
industry standards.           
                              
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FINANCIAL AND OPERATING       
                              
Q+A                           
                              
            PETER C. BROWN       President and Chief Financial Officer,        
                                 AMC Entertainment Inc.                        
                              
            PHILIP M. SINGLETON  President and Chief Operating Officer,        
                                 American Multi-Cinema, Inc.                   
                              
QUESTION:   WHAT DISTINGUISHES AMC FROM COMPETING THEATRE CIRCUITS?            
                              
Brown:      Since 1991, we have executed a series of financial    
            transactions that have led us to become one of the most solidly
            capitalized companies in our industry. This sound financial base
            allows us to continue to invest confidently in what we feel will
            drive our valuation in the future, the AMC megaplex theatre. 
                              
Singleton:  Innovation is fundamental to the AMC culture and has  always been
            our mainstay competitive advantage. For more than three decades we
            have sustained that advantage by constantly responding to the    
            customer and continually developing new concepts that enhance the
            AMC moviegoing experience.                        
                              
QUESTION:   WHAT INDICATORS DO YOU HAVE THAT AMC'S GROWTH PLAN IS ON      
            TRACK?         
                              
Singleton:  Our latest innovation, the AMC megaplex, has become the industry
            benchmark. Other circuits are following our lead. Most          
            importantly, our customers have overwhelmingly embraced our new
            concept, and our new megaplexes are performing very well.     
            Virtually every megaplex that we have opened has become one of the
            industry's most successful in terms of attendance and film
            revenue.  
                              
Brown:      We look at several key measures to evaluate the success of our
            megaplexes, the four most significant of which are attendance per
            screen, total revenues per patron, theatre-level cash flow before
            rent margin, and return on assets. Our megaplexes have demonstrated
            superior results in every one of these key measures.     
                              
                              
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       QUESTIONS AND ANSWERS  
                              
                              
QUESTION:   COULD YOU COMMENT ON THE RESULTS OF AMC'S GROWTH PLAN?  
                              
Brown:      This year we achieved our goal of adding 314 screens in 17
            locations, including two international theatres in Japan and
            Portugal. Additionally, at the end of the fiscal year, we had 
            another 558 screens in 25 locations under construction, indicating
            that we are well on our way toward our fiscal 1998 goal.   
                              
QUESTION:   WHAT IMPACT IS AMC'S EXPANSION HAVING ON THE FILM   
            INDUSTRY?       
                              
Singleton:  As we open more high-performance megaplexes, the more attractive
            AMC becomes to film studios. Our goal is to have the screen   
            capacity or "shelf space" to play all available film product.  
            Studios need a strong theatrical opening of their films in an
            often-crowded marketplace to create the value or word-of-mouth 
            demand for their film product. Consequently, studios are       
            increasingly attracted to our growing portfolio of AMC megaplexes.
                              
QUESTION:   WHAT ARE SOME OF YOUR CRITERIA FOR SELECTING FUTURE         
            MEGAPLEX LOCATIONS?                                 
                              
Singleton:  We look for quality sites in densely populated urban markets.
            These sites should be sufficiently large to allow us to build a 
            theatre with 20 to 30 screens, which would enable us to play 
            nearly all available film product. We prefer to build our   
            megaplexes in an atmosphere of entertainment-oriented retail where
            our customers can benefit from the synergy of shopping, dining and
            other leisure activities.       
                              
QUESTION:   IS AMC CONCERNED ABOUT A POTENTIAL FOR OVERSCREENING?   
                              
Brown:      AMC's growth strategy emphasizes quality over quantity. We believe
            that this type of approach will govern development activity. As we
            add new megaplexes, we are taking older-generation theatres off 
            line, resulting in a smaller aggregate theatre count.  
                              
QUESTION:   HOW DOES AMC PLAN TO INCREASE ATTENDANCE?     
                              
Singleton:  New AMC megaplexes generate higher attendance and revenues per 
            screen than many of our traditional multiplexes. We are growing
            attendance by changing our circuit portfolio to a megaplex 
            profile, as well as by providing an outstanding AMC moviegoing
            experience for our patrons.             
                              
QUESTION:   WHAT MEASURES WERE TAKEN THIS YEAR TO INCREASE THE  
            COMPANY'S VALUE?  
                             
Brown:      We continued to invest in our next-generation theatre, the AMC
            megaplex, both in the United States and internationally. This 
            investment should enhance our position in the industry, increasing
            our market share and long-term value.        
                              
                              
[PHOTO]                       
                              
Peter C. Brown (L)            
Philip M. Singleton (R)       
                              
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INNOVATION                    
                              
BEYOND                        
  BOUNDARIES                  
                              
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                    EXPANSION 
                              
AMC is changing the way the world sees movies(TM) by reaching
beyond traditional boundaries and standard approaches to
create not only a superior moviegoing experience, but a
total entertainment experience.    
    
   Where boundaries are erased, vision grows...    
    
   AMC ENTERTAINMENT INC.  
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INNOVATION 
   
   
OUR MEGAPLEX THEATRES  
ARE SETTING THE INDUSTRY  
STANDARD FOR INNOVATION   
   
[PHOTO]    
   
The AMC Ontario Mills 30 theatre, the world's largest theatre by screen count. 
   
   
Even before you arrive at an AMC megaplex, the AMC entertainment experience  
begins. Music fills the parking lot, and at many locations, sidewalk  
entertainment, such as clowns and jugglers, delights patrons of all ages. If 
you have not taken advantage of AMC's TeleTicket(TM) sales system, an abundance
of cashier stations expedites ticket purchases. Inside the theatre, personal 
touches are everywhere. From efficiently designed concession areas with  
delicious movie fare, to flowers and lotion in the ladies' room, AMC's   
commitment to customer enjoyment and comfort sets the tone. Inside the   
auditoriums, stadium seating guarantees that all seats are the "best in the  
house" by providing an unobstructed view of the screen. AMC's exclusive  
LoveSeat(TM)-style seating -- plush, cushioned, high-backed seats with   
double-wide, retractable cupholder armrests -- turns comfortable into cozy.  
AMC totally immerses you in movie magic with its exclusive High Impact Theatre 
System(TM) with wall-to-wall compound-curved Torus(TM) screens that offer 
maximum brilliance and clarity. Sony Dynamic Digital Sound(TM) surrounds you 
with an extraordinary audio environment. So sit back, settle in and enjoy the 
ultimate AMC entertainment experience.     
   
   
   
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   INNOVATION  
   
Innovation, the foundation of the AMC culture, has enabled AMC to maintain its 
competitive advantage for more than five decades. Today, AMC is clearly  
positioned at the forefront of the industry with its newest innovation, the  
megaplex. 

  The record-breaking opening of the AMC Grand 24 in Dallas, Texas, in May   
1995 launched the successful beginning of the AMC megaplex era. Now, 366  
megaplex screens later, the company is rapidly becoming a circuit of  
megaplexes, theatres with 14 or more screens with predominately stadium-style 
seating, providing the finest moviegoing experience available.    
   
   As of the end of the fiscal year, almost 30 percent of AMC's screens were in
theatres with 14 or more screens. AMC's average screen count per theatre was 
8.6 compared to the industry average of 5.2 screens.<F*>  
   
   The AMC megaplex has become the customers' theatre of choice, as demonstrated
by outstanding attendance levels and increased revenues. New AMC megaplexes  
are consistently among the top one percent of the highest-grossing theatres in
the industry.  
    
[FN]  
<F*>Source: National Association of Theatre Owners  
  
"When we go to the movies, we expect the best seat in the house. I enjoy AMC's 
LoveSeat(TM)-style seating because I can relax comfortably and watch the film 
without distraction."   
  
John Justice 
Customer  
AMC West Oaks 14 
Orlando, Florida 
  
[PHOTO]  
  
AMC's exclusive LoveSeat(TM) 
stadium-style seats are plush and    
high-backed with double-wide,   
cushioned and retractable   
cupholder armrests that lift so     
moviegoers can "cozy up."   
    
        
        
AMC Milestones      
        
        
1963       
Builds world's first   
multi-screen theatre   
in a mall.       
        
        
1966       
Introduces automated   
projection booths.     
        
        
1969       
Opens world's first    
six-screen theatre in     
Omaha, Nebraska.          
                                
                                
1979                            
Establishes industry's          
first management                
training academy.               
                                
                                
1981                            
Introduces cupholder            
armrests.                       
                                
                                
1982                            
Begins installation of          
computerized box offices.       
                                
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INNOVATION                      
                                
"AMC's megaplexes are           
growing the moviegoing          
audience. With their many       
amenities, such as stadium      
seating, these theatres         
showcase our films in the       
best possible environment,      
resulting in higher atten-      
dance and grosses."             
                                
Jeff Blake                      
President                       
Sony Distribution               
                                
[PHOTO]                         
                                
The foyer of the AMC Arrabida   
20 in Porto, Portugal, features a          
dramatic starlit scene.         
                                
AMC's stadium-style seating     
ensures that every moviegoer has       
an unobstructed view of the screen.             
                                
[PHOTO]       
        
For the fiscal year, on an annual attendance-per-screen basis, AMC megaplexes  
performed 96 percent higher than the industry average<F*> and 38 percent higher
than traditional AMC multiplexes (theatres generally without stadium-style  
seating and having less than 14 screens). AMC megaplexes also generated 10  
percent more revenue per patron than AMC multiplexes. Their margins, as     
measured by operating-cash-flow-before-rent, were 12.5 percent higher than  
traditional AMC multiplexes, further demonstrating their operational     
efficiency.      
        
Along with ticket sales, concession revenues are an important source of income
for AMC. For the fiscal year, concession sales increased 14.5 percent over the
prior year, and AMC megaplexes generated 13.5 percent more concession revenue
per patron than traditional AMC multiplexes.        
        
[FN]       
<F*>Source: National Association of Theatre Owners        
        
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             INNOVATION   
                                
AMC theatres continue to offer customers a broad selection of quality    
brand-name products. In addition to traditional movie fare, AMC continues to   
introduce new menu items such as frozen carbonated beverages, bottled water    
and fruit drinks, bulk candy and special variety packs for children.     
        
This year, AMC introduced an innovative concession design at many of its new   
megaplexes. The pass-through concession design increases efficiency and     
customer convenience by separating preparation and delivery, ensuring faster   
transaction times and service, and providing for maximum freshness.      
        
AMC enhances the overall moviegoing experience through a number of value-added 
national and local marketing programs. These programs have increased     
attendance, strengthened brand loyalty and increased revenues. Many of these   
AMC marketing programs have been recognized for their ingenuity and      
excellence. In fact, for the third consecutive year, AMC was honored with the  
industry's most coveted marketing and customer service awards at      
the 1997 National Association of Theatre Owners (NATO) ShoWest(R) convention   
held in Las Vegas. AMC theatre managers were recognized with The Hollywood  
Reporter T.E.A.M. (Theatre Excellence and Marketing) award, the NATO customer  
service award and the Eastman Kodak(R) marketing award.         
        
"AMC's culture encourages    
innovative customer service  
ideas that will continually  
improve the AMC experience.  
We're trained to focus on    
our customers, anticipate    
their needs and provide them 
with the finest entertainment   
experience possible."     
                             
John Greiner                    
Managing Director,              
AMC Burbank 28                  
Burbank, California             
Winner of the 1997 ShoWest(R)   
Customer Service Award          
                                
[PHOTO]                         
                                
The AMC pass-through concession   
design separates preparation and   
delivery, ensuring  faster transaction               
times and service, and providing for             
maximum freshness.              
                                
                                
AMC Milestones cont.            
                                
1985                            
Opens its first overseas        
theatre in England.             
                                
                                
1987                            
Opens world's first             
14-screen theatre in            
Century City, California.       
                                
                                
1989                            
Develops proprietary High       
Impact Theatre System           
(HITS(TM)) for maximum          
sound reproduction.             
                                
                                
1990                            
Establishes MovieWatcher(R)     
program, the first wide-scale   
program to reward frequent      
moviegoers.                     
                                
                                
1990                            
Pioneers an ATM-style           
ticketing system, allowing      
customers to use                
credit cards.                   
                                
                                
1991                            
Introduces unique               
"Silence is Golden(R)"          
program, encouraging            
patron courtesy.                
                                
                                
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INNOVATION                      
                                
[PHOTO]                         
                                
A conceptual drawing of the     
innovative AMC Maihama Station 
16 in the world-class urban resort               
district of Maihama, Japan, next to                     
Tokyo Disneyland(R) theme park.
                                
                                
   The company's premier marketing program, the AMC MovieWatcher(R) club,   
rewards frequent moviegoing and continues to be the only one of its kind in the
industry. This year, the club achieved a significant membership milestone of   
one million avid AMC moviegoers. The MovieWatcher(R) club enhances    
AMC brand loyalty and provides AMC with an extensive lifestyle and demographic 
database for research, analysis and direct marketing programs.     
        
   AMC continued to enhance national marketing programs by developing    
high-profile, third-party affiliations to cross-promote and drive incremental  
attendance. These affiliations include The Coca-Cola Company, Planet Hollywood 
International, Inc., Burger King Corporation and The Walt Disney World(R)   
Resort, as well as all major film studios. AMC also has established numerous   
major league sports tie-ins, including promotions with the National Football   
League(R) organization and the Super Bowl(R) game.        
                          
                                
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                   INNOVATION   
                                
   AMC continually strives to be a responsible corporate citizen and a good    
neighbor in the communities it serves. AMC's "Read for the Stars(R)" program   
encourages children to read during the summer. This year, AMC worked with the  
U.S. Department of Education's "Read Write Now" program to promote tutorial    
reading programs during the summer.              
        
   New AMC theatres open with a series of special fundraising events and    
benefits, usually tied in with film premieres that demonstrate a long-term  
commitment to serving the community. Nonprofit organizations such as Big    
Brothers/Big Sisters, as well as Variety Club and numerous other charities,    
have been the beneficiaries of such events.            
        
   AMC is already at work on the next evolution of moviegoing. Programmable    
lobbies offering interactive experiences, trams to and from parking lots,   
improved comfort amenities and newer and faster ways to serve customers are    
already in design for AMC's next generation of world-class theatres.     
        
        
[PHOTO]       
                       
AMC's 42nd Street 25 theatre in     
New York City's renowned Times 
Square will offer spectacular views
and film imaging innovations.   
                                
                                
AMC Milestones cont.            
                                
                                
1991                            
Introduces TeleTicket(TM)       
system, allowing patrons        
to purchase tickets in          
advance by telephone.           
                                
                                
1992                            
Installs the largest Torus(TM)  
compound-curved screen          
in North America.               
                                
                                
1994                            
Announces plans to install      
Sony Dynamic Digital            
Sound(TM) (SDDS(TM)) in         
all AMC auditoriums.            
                                
                                
1995                            
Opens the AMC Grand 24          
in Dallas, Texas, launching     
the era of the AMC megaplex.    
                                
                                
1996                            
Begins exporting its            
new-generation theatre          
concept to the Pacific Rim.     
                                
                                
1996                            
Opens world's largest           
theatre by screen count,        
the AMC Ontario Mills 30        
in Ontario, California.         
                                
                                
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EXPANSION                       
                                
                          OUR EXPANSION BRINGS    
                           MORE MOVIES TO MORE   
                            PEOPLE WORLDWIDE                             
                                
                                
Since its opening in December 1996, the AMC Arrabida 20 in Porto, Portugal, is 
that country's highest-grossing theatre.            
        
        
AMC's growth plan is on target. As of April 3, 1997, AMC had 1,957 screens in  
228 theatres around the world. Of the 314 new screens the company added last   
year, 308 were in new locations and 6 were the expansion of an existing     
theatre. The company has another 558 screens in construction and expects to    
open approximately 700 screens by the end of fiscal 1998. As planned, AMC is   
replacing some older existing theatres with new-generation megaplexes.   
        
   AMC's focus is on quality rather than quantity. The company continues to    
target sites in densely populated urban markets that can support a 20- to   
30-screen theatre, which will dominate its market and generate higher returns. 
                          
                                
                                
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                   EXPANSION    
                                
   The company also targets locations near entertainment-oriented retail.   
Whether the theatre is the centerpiece of a mega-mall, such as the AMC Ontario 
Mills 30, or a free-standing theatre like the AMC Pleasure Island 10 (expanding
to a 24-screen complex in fiscal 1998) at The Walt Disney World(R) Resort and  
adjacent to the Pleasure Island attraction, the combination of the AMC   
entertainment experience with shopping, dining and other leisure activities    
creates an extended entertainment event.            
        
   Among AMC's fiscal 1997 highlights was the opening of the largest theatre in
the world, the AMC Ontario Mills 30, near Los Angeles, which set a record for  
the highest opening weekend film gross in the history of the company. The AMC  
Norwalk 20, also in Los Angeles, opened last May and is consistently among  
the industry's top 10 highest-grossing theatres. Another new megaplex, the AMC 
Ahwatukee 24 in Phoenix, is the highest-grossing theatre in Arizona and among  
the top one percent of the industry's highest-grossing theatres. The AMC    
Lennox 24 in Columbus, Ohio, was among the top 10 theatres in the industry for 
each of the Star Wars Trilogy films.             
        
   AMC's fiscal 1998 domestic expansion plans include the AMC Studio 30 in  
Houston, the largest of six 30-screen theatres that AMC plans to open during   
the year. Earlier this year, AMC announced that the company had signed a lease 
for a 25-screen theatre, the AMC 42nd Street 25, located in New York City's    
renowned Times Square.    
        
