**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

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**FORM 10-K/A(Amendment No. 1)**

**(Mark One)**

**x**                              ANNUALREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

**For the fiscal yearended March 30, 2006**

**OR**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934

**Forthe transition period from  ***               ***to *               *

**Commission file number 1-8747**

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**AMCENTERTAINMENT INC.**

(Exact name of registrantas specified in its charter)

| **Delaware**                             |   | **43-1304369**      |
|------------------------------------------|--------|---------------------|
| (State or other jurisdiction of          |   | (I.R.S. Employer    |
| incorporation or organization)           |   | Identification No.) |
| **920 Main**                             |   | ** **          |
| **Kansas City, Missouri**                |   | **64105**           |
| (Address of principal executive offices) |   | (Zip Code)          |

 

Registrant’stelephone number, including area code: **(816) 221-4000**

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

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

Indicate by check mark if the registrant is awell-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct. Yes o  No x

Indicate by check mark if the registrant is notrequired to file reports pursuant to Section 13 or Section 15(d) ofthe Act. Yes o  No x

Indicate by check mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or forsuch shorter period that the registrant was required to file such reports), and(2) has been subject to such filing requirements for the past90 days. Yes x No o

Indicate by check mark if disclosure of delinquentfilers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter)is not contained herein, and will not be contained, to the best of registrant’sknowledge, in definitive proxy or information statements incorporated byreference in Part III of this Form 10-K or any amendment tothis Form 10-K. x

Indicate by check mark whether the registrant is alarge accelerated filer or a non-accelerated filer. See definition of “acceleratedfiler and large accelerated filer: in Rule 12b-2 of the ExchangeAct. (Check One):

| Large accelerated filer o | Accelerated filer o | Non-accelerated filer x |
|--------------------------------|--------------------------|------------------------------|

 

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

State the aggregate market value of the voting andnon-voting common equity held by non-affiliates computed by reference to theprice at which the common equity was last sold, or the average bid and askedprice of such common equity, as of the last business day of the registrant’smost recently completed second fiscal quarter.

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

| Title of each class of common stock | ** ** | **Number of shares  Outstanding as of May 26, 2006** | ** ** |
|-------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------------|------------|
| Common Stock, 1¢ par  value                                  |       |                                                                                    | 1          |   |   |
|                                                                   |            |                                                                                         |            |  |  |

 

**DOCUMENTSINCORPORATED BY REFERENCE**

|                   |   |   | None   |   |
|-------------------|--------|--------|--------|--------|
| Explanatory Note: |   |   |   |   |

AMC Entertainment Inc., hereby amendsParts II and IV of its Annual Report on Form 10-K for the year endedMarch 30, 2006 to include the amended Item 6. Selected FinancialData, Item 7. Management’s Discussion and Analysis of Financial Conditionand Results of Operations, Item 8. Financial Statements and SupplementaryData, Item 9A. Controls and Procedures and Item 15. Exhibits andFinancial Statement Schedules, which gives effect to the restatement for stockoption awards, reflects discontinued operations described in Note 3 and addsdisclosure about a related material weakness in our internal control over financialreporting. There have been no other changes, events or other transactions torecognize since the orginal filing date.

 

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**AMCENTERTAINMENT INC.**

**FORM 10-K/A(Amendment No. 1)**

**FOR THE FISCAL YEARENDED MARCH 30, 2006INDEX**

|              | ** ** | ** **                                                                                  | ** ** | **Page** | ** ** |
|--------------|------------|---------------------------------------------------------------------------------------------|------------|----------|------------|
|         | ** ** | **PART II**                                                                            |       |     |       |   |   |
| Item 6.      |       | Selected Financial Data                                                                     |       |     | 6          |   |   |
| Item 7.      |       | Management’s Discussion and Analysis of Financial  Condition and Results of Operations |       |     | 9          |   |   |
| Item 8.      |       | Financial Statements and Supplementary Data                                                 |       |     | 36         |   |   |
| **Item 9A.** |       | Controls and Procedures                                                                     |       |     | 119        |   |   |
|         | ** ** | **PART IV**                                                                            |       |     |       |   |   |
| Item 15.     |       | Exhibits and Financial Statement Schedules                                                  |       |     | 121        |   |   |

 

2

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**Restatement ofFinancial Statements:**

In connection with an ongoing review of its quarterlymark-to-market accounting for its liability classified shares and stock optionawards, the Company determined that its financial statements as of and for thefiscal year ended March 30, 2006 needed to be restated to correct the followingitem:

*StockOption Awards*

On December 23, 2004, certain members of managementwere granted options to purchase Marquee Holdings Inc. (“Holdings”) commonstock. Due to the existence of certain put options, at the time the stockoptions were granted, the Company determined that the stock options for twomembers of management should be recorded as liabilities with changes in theestimated fair value of those options recorded through a charge or credit tothe statement of operations. Holdings also has a call option relating to theoptions (and the underlying shares) similar to the call option referred toabove.

During February 2007, the Company determined that theoptions held by one member of management that were previously recorded as aliability should have been recorded as a component of permanent equity because Holdingsdoes not intend to exercise its call option on the vested options (or sharesobtained upon exercise of the options) and since the put option on the vestedoptions (or shares obtained upon exercise of options) is not within theemployee's control. Accordingly, the Company has restated its financialstatements as of and for the year ended March 30, 2006 to reverse thepreviously recorded mark to market effects relating to the stock optionsawarded to this member of management that had been incorrectly classified asliabilities and to reflect these options as additional paid-in capital (ratherthan as liabilities). There was no impact on net cash provided by operatingactivities as a result of the above mentioned items.

The Company has restated its financial statements asof and for the year ended March 30, 2006 to record the net effect of theadjustments referred discussed above. The impact of the adjustments for thefiscal year ended March 31, 2005 is not material (and was recorded as partof the 2006 restatement adjustments). The net effects of the adjustmentsrecorded to restate the financial statements are summarized as follows (dollarsin thousands):

 

| ** **                                                        | ** ** | **Stock based** | ** ** |
|-------------------------------------------------------------------|------------|----------------------|------------|
| ** **                                                        | ** ** | **Compensation**     | ** ** |
| **Fifty-Two Weeks Ended March 30, 2006** | ** ** | ** **           | ** ** | **Expense(1)** | ** ** |
| Decrease in Other  Long-Term Liabilities(2)                       |       |                 | $          | 425 |   |   |
| Increase in Additional  Paid-in Capital(2)                        |       |                 | $          | 2,539 |   |   |
| Increase in Net Loss                                              |       |                 | $          | 2,114 |   |   |
|                                                                   |            |                      |            |  |  |  |  |  |

 

(1)          Included within OtherG&A

(2)          Refer to discussion ofthe adjustment for stock option awards above

3

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Thefollowing table sets forth the previously reported amounts and the restatedamounts reflected in the accompanying Consolidated Financial Statements(dollars in thousands):

| ** **                                          | ** ** | **52 Weeks Ended March 30, 2006** | ** ** |
|-----------------------------------------------------|------------|------------------------------------------------------------|------------|
| ** **                                          | ** ** | **As previously reported**                       | ** ** | **As restated** | ** ** |
| Statement of Operations  data:                      |       |                                                       |       |   |   |   |   |
| General and administrative: Other                   |       |                                                       | $          | 38,041 |   |   | $ | 39,984 |   |
| Total costs and expenses                            |       |                                                       | 1,710,184  |   |   | 1,668,017 |   |
| Loss from continuing operations before income taxes |       |                                                       | (96,653    | ) |   | (96,185 | ) |
| Income tax provision                                |       |                                                       | 69,700     |   |   | 69,400 |   |
| Net loss                                            |       |                                                       | (188,762   | ) |   | (190,876 | ) |
| Balance Sheet  data (at period end):                |       |                                                       |       |   |   |   |   |
| Other Long-Term Liabilities                         |       |                                                       | $          | 417,018 |   |   | $ | 416,593 |   |
| Total Liabilities                                   |       |                                                       | 3,159,106  |   |   | 3,158,681 |   |
| Additional Paid-in Capital                          |       |                                                       | 1,477,667  |   |   | 1,480,206 |   |
| Accumulated Deficit                                 |       |                                                       | (223,525   | ) |   | (225,639 | ) |
| Total  Stockholders' Equity                         |       |                                                       | 1,243,484  |   |   | 1,243,909 |   |

 

All previously reported amounts affected by therestatement that appear elsewhere in these footnotes to the ConsolidatedFinancial Statements have also been restated. See Note 1 to theConsolidated Financial Statements.

All previously reportedamounts affected by the restatement that appear elsewhere in these footnotes tothe consolidated financial statements have also been restated.  See Note 1 to the consolidated FinancialStatements for additional information.