        
"As one of the key     
anchors of many of our    
Mills developments, AMC   
generates a huge attendance     
base, which has helped          
attract other entertain-        
ment-related businesses.        
AMC, like the Mills             
Corporation, is a quality,      
customer-oriented organi-       
zation. They have top-notch     
people who know how to          
build and operate the kind      
of theatres that keep           
customers coming back           
again and again."               
                                
Laurence Siegel                 
Chairman and                    
Chief Executive Officer         
The Mills Corporation           
Shopping Center Developer       
                                
[PHOTO]                         
                                
The AMC Ahwatukee 24 in         
Phoenix is the highest-grossing
theatre in Arizona.             
                                
                                
Fiscal 1997 Openings            
                                
AMC Canal City 13               
Fukuoka, Japan                  
April 20                        
                                
AMC Carolina Pavilion 22        
Charlotte                       
May 10                          
                                
AMC Norwalk 20                  
Los Angeles                     
May 10                          
                                
AMC Merchants Crossing 16       
Fort Myers                      
May 17                          
                                
AMC Deerbrook 24                
Houston                         
May 24                          
                                
AMC Palace 9                    
Fort Worth                      
May 24                          
                                
AMC Arrowhead 14                
Phoenix                         
August 2                        
                                
AMC Celebration 2               
Orlando                         
October 25                      
                                
AMC Tallahassee 20              
Tallahassee                     
November 15                     
                                
AMC Ahwatukee 24                
Phoenix                         
December 13                     
                                
AMC North DeKalb 16             
Atlanta                         
December 13                     
                                
AMC Ontario Mills 30            
Los Angeles                     
December 13                     
                                
AMC Lennox 24                   
Columbus                        
December 18                     
                                
AMC Arrabida 20                 
Porto, Portugal                 
December 20                     
                                
AMC Marina Pacifica 12          
(6-screen expansion)            
Long Beach                      
January 10                      
                                
AMC West Oaks 14                
Orlando                         
March 21                        
                                
AMC Indian River 24             
Vero Beach                      
March 28                        
                                
AMC West Olive 16               
St. Louis                       
April 3                         
                                
                                
       AMC ENTERTAINMENT INC.   
     ------------------------   
                          15    
                                
                                
<PAGE>
<PAGE> 18                       
                                
EXPANSION                       
                                
                                
Scheduled Fiscal 1998           
Openings                        
                                
                                
First Quarter                   
                                
AMC Fullerton 20                
(10-screen expansion)           
Los Angeles                     
                                
AMC Huebner Oaks 24             
San Antonio                     
                                
AMC Puente Hills 20             
Los Angeles                     
                                
AMC Studio 30                   
Houston                         
                                
Second Quarter                  
                                
AMC BarryWoods 24               
Kansas City                     
                                
AMC Mercado 20                  
San Jose                        
                                
AMC Oak View 24                 
Omaha                           
                                
AMC Orange Park 24              
Jacksonville                    
                                
AMC Pleasure Island 24          
(14-screen expansion)           
Orlando                         
                                
AMC Rolling Hills 20            
(14-screen expansion)           
Los Angeles                     
                                
AMC Saratoga 14                 
San Jose                        
                                
Third Quarter                   
                                
AMC Arizona Center 24           
Phoenix                         
                                
AMC Covina 30                   
Los Angeles                     
                                
[PHOTO]                         
                                
   The AMC Canal City 13 in Fukuoka, Japan, has captured more than 50 percent of
the market since its opening in April 1996.         
        
        
   In April 1996, AMC began exporting its new-generation theatre concept with  
the opening of the AMC Canal City 13 theatre in Fukuoka, Japan. Since its   
opening, the theatre has captured more than 50 percent of the market. Overall  
moviegoing in Fukuoka has increased approximately 30 percent since the theatre 
opened.       
        
   In December, the company opened the AMC Arrabida 20 in Porto, Portugal. The 
theatre is already the highest-grossing theatre in that country.      
        
   AMC's global expansion plans include the Pacific Rim, western Europe and    
Canada. In addition to sites in Japan, Hong Kong, Spain and Portugal, the   
company also is monitoring sites in South Korea, China, Taiwan, Italy, France, 
Germany and the United Kingdom. These countries are greatly underscreened yet  
are active consumers of filmed entertainment. The continued increase in     
international box-office revenues combined with the AMC megaplex concept    
creates a tremendous growth opportunity in the international marketplace.   
                       
AMC ENTERTAINMENT INC.          
------------------------        
16                              
                                
                                
                                
<PAGE>
<PAGE> 19                       
                                
                  EXPANSION     
                                
                                
   Construction for the AMC Festival Walk 11 in Hong Kong will begin this summer
with completion scheduled for spring 1998. The theatre, part of the renowned   
Festival Walk development, will have direct access to rail and subway    
transportation systems, making it easily accessible from as far away as     
mainland China.     
        
   AMC will soon begin construction of the AMC Maihama Station 16 in the    
world-class urban resort district of Maihama, Japan and next to Tokyo    
Disneyland(R) theme park. The theatre is scheduled for completion in fall 1998 
and will be the largest in Japan in terms of screen count and square footage.  
           
   The company also announced plans to build three 24-screen theatres in Spain,
which include two in Barcelona and one in the city of Palma on the island of
Mallorca. The AMC Terrassa 24, north of Barcelona, will be AMC's next  
international theatre, scheduled to open in early 1998.                      
                                
   The appeal of AMC's entertainment experience is universal. With each new
megaplex opening, AMC is further establishing itself as the world's preeminent 
motion picture exhibitor and is changing the way the world sees movies(TM).    
                                
                                
                                
"As a teenager I remember       
going to the AMC                
Northtown Mall 6 theatre        
in Dallas. That was 25 years    
ago, but I remember it being    
the newest and best thing       
going. Today, I go to the       
AMC Deerbrook 24 in             
Houston and take my own         
family. AMC continues to        
offer the best moviegoing       
experience available."          
                                
Mary Lou Sinclair               
Customer                        
AMC Deerbrook 24                
Houston, Texas                  
                                
                                
                                
AMC has more than a third       
of the screens in the Houston   
market, including the AMC       
Deerbrook 24 theatre.           
                                
[PHOTO]                         
                                
Scheduled Fiscal 1998           
Openings                        
                                
                                
Third Quarter cont.             
                                
AMC First Colony 24             
Houston                         
                                
AMC Grapevine 30                
Dallas                          
                                
AMC Gulf Pointe 30              
Houston                         
                                
AMC Highlands Ranch 24          
Denver                          
                                
AMC Midlands 30                 
Chicago                         
                                
AMC Olathe 30                   
Kansas City                     
                                
AMC Southlake Pavilion 24       
Atlanta                         
                                
AMC Southroads 20               
Tulsa                           
                                
AMC Town Center 20              
Kansas City                     
                                
AMC Westminster                 
Promenade 24                    
Denver                          
                                
                                
Fourth Quarter                  
                                
AMC Aventura 24                 
Miami                           
                                
AMC Cantera 30                  
Chicago                         
                                
AMC Esplanade 14                
Phoenix                         
                                
AMC Hampton                     
Town Center 24                  
Norfolk                         
                                
AMC Livonia 20                  
Detroit                         
                                
AMC Mesquite 30                 
Dallas                          
                                
       AMC ENTERTAINMENT INC.   
     ------------------------   
                          17    
                                
                                
<PAGE>
<PAGE> 20                       
                                
AMC THEATRE LOCATIONS<FDAG>     
                                
Arizona                         
Phoenix                         
Ahwatukee 24                    
Arizona Center 24<F*>           
Arrowhead 14                    
Bell Plaza 8                    
Esplanade 14<F*>                
Fiesta Village 6                
Gateway Village 10              
Laguna Village 10               
Lakes 6                         
Metro Village 6                 
Sunvalley Plaza 10              
Three Fountains 4               
Town & Country 6                
Tucson                          
El Con 6                        
Valencia 4                      
California                      
Bakersfield                     
Stockdale 6                     
Los Angeles                     
Alondra 6                       
Burbank 14                      
Century City 14                 
Chino Town Square 10           
Commercenter 6                  
Covina 30<F*>                   
Fine Arts 1                     
Fullerton 10 (20<F**>)          
Hermosa Beach 6                 
Main Place 6                    
Marina Pacifica 12              
Media Center 6                  
Media Center 8                  
Montebello 10                   
Old Pasadena 8                  
Pine Square 16                  
Promenade 16                    
Puente East 4                   
Puente Hills 20<F*>             
Puente Plaza 10                 
Rolling Hills 6 (20<F**>)       
Santa Monica 7                  
Victor Valley 10                
Norwalk 20                      
Ontario Mills 30                
San Diego                       
La Jolla 12                     
Mission Valley 20               
Santee Village 8                
Wiegand Plaza 8                 
San Francisco                   
Kabuki 8                        
Vallejo Plaza 6                 
San Jose                        
Mercado 20<F*>                  
Milpitas 10                     
Oakridge 6                      
Saratoga 14<F*>                 
Sunnyvale 6                     
Town & Country 1                
                                
                                
Colorado                        
Colorado Springs                
Tiffany Square 6                
Denver                          
Buckingham 6                    
Colorado Plaza 6                
Highlands Ranch 24<F*>          
Seven Hills 10                  
Southbridge Plaza 8             
Tiffany Plaza 6                 
Tivoli 12                       
Westminster 5                   
Westminster 6                   
Westminster Promenade 24<F*>    
Delaware                        
Philadelphia Area               
Cinema Center 3                 
Concord 2                       
District of Columbia            
Washington, D.C.                
Courthouse Plaza 8              
Potomac Mills 15                
Skyline Center 12               
Union Station 9                 
Florida                         
Gainesville                     
Oaks 6                          
Oaks West 4                     
Jacksonville                    
Orange Park 24<F*>              
Regency 6                       
Regency Mall 8                  
Miami                           
Aventura 24<F*>                 
Cocowalk 16                     
Coral Ridge 10                  
Fashion Island 16               
Kendall Town & Country 10       
Mall of the Americas 14         
Ocean Walk 10                   
Omni 4                          
Omni 6                          
Ridge Plaza 8                   
Sheridan 12                     
South Dade 8                    
Orlando/Daytona                 
Celebration 2                   
Fashion Village 8               
Interstate 6                    
Lakes Square 12                 
Merritt 6                       
Merritt Square 7/12             
Pleasure Island 10 (24<F**>)    
Volusia Square 8                
West Oaks 14                    
Fort Myers                      
Merchants Crossing 16           
Tallahassee                     
Tallahassee 20                  
Tampa/St. Petersburg            
Clearwater 5                    
Countryside 6                   
Crossroads Center 8             
                                
Horizon Park 4                  
Merchants Walk 10               
Old Hyde Park 7                 
Regency 20                      
Sarasota 6                      
Sarasota Exp 7/12               
Seminole 8                      
Tri-City Plaza 8                
Twin Bays 4                     
Tyrone Square 6                 
Varsity 6                       
West Palm Beach                 
Cross County 8                  
Indian River 24                 
Mizner Park 8                   
Georgia                         
Atlanta                         
Buckhead Backlot 6<F*>          
Cobb Place 8                    
Colonial 18                     
Galleria 8                      
Mansell 14                      
North DeKalb 16                 
Northlake Festival 8            
Phipps Plaza 14                 
Southlake Pavilion 24<F*>       
Illinois                        
Chicago                         
Cantera 30<F*>                  
Midlands 30<F*>                 
Kansas                          
Kansas City                     
Oak Park 6                      
Olathe 30<F*>                   
Town Center 20<F*>              
Louisiana                       
New Orleans                     
Galleria 8                      
Shreveport                      
Bossier 6                       
St. Vincents 6                  
Maryland                        
Washington, D.C. Area           
Academy 6                       
Academy 8                       
Carrollton 6                    
City Place 10                   
Country Club Mall 6             
Rivertowne 12                   
Massachusetts                   
Springfield                     
Hampshire 6                     
Mountain Farms 4                
Michigan                        
Detroit                         
Abbey 8                         
Americana West 6                
Bel-Air Center 10               
Eastland 2                      
Eastland Mall 5                 
Hampton 4                       
Laurel Park 10                  
Livonia 20<F*>                  
Maple 3                         
Old Orchard 3                   
Southfield City 12              
Southland 4                     
Sterling Center 10              
Towne 4                         
Wonderland 6                    
Woods Complex 6                 
Lansing                         
Elmwood Plaza 8                 
Meridian 1/4                    
Meridian 5/8                    
Meridian Mall 6                 
Missouri                        
Kansas City                     
Bannister Square 6              
BarryWoods 24<F*>               
Crown Center 6                  
Independence 20                 
Metro North Plaza 6             
Summit 4                        
Ward Parkway 22                 
St. Louis                       
Crestwood Plaza 10              
Esquire 7                       
Galleria 6                      
Northwest Square 10             
Regency 8                       
Village 6                       
West Olive 16                   
Nebraska                        
Omaha                           
Oak View 24<F*>                 
Westroads 2                     
Westroads 6                     
New Jersey                      
Metro New York                  
Headquarters Plaza 10           
Rockaway 6                      
Rockaway 7/12                   
Philadelphia Area               
Deptford 8                      
Marlton 8                       
Millside 4                      
Quakerbridge 4                  
Vineland 4                      
New York                        
Buffalo                         
Como 8                          
Maple Ridge 8                   
North Carolina                  
Charlotte                       
Carolina Pavilion 22            
Ohio                            
Columbus                        
Dublin Village 18               
Eastland Centre 8               
Eastland Plaza 6                
Lennox 24                       
Westerville 6                   
Oklahoma                        
Oklahoma City                   
Memorial Square 8               
Northwest 8                     
Robinson Crossing 6             
                                
AMC ENTERTAINMENT INC.          
------------------------        
18                              
                                
                                
                                
<PAGE>
<PAGE> 21                       
   AMC theatre locations<FDAG>  
                                
Tulsa                           
Southroads 20<F*>               
Pennsylvania                    
Harrisburg                      
Colonial Commons 9              
Hampden Center 8                
Wonderland 4                    
Philadelphia                    
25th Street 4                   
309 Cinema 9                    
Andorra 8                       
Anthony Wayne 2                 
Granite Run Mall 8              
Marple 10                       
Olde City 2                     
Orleans 8                       
Painters Crossing 9             
Quakertown 6                    
Tilghman Square 8               
Woodhaven 10                    
Texas                           
Dallas/Fort Worth               
Central Park 7                  
Forum 6                         
Glen Lakes 8                    
Grand 24                        
Grapevine 30<F*>                
Green Oaks 8                    
Highland Park 4                 
Hulen 10                        
Irving 8                        
Mesquite 30<F*>                 
Palace 9                        
Prestonwood 5                   
Sundance 11                     
Towne Crossing 8                
Houston                         
Almeda Square 5                 
Commerce Park 8                 
Deerbrook 8                     
Deerbrook 24                    
Festival 6                      
First Colony 24<F*>             
Greens Crossing 6               
Gulf Pointe 30<F*>              
Meyer Park 16                   
Northoaks 6                     
Studio 30<F*>                   
Town & Country 10               
Westchase 5                     
Willowbrook 10                  
San Antonio                     
Huebner Oaks 24<F*>             
Rivercenter 9                   
Virginia                        
Norfolk/Portsmouth/             
Newport News                    
Circle 4                        
Coliseum 4                      
Hampton Town Center 24<F*>      
Lynnhaven 8                     
Newmarket 4                     
Patrick Henry 7                 
Washington                      
Seattle/Tacoma                  
Center Plaza 6                  
Narrows Plaza 8                 
Seatac 6                        
Japan                           
Fukuoka                         
Canal City 13                   
Portugal                        
Porto                           
Arrabida 20                     
                                
[FN]                            
<FDAG> As of 5/1/97             
  <F*> FY 1998 Opening          
 <F**> FY 1998 Expansion        
                                
           AMC MARKETS SERVED   
                                
                      UNITED STATES
                                              
                                
JAPAN              PORTUGAL     
                                
       AMC ENTERTAINMENT INC.   
     ------------------------   
                          19    
                                
                                
<PAGE>
<PAGE> 22                       
                                
SELECTED FINANCIAL DATA         
                                
<TABLE>                         
<CAPTION>                       
                                                          April 3,     March 28,    March 30,      March 31,    April 1,            
(Dollars in thousands, except per share data)           1997<F1><F2>  1996<F1><F2> 1995<F1><F2>  1994<F1><F2>   1993<F2>            
------------------------------------------------------------------------------------------------------------------------            
<S>                                                      <C>            <C>          <C>          <C>           <C>                 
Statement of Operations Data:                                                     
   Total revenues                                        $ 749,597      $655,972     $563,344     $ 586,300     $403,775            
   Total cost of operations                                580,002       491,358      432,763       446,957      308,848            
   General and administrative                               56,647        52,059       41,639        40,559       37,582            
   Depreciation and amortization                            59,803        43,886       37,913        38,048       28,175            
   Estimated loss on future disposition of assets                -             -            -             -        2,500            
                                                         ---------------------------------------------------------------            
   Operating income                                         53,145        68,669       51,029        60,736       26,670            
   Interest expense                                         22,022        28,828       35,908        36,375       31,401            
   Investment income                                           856         7,052       10,013         1,156        8,239            
   Minority interest                                             -             -            -         1,599            -            
   Gain (loss) on disposition of assets                        (84)         (222)        (156)          296        9,638            
                                                         ---------------------------------------------------------------            
   Earnings before income taxes                                                   
      and extraordinary item                                31,895        46,671       24,978        27,412       13,146            
   Income tax provision                                     12,900        19,300       (9,000)       12,100        5,400            
                                                         ---------------------------------------------------------------            
   Earnings before extraordinary item                       18,995        27,371       33,978        15,312        7,746            
   Extraordinary item                                            -       (19,350)           -             -       (6,483)           
                                                         ---------------------------------------------------------------            
   Net earnings                                          $  18,995      $  8,021     $ 33,978     $  15,312     $  1,263            
                                                         ===============================================================            
   Preferred dividends                                       5,907         7,000        7,000           538          256            
                                                         ---------------------------------------------------------------            
   Net earnings for common shares                        $  13,088      $  1,021     $ 26,978     $  14,774     $  1,007            
                                                         ===============================================================            
   Earnings per share before extraordinary item:                                                                                    
     Primary                                             $     .74      $   1.21     $   1.63     $     .89     $    .46            
     Fully diluted                                       $     .73      $   1.20     $   1.45     $     .89     $    .46            
   Earnings per share:                                                                                                              
     Primary                                             $     .74      $    .06<F4> $   1.63     $     .89     $    .06<F3>        
     Fully diluted                                       $     .73      $    .06<F4> $   1.45     $     .89     $    .06<F3>        
   Common dividends per share                            $       -      $      -     $      -     $       -     $   1.14            
   Weighted average number of shares outstanding:                                                                                   
     Primary                                                17,726        16,795       16,593        16,521       16,217            
     Fully diluted                                          17,940        17,031       23,509        16,550       16,217            
Balance Sheet Data:                                                                                                                 
   Cash, equivalents and investments                     $  24,715      $ 10,795     $140,377     $ 151,469     $ 50,106            
   Total assets                                            718,213       483,458      522,154       501,276      374,102            
   Total debt (including capital lease obligations)        373,724       188,172      267,504       268,188      255,302            
   Stockholders' equity                                    170,012       158,918      157,388       130,404       18,171            
Other Financial Data:                                                                                                               
   EBITDA<F5>                                            $ 112,948      $112,555     $ 88,942     $  98,784     $ 57,345            
   Cash flows provided by operating activities             134,074        96,847       44,366        63,680       29,062            
   Cash flows provided by (used in) investing activities  (283,917)      (66,848)       3,664      (111,505)       4,594            
   Cash flows provided by (used in) financing activities   163,982       (90,437)      (9,116)       56,147      (21,022)           
   Capital expenditures                                    253,380       120,796       56,403        10,651        8,786            
                                
<FN>                            
<F1> Fiscal 1997, 1996, 1995 and 1994 include the effects from the acquisition
    
     of Exhibition Enterprises Partnership on May 28, 1993.                       
<F2> Fiscal 1997 consists of 53 weeks. All other fiscal years have 52 weeks.      
<F3> Fiscal 1993 includes a $6,483 extraordinary loss equal to $.40 per common    
     share.                     
<F4> Fiscal 1996 includes a $19,350 extraordinary loss equal to $1.15 per         
     common share.              
<F5> Represents operating income plus depreciation and amortization plus          
     estimated loss on future disposition of assets. EBITDA is a financial        
     measure commonly used in the Company's industry and should not be            
     construed as an alternative to operating income (as determined in            
     accordance with GAAP). EBITDA as determined by the Company, may not be       
     comparable to EBITDA as reported by other companies. In addition, EBITDA     
     is not intended to represent cash flow and does not represent the measure    
     of cash available for discretionary uses. EBITDA is a non-GAAP measure,      
     but has been used by lenders and stockholders as additional information      
     for estimating the Company's value and evaluating its ability to service     
     debt.                      
</TABLE>                        
                                
AMC ENTERTAINMENT INC.          
------------------------        
20                              
                                
                                
                                
<PAGE>
<PAGE> 23                       
                                
                      MANAGEMENT'S DISCUSSION AND ANALYSIS OF   
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS   
                                
OPERATING RESULTS               
                                
As a result of the commencement of international operations during fiscal  
1997, the Company is disaggregating its domestic and international exhibition  
operations and the Company's on-screen advertising and other business in order 
to provide more information as to the Company's revenues, cost of operations,
depreciation and amortization, and general and administrative expenses as set
forth in the table below for the fifty-three and fifty-two week periods ended
April 3, 1997 and March 28, 1996.          
        
        
<TABLE>       
<CAPTION>        
                                                                  53 Weeks Ended     52 Weeks Ended                                 
                                                                  --------------------------------------------------                
                                                                      April 3,          March 28,                                   
(Dollars in thousands)                                                  1997              1996              % Change                
--------------------------------------------------------------------------------------------------------------------                
<S>                                                                   <C>               <C>                   <C>                   
Revenues                                                                                                                            
   Domestic                                                                                                                         
     Admissions                                                       $479,629          $431,361              11.2%                 
     Concessions                                                       222,945           196,645              13.4                  
     Other                                                              15,763            15,096               4.4                  
                                                                      ----------------------------------------------                
                                                                       718,337           643,102              11.7                  
   International                                                                                                                    
     Admissions                                                         13,322                 -                 -                  
     Concessions                                                         2,222                 -                 -                  
     Other                                                                  49                 -                 -                  
                                                                      ----------------------------------------------                
                                                                        15,593                 -                 -                  
   On-screen advertising and other                                      15,667            12,870              21.7                  
                                                                      ----------------------------------------------                
     Total revenues                                                   $749,597          $655,972              14.3%                 
                                                                      ==============================================                
Cost of Operations                                                                                                                  
   Domestic                                                                                                                         
     Film rentals                                                     $239,480          $215,099              11.3%                 
     Concession costs                                                   36,045            30,417              18.5                  
     Rent                                                               75,116            64,813              15.9                  
     Other                                                             198,555           172,087              15.4                  
                                                                      ----------------------------------------------                
                                                                       549,196           482,416              13.8                  
   International                                                                                                                    
     Film rentals                                                        7,719                 -                 -                  
     Concession costs                                                      703                 -                 -                  
     Rent                                                                4,945                 -                 -                  
     Other                                                               5,377                 -                 -                  
                                                                      ----------------------------------------------                
                                                                        18,744                 -                 -                  
   On-screen advertising and other                                      12,062             8,942              34.9                  
                                                                      ----------------------------------------------                
     Total cost of operations                                         $580,002          $491,358              18.0%                 
                                                                      ==============================================                
</TABLE>                        
    AMC ENTERTAINMENT INC.   
  ------------------------   
                    21 
        
        
<PAGE>
<PAGE> 24        
        
MANAGEMENT'S DISCUSSION AND ANALYSIS OF       
FINANCIAL CONDITION AND RESULTS OF OPERATIONS   
        
<TABLE>       
<CAPTION>              
                                                                  53 Weeks Ended    52 Weeks Ended                                  
                                                                  ------------------------------------------------                  
                                                                      April 3,         March 28,                                    
(Dollars in thousands)                                                  1997             1996             % Change                  
------------------------------------------------------------------------------------------------------------------                  
<S>                                                                    <C>              <C>                 <C>                     
General and Administrative                                                                                                          
   Domestic and corporate                                              $45,558          $44,200              3.1%                   
   International                                                         6,864            4,550             50.9                    
   On-screen advertising and other                                       4,225            3,309             27.7                    
                                                                       -------------------------------------------                  
     Total general and administrative                                  $56,647          $52,059              8.8%                   
                                                                       ===========================================                  
Depreciation and Amortization                                                                                                       
   Domestic and corporate                                              $56,623          $42,550             33.1%                   
   International                                                         1,436                -                -                    
   On-screen advertising and other                                       1,744            1,336             30.5                    
                                                                       -------------------------------------------                  
     Total depreciation and amortization                               $59,803          $43,886             36.3%                   
                                                                       ===========================================                  
</TABLE>                        
           
YEARS (53/52 WEEKS) ENDED APRIL 3, 1997 AND MARCH 28, 1996      
        
Revenues. Total revenues increased 14.3%, or $93,625,000, during the year (53  
weeks) ended April 3, 1997 compared to the year (52 weeks) ended March 28, 1996.
        
Total domestic revenues increased 11.7%, or $75,235,000, from the prior year.  
Admissions revenues increased 11.2%, or $48,268,000, due to a 6.4% increase in 
attendance, which contributed $27,658,000 of the increase, and a 4.7% increase 
in average ticket prices, which contributed $20,610,000 of the increase. The   
increase in attendance was due primarily to the Company's megaplex theatres    
(theatres having at least 14 screens with predominately stadium-style seating).
Attendance at megaplex theatres increased during the year as a result of the   
addition of 12 new megaplex theatres with 248 screens and from the operation for
a full fiscal year of the Company's remaining five domestic megaplex theatres  
with 98 screens that were opened in fiscal 1996. The increase in attendance from
megaplex theatres was partially offset by a decrease in attendance at multiplex
theatres (theatres generally without stadium-style seating and having less than
14 screens) and the closure or sale of 15 theatres with 76 screens. Attendance 
at multiplex theatres decreased as a result of competitive factors. Also, during
the first nine months of the fiscal year, attendance at all theatres was    
impacted by film product from the Company's key suppliers which did not deliver
the results achieved in the prior fiscal year. The increase in average ticket  
prices is due to price increases and the growing number of megaplexes in the   
Company's circuit, which yield higher average ticket prices than multiplexes.  
Concessions revenues at domestic theatres increased by 13.4%, or $26,300,000,  
due to a 6.9% increase in average concessions per patron, which contributed    
$13,692,000 of the increase, and the increase in total attendance, which    
contributed $12,608,000 of the increase. The increase in average concessions   
per        
        
AMC ENTERTAINMENT INC.    
------------------------  
22         
        
        
        
<PAGE>
<PAGE> 25        
        
patron is attributable to the introduction of new concessions products and the 
increasing number of megaplexes in the Company's circuit, where concession  
spending per patron is higher than multiplex theatres.       
        
Total international revenues were the result of admissions and concessions  
revenues from the Company's two international theatres, the Canal City 13   
located in Fukuoka, Japan and the Arrabida 20 located in Porto, Portugal,   
which opened during the first and third quarters of fiscal 1997, respectively. 
Admissions and concessions revenues accounted for 85% and 14% of total   
international revenues, respectively. The Company's initial attendance at the  
Canal City 13 was negatively impacted by film distributors in Japan who     
restricted the Company's ability to obtain film product until approximately    
two weeks after its competitors had received it. This delay in releasing films 
to the Company has generally been eliminated.          
        
On-screen advertising and other revenues increased 21.7%, or $2,797,000, due   
primarily to an increase in the number of screens served by the Company's   
on-screen advertising business, a result of its expansion program.    
        
Cost of Operations. Total cost of operations increased 18.0%, or $88,644,000,  
during the year (53 weeks) ended April 3, 1997 compared to the year (52 weeks) 
ended March 28, 1996.     
        
Total domestic cost of operations increased 13.8%, or $66,780,000, from the    
prior year. Film rentals expense increased 11.3%, or $24,381,000, due to higher
admissions revenues. As a percentage of admissions revenues, film rentals   
expense was 49.9% in each year. The 18.5%, or $5,628,000, increase in concession
costs is attributable to the increase in concessions revenues. As a percentage 
of concessions revenues, concession costs increased from 15.5% to 16.2% due    
primarily to increases in raw popcorn costs and the lower margins on new    
concessions products. Rent expense increased 15.9%, or $10,303,000, due to the 
higher number of screens in operation. Other cost of operations increased 15.4%,
or $26,468,000, from the prior year due to the higher number of screens in  
operation, $1,825,000 of advertising expenses associated with the opening of new
theatres and higher expenses associated with the Company's theatre management  
development program.   
        
Total international cost of operations were the result of expenses associated  
with the Company's new theatres in Japan and Portugal. As a percentage of   
admissions revenues, film rentals expense was 57.9% primarily because film  
rentals in Japan are generally higher than those domestically. Concession   
costs were 31.6% of concessions revenues due to the high procurement costs of  
concessions products sourced from the United States. As a percentage of total  
revenues, rent expense was 31.7% as a result of low attendance and admissions  
revenues and the higher real estate costs in Japan.          
        
    AMC ENTERTAINMENT INC.   
 ------------------------ 
                    23    
        
        
        
<PAGE>
<PAGE> 26        
        
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF  
OPERATIONS       
        
On-screen advertising and other cost of operations increased 34.9%, or   
$3,120,000, as a result of the higher number of screens served and related  
start-up expenses.     
        
General and Administrative. General and administrative expenses increased   
8.8%, or $4,588,000, during the year (53 weeks) ended April 3, 1997.     
        
Domestic and corporate general and administrative expenses increased 3.1%, or  
$1,358,000, primarily due to increases in costs associated with the Company's  
development of theatres and increased pension and retirement expenses of    
$1,992,000. These increases were partially offset by a decrease of $3,500,000  
in the current year's bonus expense and severance payments of $967,000 for two 
former executive officers made during the prior year.        
        
International general and administrative expenses increased 50.9%, or    
$2,314,000, due primarily to increases in costs associated with the Company's  
development of new theatres and other expenses to support the Company's     
international operations and expansion plan.           
        
General and administrative expenses associated with on-screen advertising and  
other increased 27.7%, or $916,000, due primarily to an increase in payroll    
and related costs to support the expansion program at the Company's on-screen  
advertising business.     
        
Depreciation and Amortization. Depreciation and amortization increased 36.3%,  
or $15,917,000, during the year (53 weeks) ended April 3, 1997. This increase  
was caused by an increase in employed theatre assets resulting from the     
Company's expansion plan and an impairment loss of $7,231,000 due to expected  
declines in future cash flows of certain theatres.        
        
Operating income. Operating income decreased 22.6%, or $15,524,000, during the 
year (53 weeks) ended April 3, 1997. The decrease in operating income is    
attributable to the attendance and revenue decline at multiplex theatres and   
an increase in domestic and corporate general and administrative expenses of   
$1,358,000, the effects of which were partially offset by an increase in    
attendance and revenues at megaplex theatres. Additionally, operating income   
was reduced by operating losses of $4,587,000 from the Company's international 
theatres in Japan and Portugal, an increase in international general and    
administrative expenses of $2,314,000 and an increase in operating losses of   
$1,647,000 from the Company's on-screen advertising business.      
        
Interest Expense. Interest expense decreased 23.6%, or $6,806,000, during the  
year (53 weeks) ended April 3, 1997 compared to the prior year. The decrease   
in interest expense resulted from lower rates under the Company's     
        
        
AMC ENTERTAINMENT INC.    
------------------------  
24         
        
        
        
<PAGE>
<PAGE> 27        
        
$425 million credit facility (the "Credit Facility"), which was partially   
offset by an increase in average outstanding borrowings related to the Company's
expansion plan.     
        
Investment Income. Investment income decreased 87.9%, or $6,196,000, during    
the year (53 weeks) ended April 3, 1997 due to a decrease in outstanding cash  
and investments compared to the prior year. Cash and investments decreased as  
a result of the Company's redemption of substantially all of its 11 7/8%    
Senior Notes due 2000 ("Senior Notes") and 12 5/8% Senior Subordinated Notes   
due 2002 ("12 5/8% Senior Subordinated Notes") on December 28, 1995.     
        
Earnings Before Income Taxes and Extraordinary Item. Earnings before income    
taxes and extraordinary item decreased by 31.7%, or $14,776,000, during the    
year (53 weeks) ended April 3, 1997 due primarily to the $15,524,000 decrease  
in operating income.   
        
Net Earnings. Net earnings before extraordinary item decreased $8,376,000   
during the year (53 weeks) ended April 3, 1997 to $18,995,000 from $27,371,000 
in the prior year. Net earnings for the period were $18,995,000 compared to    
$8,021,000 in the prior year, which included an extraordinary item (a loss of  
$19,350,000 in connection with the early extinguishment of debt). Net earnings 
before extraordinary item per common share, after deducting preferred    
dividends, was $.74 compared to $1.21 for the prior year. Net earnings per  
common share, after deducting preferred dividends, was $.74 compared to $.06   
for the prior year.    
        
<TABLE>       
<CAPTION>        
                                                      52 Weeks Ended                            52 Weeks Ended                      
                                              ------------------------------------------------------------------------              
                                              March 28,           % of Total            March 30,           % of Total              
(Dollars in thousands)                          1996               Revenues               1995               Revenues               
----------------------------------------------------------------------------------------------------------------------              
<S>                                           <C>                    <C>                <C>                    <C>                  
Revenues                                                                                                                            
   Admissions                                 $431,361                66%               $371,145                66%                 
   Concessions                                 196,645                30                 169,120                30                  
   Other                                        27,966                 4                  23,079                 4                  
                                              ------------------------------------------------------------------------              
     Total                                    $655,972               100%               $563,344               100%                 
                                              ========================================================================              
Cost of Operations                                                                                                                  
   Film rentals                               $215,099                33%               $182,669                33%                 
   Concession costs                             30,417                 5                  24,383                 4                  
   Rent                                         64,813                10                  60,076                11                  
   Other                                       181,029                27                 165,635                29                  
                                              ------------------------------------------------------------------------              
     Total                                    $491,358                75%               $432,763                77%                 
                                              ========================================================================              
</TABLE>                        
                                
       AMC ENTERTAINMENT INC.   
     ------------------------   
                          25    
                                
<PAGE>
<PAGE> 28

MANAGEMENT'S DISCUSSION AND ANALYSIS OF  
FINANCIAL CONTITION AND RESULTS OF OPERATIONS  
                                
YEARS (52 WEEKS) ENDED MARCH 28, 1996 AND MARCH 30, 1995  
                                
Revenues. Total revenues for the year (52 weeks) ended March 28, 1996    
increased 16.4%, or $92,628,000, to $655,972,000 compared to $563,344,000 for  
the year (52 weeks) ended March 30, 1995. Admissions revenues increased 16.2%, 
or $60,216,000, due to a 11.1% increase in attendance, which contributed    
$41,151,000 of the increase, and a 4.4% increase in average ticket prices,  
which contributed $19,065,000 of the increase. The increase in attendance   
resulted from the popularity of films licensed during fiscal 1996 and the net  
addition of 89 screens since fiscal 1995 at new and higher performing    
locations. Attendance during the prior year was impacted by a dispute with a   
major distributor over film licensing terms, which resulted in the Company's   
licensing that distributor's films for a smaller number of its theatres than   
it otherwise would have. In fiscal 1996, the Company licensed that    
distributor's films for what it considers to be a more acceptable number of    
the Company's theatres. Concessions revenues increased by 16.3%, or      
$27,525,000, due to the increase in total attendance, which caused an increase 
of $18,752,000, and a 6.9% increase in average concessions per patron, which   
contributed $8,773,000 of the increase.             
        
Cost of Operations. Total cost of operations increased 13.5%, or $58,595,000,  
in fiscal 1996 to $491,358,000 from $432,763,000 in fiscal 1995. As a    
percentage of total revenues, cost of operations was 75% and 77% in fiscal  
1996 and 1995, respectively. Film rentals expense increased 17.8%, or    
$32,430,000, in fiscal 1996 due to higher attendance levels, which contributed 
$29,637,000 of the increase, and an increase in the percentage of admissions   
paid to film distributors, which caused an increase of $2,793,000. Concessions 
costs, rent and other costs of operations increased 10.5%, or $26,165,000,  
from the prior year due to increases in payroll of $6,641,000, concession   
costs of $6,034,000, rent of $4,737,000 and other theatre operating expenses   
associated with the increase in admissions and concessions revenues and from   
the higher number of screens in operation.          
        
General and Administrative. General and administrative expenses increased   
25.0%, or $10,420,000, to $52,059,000 in fiscal 1996 from $41,639,000 in    
fiscal 1995. The increase in general and administrative expenses is primarily  
attributable to payroll and other costs associated with the Company's    
development of theatres in the United States and certain international   
markets, additional bonus expenses of $3,074,000 related to improved     
profitability of the Company and severance payments of $967,000 for two former 
executive officers. As a percentage of total revenues, general and    
administrative expenses increased to 7.9% in fiscal 1996 from 7.4% in fiscal   
1995.         
        
Depreciation and Amortization. Depreciation and amortization increased 15.8%,  
or $5,973,000, to $43,886,000 in fiscal 1996 from $37,913,000 in fiscal 1995.  
This increase resulted primarily from the reduction, effective December 30,    
1994, in the estimated lives of lease rights and location premiums on certain  
smaller theatres to    
        
        
        
        
AMC ENTERTAINMENT INC.    
-----------------------   
26         
        
        
        
<PAGE>
<PAGE> 29        
        
correspond to the base terms of the theatre leases, an increase in employed    
theatre assets and the recognition of an impairment loss of $1,799,000 in   
connection with the adoption of Statement of Financial Accounting Standards    
No. 121, Accounting for the Impairment of Long-lived Assets and for Long-lived 
Assets to be Disposed Of.    
        
Interest Expense. Interest expense decreased 19.7%, or $7,080,000, to    
$28,828,000 in fiscal 1996 from $35,908,000 in fiscal 1995. The decrease in    
interest expense resulted from lower interest rates under the Company's Credit 
Facility as compared to the rates under the Senior Notes and 12 5/8% Senior    
Subordinated Notes.    
        
        
Investment Income. Investment income decreased 29.6%, or $2,961,000, to     
$7,052,000 in fiscal 1996 from $10,013,000 in fiscal 1995 due primarily to a net
gain of $1,407,000 recorded in fiscal 1995 from the sales of stock of TPI   
Enterprises, Inc. and AmeriHealth, Inc. and a decrease of $1,513,000 in interest
income in fiscal 1996.    
        
Earnings Before Income Taxes and Extraordinary Item. Earnings before income    
taxes and extraordinary item increased 86.8%, or $21,693,000, to $46,671,000   
in fiscal 1996 from $24,978,000 in fiscal 1995. The Company recorded a   
$19,350,000 extraordinary loss, net of income tax benefit of $13,400,000,   
related to extinguishment of debt in fiscal 1996.         
        