**Reclassificationfor Discontinued Operations:**

As previouslydisclosed in our Form 10-Q for the period ended December 28,2006 and as previously filed in our Form 8-K filed onFebruary 22, 2007, we have divested of certain operations that met thecriteria for reporting as discontinued operations. Under generally acceptedaccounting principles, we are required to reclassify previously reported priorperiod financial statements to reflect the discontinued operations on a basiscomparable to the current presentation. Generally accepted accountingprinciples require our financial statements that were included in ourfiscal 2006 Annual Report on Form 10-K to be updated fordiscontinued operations in our fiscal 2007 Annual Report on Form 10-K.We have previously provided certain financial information that has been revisedin advance of filing our fiscal 2007 Annual Report on Form 10-Kin our Form 8-K filed on February 22, 2007. The historical financialinformation included herein has been revised and updated from its originalpresentation to incorporate the following:

·       the reclassification of the results ofoperations for certain assets which we sold on May 11, 2006, that meet thecriteria for discontinued operations to be presented as such in accordance withStatement of Financial Accounting Standards No. 144, *Accountingfor the Impairment or Disposal of Long-Lived Assets* and theaddition to Note 3 to the Notes to the Consolidated Financial Statementsin Item 1, Financial Statements (unaudited);

·       reclassifications in Management's Discussionand Analysis of Financial Condition and Results of Operations in Item 2,Management’s Discussion and Analysis of Financial Condition and Results ofOperations;

The information includedin this Amendment No. 1 on Form 10-K/A is presented in connection with thechanges described above. The information, with respect to the reclassificationfor discontinued operations, contained in this Amendment No. 1 on Form 10-K/A ispresented for the fiscal year ended 

4

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March 30, 2006, and exceptas indicated above with respect to restatements, this information has not beenupdated to reflect financial results subsequent to that date or any otherchanges since the date of the Company's Current Report on Form 8-Kdated February 22, 2007. Other than the reclassification and footnotedisclosures discussed above related to the reclassification for discontinuedoperations and the changes related to the restatements discussed above there isno change to the Company's previously reported consolidated operating results.  There is no change to the Company’spreviously reported consolidated financial condition or cash flows except asdiscussed above related to the restatement. Therefore, this filing should be read together with other documents wehave filed with the SEC subsequent to the filing of the original Current Reporton Form 8-K filed on February 22, 2007. Information in such reports and documents updates and supersedes certaininformation contained in this document.

5

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**PART II**

**Item6. Selected Financial Data.**

| ** **                                                       | ** ** | **Years Ended**(1)(3)(7) | ** ** |
|------------------------------------------------------------------|------------|-------------------------------|------------|
| **(In thousands, except operating data)**    | ** ** | ** **                    | ** ** | **52 Weeks  Ended  March 30,  2006**(4)(5) | ** ** | **From  Inception  July 16,  2004  through  March 31,  2005**(4)(8) | ** ** | ** ** | ** ** | **April 2,  2004  through  December 23,  2004**(4)(8) | ** ** | **52 Weeks  Ended  April 1,  2004**(4) | ** ** | **53 Weeks  Ended  April 3,  2003**(4) | ** ** | **52 Weeks  Ended  March 28,  2002** | ** ** |
| ** **                                                       | ** ** | **(restated)***               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                       | ** ** | **(Successor)**               | ** ** | **(Successor)** | ** ** | ** ** | ** ** | **(Predecessor)** | ** ** | **(Predecessor)** | ** ** | **(Predecessor)** | ** ** | **(Predecessor)** | ** ** |
| **Statement  of Operations Data:**                               |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Revenues                                                         |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Admissions                                                       |       | $                             | 1,138,034  |   |   | $ | 297,310 |   |   |   |   |   | $ | 847,476 |   |   |   | $ | 1,139,108 |   |   |   | $ | 1,145,523 |   |   |   | $ | 835,516 |   |   |
| Concessions                                                      |       | 456,028                       |       |   | 117,266 |   |   |   |   |   | 328,970 |   |   |   | 436,737 |   |   |   | 450,977 |   |   |   | 342,835 |   |   |
| Other revenue                                                    |       | 92,816                        |       |   | 24,884 |   |   |   |   |   | 82,826 |   |   |   | 102,387 |   |   |   | 102,292 |   |   |   | 79,978 |   |   |
| Total revenues                                                   |       | 1,686,878                     |       |   | 439,460 |   |   |   |   |   | 1,259,272 |   |   |   | 1,678,232 |   |   |   | 1,698,792 |   |   |   | 1,258,329 |   |   |
| Costs and Expenses                                               |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Film exhibition costs                                            |       | 595,353                       |       |   | 152,747 |   |   |   |   |   | 452,727 |   |   |   | 605,898 |   |   |   | 625,772 |   |   |   | 451,733 |   |   |
| Concession costs                                                 |       | 50,581                        |       |   | 12,801 |   |   |   |   |   | 37,880 |   |   |   | 46,868 |   |   |   | 50,065 |   |   |   | 37,822 |   |   |
| Operating expense                                                |       | 451,522                       |       |   | 115,590 |   |   |   |   |   | 324,427 |   |   |   | 442,974 |   |   |   | 471,028 |   |   |   | 357,934 |   |   |
| Rent                                                             |       | 329,878                       |       |   | 80,776 |   |   |   |   |   | 223,734 |   |   |   | 288,321 |   |   |   | 277,945 |   |   |   | 214,705 |   |   |
| General and administrative:                                      |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Merger and acquisition costs                                     |       | 12,487                        |       |   | 22,268 |   |   |   |   |   | 42,732 |   |   |   | 5,508 |   |   |   | 1,128 |   |   |   | – |   |   |
| Management fee                                                   |       | 2,000                         |       |   | 500 |   |   |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |
| Other(9)                                                         |       | 39,984                        |       |   | 14,600 |   |   |   |   |   | 33,727 |   |   |   | 56,798 |   |   |   | 65,728 |   |   |   | 36,018 |   |   |
| Preopening expense                                               |       | 6,607                         |       |   | 39 |   |   |   |   |   | 1,292 |   |   |   | 3,865 |   |   |   | 2,934 |   |   |   | 3,843 |   |   |
| Theatre and other closure expense                                |       | 601                           |       |   | 1,267 |   |   |   |   |   | 10,758 |   |   |   | 4,068 |   |   |   | 5,416 |   |   |   | 2,124 |   |   |
| Restructuring charge(10)                                         |       | 3,980                         |       |   | 4,926 |   |   |   |   |   | – |   |   |   | – |   |   |   | – |   |   |   | – |   |   |
| Depreciation and amortization                                    |       | 164,047                       |       |   | 43,931 |   |   |   |   |   | 86,052 |   |   |   | 115,296 |   |   |   | 119,835 |   |   |   | 92,920 |   |   |
| Impairment of long-lived assets                                  |       | 11,974                        |       |   | – |   |   |   |   |   | – |   |   |   | 16,272 |   |   |   | 14,564 |   |   |   | – |   |   |
| Disposition of assets and other gains                            |       | (997                          | )          |   | (302 | ) |   |   |   |   | (2,715 | ) |   |   | (2,590 | ) |   |   | (1,385 | ) |   |   | (1,821 | ) |   |
| Total costs and expenses                                         |       | 1,668,017                     |       |   | 449,143 |   |   |   |   |   | 1,210,614 |   |   |   | 1,583,278 |   |   |   | 1,633,030 |   |   |   | 1,195,278 |   |   |
| Other expense (income)(6)                                        |       | (9,818                        | )          |   | (6,778 | ) |   |   |   |   | – |   |   |   | 13,947 |   |   |   | – |   |   |   | 3,754 |   |   |
| Interest expense                                                 |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate borrowings                                             |       | 116,140                       |       |   | 39,668 |   |   |   |   |   | 66,851 |   |   |   | 66,963 |   |   |   | 65,585 |   |   |   | 48,015 |   |   |
| Capital and financing lease obligations                          |       | 4,068                         |       |   | 1,449 |   |   |   |   |   | 5,848 |   |   |   | 8,698 |   |   |   | 11,295 |   |   |   | 12,745 |   |   |
| Investment  (income) expense                                     |       | 4,656                         |       |   | (2,512 | ) |   |   |   |   | (6,473 | ) |   |   | (2,837 | ) |   |   | (3,491 | ) |   |   | (2,057 | ) |   |
| Earnings (loss) from continuing operations before  income taxes  |       | (96,185                       | )          |   | (41,510 | ) |   |   |   |   | (17,568 | ) |   |   | 8,183 |   |   |   | (7,627 | ) |   |   | 594 |   |   |
| Income tax  provision (benefit)                                  |       | 69,400                        |       |   | (6,880 | ) |   |   |   |   | 14,760 |   |   |   | 10,400 |   |   |   | 9,400 |   |   |   | 2,300 |   |   |
| Loss from continuing operations                                  |       | (165,585                      | )          |   | (34,630 | ) |   |   |   |   | (32,328 | ) |   |   | (2,217 | ) |   |   | (17,027 | ) |   |   | (1,706 | ) |   |
| Loss from  discontinued operations, net of income tax benefit(2) |       | (25,291                       | )          |   | (133 | ) |   |   |   |   | (3,550 | ) |   |   | (8,497 | ) |   |   | (12,519 | ) |   |   | (8,672 | ) |   |
| Net loss                                                         |       | $                             | (190,876   | ) |   | $ | (34,763 | ) |   |   |   |   | $ | (35,878 | ) |   |   | $ | (10,714 | ) |   |   | $ | (29,546 | ) |   |   | $ | (10,378 | ) |   |
| Preferred dividends                                              |       | –                        |       |   | – |   |   |   |   |   | 104,300 |   |   |   | 40,277 |   |   |   | 27,165 |   |   |   | 29,421 |   |   |
| Net loss for  shares of common stock                             |       | $                             | (190,876   | ) |   | $ | (34,763 | ) |   |   |   |   | $ | (140,178 | ) |   |   | $ | (50,991 | ) |   |   | $ | (56,711 | ) |   |   | $ | (39,799 | ) |   |
|                                                                  |            |                               |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