Net Earnings. For the year (52 weeks) ended March 28, 1996, the Company recorded
net earnings of $8,021,000, a $25,957,000 decrease from net earnings of     
$33,978,000 for the year (52 weeks) ended March 30, 1995. Net earnings per  
common share, after deducting $7,000,000 of preferred dividends, was $.06 in   
fiscal 1996 compared to $1.63 in fiscal 1995. The decrease in net earnings was 
impacted by an extraordinary loss of $19,350,000 incurred as a result of the   
Company's repurchase of Senior Notes and 12 5/8% Senior Subordinated Notes in  
fiscal 1996. Also, in fiscal 1996 the Company had a tax expense of $19,300,000,
as opposed to a tax benefit of $9,000,000 in fiscal 1995. The fiscal 1995 tax  
benefit resulted from a $19,792,000 reduction in the deferred tax valuation    
allowance established under Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. Earnings per share before extraordinary item, after
deduction of preferred dividends, was $1.21 in fiscal 1996 compared to $1.63 in
fiscal 1995.     
        
LIQUIDITY AND CAPITAL RESOURCES               
        
The forward-looking statements included in this section, which reflect   
management's best judgment based on factors currently known, involve risks and 
uncertainties. Actual results could differ materially from those anticipated   
in the forward-looking statements included herein as a result of a number of   
factors, including but not limited to the Company's ability to enter into   
various financing programs, competition from other companies, changes in    
        
        
  AMC ENTERTAINMENT INC.  
   ------------------------  
      27   
        
        
<PAGE>
<PAGE> 30        
        
MANAGEMENT'S DISCUSSION AND ANALYSIS OF             
FINANCIAL CONDITION AND RESULTS OF OPERATIONS          
        
economic climate, increase in demand for real estate, demographic changes,  
changes in real estate, zoning and tax laws, the performance of films licensed 
by the Company and other risks and uncertainties.         
        
The Company's revenues are collected in cash, principally through box office   
admissions and theatre concessions sales. The Company has an operating "float" 
which partially finances its operations and which generally permits the Company
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 30 to 45 days
following receipt of box office admission revenues. The Company is only     
occasionally required to make advance payments or non-refundable guarantees of 
film rentals. Film distributors generally release films which they anticipate  
will be the most successful during the summer and holiday seasons. Consequently,
the Company typically generates higher revenues during such periods. Cash flows 
from operating activities, as reflected in the Consolidated Statements of Cash 
Flows, was $134,074,000, $96,847,000 and $44,366,000 in fiscal years 1997, 1996
and 1995, respectively. During fiscal 1997, the Company had capital expenditures
of $253,380,000 primarily for the development of new theatres and the addition 
of screens at existing locations. The Company has continued its expansion plan 
by opening 14 leased theatres with 244 screens, two owned theatres with 46  
screens and one theatre with 24 screens leased pursuant to a ground lease.  
Included in these openings is the Company's first theatre in Japan, the Canal  
City 13 in Fukuoka, which opened in April 1996, and the Company's first theatre
in Portugal, the Arrabida 20 in Porto, which opened in late December 1996. In  
addition, the Company closed or sold 14 leased theatres with 72 screens and one
owned theatre with four screens, resulting in a circuit total of 1,957 screens 
in 228 theatres as of April 3, 1997.             
        
The Company has plans to open approximately 700 screens during fiscal 1998. If 
these planned screens are opened as scheduled, the Company estimates that   
total capital expenditures for fiscal 1998 will aggregate approximately $425   
million. Included in these amounts are assets which the Company may place into 
sale/leaseback or other comparable financing programs which will have the effect
of reducing the Company's net cash outlays. As of April 3, 1997, the Company had
under construction 15 new leased theatre locations totaling 362 screens, four  
new owned theatres with 104 screens, two theatres with 48 screens leased    
pursuant to a ground lease and additions to four existing theatres for 44 new  
screens. All of these theatres and screens will be located in the United States.
        
On December 28, 1995, the Company completed the redemption of substantially    
all of its Senior Notes and 12 5/8% Senior Subordinated Notes. The Company  
redeemed $99,383,000 of the Senior Notes at a total price of       
        
AMC ENTERTAINMENT INC.    
------------------------  
28         
        
        
        
<PAGE>
<PAGE> 31        
        
$1,117.90 per $1,000 principal amount and $95,096,000 of the 12 5/8% Senior    
Subordinated Notes at a total price of $1,144.95 per $1,000 principal amount.  
The Company utilized cash and investments along with borrowings of    
$130,000,000 on a credit facility to redeem the Senior Notes and the 12 5/8%   
Senior Subordinated Notes.   
        
As a part of the refinancing plan, the Company entered into the Credit   
Facility, which was subsequently amended and restated as of April 10, 1997.    
The Credit Facility, permits borrowings at interest rates based on either the  
bank's base rate or LIBOR and requires an annual commitment fee based on    
margin ratios that could result in a rate of .1875% to .375% on the unused  
portion of the commitment. The Credit Facility matures in 2004. The commitment 
thereunder will reduce by $25 million on each of December 31, 2002, March 31,  
2003, June 30, 2003 and September 30, 2003 and by $50 million on December 31,  
2003. As of April 3, 1997, the Company had outstanding borrowings of     
$110,000,000 under the Credit Facility at an average interest rate of 6.4% per 
annum.        
        
Covenants of the Credit Facility, as amended and restated, impose limitations  
on the incurrence of additional indebtedness, creation of liens, change of  
control, transactions with affiliates, mergers, investments, guaranties, asset 
sales, business activities and pledges. The Company is required to maintain    
(i) a maximum net indebtedness to consolidated EBITDA ratio, as defined in the 
Credit Facility (generally, the ratio of the principal amount of outstanding   
indebtedness (less cash and equivalents) to earnings before interest, taxes,   
depreciation, amortization and other noncash charges), of 5.25 to 1 during the 
first four years of the Credit Facility, a ratio of 4.75 to 1 during the fifth 
year, a ratio of 4.25 to 1 in the sixth year and a ratio of 4.0 to 1     
thereafter, and a (ii) minimum cash flow coverage ratio, as defined in the  
Credit Facility (generally, the ratio of consolidated EBITDA for the most   
recent four quarters to the sum of (A) consolidated interest expense for such  
period, (B) amounts paid as dividends, for the optional repurchase or    
redemption of subordinated debt or capital stock, or with respect to the    
principal amount of capital lease obligations during such period, plus (C) the 
current portion of debt with an original maturity exceeding one year), of 1.40 
to 1. If the Company prepays, defeases or repurchases more than $10 million of 
the Notes (as defined below) or any other subordinated debt incurred after  
April 10, 1997, it is required to maintain a maximum net senior indebtedness   
to EBITDA ratio, as defined in the Credit Facility, of 4.5 to 1 during the  
first four years of the Credit Facility and 4.0 to 1 thereafter. As of April   
3, 1997, the Company was in compliance with all financial covenants relating   
to the Credit Facility.   
        
Prior to its April 10, 1997 amendment and restatement, the Credit Facility  
contained a covenant that generally limited the Company's capital     
expenditures. This covenant has been eliminated.          
        
  AMC ENTERTAINMENT INC.  
   ------------------------  
                  29      
                             
        
<PAGE>
<PAGE> 32  
  
MANAGEMENT'S DISCUSSION AND ANALYSIS OF    
FINANCIAL CONDITION AND RESULTS OF OPERATIONS    
  
On March 19, 1997, the Company sold $200 million aggregate principal amount of 
9 1/2% Senior Subordinated Notes due 2009 (the "Notes"). Net proceeds from the 
issuance of the Notes (approximately $193.8 million) were used to reduce 
borrowings under the Credit Facility. Amounts repaid under the Credit Facility 
will again be available for borrowing thereunder, and the Company intends to   
utilize this increased availability to continue with its current expansion  
program.   
  
The Notes bear interest at the rate of 9 1/2% per annum, payable in March and  
September. The Notes 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. Upon a change of control (as defined in the Note Indenture), each holder 
of the Notes will have the right to require the Company to repurchase such  
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 are  
subordinated to all existing and future senior indebtedness (as defined in the 
Note Indenture) of the Company.
  
The Company has agreed to use its best efforts to (i) file and cause to become 
effective by August 16, 1997, a registration statement relating to a  
registered offer to exchange the Notes (the "Exchange Offer") for notes of  
AMCE with terms identical in all material respects to the Notes and (ii) cause 
the Exchange Offer to be consummated by September 15, 1997. If the Exchange 
Offer registration statement is not declared effective by August 16, 1997, the 
Company has agreed that in lieu thereof it will use its best efforts to cause  
to become effective by September 15, 1997 a shelf registration statement with  
respect to the Notes. In the event that either (a) the Exchange Offer 
registration statement is not filed on or prior to June 17, 1997, (b) the   
Exchange Offer registration statement is not declared effective on or prior to 
August 16, 1997 or (c) the Exchange Offer is not consummated or a shelf  
registration statement, with respect to the Notes, is not declared effective   
on or prior to September 15, 1997, the interest rate borne by the Notes will   
increase by 0.50% per annum following June 17, 1997 in the case of clause (a)  
above, following August 16, 1997 in the case of clause (b) above and following 
September 15, 1997 in the case of clause (c) above. The aggregate amount of 
such increase will in no event exceed 1.00% per annum. Upon (x) the filing of  
the Exchange Offer registration statement after June 17, 1997, (y) the   
effectiveness of the Exchange Offer registration statement after August 16, 
1997 or (z) the consummation of the Exchange Offer or the effectiveness of a   
shelf registration statement, as the case may be, after September 15, 1997, 
the interest rate borne by the Notes from the date of filing, effectiveness or 
consummation, as the case may be, will be reduced to 9 1/2%. The Exchange   
Offer registration statement was filed on June 13, 1997.  
  
  
AMC ENTERTAINMENT INC. 
------------------------  
30         
        
     
     
<PAGE>
<PAGE> 33        
        
The Note Indenture contains certain covenants that, among other things,  
restrict the ability of the Company and its subsidiaries to: incur additional  
indebtedness; pay dividends or make distributions in respect of their capital  
stock; purchase or redeem capital stock; enter into transactions with 
stockholders or certain affiliates; or consolidate, merge or sell all or 
substantially all of the Company's assets, other than in certain transactions  
between the Company and one or more of its wholly-owned subsidiaries and other 
than a proposed merger between the Company and its majority stockholder, 
Durwood, Inc. (see discussion below). All of these limitations are subject to  
a number of important qualifications. The Note Indenture does not impose any   
limitation on the incurrence by the Company and its subsidiaries of   
liabilities that are not considered "Indebtedness" under the Note Indenture,   
such as those that would be incurred under certain sale/leaseback  
transactions; nor does the Note Indenture impose any limitation on the amount  
of liabilities incurred by subsidiaries, if any, that might be designated as   
Unrestricted Subsidiaries (as defined therein). Furthermore, there are no   
restrictions on the ability of the Company and its subsidiaries to make  
advances to, or invest in, other entities (including unaffiliated entities) 
and no restrictions on the ability of the Company's subsidiaries to enter into 
agreements restricting their ability to pay dividends or otherwise transfer 
funds to the Company. If the Notes attain "investment grade status" (as  
defined in the Note Indenture), the covenants in the Note Indenture limiting   
the Company's ability to incur indebtedness, pay dividends, acquire stock or   
engage in transactions with affiliates will cease to apply.  
  
The Company believes that cash generated from operations, existing cash and 
equivalents, amounts received from sale/leaseback or other comparable 
financing programs which the Company is currently pursuing and the unused   
commitment amount under its Credit Facility will be sufficient to fund   
operations and planned capital expenditures through the end of fiscal 1998. 
  
During the year (53 weeks) ended April 3, 1997, various holders of the   
Company's $1.75 Cumulative Convertible Preferred Stock (the "Convertible 
Preferred Stock") converted 696,400 shares into 1,200,589 shares of Common  
Stock at a conversion rate of 1.724 shares of Common Stock for each share of   
Convertible Preferred Stock. Convertible Preferred Stock dividend payments  
decreased 14.4%, or $1,007,000, to $5,993,000 for the year (53 weeks) ended 
April 3, 1997 from $7,000,000 in the prior year as a result of the 
conversions. Future conversions will continue to reduce the amount of 
dividends paid by the Company and increase the number of shares of Common   
Stock outstanding.  
  
The Convertible Preferred Stock is redeemable in whole or in part, at the   
option of the Company, at a current redemption price of $26 per share,   
declining by $.25 per share on March 15 of each year until March 15, 2001,  
  
  AMC ENTERTAINMENT INC.  
   ------------------------  
      31   
        
  
<PAGE>
<PAGE> 34  
     
MANAGEMENT'S DISCUSSION AND ANALYSIS OF             
FINANCIAL CONDITION AND RESULTS OF OPERATIONS          
        
when such price will become fixed at $25. Shares called for redemption may be  
converted by the holders thereof prior to the redemption date.        
        
On January 10, 1997, the Company purchased the 20% minority interest in the    
common stock of AMC Philadelphia, Inc., an 80% owned subsidiary, for     
$7,400,000 in cash. The Company utilized borrowings on its Credit Facility to  
finance the purchase. Management does not believe that the acquisition will    
have a significant effect on the Company's results of operations.     
        
OTHER         
        
The Board of Directors has approved an agreement (the "Merger Agreement")   
providing for the merger of the Company and its principal stockholder,   
Durwood, Inc. ("DI"), with the Company remaining as the surviving entity (the  
"Merger"). The Merger has been sought by members of the Durwood family so that 
they may hold their interests in the Company directly instead of indirectly    
through DI and a related entity. In the Merger, stockholders of DI would    
exchange their shares of DI stock for shares of the Company's stock. Although  
the outstanding shares of the Company's Common Stock will increase and the  
outstanding shares of its Class B Stock will decrease if the Merger is   
effected, no aggregate increase in total outstanding shares will occur because 
the shares of the Company owned by DI will be canceled and the shares of the   
Company held by other stockholders would not be exchanged in the Merger. A  
condition to the Merger is that the Merger Agreement receive approval of the   
holders of a majority of the shares of Common Stock other than DI, the Durwood 
family, their spouses and children and officers and directors of the Company.  
        
DI is primarily a holding company with no significant operations or assets other
than its equity interest in the Company. Management expects that the Merger will
be accounted for as a corporate reorganization and that, accordingly, the   
recorded balances for consolidated assets, liabilities, total stockholders'    
equity and results of operations of the Company would not be affected. If the  
Merger occurs, the Company will be responsible for paying 50% of its costs in  
connection with the Merger; the aggregate merger costs for both the Company and
DI are estimated to be approximately $2 million.  Management does not believe  
that the transaction will have a significant effect on the Company's financial 
condition, liquidity or capital resources.          
        
The Company is in the process of modifying its computer applications to ensure 
their continuing functionality for the "Year 2000" and beyond. At the present  
time the Company estimates that expenses related to this project will total    
approximately $1.5 million to $2.0 million. These total estimated expenses are 
expected to be incurred during fiscal years 1998 and 1999.      
        
        
AMC ENTERTAINMENT INC.    
------------------------  
32         
        
        
        
<PAGE>
<PAGE> 35        
        
Congress passed legislation to increase the federal minimum hourly wage paid   
to hourly wage employees over a two-year period. This legislation will   
increase the aggregate average hourly wage paid by the Company. The Company    
intends to relieve the cost pressure from the minimum wage increase by   
pursuing better labor and operating efficiencies as well as some price   
adjustments for theatres in certain markets. Such legislation is not expected  
to have a material adverse effect on the Company's results of operations,   
liquidity or financial condition.             
        
IMPACT OF INFLATION    
        
Historically, the principal impact of inflation and changing prices upon the   
Company has been to increase the costs of the construction of new theatres,    
the purchase of theatre equipment and the utility and labor costs incurred in  
connection with continuing theatre operations. Film rentals expense, the    
largest cost of operations of the Company, is customarily paid as a percentage 
of admissions revenues and hence, while the film rentals expense 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 the   
Company's total revenues and results of operations.          
        
RECENTLY ISSUED FINANCIAL ACCOUNTING PRONOUNCEMENTS          
        
During fiscal 1996, the Financial Accounting Standards Board issued Statement  
of Financial Accounting Standards No. 123, Accounting for Stock-Based    
Compensation. The Statement allows companies to measure compensation cost in   
connection with employee stock compensation plans using a fair value based  
method or to continue to use an intrinsic value based method to account for    
stock options and awards. The Company has chosen to continue using the   
intrinsic value based method while adopting the disclosure-only provisions of  
the pronouncement.     
        
During fiscal 1997, the Financial Accounting Standards Board issued Statement  
of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings per Share.    
SFAS 128 eliminates the presentation of primary and fully diluted earnings per 
share ("EPS") and requires presentation of basic and diluted EPS. The    
principal difference between primary and basic EPS is that common stock     
equivalents are not included with the weighted average number of shares     
outstanding used in the computation of basic EPS. Diluted EPS is computed   
similarly to fully diluted EPS. SFAS 128 is effective for periods ending after 
December 15, 1997, including interim periods, and requires restatement of all  
prior-period EPS data. Early adoption is not permitted. Management has not yet 
determined the impact that this statement will have on the Company.      
        
  AMC ENTERTAINMENT INC.     
   ------------------------     
                        33   
        
        
<PAGE>
<PAGE> 36        
        
RESPONSIBILITY FOR PREPARATION 
OF FINANCIAL STATEMENTS   
        
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 generally accepted accounting principles 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. In    
addition, as part of their audit of the consolidated financial statements, the 
Company's independent accountants review and test the internal accounting   
controls on a selected basis to establish a basis of reliance in determining   
the nature, extent and timing of audit tests to be applied.        
        
The Board of Directors oversees financial reporting and internal accounting    
control through its Audit Committee. This committee meets (jointly and   
separately) with the independent accountants, management and internal auditor  
to monitor the proper discharge of responsibilities relative to internal    
accounting controls and consolidated financial statements.      
        
        
/s/ Peter C. Brown     
        
Peter C. Brown      
President and Chief Financial Officer            
        
        
        
AMC ENTERTAINMENT INC.    
------------------------  
34         
        
        
        
<PAGE>
<PAGE> 37        
        
                         REPORT OF INDEPENDENT ACCOUNTANTS   
        
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF AMC ENTERTAINMENT INC.     
KANSAS CITY, MISSOURI     
        
We have audited the accompanying consolidated balance sheets of AMC      
Entertainment Inc. and subsidiaries as of April 3, 1997 and March 28, 1996,    
and the related consolidated statements of operations, stockholders' equity    
and cash flows for the year (53 weeks) ended April 3, 1997 and the years (52   
weeks) ended March 28, 1996 and March 30, 1995. These financial statements are 
the responsibility of the Company's management. Our responsibility is to    
express an opinion on these financial statements based on our audits.    
        
We conducted our audits in accordance with generally accepted auditing   
standards. Those standards require that we plan and perform the audit to    
obtain reasonable assurance about whether the financial statements are free of 
material misstatement. An audit includes examining, on a test basis, evidence  
supporting the amounts and disclosures in the financial statements. An audit   
also includes assessing the accounting principles used and significant   
estimates made by management, as well as evaluating the overall financial   
statement presentation. We believe that our audits provide a reasonable basis  
for our opinion.    
        
In our opinion, the financial statements referred to above present fairly, in  
all material respects, the consolidated financial position of AMC     
Entertainment Inc. and subsidiaries as of April 3, 1997 and March 28, 1996,    
and the consolidated results of their operations and their cash flows for the  
year (53 weeks) ended April 3, 1997 and the years (52 weeks) ended March 28,   
1996 and March 30, 1995, in conformity with generally accepted accounting   
principles.      
        
        
/s/ Cooper & Lybrand L.L.P.  
        
Kansas City, Missouri     
May 16, 1997     
        
  AMC ENTERTAINMENT INC.     
   ------------------------     
                        35      
                                
                                
<PAGE>
<PAGE> 38        
        
CONSOLIDATED STATEMENTS OF OPERATIONS            
        
<TABLE>       
<CAPTION>        
                                                                   53 Weeks Ended    52 Weeks Ended    52 Weeks Ended               
                                                                   --------------------------------------------------               
                                                                       April 3,         March 28,         March 30,                 
(In thousands, except per share amount)                                 1997              1996              1995                    
---------------------------------------------------------------------------------------------------------------------               
<S>                                                                   <C>               <C>               <C>                       
Revenues                                                                                                                            
   Admissions                                                         $492,951          $431,361          $371,145                  
   Concessions                                                         225,167           196,645           169,120                  
   Other                                                                31,479            27,966            23,079                  
                                                                      -----------------------------------------------               
         Total revenues                                                749,597           655,972           563,344                  
                                                                                                                                    
Expenses                                                                                                                            
   Film rentals                                                        247,199           215,099           182,669                  
   Concession costs                                                     36,748            30,417            24,383                  
   Other                                                               296,055           245,842           225,711                  
                                                                      -----------------------------------------------               
         Total cost of operations                                      580,002           491,358           432,763                  
                                                                                                                                    
   General and administrative                                           56,647            52,059            41,639                  
   Depreciation and amortization                                        59,803            43,886            37,913                  
                                                                      -----------------------------------------------               
   Total expenses                                                      696,452           587,303           512,315                  
                                                                      -----------------------------------------------               
         Operating income                                               53,145            68,669            51,029                  
                                                                                                                                    
Other expense (income)                                                                                                              
   Interest expense                                                                                                                 
     Corporate borrowings                                               12,016            18,099            24,502                  
     Capital lease obligations                                          10,006            10,729            11,406                  
   Investment income                                                      (856)           (7,052)          (10,013)                 
   Loss on disposition of assets                                            84               222               156                  
                                                                      -----------------------------------------------               
Earnings before income taxes and extraordinary item                     31,895            46,671            24,978                  
   Income tax provision                                                 12,900            19,300            (9,000)                 
                                                                      -----------------------------------------------               
Earnings before extraordinary item                                      18,995            27,371            33,978                  
   Extraordinary item - Loss on extinguishment of debt                                                                              
     (net of income tax benefit of $13,400)                                  -           (19,350)                -                  
                                                                      -----------------------------------------------               
Net earnings                                                          $ 18,995          $  8,021          $ 33,978                  
                                                                      ===============================================               
   Preferred dividends                                                   5,907             7,000             7,000                  
                                                                      -----------------------------------------------               
Net earnings for common shares                                        $ 13,088          $  1,021          $ 26,978                  
                                                                      ===============================================               
Earnings per share before extraordinary item:                                                                                       
   Primary                                                            $    .74          $   1.21          $   1.63                  
                                                                      ===============================================               
   Fully diluted                                                      $    .73          $   1.20          $   1.45                  
                                                                      ===============================================               
Earnings per share:                                                                                                                 
   Primary                                                            $    .74          $    .06          $   1.63                  
                                                                      ===============================================               
   Fully diluted                                                      $    .73          $    .06          $   1.45                  
                                                                      ===============================================               
                                                                                                                                    
See Notes to Consolidated Financial Statements.                                                                                     
</TABLE> 
      
         
         
AMC ENTERTAINMENT INC.  
------------------------   
36       
         
         
         
<PAGE>
<PAGE> 39      
                           
                                                    CONSOLIDATED BALANCE SHEETS 
                              
<TABLE>                       
<CAPTION>                     
                                                                                            April 3,          March 28,           
(In thousands, except share amounts)                                                            1997              1996              
-------------------------------------------------------------------------------------------------------------------------           
<S>                                                                                          <C>                <C>                 
ASSETS                                                                                                                              
Current assets:                                                                                                                     
   Cash and equivalents                                                                      $ 24,715           $ 10,795            
   Receivables, net of allowance for doubtful accounts of $704                                                                      
    as of April 3, 1997 and $801 as of March 28, 1996                                          42,188             20,503            
   Other current assets                                                                        16,769             15,179            
                                                                                             ----------------------------           
     Total current assets                                                                      83,672             46,477            
                                                                                                                                    
Property, net                                                                                 543,058            355,485            
Intangible assets, net                                                                         28,679             36,483            
Other long-term assets                                                                         62,804             45,013            
                                                                                             ----------------------------           
     Total assets                                                                            $718,213           $483,458            
                                                                                             ============================           
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                
Current liabilities:                                                                                                                
   Accounts payable                                                                          $ 88,367           $ 59,353            
   Accrued expenses and other liabilities                                                      42,459             43,319            
Current maturities of corporate borrowings and capital lease obligations                        3,441              2,904            
                                                                                             ----------------------------           
     Total current liabilities                                                                134,267            105,576            
                                                                                                                                    
Corporate borrowings                                                                          315,046            126,127            
Capital lease obligations                                                                      55,237             59,141            
Other long-term liabilities                                                                    43,651             33,696            
                                                                                             ----------------------------           
     Total liabilities                                                                        548,201            324,540            
                                                                                                                                    
Commitments and contingencies                                                                                                       
                                                                                                                                    
Stockholders' equity:                                                                                                               
$1.75 Cumulative Convertible Preferred Stock, 66 2/3 cents par value; 3,303,600 and                                                 
 4,000,000 shares issued and outstanding as of April 3, 1997, and March 28,                                                         
 1996, respectively (aggregate liquidation preference of $82,590 and $100,000 as                                                    
 of April 3, 1997 and March 28, 1996, respectively)                                             2,202              2,667            
                                                                                                                                    
   Common Stock, 66 2/3 cents par value; 6,,604,469 and 5,388,880 shares                                                            
     issued as of April 3, 1997, and March 28, 1996, respectively                               4,403              3,593            
                                                                                                                                    
   Convertible Class B Stock, 66 2/3 cents par value; 11,157,000 shares issued and                                                  
     outstanding                                                                                7,438              7,438            
   Additional paid-in capital                                                                 107,781            107,986            
   Foreign currency translation adjustment                                                     (2,048)                 -            
   Retained earnings                                                                           50,605             37,603            
                                                                                             ----------------------------           
                                                                                              170,381            159,287            
   Less - Common Stock in treasury, at cost, 20,500 shares as of April 3, 1997                                                      
     and March 28, 1996                                                                           369                369            
                                                                                             ----------------------------           
     Total stockholders' equity                                                               170,012            158,918            
                                                                                             ----------------------------           
     Total liabilities and stockholders' equity                                              $718,213           $483,458            
                                                                                             ============================           
                                                                                                                                    
See Notes to Consolidated Financial Statements.                                                                                     
</TABLE> 
                     
                              
      AMC ENTERTAINMENT INC.  
    ------------------------  
                         37   
                              
                              
                              
<PAGE>
<PAGE> 40      
         
CONSOLIDATED STATEMENTS OF CASH FLOWS           
         
<TABLE>        
<CAPTION>      
                                                                       53 Weeks Ended     52 Weeks Ended    52 Weeks Ended          
                                                                       ---------------------------------------------------          
                                                                           April 3,          March 28,         March 30,            
(In thousands)                                                               1997              1996              1995               
--------------------------------------------------------------------------------------------------------------------------          
<S>                                                                        <C>               <C>              <C>                   
Increase (Decrease) in Cash and Equivalents                                                                                         
                                                                                                                                    
Cash flows from operating activities:                                                                                               
   Net earnings                                                            $  18,995         $   8,021        $  33,978             
   Adjustments to reconcile net earnings to                                                                                         
    net cash provided by operating activities:                                                                                      
      Depreciation and amortization                                           59,803            43,886           37,913             
      Deferred income taxes                                                   (2,476)           (1,328)         (21,285)            
      Gain on sale of available for sale investments                               -                 -           (1,407)            
      Extraordinary item                                                           -            19,350                -             
      Loss on sale of long-term assets                                            84               222              156             
      Change in assets and liabilities:                                                                                             
         Receivables                                                            (609)           (1,537)             807             
         Other current assets                                                  1,578            10,167             (578)            
         Accounts payable                                                     41,486             7,458              341             
         Accrued expenses and other liabilities                               12,441             7,640           (5,763)            
      Other, net                                                               2,772             2,968              204             
                                                                           -----------------------------------------------          
            Total adjustments                                                115,079            88,826           10,388             
                                                                           -----------------------------------------------          
      Net cash provided by operating activities                              134,074            96,847           44,366             
                                                                           -----------------------------------------------          
Cash flows from investing activities:                                                                                               
   Capital expenditures                                                     (253,380)         (120,796)         (56,403)            
   Purchase of real estate investment                                         (7,692)                -                -             
   Acquisition of minority interest                                           (7,400)                -                -             
   Purchases of available for sale investments                                     -          (424,134)        (314,368)            
   Proceeds from maturities of available for sale investments                      -           493,278          364,374             
   Proceeds from sales of available for sale investments                           -                 -           11,689             
   Proceeds from disposition of long-term assets                              15,054             2,243               70             
   Net change in refundable construction advances                            (21,076)          (10,394)            (182)            
   Other, net                                                                 (9,423)           (7,045)          (1,516)            
                                                                           -----------------------------------------------          
   Net cash provided by (used in) investing activities                      (283,917)          (66,848)           3,664             
                                                                           -----------------------------------------------          
Cash flows from financing activities:                                                                                               
   Net borrowings (repayments) under revolving credit facility               (10,000)          120,000                -             
   Proceeds from issuance of 9 1/2% Senior Subordinated Notes                198,938                 -                -             
   Principal payments under capital lease obligations                         (2,835)           (2,455)          (2,088)            
   Repurchase of 11 7/8% Senior and 12 5/8% Senior Subordinated Notes              -          (220,734)               -             
   Cash overdrafts                                                           (11,673)           22,848                -             
   Other repayments                                                                -              (404)             (34)            
   Proceeds from exercise of stock options                                       140               878              239             
   Dividends paid on preferred stock                                          (5,993)           (7,000)          (7,233)            
   Deferred financing costs and other                                         (4,595)           (3,570)               -             
                                                                           -----------------------------------------------          
   Net cash provided by (used in) financing activities                       163,982           (90,437)          (9,116)            
                                                                           -----------------------------------------------          
   Effect of exchange rate changes on cash and equivalents                      (219)                -                -             
                                                                           -----------------------------------------------          
Net increase (decrease) in cash and equivalents                               13,920           (60,438)          38,914             
Cash and equivalents at beginning of year                                     10,795            71,233           32,319             
                                                                           -----------------------------------------------          
Cash and equivalents at end of year                                        $  24,715         $  10,795        $  71,233             
                                                                           ===============================================          
</TABLE>
                      
         
AMC ENTERTAINMENT INC.  
------------------------   
38       
         
         
         
<PAGE>
<PAGE> 41      
         
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:    
         
During 1995, capital lease obligations of $1,363 were incurred in connection  
with property acquired.    
         
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
         
<TABLE>        
<CAPTION>      
                                                                       53 Weeks Ended     52 Weeks Ended    52 Weeks Ended          
                                                                       ---------------------------------------------------          
                                                                           April 3,          March 28,         March 30,            
(In thousands)                                                               1997              1996              1995               
--------------------------------------------------------------------------------------------------------------------------          
<S>                                                                         <C>               <C>               <C>                 
Cash paid during the period for:                                                                                                    
   Interest (net of amounts capitalized of $3,344, $3,003 and $870)         $24,188           $34,775           $35,878             
   Income taxes, net                                                          6,285             9,787            14,822             
                                                                                                                                    
See Notes to Consolidated Financial Statements.                                                                                     
</TABLE> 
      
         
         
   AMC ENTERTAINMENT INC.  
    ------------------------  
                         39   
         
         
         
<PAGE>
<PAGE> 42      
         
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY          
         
<TABLE>        
<CAPTION>      
                                                               Preferred Stock                       Common Stock                   
(In thousands, except share and per share amounts)        Shares             Amount           Shares             Amount             
------------------------------------------------------------------------------------------------------------------------            
<S>                                                      <C>                  <C>            <C>                  <C>               
Balance, April 1, 1994                                   4,000,000            $2,667         5,266,830            $3,511            
Net earnings                                                     -                 -                 -                 -            
Exercise of options on Common Stock                              -                 -            39,550                27            
Dividends declared: $1.75 Preferred Stock                        -                 -                 -                 -            
                                                         ---------------------------------------------------------------            
Balance, March 30, 1995                                  4,000,000             2,667         5,306,380             3,538            
Net earnings                                                     -                 -                 -                 -            
Exercise of options on Common Stock                              -                 -            82,500                55            
Dividends declared: $1.75 Preferred Stock                        -                 -                 -                 -            
Acquisition of Common                                                                                                               
Stock in Treasury                                                -                 -                 -                 -            
                                                         ---------------------------------------------------------------            
Balance, March 28, 1996                                  4,000,000             2,667         5,388,880             3,593            
Net earnings                                                     -                 -                 -                 -            
Exercise of options on Common Stock                              -                 -            15,000                10            
Preferred Stock conversions                               (696,400)             (465)        1,200,589               800            
Dividends declared: $1.75 Preferred Stock                        -                 -                 -                 -            
Foreign currency translation adjustment                          -                 -                 -                 -            
                                                         ---------------------------------------------------------------            
Balance, April 3, 1997                                   3,303,600            $2,202         6,604,469            $4,403            
                                                         ===============================================================            
                                                                                                                                    
See Notes to Consolidated Financial Statements.                                                                                     
                                                                                                                                    
AMC ENTERTAINMENT INC.                                                                                                              
------------------------                                                                                                            
40                                                                                                                                  
                                                                                                                                    
                                                                                                                                    
                                                                                                                                    
<PAGE>
<PAGE> 43         
                                 
<CAPTION>                                 
                                                                                             Additional       Foreign Currency      
                                                                  Class B Stock               Paid-in           Translation         
                                                          Shares              Amount          Capital           Adjustment          
------------------------------------------------------------------------------------------------------------------------------      
<S>                                                     <C>                   <C>             <C>                <C>                
Balance, April 1, 1994                                  11,157,000            $7,438          $106,951           $     -            
Net earnings                                                     -                 -                 -                 -            
Exercise of options on Common Stock                              -                 -               212                 -            
Dividends declared: $1.75 Preferred Stock                        -                 -                 -                 -            
                                                        ----------------------------------------------------------------------      
Balance, March 30, 1995                                 11,157,000             7,438           107,163                 -            
Net earnings                                                     -                 -                 -                 -            
Exercise of options on Common Stock                              -                 -               823                 -            
Dividends declared: $1.75 Preferred Stock                        -                 -                 -                 -            
Acquisition of Common                                                                                                               
Stock in Treasury                                                -                 -                 -                 -            
                                                        ----------------------------------------------------------------------      
Balance, March 28, 1996                                 11,157,000             7,438           107,986                 -            
Net earnings                                                     -                 -                 -                 -            
Exercise of options on Common Stock                              -                 -               130                 -            
Preferred Stock conversions                                      -                 -              (335)                -            
Dividends declared: $1.75 Preferred Stock                        -                 -                 -                 -            
Foreign currency translation adjustment                          -                 -                 -            (2,048)           
                                                        ----------------------------------------------------------------------      
Balance, April 3, 1997                                  11,157,000            $7,438          $107,781           $(2,048)           
                                                        ======================================================================      
                                                                                                                                    
                                                                                                                                    
<CAPTION>                                                                                                                           
                                                                                    Common Stock              Total                 
                                                          Retained                  in Treasury            Stockholders'            
                                                          Earnings            Shares           Amount         Equity                
------------------------------------------------------------------------------------------------------------------------            
<S>                                                       <C>                 <C>              <C>           <C>                    
Balance, April 1, 1994                                    $ 9,837                  -           $    -        $130,404               
Net earnings                                               33,978                  -                -          33,978               
Exercise of options on Common Stock                             -                  -                -             239               
Dividends declared: $1.75 Preferred Stock                  (7,233)                 -                -          (7,233)              
                                                          --------------------------------------------------------------            
Balance, March 30, 1995                                    36,582                  -                -         157,388               
Net earnings                                                8,021                  -                -           8,021               
Exercise of options on Common Stock                             -                  -                -             878               
Dividends declared: $1.75 Preferred Stock                  (7,000)                 -                -          (7,000)              
Acquisition of Common                                                                                                               
Stock in Treasury                                               -             20,500             (369)           (369)              
                                                          --------------------------------------------------------------            
Balance, March 28, 1996                                    37,603             20,500             (369)        158,918               
Net earnings                                               18,995                  -                -          18,995               
Exercise of options on Common Stock                             -                  -                -             140               
Preferred Stock conversions                                     -                  -                -               -               
Dividends declared: $1.75 Preferred Stock                  (5,993)                 -                -          (5,993)              
Foreign currency translation adjustment                         -                  -                -          (2,048)              
                                                          --------------------------------------------------------------            
Balance, April 3, 1997                                    $50,605             20,500           $ (369)       $170,012               
                                                          ==============================================================            
                                                                                                                                    
</TABLE> 
                     
                              
      AMC ENTERTAINMENT INC.  
    ------------------------  
                         41   
                              
                              
                              
<PAGE>
<PAGE> 44                     
                              
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                    
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996 
and March 30, 1995            
                              
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 (collectively with AMCE, unless the context otherwise       
requires, the "Company"), is principally involved in the operation of motion  
picture theatres throughout the United States and in Japan and Portugal. 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, National Cinema Network, Inc.                               
                              
Approximately 78% of AMCE's outstanding voting securities are owned by     
Durwood, Inc. ("DI"). See Note 12 for further description of AMCE's      
transactions with DI.         
                              
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 amounts reported in the financial statements  
and accompanying notes. Although these estimates are based on management's   
knowledge of current events and actions it may undertake in the future, they 
may ultimately differ from actual results.                                    
                              
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. The 1997 fiscal year reflects a 53 week    
period, fiscal years 1996 and 1995 each reflect a 52 week period. Fiscal year 
1998 will reflect a 52 week period.                                           
                              
Revenues and Film Rental Costs: Revenues are recognized when admissions and   
concessions sales are received at the theatres. Film rental costs are         
recognized based on the applicable box office receipts and the terms of the   
film licenses.                
                              
Cash and Equivalents: Cash and equivalents consists of cash on hand and      
temporary cash investments with original maturities of less than thirty days. 
The Company invests excess cash in deposits with major banks and in temporary  
cash investments. Such investments are made only in instruments issued or     
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.                     
                              
                              
AMC ENTERTAINMENT INC.        
------------------------      
42                            
                              
                              
               
<PAGE>
<PAGE> 45      
         
The amount of these checks included in accounts payable as of April 3, 1997   
and March 28, 1996 was $11,175,000 and $22,848,000, respectively.    
         