6

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| ** **                                           | ** ** | **Years Ended**(1)(3)(7) | ** ** |
|------------------------------------------------------|------------|-------------------------------|------------|
| ** **                                           | ** ** | ** **                    | ** ** | **From** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                           | ** ** | ** **                    | ** ** | **Inception** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                           | ** ** | ** **                    | ** ** | **July 16,** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                           | ** ** | **52 Weeks**             | ** ** | **2004** | ** ** | ** ** | ** ** | **April 2, 2004** | ** ** | **52 Weeks** | ** ** | **53 Weeks** | ** ** | **52 Weeks** | ** ** |
| ** **                                           | ** ** | **Ended**                     | ** ** | **through** | ** ** | ** ** | ** ** | **through** | ** ** | **Ended** | ** ** | **Ended** | ** ** | **Ended** | ** ** |
| **(In thousands, except operating**   | ** ** | **March 30,**            | ** ** | **March 31,** | ** ** | ** ** | ** ** | **December 23,** | ** ** | **April 1,** | ** ** | **April 3,** | ** ** | **March 28,** | ** ** |
| **data)**                                            | ** ** | **2006**(4)(5)                | ** ** | **2005**(4)(8) | ** ** | ** ** | ** ** | **2004**(4)(8) | ** ** | **2004**(4) | ** ** | **2003**(4) | ** ** | **2002** | ** ** |
| ** **                                           | ** ** | **(restated)***               | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                           | ** ** | **(Successor)**               | ** ** | **(Successor)** | ** ** | ** ** | ** ** | **(Predecessor)** | ** ** | **(Predecessor)** | ** ** | **(Predecessor)** | ** ** | **(Predecessor)** | ** ** |
| **Balance  Sheet Data (at period end):**             |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash and  equivalents                                |       | $                             | 230,115    |   | $ | 70,949 |   |   |   |   |   |   |   |   | $ | 333,248 |   |   |   | $ | 244,412 |   |   |   | $ | 219,432 |   |   |
| Corporate  borrowings                                |       | 2,250,559                     |       | 1,161,970 |   |   |   |   |   |   |   |   | 686,431 |   |   |   | 668,661 |   |   |   | 596,540 |   |   |
| Other long-term  liabilities                         |       | 416,593                       |       | 350,490 |   |   |   |   |   |   |   |   | 182,467 |   |   |   | 177,555 |   |   |   | 120,770 |   |   |
| Capital and  financing lease obligations             |       | 68,130                        |       | 65,470 |   |   |   |   |   |   |   |   | 61,281 |   |   |   | 59,101 |   |   |   | 57,056 |   |   |
| Stockholder’s  equity                           |       | 1,243,909                     |       | 900,966 |   |   |   |   |   |   |   |   | 280,604 |   |   |   | 279,719 |   |   |   | 255,415 |   |   |
| Total assets                                         |       | 4,402,590                     |       | 2,789,948 |   |   |   |   |   |   |   |   | 1,506,534 |   |   |   | 1,480,698 |   |   |   | 1,276,970 |   |   |
| **Cash  Flow Data:**                                 |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net cash provided  by (used in) operating activities |       | $                             | 23,654     |   | $ | (46,687 | ) |   |   |   | $ | 145,364 |   |   |   | $ | 163,939 |   |   |   | $ | 136,072 |   |   |   | $ | 97,685 |   |   |
| Net cash provided  by (used in) investing activities |       | 109,323                       |       | (1,259,794 | ) |   |   |   | (692,395 | ) |   |   | (69,378 | ) |   |   | (137,201 | ) |   |   | (144,510 | ) |   |
| Net cash provided  by (used in) financing activities |       | 21,434                        |       | 1,375,583 |   |   |   |   | 611,034 |   |   |   | (5,274 | ) |   |   | 26,112 |   |   |   | 232,285 |   |   |
| **Other  Data:**                                     |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Capital expenditures                                 |       | $                             | (117,668   | ) | $ | (18,622 | ) |   |   |   | $ | (66,155 | ) |   |   | $ | (95,011 | ) |   |   | $ | (100,932 | ) |   |   | $ | (82,762 | ) |   |
| Proceeds from  sale/leasebacks                       |       | 35,010                        |       | 50,910 |   |   |   |   | – |   |   |   | 63,911 |   |   |   | 43,665 |   |   |   | 7,486 |   |   |
| **Operating  Data (at period end):**                 |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Screen additions                                     |       | 137                           |       | – |   |   |   |   | 44 |   |   |   | 114 |   |   |   | 95 |   |   |   | 146 |   |   |
| Screen  acquisitions                                 |       | 2,117                         |       | 3,728 |   |   |   |   | – |   |   |   | 48 |   |   |   | 809 |   |   |   | 68 |   |   |
| Screen  dispositions                                 |       | 150                           |       | 14 |   |   |   |   | 28 |   |   |   | 142 |   |   |   | 111 |   |   |   | 86 |   |   |
| Average screens(11)                                  |       | 3,661                         |       | 3,355 |   |   |   |   | 3,350 |   |   |   | 3,309 |   |   |   | 3,324 |   |   |   | 2,634 |   |   |
| Number of screens  operated                          |       | 5,829                         |       | 3,714 |   |   |   |   | 3,728 |   |   |   | 3,712 |   |   |   | 3,692 |   |   |   | 2,899 |   |   |
| Number of theatres  operated                         |       | 428                           |       | 247 |   |   |   |   | 249 |   |   |   | 250 |   |   |   | 257 |   |   |   | 181 |   |   |
| Screens per  theatre                                 |       | 13.6                          |       | 15.0 |   |   |   |   | 15.0 |   |   |   | 14.8 |   |   |   | 14.4 |   |   |   | 16.0 |   |   |
| Attendance (in thousands)(11)                        |       | 165,831                       |       | 44,278 |   |   |   |   | 126,450 |   |   |   | 176,162 |   |   |   | 187,030 |   |   |   | 148,476 |   |   |

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                    * We restated our financial statements for stockoption awards. See Note 1 to our consolidated financial statements.

              (1) There were no cash dividendsdeclared on common stock during the last five fiscal years.

              (2) Fiscal 2004, 2003, and 2002include losses from discontinued operations related to a theatre in Sweden thatwas sold during fiscal 2004. Fiscal 2006, 2005, 2004, 2003 and 2002 includeslosses from discontinued operations related to five theatres in Japan that weresold during fiscal 2006 and five theatres in Iberia that were sold duringfiscal 2007. During fiscal 2006 the Successor includes a loss from discontinuedoperations of $25,291 (net of income tax provision of $20,400). During fiscal2005 the Successor includes loss from discontinued operations of $133 (net ofincome tax provision of $80) and the Predecessor includes a loss fromdiscontinued operations of $3,550 (net of income tax provision of $240). Fiscal2004 includes a $8,497 loss from discontinued operations (net of income taxbenefit of $2,000), fiscal 2003 includes a $12,519 loss from discontinuedoperations including a charge for impairment of long-lived assets of $4,999(net of income tax benefit of $100), and fiscal 2002 includes a $8,672 lossfrom discontinued operations including a charge for impairment of long-livedassets of $4,668 (net of income tax benefit of $3,200).

              (3) Fiscal 2003 includes 53 weeks. Allother years have 52 weeks.

              (4) We acquired Gulf States Theatreson March 15, 2002 and GC Companies, Inc. on March 29, 2002,which significantly increased our size. In the Gulf States Theatresacquisition, we acquired 5 theatres with 68 screens in the New Orleans area. Inthe GC Companies acquisition, we acquired 66 theatres with 621 screensthroughout the United States. Accordingly, results of operations for theSuccessor periods ended March 30, 2006 and March 31, 2005 and Predecessorperiods ended December 23, 2004 and April 1, 2004 are not comparableto our results for the prior fiscal year.