Investments: For purposes of determining gross realized gains and losses, the 
cost of investment securities sold is determined upon specific identification.
Proceeds and gross realized gains from the sales in 1995 of equity securities 
classified as other long-term assets as of March 31, 1994 were $11,689,000 and
$1,407,000, respectively.  
         
Refundable Construction Advances: Included in receivables as of April 3, 1997 
and March 28, 1996 is $33,193,000 and $12,117,000, respectively, due from  
developers to fund a portion of the construction costs of new theatres that   
are to be operated by the Company pursuant to lease agreements. These amounts 
are repaid by the developers either during construction or shortly after   
completion.       
         
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 generally as follows:      
         
      Buildings and improvements                      20 to 40 years 
      Leasehold improvements                           5 to 25 years 
      Furniture, fixtures and equipment                3 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 are eliminated 
from the accounts in the year of disposal. Gains or losses resulting from  
property disposals are credited or charged to operations currently.     
         
Intangible Assets: Intangible assets are recorded at cost and are comprised of
lease rights, which are amounts assigned to theatre leases assumed under   
favorable terms, and location premiums on acquired theatres which are being   
amortized on a straight-line basis over the estimated remaining useful life of
the theatre. Accumulated amortization on intangible assets was approximately  
$41,690,000 and $36,035,000 as of April 3, 1997 and March 28, 1996,     
respectively.     
         
Effective December 30, 1994, the Company reduced the estimated lives of lease 
rights and location premiums on certain smaller theatres to correspond to the 
base terms of the theatre leases. This change in accounting estimate was made 
to better match the estimated life of the intangible assets with the life of  
the theatre due to the Company's strategic plans to primarily own and operate 
larger theatres. The effect of this change in estimate was to increase     
amortization expense in 1995 by $1,542,000 and decrease net earnings by    
$876,000, or $.05 per share.  
         
         
   AMC ENTERTAINMENT INC.  
    ------------------------  
                         43   
                              
                     
         
<PAGE>
<PAGE> 46      
         
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996
         
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 life of the issue; investments in real
estate; investments in partnerships and corporate joint ventures accounted for
under the equity method; preopening costs relating to new theatres which are  
being amortized over two years; and long-term deferred income taxes. 
   
Foreign Currency Translation: The financial statements of subsidiaries outside
the United States are generally measured using the local currency as the   
functional currency. Assets and liabilities of these subsidiaries 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 stockholders' equity. Gains and losses 
from foreign currency transactions of these subsidiaries are included in net  
earnings and have not been material.            
         
Income Taxes: Income taxes are calculated in accordance with Statement of  
Financial Accounting Standards No. 109 ("SFAS 109"), Accounting for Income    
Taxes. The statement requires that deferred income taxes reflect the impact of 
temporary differences between the amount of assets and liabilities for     
financial reporting purposes and such amounts as measured by tax laws and  
regulations.      
         
Earnings per Share: Primary earnings per share is computed by dividing net
earnings for common shares by the sum of the weighted average number of common
shares outstanding and outstanding stock options, when their effect is
dilutive. The average shares used in the computations were 17,726,000 in 1997,
16,795,000 in 1996 and 16,593,000 in 1995. On a fully diluted basis, both net
earnings and shares outstanding are adjusted to assume the conversion of $1.75
Cumulative Convertible Preferred Stock, if dilutive. The average shares used  
in the computations were 17,940,000 in 1997, 17,031,000 in 1996 and 23,509,000 
in 1995.       
         
Changes in Accounting Principles: During fiscal 1996, the Financial Accounting 
Standards Board issued Statement of Financial Accounting Standards No. 123,   
Accounting for Stock-Based Compensation. The Statement allows companies to    
measure compensation cost in connection with employee stock compensation plans 
using a fair value based method or to continue to use an intrinsic value based 
method to account for stock options and awards. The Company has chosen to  
continue using the intrinsic value based method while adopting the      
disclosure-only provisions of the pronouncement.         
         
         
AMC ENTERTAINMENT INC.  
------------------------
44       
         
         
         
<PAGE>
<PAGE> 47      
         
During the fourth quarter of fiscal 1996, the Company adopted Statement of    
Financial Accounting Standards No. 121, Accounting for the Impairment of   
Long-lived Assets and for Long-lived Assets to be Disposed Of ("SFAS 121").   
This Statement establishes accounting standards for the impairment of   
long-lived assets, certain identifiable intangibles and goodwill related to   
those assets to be held and used. In connection with the adoption of this  
Statement, the Company reviewed the assets and related intangibles of its motion
picture theatres for impairment on a disaggregated basis. The expected future 
cash flows of certain theatres, undiscounted and without interest charges, were
less than the carrying value of the assets. As a result, the Company 
recognized an impairment loss of $1,799,000. The impairment loss represents   
the amount by which the carrying value of the theatre assets, including    
intangibles, exceeded the estimated fair value of those assets. The estimated 
fair value of assets was determined as the present value of estimated expected 
future cash flows. The loss is included in depreciation and amortization in   
the Consolidated Statements of Operations.            
         
During fiscal 1997, the Company continued to review the assets and related    
intangibles of its motion picture theatres for impairment in accordance with  
the provisions of SFAS 121. As a result of expected declines in future cash   
flows of certain theatres, the Company recognized an impairment loss of    
$7,231,000 which is included in depreciation and amortization in the    
Consolidated Statements of Operations.             
         
During fiscal 1997, the Financial Accounting Standards Board issued Statement 
of Financial Accounting Standards No. 128 ("SFAS 128"), Earnings per Share.   
SFAS 128 eliminates the presentation of primary and fully diluted earnings per 
share ("EPS") and requires presentation of basic and diluted EPS. The   
principal difference between primary and basic EPS is that common stock    
equivalents are not included with the weighted average number of shares    
outstanding used in the computation of basic EPS. Diluted EPS is computed  
similarly to fully diluted EPS. SFAS 128 is effective for periods ending after 
December 15, 1997, including interim periods, and requires restatement of all 
prior-period EPS data. Early adoption is not permitted. Management has not yet 
determined the impact that this statement will have on the Company.     
         
Presentation: Certain amounts have been reclassified from prior period     
consolidated financial statements to conform with the current year      
presentation.     
         
NOTE 2 - ACQUISITION    
         
On January 10, 1997, the Company purchased the 20% minority interest in the   
common stock of AMC Philadelphia, Inc., an 80% owned subsidiary, for    
$7,400,000 in cash. The acquisition has been accounted for using the purchase 
method of accounting. The excess of the purchase price over the fair value of 
the assets acquired is  
         
   AMC ENTERTAINMENT INC.  
    ------------------------  
                         45   
                              
                              
                              
<PAGE>
<PAGE> 48      
         
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996 
and March 30, 1995   
         
being amortized on a straight-line basis over the estimated useful life of the 
assets acquired.     
         
NOTE 3 - PROPERTY    
         
A summary of property is as follows:            
         
<TABLE>        
<CAPTION>      
         
(In thousands)                                                                     1997              1996  
------------------------------------------------------------------------------------------------------------  
<S>                                                                               <C>               <C>                             
Property owned:                                                                                                                     
   Land                                                                           $ 60,090          $ 35,610
   Buildings and improvements                                                      221,396           146,061
   Furniture, fixtures and equipment                                               264,619           205,761
   Leasehold improvements                                                          211,720           146,152 
                                                                                  --------------------------
                                                                                   757,825           533,584 
   Less-accumulated depreciation and amortization                                  246,476           213,654 
                                                                                  --------------------------
                                                                                   511,349           319,930 
Property leased under capital leases:                                                                   
   Buildings                                                                        66,074            67,274 
   Less-accumulated amortization                                                    34,365            31,719
                                                                                  -------------------------- 
                                                                                    31,709            35,555 
                                                                                  --------------------------                        
                                                                                  $543,058          $355,485 
                                                                                  ========================== 
       
         
Included in property is $83,558,000 and $35,289,000 of construction in     
progress as of April 3, 1997 and March 28, 1996, respectively.       
         
         
AMC ENTERTAINMENT INC.  
------------------------   
46       
         
         
         
<PAGE>
<PAGE> 49      
         
NOTE 4 - OTHER ASSETS AND LIABILITIES           
         
Other assets and liabilities consist of the following:         
         

</TABLE>
<TABLE>        
<CAPTION>         
(In thousands):
                                                                                      1997              1996  
------------------------------------------------------------------------------------------------------------                        
<S>                                                                                <C>               <C>                            
Other current assets:                                                                                                               
   Prepaid rent                                                                    $ 7,366           $ 6,412                        
   Prepaid income taxes                                                                  -             3,074                        
   Deferred income taxes                                                             6,376             3,207                        
   Other                                                                             3,027             2,486                        
                                                                                   -------------------------                        
                                                                                   $16,769           $15,179                        
                                                                                   =========================                        
Other long-term assets:                                                                                                             
   Investments in real estate                                                      $15,329           $ 6,922                        
   Investments in partnerships and corporate joint ventures                            733             1,121                        
   Deferred charges, net                                                            12,147             6,203                        
   Deferred income taxes                                                            23,813            24,506                        
   Preopening costs                                                                  6,519             2,636                        
   Other                                                                             4,263             3,625                        
                                                                                   -------------------------                        
                                                                                   $62,804           $45,013                        
                                                                                   =========================                        
Accrued expenses and other liabilities:                                                                                             
   Taxes other than income                                                         $10,030           $ 7,110                        
   Income taxes                                                                      6,017                 -                        
   Interest                                                                          1,512               841                        
   Payroll and vacation                                                              4,982             6,149                        
   Casualty claims and premiums                                                      4,655             2,034                        
   Deferred income                                                                   8,911            11,634                        
   Accrued bonus                                                                     3,974             7,634                        
   Other                                                                             2,378             7,917                        
                                                                                   -------------------------                        
                                                                                   $42,459           $43,319                        
                                                                                   =========================                        
</TABLE>
                      
                              
      AMC ENTERTAINMENT INC.  
    ------------------------  
                         47   
                              
                              
<PAGE>
<PAGE> 50      
         
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS            
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996 
and March 30, 1995   
         
NOTE 5 - CORPORATE BORROWINGS AND CAPITAL LEASE OBLIGATIONS       
         
A summary of corporate borrowings and capital lease obligations is as follows: 
         
<TABLE>        
<CAPTION>         
(In thousands)                                                                      1997              1996                          
------------------------------------------------------------------------------------------------------------                        
<S>                                                                               <C>               <C>                             
$425 million revolving Credit Facility due 2004                                   $110,000          $120,000                        
11 7/8% Senior Notes due 2000                                                          615               614                        
9 1/2% Senior Subordinated Notes due 2009                                          198,940                 -                        
12 5/8% Senior Subordinated Notes due 2002                                           4,882             4,878                        
Capital lease obligations, interest ranging from 7 1/4% to 20%                      58,652            62,022                        
Other indebtedness                                                                     635               658                        
                                                                                  --------------------------                        
Total                                                                              373,724           188,172                        
Less-current maturities                                                              3,441             2,904                        
                                                                                  --------------------------                        
                                                                                  $370,283          $185,268                        
                                                                                  ==========================                        
</TABLE>  
                    
                              
On December 28, 1995, the Company completed the redemption of $99,383,000 of  
its outstanding 11 7/8% Senior Notes due 2000 at a price of $1,117.90 per  
$1,000 principal amount and $95,096,000 of its outstanding 12 5/8% Senior  
Subordinated Notes due 2002 at a price of $1,144.95 per $1,000 principal   
amount. In addition, the terms of the Indentures governing the remaining   
Senior and Senior Subordinated Notes were amended to eliminate certain     
restrictive covenants. Sources of funds for the redemption were cash and   
investments on hand and borrowings on a credit facility. Premiums paid to  
redeem the Senior and Senior Subordinated Notes, together with the write-off  
of unamortized debt issue costs and other costs directly related to the debt  
redemptions, resulted in an extraordinary loss of $19,350,000, net of income  
tax benefit of $13,400,000. The extraordinary loss reduced earnings per share 
by $1.15 for the year (52 weeks) ended March 28, 1996.         
         
As a part of the refinancing plan, the Company entered into a $425 million    
credit facility (the "Credit Facility"), which was amended and restated as of 
April 10, 1997. The Credit Facility permits borrowings at interest rates based 
on either the bank's base rate or LIBOR and requires an annual commitment fee 
based on margin ratios that could result in a rate of .1875% to .375% on the  
unused portion of the commitment. The Credit Facility matures in 2004. The    
commitment thereunder will reduce by $25 million on each of December 31, 2002,
March 31, 2003, June 30, 2003 and September 30, 2003 and by $50 million on 
December 31, 2003. As of April 3, 1997, the Company had outstanding borrowings 
of $110,000,000 under the Credit Facility at an average interest rate of 6.4% 
per annum.  
         
         
AMC ENTERTAINMENT INC.  
------------------------   
48       
         
         
         
<PAGE>
<PAGE> 51      
         
Covenants of the Credit Facility impose limitations on the incurrence of   
additional indebtedness, creation of liens, change of control, transactions   
with affiliates, mergers, investments, guaranties, asset sales, business   
activities and pledges. The Company is also required to maintain certain   
financial covenants, as defined in the Credit Facility. As of April 3, 1997,  
the Company was in compliance with all financial covenants relating to the    
Credit Facility.     
         
Prior to its April 10, 1997 amendment and restatement, the Credit Facility    
contained a covenant that generally limited the Company's capital    
expenditures. This covenant has been eliminated.         
         
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 $2,821,000 as of April 3, 1997 are included in  
other long-term assets.    
         
On March 19, 1997, the Company sold $200 million of Senior Subordinated Notes 
due 2009 (the "Notes"). The Notes bear interest at the rate of 9 1/2% per  
annum, payable in March and September. The Notes 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. Upon a change of control (as defined 
in the Note Indenture), each holder of the Notes will have the right to    
require the Company to repurchase such 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 are subordinated to all existing and future senior 
indebtedness (as defined in the Note Indenture) of the Company.    
          
The Note Indenture contains certain covenants that, among other things,    
restrict 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 attain "investment grade status" (as defined in
the Note Indenture), the covenants in the Note Indenture limiting the    
Company's ability to incur additional indebtedness and pay dividends will    
cease to apply. As of April 3, 1997, the Company was in compliance with all
financial covenants relating to the Note Indenture.          
          
The Note Indenture also requires the Company to use its best efforts to    
consummate a registered offer to exchange the Notes (the "Exchange Offer") for
notes of AMCE with terms identical in all material respects to the Notes or  
cause a shelf registration statement with respect to the Notes to become   
effective. In the event that certain filing deadlines as specified in the Note 
Indenture are not met, the interest rate borne by the Notes could increase as
much as 1.0% per annum. The Company anticipates meeting its filing deadlines.  
          
          
    AMC ENTERTAINMENT INC.  
    ------------------------  
                         49   
                              
                              
<PAGE>
<PAGE> 52                     
          
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996
and March 30, 1995    
          
          
The discount on the Notes is being amortized to interest expense following the 
interest method of amortization. Costs related to the issuance of the Notes  
were capitalized and are charged to interest expense, following the        
interest method, over the life of the securities. Unamortized issuance costs  
of $4,572,000 as of April 3, 1997 are included in other long-term assets.    
          
Minimum annual payments required under existing capital lease obligations (net 
present value thereof) and maturities of corporate borrowings as of April 3,   
1997, are as follows:   
          
<TABLE>         
<CAPTION>       
                                                           Capital Lease Obligations                                                
                                                    --------------------------------------                                          
                                                     Minimum                         Net                                            
                                                      Lease           Less         Present        Corporate                         
(In thousands)                                       Payments       Interest        Value         Borrowings      Total             
------------------------------------------------------------------------------------------------------------------------            
<S>                                                 <C>             <C>            <C>           <C>            <C>                 
1998                                                $ 12,795        $ 9,380        $ 3,415       $     26       $  3,441            
1999                                                  12,800          8,715          4,085             30          4,115            
2000                                                  12,211          8,026          4,185             34          4,219            
2001                                                  11,939          7,294          4,645            653          5,298            
2002                                                  11,110          6,529          4,581             43          4,624            
Thereafter                                            70,161         32,420         37,741        314,286        352,027            
                                                    --------------------------------------------------------------------            
   Total                                            $131,016        $72,364        $58,652       $315,072       $373,724            
                                                    ====================================================================            
</TABLE> 
         
          
The Company maintains a letter of credit in the normal course of its business. 
The unused portion of the letter of credit was $2,378,000 as of April 3, 1997. 
          
NOTE 6 - STOCKHOLDERS' EQUITY 
          
The authorized Common Stock of AMCE consists of two classes of stock. Except   
for the election of directors, each holder of Common Stock (66 2/3 cents par   
value; 45,000,000 shares authorized) is entitled to one vote per share, and each
holder of Class B Stock (66 2/3 cents par value; 30,000,000 shares authorized)
is entitled to 10 votes per share. Common stockholders voting as a class are 
presently entitled to elect two of the seven members of AMCE's Board of    
Directors with Class B stockholders electing the remainder.        
          
Holders of the Company's stock have no pre-emptive or subscription rights and  
there are no restrictions with respect to transferability. Holders of the    
Common Stock have no conversion rights, but 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 (66 2/3 cents  
par value), of which 3,303,600 shares of $1.75 Cumulative Convertible Preferred
Stock (66 2/3 cents par value) (the "Convertible Preferred Stock") are issued  
and outstanding. Dividends are payable quarterly at an annual rate of $1.75 per
share.        
          
          
AMC ENTERTAINMENT INC.    
------------------------  
50                          
                              
                              
                              
<PAGE>
<PAGE> 53       
          
The Convertible Preferred Stock has preference in liquidation in the amount of
$25 per share plus accrued and unpaid dividends. The Convertible Preferred 
Stock is convertible at the option of the holder into shares of Common Stock   
at a conversion price of $14.50 per share of Common Stock, subject to change   
in certain events. In lieu of conversion the Company may, at its option, pay   
to the holder cash equal to the then market value of the Common Stock. The   
Company may redeem in whole or in part the Convertible Preferred Stock at a  
redemption price beginning at $26.00 per share, declining ratably to $25.00  
per share after March 15, 2001.                  
          
During 1997, various holders of the Company's Convertible Preferred Stock    
converted 696,400 shares into 1,200,589 shares of Common Stock at a conversion 
rate of 1.724 shares of Common Stock for each share of Convertible Preferred   
Stock.        
          
Stock-Based Compensation Plans                 
In June 1983, AMCE adopted a stock option plan (the "1983 Plan") for selected  
employees. This plan provided for the grant of rights to purchase shares of  
Common Stock under both incentive and non-incentive stock option agreements.   
The number of shares which could be sold under the plan could not exceed   
750,000 shares. The 1983 Plan provided that the exercise price could not be  
less than the fair market value of the stock at the date of grant and    
unexercised options expired no later than ten years after date of grant.   
Pursuant to the terms of the 1983 Plan, no further options may be granted    
under this plan.      
          