              (5) We acquired Loews CineplexEntertainment Corporation on January 26, 2006, which significantlyincreased our size. In the Loews acquisition we acquired 112 theatres with1,308 screens throughout the United States that we consolidate and 40 theatreswith 443 screens in Mexico that we consolidate. Accordingly, results ofoperations for the Successor period ended March 30, 2006 are not comparableto our results for the prior fiscal years.

              (6) During fiscal 2006, other expense(income) is composed of $8,699 of income related to the derecognition of storedvalue card liabilities where management believes future redemption to beremote, insurance recoveries of $3,032 for property losses 

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related to HurricaneKatrina, net of disposition losses of $346, $1,968 of business interruptioninsurance recoveries related to Hurricane Katrina and the write-off of deferredfinancing cost of $1,097 related to our senior secured credit facility inconnection with our issuance of the new senior secured credit facility and$2,438 of fees related to an unused bridge facility in connection with theMergers and related financing transactions. During fiscal 2005, other expense(income) is composed of $6,745 of income related to the derecognition of storedvalue card liabilities where management believes future redemption to be remoteand $33 of gain recognized on the redemption of $1,663 of our SeniorSubordinated Notes due 2011. During fiscal 2004, other expense (income) iscomposed of losses recognized on the redemption of $200,000 of our SeniorSubordinated Notes due 2009 and $83,400 of our Senior Subordinated Notes due2011. During fiscal 2002, other expense (income) is comprised of transactionexpenses incurred in connection with the issuance of Preferred Stock.

              (7) As a result of the merger withMarquee, the Successor applied the purchase method of accounting to theseparable assets, including goodwill, and liabilities of the accountingacquiree, AMC Entertainment, as of December 23, 2004. Because of theapplication of purchase accounting, Successor and Predecessor periods are notprepared on comparable bases of accounting.

              (8) In connection with the merger withMarquee, Marquee was formed on July 16, 2004, and issued debt and held therelated proceeds from issuance of debt in escrow until consummation of themerger. The Predecessor consolidated this merger entity in accordance with FIN46(R). As a result, both the Predecessor and Successor have recorded interestexpense of $12,811, interest income of $2,225 and income tax benefit of $4,500related to Marquee.

              (9) Includes stock-basedcompensation of $3,433 for the 52 week periods ended March 30, 2006 (Successor),and includes stock based compensation of $1,201, $0, $8,727, $2,011 and $442during fiscal 2005 Successor, fiscal 2005 Predecessor, fiscal 2004, 2003 and2002, respectively.

     (10) Restructuringcharges related to one-time termination benefits and other cost related to thedisplacement of approximately 200 associates in connection with anorganizational restructuring, which was completed to create a simplifiedorganizational structure, and contribution of assets by NCN to NCM. Thisorganizational restructuring was substantially completed as of March 30,2006.

     (11) Includesconsolidated theatres only.

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**Item 7.Management’s Discussion and Analysis of Financial Condition and Results ofOperations.**

**Overview**

We are one of the world’sleading theatrical exhibition companies. As of March 30, 2006, aftergiving effect to the expected disposal of 10 theatres and 120 screens in theU.S. in connection with the approval of the Mergers and dispositions of 4theatres with 86 screens in Spain and 1 theatre with 20 screens in Portugal, weowned, operated or had interests in 413 theatres with a total of 5,603 screens,with 82%, or 4,597, of our screens in the U.S. and Canada, and 18%, or 1,006,of our screens in Mexico, Argentina, Brazil, Chile, Uruguay, China (Hong Kong),France, Spain and the United Kingdom.

In connection with theMergers as discussed below, we acquired Loews on January 26, 2006, whichsignificantly increased our size. In the Merger, we acquired 112 theatres with1,308 screen in the United States and 40 theatres with 443 screens in Mexicothat are included in our consolidated results of operations from January 26,2006. Accordingly, results of operations for the fifty-two weeks ended March 30,2006, which include nine weeks of operations of the businesses we acquired, arenot comparable to our results for the fifty-two weeks ended March 31,2005. For additional information about the Merger, see Note 2 to theConsolidated Financial Statements under Part II Item 8. of thisAnnual Report on Form 10-K/A.

We completed a merger on December 23,2004 in which Marquee Holdings Inc. (“Holdings”) acquired AMC EntertainmentInc. (“AMC Entertainment”). Marquee Inc. (“Marquee”) was formed on July 16,2004. On December 23, 2004, pursuant to a merger agreement, Marquee mergedwith AMC Entertainment (the “Predecessor”). Upon the consummation of the mergerbetween Marquee and AMC Entertainment on December 23, 2004, AMCEntertainment was the surviving reporting entity (the “Successor”). The mergerwas treated as a purchase with Marquee being the “accounting acquirer” inaccordance with Statement of Financial Accounting Standards No. 141, *Business Combinations*. As a result, theSuccessor applied the purchase method of accounting to the separable assets,including goodwill, and liabilities of the accounting acquiree and Predecessor,AMC Entertainment, as of December 23, 2004, the merger date.

We are organized as anintermediate holding company. Following the consummation of the merger withMarquee on December 23, 2004, we became a privately held company, whollyowned by Holdings. Holdings is wholly owned by J.P. Morgan Partners L.P.,Apollo Investment Fund V, L.P., other co-investors and certain members ofmanagement. Our principal directly owned subsidiaries are American Multi-Cinema, Inc.(“AMC”), Grupo Cinemex, S.A. de C.V. (“Cinemex”) and AMC EntertainmentInternational, Inc. (“AMCEI”). We conduct our U.S. and Canada theatricalexhibition business through AMC and its subsidiaries and AMCEI and itssubsidiaries. We are operating theatres outside the United States primarilythrough Cinemex and AMCEI and its subsidiaries.

On March 29, 2005,AMC Entertainment and another exhibitor combined their respective cinema screenadvertising businesses into a new joint venture company called NationalCineMedia, LLC (“NCM”). The new company engages in the marketing and sale ofcinema advertising and promotions products; business communications andtraining services; and the distribution of digital alternative content. Wecontributed fixed assets and exhibitor agreements to NCM. Additionally, we paidtermination benefits related to the displacement of certain National CinemaNetwork, Inc. (“NCN”) associates. In consideration of the NCNcontributions described above, NCM issued a 37% interest in its Class Aunits to NCN. Since that date, NCN’s interest has declined to 29% due to theentry of new investors.

On June 20, 2005,Holdings entered into a merger agreement with LCE Holdings, Inc. (“LCEHoldings”), the parent of Loews Cineplex Entertainment Corporation (“Loews”),pursuant to which LCE Holdings merged with and into Holdings, with Holdingscontinuing as the holding company for the merged businesses, and Loews mergedwith and into AMC Entertainment, with AMC Entertainment continuing after themerger (the “Merger” and collectively, “the Mergers”). The transactions closedon January 26, 

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2006.Upon completion of the Mergers, the existing stockholders of Holdings holdapproximately 60% of its outstanding capital stock, and the existingstockholders of LCE Holdings, including affiliates of Bain Capital Partners,LLC, The Carlyle Group and Spectrum Equity Investors, hold approximately 40% ofHolding’s outstanding capital stock.

Inconnection with the Merger, on January 26, 2006, AMC Entertainment enteredinto the following financing transactions:

·       theissuance of $325.0 million in aggregate principal amount of 11% SeniorSubordinated Notes due 2016 (the “Notes due 2016”);

·       anew senior secured credit facility with Citicorp North America, Inc.,Banco Nacional De Mexico, S.A., Integrante del Grupo Financiero Banamex and thelenders named therein, consisting of a $650.0 million term loan facilityand a $200.0 million revolving credit facility (the “New Credit Facility”);

·       thetermination of AMC Entertainment’s March 25, 2004 senior secured credit,under which no amounts were outstanding;

·       therepayment of all outstanding amounts under Loews’ existing senior securedcredit facility and the termination of all commitments thereunder (the “LoewsFacility”); and

·       thecompletion of a tender offer and consent solicitation (the “Tender Offer”) forall $315.0 million aggregate principal amount of Loews’ outstanding 9.0%senior subordinated notes due 2014.

The proceeds of thefinancing transactions were used to repay amounts outstanding under the LoewsFacility, to fund the Tender Offer, to pay related fees and expenses, and topay fees and expenses related to the Merger.

On June 30, 2005, wesold one of our wholly-owned subsidiaries, Japan AMC Theatres Inc.,including four of our five theatres in Japan. We sold our remaining Japantheatre on September 1, 2005. The operations and cash flows of the Japantheatres have been eliminated from our ongoing operations as a result of thedisposal transactions. We do not have any significant continuing involvement inthe operations of the Japan theatres. The results of operations of the Japantheatres have been classified as discontinued operations, and informationpresented for all periods reflects the new classification. The operations ofthe Japan theatres were previously reported in our International theatricalexhibition operating segment.

We disposed of our onlytheatre in Hong Kong on January 5, 2006 and entered into a licenseagreement with the purchaser for continued use of our trademark. Theseoperations did not meet the criteria for reporting as discontinued operations.

In May 2006, AMCEIand its subsidiary AMC Entertainment International Limited sold its interestsin AMC Entertainment España S.A., which owned and operated 4 theatres with 86screens in Spain, and Actividades Multi-Cinemas E Espectáculos, LDA,which owned and operated 1 theatre with 20 screens in Portugal. Theseoperations have been classified as discontinued operations as a result of ourdisposition of Yelmo Cineplex, S.L. (“Yelmo”) in December 2006 as we nolonger have continuing involvement in the region.

In December 2006 wedisposed of our equity method investment in Yelmo which owned and operated27 theatres with 310 screens in Spain on the date of sale.

For financial reportingpurposes we have three segments, U.S. and Canada theatrical exhibition(formerly, North American theatrical exhibition), International theatricalexhibition and Other, with the most significant activity in Other related toon-screen advertising.

Our U.S. and Canada andInternational theatrical exhibition revenues are generated primarily from boxoffice admissions and theatre concession sales. The balance of our revenues aregenerated from 

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ancillarysources, including on-screen advertising, rental of theatre auditoriums, feesand other revenues generated from the sale of gift certificates and theatretickets and arcade games located in theatre lobbies.

Box office admissions areour largest source of revenue. We predominantly license “first-run” motionpictures from distributors owned by major film production companies and fromindependent distributors. We license films on a film-by-film andtheatre-by-theatre basis. Film exhibition costs are accrued based on theapplicable admissions revenues and estimates of the final settlement pursuantto our film licenses. Licenses that we enter into typically state that rentalfees are based on either aggregate terms established prior to the opening ofthe picture or on a mutually agreed settlement upon the conclusion of the picturerun. Under an aggregate terms formula, we pay the distributor a specifiedpercentage of box office receipts. The settlement process allows fornegotiation based upon how a film actually performs.

Concessions sales are oursecond largest source of revenue after box office admissions. Concessions itemsinclude popcorn, soft drinks, candy, hot dogs and other products. We negotiateprices for our concessions products and supplies directly with concessionsvendors on a national or regional basis to obtain high volume discounts or bulkrates and marketing incentives.

Our revenues are dependentupon the timing and popularity of motion picture releases by distributors. Themost marketable motion pictures are usually released during the summer and theyear-end holiday seasons. Therefore, our business can be seasonal, with higherattendance and revenues generally occurring during the summer months andholiday seasons. Our results of operations may vary significantly from quarterto quarter.

During fiscal 2006, filmslicensed from our ten largest distributors based on revenues accounted forapproximately 88% of our U.S. and Canada admissions revenues. Our revenuesattributable to individual distributors may vary significantly from year toyear depending upon the commercial success of each distributor’s motionpictures in any given year.

During the period from1990 to 2005, the annual number of first-run motion pictures released bydistributors in the United States ranged from a low of 370 in 1995 to a high of535 in 2005, according to Motion Picture Association 2005 MPA MarketStatistics.

We continually upgrade thequality of our theatre circuit by adding new screens through new builds(including expansions) and acquisitions and by disposing of older screensthrough closures and sales. We believe our introduction of the megaplex conceptin 1995 has led to the current industry replacement cycle, which hasaccelerated the obsolescence of older, smaller theatres by setting newstandards for moviegoers. From 1995 through March 30, 2006, AMCEntertainment and Loews added 191 theatres with 3,475 new screens, acquired 431theatres with 3,007 screens and disposed of 666 theatres with 4,018 screens. Asof March 30, 2006, approximately 69%, or 3,168, of our screens werelocated in megaplex theatres.

**CRITICAL ACCOUNTING ESTIMATES**

The accounting estimatesidentified below are critical to our business operations and the understandingof our results of operations. The impact of, and any associated risks relatedto, these estimates on our business operations are discussed throughoutManagement’s Discussion and Analysis of Financial Condition and Results ofOperations where such estimates affect our reported and expected financialresults. For a detailed discussion on the application of these estimates andother accounting policies, see Notes to the Consolidated Financial Statementsunder Part II Item 8. of this Annual Report on Form 10-K.The methods and judgments we use in applying our accounting estimates have asignificant impact on the results we report in our financial statements. Someof our accounting estimates require us to make difficult and subjectivejudgments, often as a result of the need to make estimates of matters that areinherently uncertain. Our most critical accounting estimates include theassessment of recoverability of long-lived assets, including intangibles, whichimpacts impairment of long-lived assets when we impair assets or acceleratetheir depreciation; recoverability of goodwill, which creates the potential forwrite-offs 

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ofgoodwill; recognition and measurement of current and deferred income tax assetsand liabilities, which impacts our tax provision; recognition and measurementof our remaining lease obligations to landlords on our closed theatres andother vacant space, which impacts theatre and other closure expense; estimationof self-insurance reserves which impacts theatre operating and general andadministrative expenses; recognition and measurement of net periodic benefitcosts for our pension and other defined benefit programs, which impacts generaland administrative expense; estimation of film settlement terms and measurementof film rental fees, which impacts film exhibition costs and estimation of thefair value of assets acquired, liabilities assumed and consideration paid foracquisitions, which impacts the measurement of assets acquired (includinggoodwill) and liabilities assumed in a business combination. Below, we discussthese areas further, as well as the estimates and judgments involved.

*Impairments.**  *We review long-lived assets,including intangibles and investments in unconsolidated subsidiaries accountedfor under the equity method, for impairment as part of our annual budgetingprocess and whenever events or changes in circumstances indicate that thecarrying amount of the assets may not be fully recoverable. We review internalmanagement reports on a quarterly basis as well as monitor current andpotential future competition in the markets where we operate for indicators oftriggering events or circumstances that indicate impairment of individualtheatre assets. We evaluate theatres using historical and projected data oftheatre level cash flow as our primary indicator of potential impairment andconsider the seasonality of our business when evaluating theatres forimpairment. Because Christmas and New Years holiday results comprise asignificant portion of our operating cash flow, the actual results from thisperiod, which are available during the fourth quarter of each fiscal year, arean integral part of our impairment analysis. As a result of these analyses, ifthe sum of the estimated future cash flows, undiscounted and without interestcharges, are less than the carrying amount of the asset, an impairment loss isrecognized in the amount by which the carrying value of the asset exceeds itsestimated fair value. Assets are evaluated for impairment on an individualtheatre basis, which we believe is the lowest level for which there areidentifiable cash flows. The impairment evaluation is based on the estimatedcash flows from continuing use until the expected disposal date or the fairvalue of furniture, fixtures and equipment. The expected disposal date does notexceed the remaining lease period and is often less than the remaining leaseperiod when we do not expect to operate the theatre to the end of its leaseterm. The fair value of assets is determined as either the expected sellingprice less selling costs (where appropriate) or the present value of theestimated future cash flows. The fair value of furniture, fixtures andequipment has been determined using similar asset sales and in some instancesthe assistance of third party valuation studies. The discount rate used indetermining the present value of the estimated future cash flows was 20% andwas based on management’s expected return on assets during fiscal 2006, 2005and 2004. There is considerable management judgment necessary to determine thefuture cash flows, fair value and the expected operating period of a theatre,and, accordingly, actual results could vary significantly from such estimates.We have recorded impairments of long-lived assets of $12.0 million, $0 and$16.3 million during fiscal 2006, 2005 and 2004, respectively.

*Goodwill.**  *Our recorded goodwill was$2,018.3 million as of March 30, 2006. We evaluate goodwill forimpairment annually as of the end of the fourth fiscal quarter and any time anevent occurs or circumstances change that reduce the fair value for a reportingunit below its carrying amount. Goodwill is recorded in our U.S. and Canadatheatrical exhibition operating segment, in Cinemex and in our Spain andPortugal theatres, which are also our reporting units for purposes ofevaluating our recorded goodwill for impairment. If the carrying value of thereporting unit exceeds its fair value we are required to reallocate the fairvalue of the reporting unit as if the reporting unit had been acquired in abusiness combination and the fair value of the reporting unit was the pricepaid to acquire the reporting unit. We determine fair value by using anenterprise valuation methodology determined by applying multiples to cash flowestimates less net indebtedness which we believe is an appropriate method todetermine fair value. There is considerable management judgment with respect tocash flow estimates and appropriate multiples to be used in determining fairvalue.