In September 1984, AMCE adopted a non-qualified stock option plan (the "1984   
Plan"). This plan provided for the grant of rights to purchase shares of   
Common Stock under non-qualified stock option agreements. The number of shares 
which could be sold under the plan could not exceed 750,000 shares. The 1984   
Plan provided that the exercise price would be determined by the Company's   
Stock Option Committee and that the options expired no later than ten years  
after date of grant. Pursuant to the terms of the 1984 Plan, no further    
options may be granted under this plan.              
          
In November 1994, AMCE adopted a stock option and incentive plan (the "1994  
Plan"). This plan provides for three basic types of awards: (i) grants of    
stock options which are either incentive or non-qualified stock options, (ii)  
grants of stock awards, which may be either performance or restricted stock  
awards, and (iii) performance unit awards. The number of shares of Common    
Stock which may be sold or granted under the plan may not exceed 1,000,000   
shares. The 1994 Plan provides that the 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 1994 Plan vest over two years from the date of    
issuance.       
          
          
    AMC ENTERTAINMENT INC.  
    ------------------------  
                         51   
                              
                              
                              
<PAGE>
<PAGE> 54         
          
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996  
and March 30, 1995    
          
The Company has adopted the disclosure-only provisions of SFAS 123. As     
permitted by SFAS 123, the Company has chosen to continue to account for   
stock-based compensation using the intrinsic value method. Accordingly,    
no compensation expense has been recognized for the Company's stock-based    
compensation plans other than for performance-based stock awards. In 1997 and  
1996, the Company granted to certain individuals stock awards which are    
issuable at the end of a performance period ending April 2, 1998 based on    
certain performance criteria. The number of shares which may be issued at the  
end of the performance period ranges from zero to 216,000. The Company     
recognized compensation expense for performance stock awards of $586,000 and   
$772,000 in 1997 and 1996, respectively. Had compensation expense for the    
Company's plans been determined based on the fair value at the grant dates for 
stock options and awards granted in 1997 and 1996, the Company's net earnings  
and net earnings for common shares would have been different.        
          
The pro forma amounts under SFAS 123 are indicated below:        
          
<TABLE>         
<CAPTION>       
                              
(In thousands except per share amounts)                                                   1997              1996                    
------------------------------------------------------------------------------------------------------------------                  
<S>                                                                                      <C>                <C>                     
Net earnings                                                                                                                        
     As reported                                                                         $18,995            $8,021                  
     Pro forma                                                                           $18,664            $8,210                  
Net earnings per common share                                                                                                       
     As reported                                                                         $   .74            $  .06                  
     Pro forma                                                                           $   .72            $  .07                  
                                                                                                                                    
</TABLE>
                      
                              
The following table reflects the weighted average fair value per option    
granted during the year, as well as the significant weighted average     
assumptions used in determining fair value using the Black-Scholes     
option-pricing model:   
          
<TABLE>         
<CAPTION>       
                                                                                          1997              1996                    
------------------------------------------------------------------------------------------------------------------                  
<S>                                                                                      <C>               <C>                      
Fair value on grant date                                                                 $11.63            $ 6.96                   
Risk-free interest rate                                                                    6.24%             5.64%                  
Expected life (years)                                                                         5                 5                   
Expected volatility                                                                       42.9 %            46.0 %                  
Expected dividend yield                                                                       -                 -                   
</TABLE> 
                     
                              
AMC ENTERTAINMENT INC.        
------------------------      
52                            
                              
                              
                              
<PAGE>
<PAGE> 55                     
                              
A summary of stock option activity under all plans is as follows:      
          
<TABLE>         
<CAPTION>       
                                           1997                          1996                             1995                      
                               --------------------------------------------------------------------------------------------         
                                                Weighted                       Weighted                         Weighted            
                                                 Average                        Average                          Average            
                                 Number      Exercise Price    Number       Exercise Price      Number       Exercise Price         
                               of Shares        Per Share    of Shares         Per Share      of Shares         Per Share           
                               --------------------------------------------------------------------------------------------         
<S>                            <C>              <C>          <C>               <C>            <C>               <C>                 
Outstanding at                                                                                                                      
 beginning of year              487,500          $  9.67      776,500           $  9.57        813,300           $  9.29            
Granted                         103,250          $ 24.80       23,250           $ 14.50         36,500           $ 11.75            
Canceled                        (17,250)         $ 10.04     (229,750)          $  9.46        (33,750)          $  9.38            
Exercised                       (15,000)         $ 9.375      (82,500)          $ 10.65        (39,550)          $  6.01            
                               --------------------------------------------------------------------------------------------         
Outstanding at                                                                                                                      
 end of year                    558,500          $ 12.47      487,500           $  9.67        776,500           $  9.57            
                               ============================================================================================         
Exercisable at                                                                                                                      
 end of year                    365,875          $ 10.51      233,250           $  9.45        230,000           $  9.79            
                               ============================================================================================         
Available for grant at                                                                                                              
 end of year                    630,500                       746,500                          817,500                              
                               ============================================================================================         
</TABLE> 
                     
                              
The following table summarizes information about stock options as of April 3,  
1997:         
          
<TABLE>         
<CAPTION>             
                                              Outstanding Stock Options                         Exercisable Stock Options           
----------------------------------------------------------------------------------------------------------------------------        
                                                  Weighted-Average                                                                  
          Range of                 Number             Remaining        Weighted-Average         Number      Weighted-Average        
      Exercise Prices            of Shares        Contractual Life      Exercise Price        of Shares      Exercise Price         
<S>                              <C>                 <C>                   <C>                <C>               <C>                 
$  9.25     to    $  11.75        436,500             6.3 years             $  9.46            335,250           $  9.51            
$ 14.50     to    $  18.50         29,250             8.7 years             $ 15.94              9,375           $ 14.50            
$ 24.50     to    $ 26.375         92,750             9.1 years             $ 25.52             21,250           $ 24.50            
----------------------------------------------------------------------------------------------------------------------------        
$  9.25     to    $ 26.375        558,500             6.9 years             $ 12.47            365,875           $ 10.51            
============================================================================================================================        
</TABLE> 
                     
                              
      AMC ENTERTAINMENT INC.  
    ------------------------  
                         53   
                              
                              
<PAGE>
<PAGE> 56         
          
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996  
and March 30, 1995    
          
NOTE 7 - INCOME TAXES   
          
Income taxes reflected in the Consolidated Statements of Operations for the  
three years ended April 3, 1997 are as follows:            
          
<TABLE>         
<CAPTION>       
(In thousands)                                                       1997              1996               1995                    
------------------------------------------------------------------------------------------------------------------                  
<S>                                                                 <C>               <C>                <C>                        
Current:                                                                                                                            
   Federal                                                           $ 11,418          $  5,134           $  7,738                  
   State                                                                3,958             2,094              4,547                  
                                                                     ---------------------------------------------                  
      Total current                                                    15,376             7,228             12,285                  
Deferred:                                                                                                                           
   Federal                                                             (2,114)           (1,121)            (1,238)                 
   State                                                                 (362)             (207)              (255)                 
   Change in valuation allowance                                            -                 -            (19,792)                 
                                                                     ---------------------------------------------                  
      Total deferred                                                   (2,476)           (1,328)           (21,285)                 
                                                                     ---------------------------------------------                  
Total provision                                                        12,900             5,900             (9,000)                 
Tax benefit of extraordinary item - extinguishment of debt                  -            13,400                  -                  
                                                                     ---------------------------------------------                  
Total provision before extraordinary item                            $ 12,900          $ 19,300           $ (9,000)                 
                                                                     =============================================                  
</TABLE> 
                     
                              
The effective tax rate on income before extraordinary items was 40.4%, 41.4%,  
and (36.0%) in 1997, 1996 and 1995, respectively. The difference between the   
effective rate and the U.S. federal income tax statutory rate of 35% is    
accounted for as follows:   
          
<TABLE>         
<CAPTION>       
(In thousands)                                                          1997              1996              1995                    
------------------------------------------------------------------------------------------------------------------                  
<S>                                                                  <C>               <C>               <C>                        
Tax on earnings before provision for income tax                                                                                     
 and extraordinary item at statutory rates                            $ 11,163          $ 16,335          $  8,742                  
Add (subtract) tax effect of:                                                                                                       
   State income taxes, net of federal tax benefit                        2,258             3,163             2,973                  
   Change in valuation allowance                                             -                 -           (19,792)                 
   Other, net                                                             (521)             (198)             (923)                 
                                                                      --------------------------------------------                  
   Income tax provision                                               $ 12,900          $ 19,300          $ (9,000)                 
                                                                      ============================================                  
</TABLE> 
                     
                              
                              
AMC ENTERTAINMENT INC.        
------------------------      
54                            
                              
                              
<PAGE>
<PAGE> 57                     
                              
                              
The significant components of deferred income tax assets and liabilities as of 
April 3, 1997 and March 28, 1996 are as follows:           
 
<TABLE>                       
<CAPTION>                     
                                                                      1997                                1996                      
                                                          ----------------------------------------------------------------          
                                                               Deferred Income Tax                 Deferred Income Tax              
(In thousands)                                             Assets          Liabilities         Assets          Liabilities          
--------------------------------------------------------------------------------------------------------------------------          
<S>                                                      <C>                <C>              <C>                <C>                 
Accrued reserves and liabilities                          $  9,189           $   179          $  5,323           $   343            
Investments in partnerships                                      -               495                 -               419            
Capital lease obligations                                   11,464                 -            10,852                 -            
Depreciation                                                 5,587                 -             7,842                 -            
Deferred rents                                               6,254                 -             5,266                 -            
Other                                                          550             2,181               683             1,491            
                                                          ----------------------------------------------------------------          
      Total                                                 33,044             2,855            29,966             2,253            
Less: Current deferred income taxes                          6,586               210             3,702               495            
                                                          ----------------------------------------------------------------          
Total noncurrent deferred income taxes                    $ 26,458           $ 2,645          $ 26,264           $ 1,758            
                                                          ================================================================          
Net noncurrent deferred income taxes                      $ 23,813                            $ 24,506                              
                                                          ================================================================          
</TABLE>  
                    
            
SFAS 109 requires that a valuation allowance be provided against deferred tax  
assets if, based on the weight of available evidence, it is more likely than   
not that some or all of the deferred tax assets will not be realized. Based  
upon positive earnings in recent years and the expectation that taxable income 
will continue for the foreseeable future, management believes it is more   
likely than not that the Company will realize its deferred tax assets and,   
accordingly, no valuation allowance has been provided as of April 3, 1997 and  
March 28, 1996.     
          
NOTE 8 - LEASES     
          
The majority of the Company's operations are conducted in premises occupied  
under lease agreements with base terms ranging generally from 15 to 25 years,  
with certain leases containing options to extend the leases for up to    
an additional 20 years. The leases provide for fixed rentals and/or rentals  
based on revenues with a guaranteed minimum. The Company also leases certain   
equipment under leases expiring at various dates. 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. Performance under some   
leases has been guaranteed by DI.                
          
          
    AMC ENTERTAINMENT INC.  
    ------------------------  
                         55   
                              
                              
<PAGE>
<PAGE> 58                     
                              
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996  
and March 30, 1995    
          
          
Following is a schedule, by year, of future minimum rental payments required   
under existing operating leases that have initial or remaining non-cancellable 
terms in excess of one year as of April 3, 1997:           
          
<TABLE>         
<CAPTION>       
(In thousands)                
--------------------------------------------------------------------------------                                                    
<S>                                                          <C>                                                                    
      1998                                                    $   68,551                                                            
      1999                                                        69,070                                                            
      2000                                                        68,406                                                            
      2001                                                        66,388                                                            
      2002                                                        63,748                                                            
      Thereafter                                                 722,341                                                            
                                                              ----------                                                            
        Total minimum payments required                       $1,058,504                                                            
                                                              ==========                                                            
</TABLE> 
                     
                              
The Company has entered into agreements to lease space for the operation of  
theatres not yet fully constructed. The scheduled completion of construction   
and theatre openings are at various dates during fiscal 1998. The future   
minimum rental payments required under the terms of these leases total     
approximately $429 million. 
          
In addition, the Company entered into a master lease agreement during fiscal   
1997 for three theatres with an expected cost of approximately $81 million.  
Rental amounts will be based on the final construction costs of the theatres   
and the lessor's cost of funds and will be finalized as the theatres open. The 
initial lease term under the agreement will be three years. The master lease   
agreement provides for a substantial residual value guarantee by the Company   
and includes purchase and renewal options. The Company expects these leases to 
be classified as operating leases.                 
          
The Company records rent expense on a straight-line basis over the term of the
lease. Included in long-term liabilities as of April 3, 1997 and March 28, 1996
is $16,278,000 and $12,858,000, respectively, of deferred rent representing pro
rata future minimum rental payments for leases with scheduled rent increases.  
        
Rent expense is summarized as follows:               
          
<TABLE>         
<CAPTION>       
(In thousands)                                                          1997              1996              1995                    
------------------------------------------------------------------------------------------------------------------                  
<S>                                                                  <C>               <C>               <C>                        
Minimum rentals                                                       $ 80,670          $ 64,657          $ 59,790                  
Percentage rentals based on revenues                                     2,008             2,354             1,970                  
                                                                      --------------------------------------------                  
                                                                      $ 82,678          $ 67,011          $ 61,760                  
                                                                      ============================================                  
</TABLE>
                      
                              
                              
AMC ENTERTAINMENT INC.        
------------------------      
56                            
                              
                              
<PAGE>
<PAGE> 59                     
                              
NOTE 9 - EMPLOYEE BENEFIT PLANS                  
          
The Company sponsors a non-contributory defined benefit pension plan covering, 
after a minimum of one year of employment, all employees age 21 or older, who  
have completed 1,000 hours of service in their first twelve months of    
employment or in a calendar year and who are not covered by a collective   
bargaining agreement.   
          
The plan calls for benefits to be paid to eligible employees 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. Plan assets are 
invested in a group annuity contract 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 following table sets forth the plan's funded status as of December 31,   
1996 and 1995 (plan valuation dates) and the amounts included in the     
Consolidated Balance Sheets as of April 3, 1997 and March 28, 1996:      
          
<TABLE>         
<CAPTION>       
(In thousands)                                                                   1997               1996                          
------------------------------------------------------------------------------------------------------------                        
<S>                                                                             <C>                <C>                              
Actuarial present value of accumulated benefit                                                                                      
 obligation, including vested benefits of $11,139 and $10,041                    $ 11,309           $ 10,205                        
                                                                                 ===========================                        
Projected benefit obligation for service rendered to date                        $ 18,489           $ 17,051                        
Plan assets at fair value                                                         (10,857)            (9,580)                       
                                                                                 ---------------------------                        
Projected benefit obligation in excess of plan assets                               7,632              7,471                        
Unrecognized net loss from past experience different from that                                                                      
 assumed and effects of changes in assumptions                                       (686)            (1,509)                       
Unrecognized net obligation upon adoption being recognized over 15 years           (1,411)            (1,588)                       
                                                                                 ---------------------------                        
Pension liability                                                                 $ 5,535            $ 4,374                        
                                                                                 ===========================                        
</TABLE>   
                   
                              
Net pension expense includes the following components:     
                              
<TABLE>                       
<CAPTION>                                                                                                                           
(In thousands)                                                   1997              1996              1995                           
-----------------------------------------------------------------------------------------------------------                         
<S>                                                            <C>               <C>               <C>                              
Service cost                                                    $ 1,191           $   855           $ 1,261                         
Interest cost                                                     1,188               966               971                         
Actual return on plan assets                                     (1,218)           (1,630)               55                         
Net amortization and deferral                                       563             1,096              (190)                        
                                                                -------------------------------------------                         
Net pension expense                                             $ 1,724           $ 1,287           $ 2,097                         
                                                                ===========================================                         
</TABLE>  
                    
                              
The Company also sponsors a non-contributory Supplemental Executive Retirement 
Plan (the "SERP") which provides certain employees additional pension benefits.
The actuarial present value of accumulated plan benefits related to the SERP 
was $569,000 and $379,000 as of April 3, 1997 and March 28, 1996, respectively,
which is reflected in the Consolidated Balance Sheets.         
          
          
    AMC ENTERTAINMENT INC.  
    ------------------------  
                         57   
                              
                              
<PAGE>
<PAGE> 60                     
                              
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             
Year (53 Weeks) Ended April 3, 1997, and Years (52 Weeks) Ended March 28, 1996 
and March 30, 1995    
          
The weighted average discount rate used to measure the plans' projected    
benefit obligations was 7.0% for 1997 and 1996 and 7.75% in 1995. The rate of
increase in future compensation levels was 6.0% for 1997, 1996 and 1995 and  
the expected long-term rate of return on assets was 8.5% for 1997, 1996 and  
1995. A limited number of employees are covered by collective bargaining   
agreements under which payments are made to a union-administered fund.     
          
The Company sponsors a voluntary thrift savings plan covering the same     
employees eligible for the pension plan. Since inception of the savings plan,
the Company has matched 50% of each eligible employee's elective contributions,
limited to 3% of the employee's salary.            
          
The Company's expense under the thrift savings plan was $1,270,000, $1,032,000 
and $1,015,000 for 1997, 1996 and 1995, respectively.          
          
The Company currently offers eligible retirees the opportunity to participate  
in a health plan (medical and dental) and a life insurance plan. Substantially 
all employees may become eligible for these benefits provided that the employee
must be at least 55 years of age and have 15 years of credited service at  
retirement. The health plan is contributory, with retiree contributions    
adjusted annually; the life insurance plan is noncontributory. The accounting  
for the health plan 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. Retiree health and life     
insurance plans are not funded. The Company is amortizing the transition   
obligation on the straight-line method over a period of 20 years.      
          
The following table sets forth the plans' accumulated postretirement benefit   
obligation reconciled with the amounts included in the Consolidated Balance  
Sheets as of April 3, 1997 and March 28, 1996:             
          
<TABLE>         
<CAPTION>       
(In thousands)                                                                     1997              1996                          
-----------------------------------------------------------------------------------------------------------                         
<S>                                                                              <C>               <C>                              
Accumulated postretirement benefit obligation:                                                                                      
   Retirees                                                                       $   618           $   557                         
   Fully eligible active plan participants                                            513               438                         
   Other active plan participants                                                   1,777             1,292                         
                                                                                  -------------------------                         
Accumulated postretirement benefit obligation                                       2,908             2,287                         
Unrecognized net obligation upon adoption being                                                                                     
 recognized over 20 years                                                            (697)             (747)                        
Unrecognized gain (loss)                                                             (190)              105                         
                                                                                  -------------------------                         
Postretirement benefit liability                                                  $ 2,021           $ 1,645                         
                                                                                  =========================                         
</TABLE> 

                     
                              
AMC ENTERTAINMENT INC.        
------------------------      
58                            
                              
                              
<PAGE>
<PAGE> 61                     
                              
                              
Postretirement expense includes the following components:        
                              
<TABLE>                       
<CAPTION>                     
(In thousands)                                                     1997             1996               1995                         
------------------------------------------------------------------------------------------------------------                        
<S>                                                               <C>              <C>                <C>                           
Service cost                                                       $ 199            $ 192              $ 188                        
Interest cost                                                        172              208                202                        
Net amortization and deferral                                         50               66                 66                        
                                                                   -----------------------------------------                        
Postretirement expense                                             $ 421            $ 466              $ 456                        
                                                                   =========================================                        
</TABLE> 
                     
                              
For measurement purposes, the annual rate of increase in the per capita cost   
of covered health care benefits assumed for 1997 was 7.5% for medical and    
4.75% for dental. The rates were assumed to decrease gradually to 5.0% for   
medical and 3.0% for dental at 2020 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 3, 1997 by $862,000 and the aggregate of the service and
interest cost components of postretirement expense for 1997 by $164,000. The 
weighted-average discount rate used in determining the accumulated     
postretirement benefit obligation was 7.0% for 1997 and 1996 and 7.75% for   
1995.         
          