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*Income taxes.**  *In determining income for financialstatement purposes, we must make certain estimates and judgments. Theseestimates and judgments occur in the calculation of certain tax liabilities andin the determination of the recoverability of certain of the deferred taxassets, which arise from temporary differences between the tax and financialstatement recognition of revenue and expense as well as operating loss and taxcredit carryforwards. We must assess the likelihood that we will be able torecover our deferred tax assets in each domestic and foreign tax jurisdictionin which we operate. If recovery is not more likely than not, we must record avaluation allowance for the deferred tax assets that we estimate are morelikely than not unrealizable. Valuation allowances recorded against our netdeferred tax assets in U.S. tax jurisdictions during fiscal 2006 increased ourprovision for income taxes by approximately $105 million. As of March 30,2006, we had recorded approximately $9.0 million of net deferred tax assets(net of valuation allowances of $430 million) related to the estimatedfuture tax benefits of temporary differences between the tax bases of assetsand liabilities and amounts reported in the accompanying consolidated balancesheets, as well as operating loss and tax credit carryforwards. Therecoverability of these deferred income tax assets is dependent upon ourability to generate future taxable income in the relevant taxing jurisdictions.Projections of future taxable income require considerable management judgmentabout future attendance levels, revenues and expenses.

*Theatre and Other ClosureExpense.**  *Theatreand other closure expense is primarily related to payments made or expected tobe made to landlords to terminate leases on certain of our closed theatres,other vacant space and theatres where development has been discontinued.Theatre and other closure expense is recognized at the time the theatre closes,space becomes vacant or development is discontinued. Expected payments tolandlords are based on actual or discounted contractual amounts. We estimatetheatre closure expense based on contractual lease terms and our estimates oftaxes and utilities. The discount rate we use to estimate theatre and otherclosure expense is based on estimates of our borrowing costs at the time ofclosing. Prior to the merger with Marquee our discount rates ranged from 6.6%to 21.0%. As a result of the merger with Marquee, we have remeasured ourliability for theatre closure at a rate of 7.55%, our estimated borrowing coston the date of this merger. We have recorded theatre and other closure expenseof $0.6 million and $1.3 million during the Successor periods ended March 30,2006 and March 31, 2005 and $10.7 million and $4.1 millionduring the Predecessor periods ended December 23, 2004 and April 1,2004, respectively. Accretion expense for Predecessor exit activities initiatedafter December 31, 2002, and all accretion expense for Successor exitactivities, is included as a component of theatre and other closure expense.

*Casualty Insurance.**  *We are self-insured for generalliability up to $400,000 per occurrence and carry a $400,000 deductible limitper occurrence for workers compensation claims. We utilize actuarialprojections of our estimated ultimate losses that we will be responsible forpaying and as a result there is considerable judgment necessary to determine ourcasualty insurance reserves. The actuarial method that we use includes anallowance for adverse developments on known claims and an allowance for claimswhich have been incurred but which have not been reported. As of March 30,2006 and March 31, 2005, we had recorded casualty insurance reserves of$26.4 million and $22.1 million, respectively. We have recordedexpense related to general liability and workers compensation claims of$10.9 million and $2.1 million during the Successor periods ended March 30,2006 and March 31, 2005, respectively, and $8.3 million and,$10.6 million during the Predecessor periods ended December 23, 2004and April 1, 2004, respectively.

*Pension and PostretirementAssumptions.**  *Pensionand postretirement benefit obligations and the related effects on operationsare calculated using actuarial models. Two critical assumptions, discount rateand expected return on assets, are important elements of plan expense and/orliability measurement. We evaluate these critical assumptions at leastannually. Other assumptions involve demographic factors such as retirement,expected increases in compensation, mortality and turnover. These assumptionsare 

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evaluatedperiodically and are updated to reflect our experience. Actual results in anygiven year will often differ from actuarial assumptions because of economic andother factors.

The discount rate enablesus to state expected future cash flows at a present value on the measurementdate. We have little latitude in selecting this rate, as it is required torepresent the market rate for high-quality fixed income investments. A lowerdiscount rate increases the present value of benefit obligations and increasespension and postretirement expense. For our principal pension plans, a 50 basispoint decrease in the discount rate would increase pension expense byapproximately $630,000. For our postretirement plans, a 50 basis point decreasein the discount rate would increase postretirement expense by approximately$41,000. We maintained our discount rate at 5 3¤4% for the AMC Entertainment plans and 5 1¤2% for the Loews’ plans forfiscal 2007. We have recorded expenses for our pension and postretirement plansof $4.7 million and $1.8 million during the Successor periods ended March 30,2006 and March 31, 2005, respectively, and $5.3 million and,$6.0 million during the Predecessor periods ended December 23, 2004and April 1, 2004, respectively. We expect that our total pension andpostretirement expense will increase by approximately $2.5 million fromfiscal 2006 to fiscal 2007, $0.9 million of which results from theacquisition of LCE plan. Our unrecognized net actuarial gain for pension andpostretirement plans was $5.5 million as of March 30, 2006. Inconnection with a recent reorganization, there was a reduction in certainpension and postretirement plan participants, which resulted in curtailmentgains in fiscal 2006 for accounting purposes of $2.3 million.

To determine the expectedlong-term rate of return on pension plan assets, we consider the current andexpected asset allocations, as well as historical and expected returns onvarious categories of plan assets obtained from our investment portfoliomanager. A 50 basis point decrease in the expected return on assets of ourqualified defined benefit pension plan would increase pension expense on ourprincipal plans by approximately $223,000 per year. Note 11 to theConsolidated Financial Statements under Part II Item 8. of thisAnnual Report on Form 10-K includes disclosure of our pension planand postretirement plan assumptions and information about our pension planassets.

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

Licenses that we enterinto typically state that rental fees are based on either aggregate termsestablished prior to the opening of the picture or on a mutually agreedsettlement upon the conclusion of the picture run. Under an aggregate termsformula, we pay the distributor a specified percentage of box office receipts.The settlement process allows for negotiation based upon how a film actuallyperforms.

We accrue film exhibitioncosts based on the applicable box office receipts and estimates of the finalsettlement pursuant to the film licenses entered into with our distributors.Generally, less than one third of our quarterly film exhibition cost isestimated at period-end. The length of time until these costs are known withcertainty depends on the ultimate duration of the film play, but is typically “settled”within two to three months of a particular film’s opening release. Uponsettlement with our film distributors, film cost expense and the related filmcost payable are adjusted to the final film settlement. Such adjustments havebeen historically insignificant. However, actual film costs and film costspayable could differ materially from those estimates. For fiscal years 2006,2005 and 2004 there were no significant changes in our film cost estimation andsettlement procedures.

As of March 30, 2006and March 31, 2005, we had recorded film payables of $66 million and$53 million, respectively. We have recorded film exhibition costs of $595 millionand $153 million during the Successor periods ended March 30, 2006and March 31, 2005 and $453 million and, $606 million during thePredecessor periods ended December 23, 2004 and April 1, 2004,respectively.

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*Acquisitions.**  *We account for our acquisitions oftheatrical exhibition businesses using the purchase method. The purchase methodrequires that we estimate the fair value of the individual assets andliabilities acquired as well as various forms of consideration given includingcash, common stock, senior subordinated notes and bankruptcy related claims. Wehave obtained independent third party valuation studies for certain of theassets and liabilities acquired to assist us in determining fair value. Theestimation of the fair value of the assets and liabilities acquired includingdeferred tax assets and liabilities related to such amounts and considerationgiven involves a number of judgments and estimates that could differ materiallyfrom the actual amounts.

We completed the Mergerwith Loews on January 26, 2006. The acquisition was treated as a purchasein accordance with Statement of Financial Accounting Standards No. 141, *Business Combinations* for an estimatedpurchase price of $540,671,000. Consideration was provided through a stockissuance by Holdings. The consolidated financials include only the results ofLoews operations from the date of the Merger.

We completed the mergerwith Marquee on December 23, 2004. The merger was treated as a purchasewith Marquee being the “accounting acquirer” in accordance with Statement ofFinancial Accounting Standards No. 141, *BusinessCombinations*. As a result, the Successor applied the purchase methodof accounting to the separable assets, including goodwill, and liabilities ofthe accounting acquiree and Predecessor, AMC Entertainment, as of December 23,2004, the merger date. The consolidated financial statements presented hereinare those of the accounting acquirer from its inception on July 16, 2004through March 30, 2006, and those of its Predecessor, AMC Entertainment,for all periods presented through the merger date.

We also consummatedacquisitions in fiscal 2004 as discussed in Note 2 to the ConsolidatedFinancial Statements under Part II Item 8. of this Annual Report on Form 10-K/A.During fiscal 2004 we acquired the assets of Megastar for a cash purchase priceof $15 million.

**Operating Results**

All periods commencing onor after December 24, 2004 are referred to herein as a “Successor” period.The thirty-eight weeks that ended December 23, 2004 and the yearended April 1, 2004 occurred prior to the consummation of the Mergers andare referred to herein as “Predecessor” periods. As a result of the merger withMarquee, we are required to separately present our operating results for thePredecessor and the Successor in the thirty-eight weeks endedDecember 23, 2004 and the fourteen weeks ended March 31, 2005 undergenerally accepted accounting principles. In the following discussion, theresults for the fifty-two weeks ended March 31, 2005 andApril 1, 2004 are adjusted to reflect the pro forma effect of the mergerwith Marquee as if they had occurred on April 4, 2003. Pro formaadjustments relate primarily to decreased rent expense, resulting from unfavorableleases; increased depreciation and amortization, resulting from increases infixed asset and intangibles values and increased interest expense resultingfrom increases in corporate borrowings. The pro forma basis amounts for thecombined fifty-two weeks ended March 31, 2005 are compared to thefifty-two weeks ended April 1, 2004 on a pro forma basis. We believethis is the most meaningful and practical way to comment on our results ofoperations.

The following table setsforth our revenues, costs and expenses attributable to our United States andCanada and International theatrical exhibition operations and Other businesses.Reference is made to Note 16 to the Consolidated Financial Statements foradditional information about our operations by operating segment.

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**OPERATING RESULTS**

| ** **                             | ** ** | **52 Weeks**            | ** ** | ** **        | ** ** | ** **                   | ** ** | ** **                      | ** ** | **Pro Forma** | ** ** | ** **                   | ** ** | ** **                  | ** ** | **Pro Forma** | ** ** |
|----------------------------------------|------------|------------------------------|------------|-------------------|------------|------------------------------|------------|---------------------------------|------------|--------------------|------------|------------------------------|------------|-----------------------------|------------|--------------------|------------|
| ** **                             | ** ** | **Ended**                    | ** ** | **14 Weeks** | ** ** | **38 Weeks**            | ** ** | ** **                      | ** ** | **52 Weeks**  | ** ** | **52 Weeks**            | ** ** | ** **                  | ** ** | **52 Weeks**  | ** ** |
| ** **                             | ** ** | **March 30, 2006** | ** ** | **Ended**         | ** ** | **Ended**                    | ** ** | **Pro Forma**              | ** ** | **Ended**          | ** ** | **Ended**                    | ** ** | **Pro Forma**          | ** ** | **Ended**          | ** ** |
| **(Dollars in thousands)**   | ** ** | ** **                   | ** ** | **(restated)***   | ** ** | **March 31, 2005** | ** ** | **December 23, 2004** | ** ** | **Adjustments**    | ** ** | **March 31, 2005** | ** ** | **April 1, 2004** | ** ** | **Adjustments**    | ** ** | **April 1, 2004** | ** ** |
| ** **                             | ** ** | **(Successor)**              | ** ** | **(Successor)**   | ** ** | **(Predecessor)**            | ** ** | ** **                      | ** ** | **(Predecessor)**  | ** ** | **(Predecessor)**            | ** ** | ** **                  | ** ** | ** **         | ** ** |
| **Revenues**                           |       |                         |       |              |       |                         |       |                            |       |               |       |                         |       |                        |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. and Canada  theatrical exhibition |       |                         |       |              |       |                         |       |                            |       |               |       |                         |       |                        |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                        |            |                              |            |                   |            |                              |            |                                 |            |                    |            |                              |            |                             |            |                    |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

| Admissions                                             |   |   | $         | 1,110,464 |   |   |    | $      | 292,514 |   |      |   | $      | 836,254   |   |   |   |   |      |   |   | $      | 1,128,768 |      |   |   | $      | 1,125,922 |      |   |      |   |   |   |   | $      | 1,125,922 |   |      |
|--------------------------------------------------------|--------|--------|-----------|-----------|--------|--------|---------|--------|---------|--------|-----------|--------|--------|-----------|--------|--------|--------|--------|-----------|--------|--------|--------|-----------|-----------|--------|--------|--------|-----------|-----------|--------|-----------|--------|--------|--------|--------|--------|-----------|--------|-----------|
| Concessions                                            |   |   | 443,580   |      |   |   | 115,997 |   |    |   | 326,086   |   |   |      |   |   |   |   | 442,083   |   |   |   | 434,024   |      |   |   |   |      |      |   | 434,024   |   |   |
| Other  theatre                                         |   |   | 76,485    |      |   |   | 14,052  |   |    |   | 43,306    |   |   |      |   |   |   |   | 57,358    |   |   |   | 49,241    |      |   |   |   |      |      |   | 49,241    |   |   |
|                                                   |   |   | 1,630,529 |      |   |   | 422,563 |   |    |   | 1,205,646 |   |   |      |   |   |   |   | 1,628,209 |   |   |   | 1,609,187 |      |   |   |   |      |      |   | 1,609,187 |   |   |
| International theatrical  exhibition                   |   |   |      |      |   |   |    |   |    |   |      |   |   |      |   |   |   |   |      |   |   |   |      |      |   |   |   |      |      |   |      |   |   |
| Admissions                                             |   |   | 27,570    |      |   |   | 4,796   |   |    |   | 11,222    |   |   |      |   |   |   |   | 16,018    |   |   |   | 13,186    |      |   |   |   |      |      |   | 13,186    |   |   |
| Concessions                                            |   |   | 12,448    |      |   |   | 1,269   |   |    |   | 2,884     |   |   |      |   |   |   |   | 4,153     |   |   |   | 2,713     |      |   |   |   |      |      |   | 2,713     |   |   |
| Other  theatre                                         |   |   | 3,424     |      |   |   | 365     |   |    |   | 709       |   |   |      |   |   |   |   | 1,074     |   |   |   | 692       |      |   |   |   |      |      |   | 692       |   |   |
|                                                   |   |   | 43,442    |      |   |   | 6,430   |   |    |   | 14,815    |   |   |      |   |   |   |   | 21,245    |   |   |   | 16,591    |      |   |   |   |      |      |   | 16,591    |   |   |
| Other                                                  |   |   | 12,907    |      |   |   | 10,467  |   |    |   | 38,811    |   |   |      |   |   |   |   | 49,278    |   |   |   | 52,454    |      |   |   |   |      |      |   | 52,454    |   |   |
| Total  revenues                                        |   |   | $         | 1,686,878 |   |   |    | $      | 439,460 |   |      |   | $      | 1,259,272 |   |   |   |   |      |   |   | $      | 1,698,732 |      |   |   | $      | 1,678,232 |      |   |      |   |   |   |   | $      | 1,678,232 |   |      |
| **Costs and Expenses**                                 |   |   |      |      |   |   |    |   |    |   |      |   |   |      |   |   |   |   |      |   |   |   |      |      |   |   |   |      |      |   |      |   |   |
| U.S. and Canada  theatrical exhibition                 |   |   |      |      |   |   |    |   |    |   |      |   |   |      |   |   |   |   |      |   |   |   |      |      |   |   |   |      |      |   |      |   |   |
| Film  exhibition costs                                 |   |   | $         | 583,626   |   |   |    | $      | 150,557 |   |      |   | $      | 447,412   |   |   |   |   |      |   |   | $      | 597,969   |      |   |   | $      | 599,746   |      |   |      |   |   |   |   | $      | 599,746   |   |      |
| Concession  costs                                      |   |   | 47,922    |      |   |   | 12,575  |   |    |   | 37,161    |   |   |      |   |   |   |   | 49,736    |   |   |   | 46,191    |      |   |   |   |      |      |   | 46,191    |   |   |
| Theatre  operating expense                             |   |   | 421,665   |      |   |   | 103,578 |   |    |   | 286,706   |   |   |      |   |   |   |   | 390,284   |   |   |   | 389,665   |      |   |   |   |      |      |   | 389,665   |   |   |
| Rent                                                   |   |   | 317,181   |      |   |   | 77,804  |   |    |   | 214,927   |   |   |      | (3,229 | )      |   |   | 289,502   |   |   |   | 277,584   |      |   |   | (4,344 | )         |      |   | 273,240   |   |   |
| Preopening  expense                                    |   |   | 5,768     |      |   |   | 39      |   |    |   | 1,292     |   |   |      |   |   |   |   | 1,331     |   |   |   | 2,921     |      |   |   |   |      |      |   | 2,921     |   |   |
| Theatre  and other closure expense                     |   |   | 1,313     |      |   |   | 988     |   |    |   | 10,758    |   |   |      |   |   |   |   | 11,746    |   |   |   | 3,570     |      |   |   |   |      |      |   | 3,570     |   |   |
|                                                   |   |   | 1,377,475 |      |   |   | 345,541 |   |    |   | 998,256   |   |   |      | (3,229 | )      |   |   | 1,340,568 |   |   |   | 1,319,677 |      |   |   | (4,344 | )         |      |   | 1,315,333 |   |   |
| International theatrical  exhibition                   |   |   |      |      |   |   |    |   |    |   |      |   |   |      |   |   |   |   |      |   |   |   |      |      |   |   |   |      |      |   |      |   |   |
| Film  exhibition costs                                 |   |   | 11,727    |      |   |   | 2,190   |   |    |   | 5,315     |   |   |      |   |   |   |   | 7,505     |   |   |   | 6,152     |      |   |   |   |      |      |   | 6,152     |   |   |
| Concession  costs                                      |   |   | 2,659     |      |   |   | 226     |   |    |   | 719       |   |   |      |   |   |   |   | 945       |   |   |   | 677       |      |   |   |   |      |      |   | 677       |   |   |
| Theatre  operating expense                             |   |   | 14,888    |      |   |   | 1,551   |   |    |   | 6,281     |   |   |      |   |   |   |   | 7,832     |   |   |   | 6,462     |      |   |   |   |      |      |   | 6,462     |   |   |
| Rent                                                   |   |   | 12,697    |      |   |   | 2,972   |   |    |   | 8,807     |   |   |      | (2,231 | )      |   |   | 9,548     |   |   |   | 10,737    |      |   |   | (3,065 | )         |      |   | 7,672     |   |   |
| Preopening  expense                                    |   |   | 839       |      |   |   | —  |   |    |   | —    |   |   |      |   |   |   |   | —    |   |   |   | 944       |      |   |   |   |      |      |   | 944       |   |   |
| Theatre  and other closure expense                     |   |   | (712      | )         |   |   | —  |   |    |   | —    |   |   |      |   |   |   |   | —    |   |   |   | —    |      |   |   |   |      |      |   | —    |   |   |
|                                                   |   |   | 42,098    |      |   |   | 6,939   |   |    |   | 21,122    |   |   |      | (2,231 | )      |   |   | 25,830    |   |   |   | 24,972    |      |   |   | (3,065 | )         |      |   | 21,907    |   |   |
| Other                                                  |   |   | 14,969    |      |   |   | 10,461  |   |    |   | 31,440    |   |   |      |   |   |   |   | 41,901    |   |   |   | 46,847    |      |   |   |   |      |      |   | 46,847    |   |   |
| Theatre and other closure  expense (included in Other) |   |   | —    |      |   |   | 279     |   |    |   | —    |   |   |      |   |   |   |   | 279       |   |   |   | 498       |      |   |   |   |      |      |   | 498       |   |   |
| General and  administrative expense:                   |   |   |      |      |   |   |    |   |    |   |      |   |   |      |   |   |   |   |      |   |   |   |      |      |   |   |   |      |      |   |      |   |   |
| Merger  and Acquisition Costs                          |   |   | 12,487    |      |   |   | 22,268  |   |    |   | 42,732    |   |   |      |   |   |   |   | 65,000    |   |   |   | 5,508     |      |   |   |   |      |      |   | 5,508     |   |   |
| Management  Fee                                        |   |   | 2,000     |      |   |   | 500     |   |    |   | —    |   |   |      | 1,500  |   |   |   | 2,000     |   |   |   | —    |      |   |   | 2,000  |      |      |   | 2,000     |   |   |
| Other                                                  |   |   | 39,984    |      |   |   | 14,600  |   |    |   | 33,727    |   |   |      |   |   |   |   | 48,327    |   |   |   | 56,798    |      |   |   |   |      |      |   | 56,798    |   |   |
| Restructuring Charge                                   |   |   | 3,980     |      |   |   | 4,926   |   |    |   | —    |   |   |      |   |   |   |   | 4,926     |   |   |   | —    |      |   |   |   |      |      |   | —    |   |   |
| Depreciation and  amortization                         |   |   | 164,047   |      |   |   | 43,931  |   |    |   | 86,052    |   |   |      | 27,798 |   |   |   | 157,781   |   |   |   | 115,296   |      |   |   | 38,041 |      |      |   | 153,337   |   |   |
| Impairment of long-lived  assets                       |   |   | 11,974    |      |   |   | —  |   |    |   | —    |   |   |      |   |   |   |   | —    |   |   |   | 16,272    |      |   |   |   |      |      |   | 16,272    |   |   |
| Disposition of assets and  other gains                 |   |   | (997      | )         |   |   | (302    | )      |    |   | (2,715    | )      |   |      |   |   |   |   | (3,017    | )      |   |   | (2,590    | )         |   |   |   |      |      |   | (2,590    | )      |   |
| Total costs and expenses                               |   |   | $         | 1,668,017 |   |   |    | $      | 449,143 |   |      |   | $      | 1,210,614 |   |   |   | $      | 23,838    |   |   |   | $         | 1,683,595 |   |   |   | $         | 1,583,278 |   |      |   | $      | 32,632 |   |   |      | $      | 1,615,910 |   |   |
|                                                        |        |        |           |           |        |        |         |        |         |        |           |        |        |           |        |        |        |        |           |        |        |        |           |           |        |        |        |           |           |        |           |        |        |        |        |        |           |        |           |  |  |