NOTE 10 - CONTINGENCIES   
          
The Company, in the normal course of business, is party to various legal   
actions. 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.          
          
NOTE 11 - FUTURE DISPOSITION OF ASSETS               
          
The Company has provided reserves for estimated losses from discontinuing the  
operation of fast food restaurants, for theatres which have been or are    
expected to be closed and for other future dispositions of assets.     
          
In conjunction with the opening of certain new theatres in fiscal 1986 through 
1988, the Company expanded its food services by leasing additional space   
adjacent to those theatres to operate specialty fast food restaurants. The   
Company discontinued operating the restaurants due to unprofitability. The   
Company continues to sub-lease or to convert to other uses the space leased  
for these restaurants. The Company is obligated under long-term lease    
commitments with remaining terms of up to eleven years. As of April 3, 1997,   
the base rents aggregate approximately $779,000 annually, and $7,150,000 over  
the remaining term of the leases. As of April 3, 1997, the Company has     
subleased approximately 55% of the space with remaining terms ranging from 2   
months to 68 months. Non-cancellable subleases currently aggregate     
approximately $496,000 annually, and $4,216,000 over the remaining term of the 
subleases.        
          
          
    AMC ENTERTAINMENT INC.  
    ------------------------  
                         59   
                              
                              
<PAGE>
<PAGE> 62                     
            
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS             
Year (53 Weeks) Ended April 3, 1997 and Years (52 Weeks) Ended March 28, 1996  
and March 30, 1995    
          
          
NOTE 12 - TRANSACTIONS WITH DURWOOD, INC.              
          
The Company and DI maintain intercompany accounts. Charges to the intercompany 
accounts include the allocation of AMC general and administrative expense of   
$116,000 in 1996 and 1995 and payments made by AMC on behalf of DI. There were 
no general and administrative allocations in 1997. DI and non-AMCE subsidiaries
owed the Company $181,000 and $795,000 as of April 3, 1997 and March 28, 1996, 
respectively.       
          
The Board of Directors has approved an agreement providing for the Merger of   
the Company and DI, with the Company remaining as the surviving entity. The  
Merger has been sought by members of the Durwood family so that they may hold  
their interests in the Company directly instead of indirectly through DI and a 
related entity. In the Merger, stockholders of DI would exchange their shares  
of DI stock for shares of the Company's stock. Although the outstanding shares 
of the Company's Common Stock will increase and the outstanding shares of its  
Class B Stock will decrease if the Merger is effected, no aggregate increase   
in total outstanding shares will occur because the shares of the Company owned 
by DI will be canceled and the shares of the Company held by other stockholders
would not be exchanged in the Merger. A condition to the Merger is that the  
Merger Agreement receive approval of the holders of a majority of the shares of
Common Stock other than DI, the Durwood family, their spouses and children and 
officers and directors of the Company.               
          
DI is primarily a holding company with no significant operations or assets   
other than its equity interest in the Company. Management expects that the   
Merger will be accounted for as a corporate reorganization and that,     
accordingly, the recorded balances for consolidated assets, liabilities, total 
stockholders' equity and results of operations of the Company would not be   
affected. If the Merger occurs, the Company will be responsible for paying 50% 
of the costs in connection with the Merger; the aggregate merger costs for both
the company and DI are estimated to be approximately $2 million. Management  
does not believe that the transaction will have a significant effect on the  
Company's financial condition, liquidity or capital resources.       
          
          
AMC ENTERTAINMENT INC.    
------------------------  
60          
          
          
<PAGE>
<PAGE> 63       
          
NOTE 13 - 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 and investments in debt securities
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:        
          
<TABLE>         
<CAPTION>       
                                                               1997                               1996                              
                                                    --------------------------------------------------------------                  
                                                    Carrying            Fair           Carrying             Fair                    
(In thousands)                                       Amount             Value           Amount              Value                   
------------------------------------------------------------------------------------------------------------------                  
<S>                                                <C>               <C>              <C>                <C>                        
Financial assets:                                                                                                                   
   Cash and equivalents                             $ 24,715          $ 24,715         $ 10,795           $ 10,795                  
Financial liabilities:                                                                                                              
   Cash overdrafts                                  $ 11,175          $ 11,175         $ 22,848           $ 22,848                  
   Corporate borrowings                              315,072           315,804          126,150            126,992                  
</TABLE> 
                     
                              
                              
      AMC ENTERTAINMENT INC.  
    ------------------------  
                         61   
                              
                              
<PAGE>
<PAGE> 64                     
                              
<TABLE>                       
STATEMENTS OF OPERATIONS BY QUARTER                                              
                              
<CAPTION>                                                                        
                                                          June 27,          June 29,         Sept. 26,         Sept. 28,            
(In thousands, except per share amounts) (Unaudited)        1996              1995              1996              1995              
------------------------------------------------------------------------------------------------------------------------------      
<S>                                                     <C>               <C>               <C>               <C>                   
Total revenues                                           $ 161,927         $ 153,409         $ 202,436         $ 184,482            
Total cost of operations                                   132,821           118,738           155,593           135,497            
General and administrative                                  13,025            11,085            11,647            14,497            
Depreciation and amortization                               11,674             9,972            12,740            10,471            
                                                         ---------------------------------------------------------------------      
Operating income                                             4,407            13,614            22,456            24,017            
Interest expense                                             4,909             8,309             4,852             8,318            
Investment income                                              182             2,226               139             2,440            
Gain (loss) on disposition of assets                            18               (15)              (49)             (123)           
                                                         ---------------------------------------------------------------------      
Earnings (loss) before income taxes                                                                                                 
 and extraordinary item                                       (302)            7,516            17,694            18,016            
Income tax provision                                          (125)            3,100             7,125             7,400            
                                                         ---------------------------------------------------------------------      
Earnings (loss) before extraordinary item                     (177)            4,416            10,569            10,616            
Extraordinary item                                                                                                                  
 - Loss on extinguishment of debt                                                                                                   
 (net of income tax benefit of $13,400)                          -                 -                 -                 -            
                                                         ---------------------------------------------------------------------      
Net earnings (loss)                                      $    (177)        $   4,416         $  10,569         $  10,616            
                                                         =====================================================================      
Preferred dividends                                          1,546             1,750             1,454             1,750            
                                                         ---------------------------------------------------------------------      
Net earnings (loss)                                                                                                                 
 for common shares                                       $  (1,723)        $   2,666         $   9,115         $   8,866            
                                                         =====================================================================      
Earnings (loss) per share before                                                                                                    
 extraordinary item:                                                                                                                
Primary                                                  $    (.10)        $     .16         $     .51         $     .53            
                                                         =====================================================================      
Fully diluted                                            $    (.10)        $     .16         $     .44         $     .45            
                                                         =====================================================================      
Earnings (loss) per share:                                                                                                          
Primary                                                  $    (.10)        $     .16         $     .51         $     .53            
                                                         =====================================================================      
Fully diluted                                            $    (.10)        $     .16         $     .44         $     .45            
                                                         =====================================================================      

<FN>          
<F1> During the fourth quarter of 1996, the Company adopted Statement of
     Financial Accounting Standards No. 121 ("SFAS 121"), Accounting for the
     Impairment of Long-lived Assets and for Long-lived Assets to be Disposed
     Of. As a result, the Company recognized an impairment loss under SFAS 121 
     of $1,799.   
<F2> During the fourth quarter of 1997, the Company recognized an impairment
     loss under SFAS 121 of $7,231.                        
<F3> Fiscal year 1997 consists of 53 weeks and the fiscal quarter ended April
     3, 1997 consists of 14 weeks.                         
                              
                              
AMC ENTERTAINMENT INC.        
------------------------      
62                            
                              
                              
<PAGE>
<PAGE> 65                     
                              
<CAPTION>                     
                                                                      Dec. 26,          Dec. 28,          April 3,                  
                                                                        1996              1995            1997<F3>                  
------------------------------------------------------------------------------------------------------------------------------      
<S>                                                                 <C>               <C>               <C>                         
Total revenues                                                       $ 163,192         $ 154,970         $ 222,042                  
Total cost of operations                                               130,464           118,252           161,124                  
General and administrative                                              13,910            11,437            18,065                  
Depreciation and amortization                                           13,129            10,399            22,260<F2>              
                                                                     ---------------------------------------------------------      
Operating income                                                         5,689            14,882            20,593                  
Interest expense                                                         5,275             7,883             6,986                  
Investment income                                                          343             1,958               192                  
Gain (loss) on disposition of assets                                       (53)              159                 -                  
                                                                     ---------------------------------------------------------      
Earnings (loss) before income taxes                                                                                                 
 and extraordinary item                                                    704             9,116            13,799                  
Income tax provision                                                       285             3,800             5,615                  
                                                                     ---------------------------------------------------------      
Earnings (loss) before extraordinary item                                  419             5,316             8,184                  
Extraordinary item                                                                                                                  
 - Loss on extinguishment of debt                                                                                                   
 (net of income tax benefit of $13,400)                                      -           (19,350)                -                  
                                                                     ---------------------------------------------------------      
Net earnings (loss)                                                  $     419         $ (14,034)        $   8,184                  
                                                                     =========================================================      
Preferred dividends                                                      1,454             1,750             1,453                  
                                                                     ---------------------------------------------------------      
Net earnings (loss)                                                                                                                 
 for common shares                                                   $  (1,035)        $ (15,784)        $   6,731                  
                                                                     =========================================================      
Earnings (loss) per share before                                                                                                    
 extraordinary item:                                                                                                                
Primary                                                              $    (.06)        $     .21         $     .38                  
                                                                     =========================================================      
Fully diluted                                                        $    (.06)        $     .21         $     .34                  
                                                                     =========================================================      
Earnings (loss) per share:                                                                                                          
Primary                                                              $    (.06)        $    (.93)        $     .38                  
                                                                     =========================================================      
Fully diluted                                                        $    (.06)        $    (.93)        $     .34                  
                                                                     =========================================================      

                                                                                                                                    
    AMC ENTERTAINMENT INC.                                                     
  ------------------------                                                     
                        63                                                      
                                                                                                                                    
                                                                                                                                    
<PAGE>
<PAGE> 66                                                                 

<CAPTION>                                                                                                                           
                                                                     March 28,                 Fiscal Year                          
                                                                       1996             1997<F3>            1996                    
------------------------------------------------------------------------------------------------------------------------------      
<S>                                                                 <C>               <C>               <C>                         
Total revenues                                                       $ 163,111         $ 749,597         $ 655,972                  
Total cost of operations                                               118,871           580,002           491,358                  
General and administrative                                              15,040            56,647            52,059                  
Depreciation and amortization                                           13,044<F1>        59,803            43,886                  
                                                                     ---------------------------------------------------------      
Operating income                                                        16,156            53,145            68,669                  
Interest expense                                                         4,318            22,022            28,828                  
Investment income                                                          428               856             7,052                  
Gain (loss) on disposition of assets                                      (243)              (84)             (222)                 
                                                                     ---------------------------------------------------------      
Earnings (loss) before income taxes                                                                                                 
 and extraordinary item                                                 12,023            31,895            46,671                  
Income tax provision                                                     5,000            12,900            19,300                  
                                                                     ---------------------------------------------------------      
Earnings (loss) before extraordinary item                                7,023            18,995            27,371                  
Extraordinary item                                                                                                                  
 - Loss on extinguishment of debt                                                                                                   
 (net of income tax benefit of $13,400)                                      -                 -           (19,350)                 
                                                                     ---------------------------------------------------------      
Net earnings (loss)                                                  $   7,023         $  18,995         $   8,021                  
                                                                     =========================================================      
Preferred dividends                                                      1,750             5,907             7,000                  
                                                                     ---------------------------------------------------------      
Net earnings (loss)                                                                                                                 
 for common shares                                                   $   5,273         $  13,088         $   1,021                  
                                                                     =========================================================      
Earnings (loss) per share before                                                                                                    
 extraordinary item:                                                                                                                
Primary                                                              $     .31         $     .74         $    1.21                  
                                                                     =========================================================      
Fully diluted                                                        $     .29         $     .73         $    1.20                  
                                                                     =========================================================      
Earnings (loss) per share:                                                                                                          
Primary                                                              $     .31         $     .74         $     .06                  
                                                                     =========================================================      
Fully diluted                                                        $     .29         $     .73         $     .06                  
                                                                     =========================================================      
</TABLE> 
                     
                              
                              
      AMC ENTERTAINMENT INC.  
    ------------------------  
                         63   
                              
                              
<PAGE>
<PAGE> 67                     
                              
INVESTOR INFORMATION          
                              
Stock Listing/Symbol    
AMC Entertainment Inc. Common Stock is traded on the American and Pacific    
Stock Exchanges under the symbol AEN. The Preferred Stock is traded on the   
American Stock Exchange under the symbol AEN Pr. There is no established   
public trading market for Convertible Class B Stock.           
                          
<TABLE>                       
Quarterly Common Stock Price Range                                               
<CAPTION>                     
                                Fiscal 1997                   Fiscal 1996        
                          ------------------------------------------------------ 
                            High           Low            High           Low     
                          ------------------------------------------------------ 
<S>                      <C>            <C>            <C>            <C>        
First Quarter             $ 33.87        $ 23.12        $ 14.50        $ 11.00   
Second Quarter              27.87          15.87          18.12          13.50   
Third Quarter               19.50          13.75          23.50          17.62   
Fourth Quarter              20.25          13.87          24.12          19.25   
Year                      $ 33.87        $ 13.75        $ 24.12        $ 11.00   
                              
(As reported on the American Stock Exchange)                                     
</TABLE>                      
                              
Stock Ownership               
At the end of fiscal 1997, the Company had 6,583,969 common shares of Common   
Stock outstanding, 42.9% of which were beneficially owned by company     
management. There were 470 shareholders of record on May 19, 1997. At the end  
of fiscal 1997, the Company had 11,157,000 shares of Convertible Class B   
outstanding, 100% of which were beneficially owned by Company management.    
There was one shareholder of record on May 19, 1997.           
          
SEC Form 1O-K       
A copy of the report to the Securities and Exchange Commission on Form 10-K  
may be obtained without charge upon written request to the Finance Department  
at AMC headquarters.    
          
Annual Meeting      
The annual meeting of stockholders will be held on Thursday, November 13,    
1997, at 11a.m. cst. Location will be announced at a later date.       
          
Quarterly Calendar    
The Company has a 52/53 week fiscal year ending on the Thursday closest to the 
last day of March. Fiscal 1998 quarter-end dates will be July 3, October 2,  
January 1 and April 2. Fiscal 1998 will be a 52 week year. Quarterly results   
usually are announced approximately four weeks after the close of the quarter. 
          
Registrar and Transfer Agent  
UMB Bank, n.a., Securities Transfer Division             
928 Grand Avenue, 13th Floor, P.O. Box 410064            
Kansas City, Missouri 64141-6226                 
          
Corporate Offices     
AMC Entertainment Inc., 106 West 14th Street     
P.O. Box 419615, Kansas City, Missouri 64141-6615  
(816) 221-4000      
                  
Independent Public Accountants    
Coopers & Lybrand L.L.P., Kansas City, Missouri    
                              
Additional Information        
For additional information on AMC Entertainment Inc.,  
please contact:               
                              
Craig R. Ramsey, Vice President, Finance     
AMC Entertainment Inc.,106 West 14th Street   
P.O. Box 419615, Kansas City, Missouri 64141-6615  
(816) 221-4000                
                              
                              
AMC ENTERTAINMENT INC.  
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64                            
                              
                              
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<PAGE> 68                     
                              
                     CORPORATE OFFICERS AND DIRECTORS  
                              
Corporate Officers    
                              
AMC Entertainment Inc.  
                              
  Stanley H. Durwood          
  Chairman of the Board and Chief Executive Officer  
                              
  Peter C. Brown              
  President and Chief Financial Officer  
                              
  Richard L. Obert            
  Senior Vice President and Chief Accounting  
  and Information Officer     
                              
  James V. Beynon             
  Vice President and Treasurer  
                              
  Craig R. Ramsey             
  Vice President, Finance   
                              
  Nancy L. Gallagher          
  Vice President and Corporate Secretary     
                              
American Multi-Cinema, Inc.   
                              
  Philip M. Singleton         
  President and Chief Operating Officer          
                              
  John D. McDonald            
  Senior Vice President, Corporate Operations     
                              
  Richard J. King             
  Senior Vice President, Northeast Operations    
                              
  Rolando B. Rodriguez        
  Senior Vice President, South Operations       
                              
  Richard T. Walsh            
  Senior Vice President, West Operations      
                              
AMC Entertainment International, Inc.         
                              
  Gary S. Thyer               
  Vice President, International Operations    
                              
  Mark A. McDonald            
  Senior Vice President, Asia Operations    
                              
  Bruno B. Frydman            
  President, AMC Europe S.A.  
                              
Centertainment, Inc.          
                              
  Charles P. Stilley          
  President                   
                              
  Sam J. Giordano             
  Executive Vice President, Design and Construction  
                              
  Nicholas A. Bashkiroff      
  Vice President, Development 
                              
AMC Film Marketing            
                              
  Richard M. Fay              
  President                   
                              
National Cinema Network, Inc. 
                              
  Robert E. Martin            
  President                   
                              
Board of Directors            
                              
  Stanley H. Durwood          
  Chairman of the Board and Chief Executive Officer  
  AMC Entertainment Inc.      
                              
  Peter C. Brown              
  President and Chief Financial Officer 
  AMC Entertainment Inc.      
                              
  Philip M. Singleton         
  President and Chief Operating Officer  
  American Multi-Cinema, Inc. 
                              
  Charles J. Egan, Jr.        
  Vice President              
  Hallmark Cards, Incorporated    
                              
  William T. Grant, II        
  Chairman, President and Chief Executive Officer  
  LabOne, Inc.                
                              
  John P. Mascotte            
  President and Chief Executive Officer 
  Blue Cross and Blue Shield of Kansas City, Inc. 
                              
  Paul E. Vardeman            
  Shareholder and Director    
  Polsinelli, White, Vardeman and Shalton, P.C.  
                              
                              
      AMC ENTERTAINMENT INC.  
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                         65