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*                     We restated our financial statements for stock optionawards. See Note 1 to our consolidated financial statements.

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**For the Year EndedMarch 30, 2006 and Pro Forma Year Ended March 31, 2005**

**Revenues.****  **Total revenues decreased 0.7%, or$11,854,000, during the year ended March 30, 2006 compared to the proforma year ended March 31, 2005. This decrease was mitigated by approximately$118,840,000 of additional admission and concessions revenues resulting fromthe Merger.

U.S. and Canada theatricalexhibition revenues increased 0.1%, or $2,320,000 during the year endedMarch 30, 2006 compared to the pro forma year ended March 31, 2005.Admissions revenues decreased 1.6% or $18,304,000 during the year endedMarch 30, 2006 compared to the pro forma year ended March 31, 2005,due to a 5.4% decrease in total attendance, partially offset by a 4.0% increasein average ticket prices and the increased attendance and admissions revenues($70,846,000) due to the Merger. Attendance at comparable theatres (theatresopened on or before April 2, 2004 and operated throughout the last twofiscal years) was down 11.8%. Industry-wide box office declined 4%, withattendance estimated to be down nearly 7% in the aggregate (down 10.0% forcomparable screens), offset by average ticket price increases estimated to beup 3%. The year over year performance of our U.S. and Canada comparable screensversus industry-wide comparable screens was impacted primarily bycompetition from new build openings. The increase in average ticket price wasprimarily due to our practice of periodically reviewing ticket prices and thediscounts we offer and making selective adjustments based upon such factors asgeneral inflationary trends and conditions in local markets. Concessionsrevenues increased 0.3%, or $1,497,000, during the year ended March 30,2006 compared to the pro forma year ended March 31, 2005 due to a 6.0% increasein average concessions per patron related to price increases and an increase inunits sold per patron, partially offset by the decrease in attendance.Concession revenues increased by $27,276,000 due to the Merger. Other theatrerevenues increased 33.3% during the year ended March 30, 2006 compared tothe pro forma year ended March 31, 2005. Included in other theatrerevenues are our share of on-screen advertising revenues generated by NCN andNCM. The increase in other theatre revenues was primarily due to increases inon-screen advertising revenues.

International theatricalexhibition revenues increased $22,197,000, during the year ended March 30,2006 compared to the pro forma year ended March 31, 2005. Admissionsrevenues increased $12,791,000 due to the theatres acquired in Mexico in theMerger. Overall, admissions revenues increased $11,552,000, during the yearended March 30, 2006 compared to the pro forma year endedMarch 31, 2005 primarily due to the theatres acquired in Mexico.Concession revenues increased $7,942,000 due to the theatres acquired in Mexicoin the Merger. Overall, concession revenues increased $8,295,000 during theyear ended March 30, 2006 compared to the pro forma year endedMarch 31, 2005 due primarily to the theatres acquired in Mexico.

Revenues from Otherdecreased 73.8% during the year ended March 30, 2006 compared to the proforma year ended March 31, 2005 due to the contribution of NCN’s netassets to NCM on March 29, 2005. The revenues of NCN during fiscal 2006are related to run-off of customer contracts entered into prior toMarch 29, 2005. Our share of advertising revenues generated by NCM areincluded in U.S. and Canada other theatre revenues.

**Costs and expenses.****  **Total costs and expenses decreased 0.9%,or $15,578,000, during the year ended March 30, 2006 compared to the proforma year ended March 31, 2005. The effect of the Merger was an increasein total costs and expenses of approximately $110,401,000.

U.S. and Canada theatricalexhibition costs and expenses increased 2.8% during the year endedMarch 30, 2006 compared to the pro forma year ended March 31, 2005.Film exhibition costs decreased 2.4% during the year ended March 30, 2006compared to the pro forma year ended March 31, 2005 due to the decrease inadmissions revenues, offset by a decrease in the percentage of admissions paidto film distributors. As a percentage of admissions revenues, film exhibitioncosts were 52.6% in the current period as compared with 53.0% in the pro formaprior period due to more favorable film rental terms primarily from the Merger.Concession costs decreased 3.6% during the year ended March 30, 2006 

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comparedto the pro forma year ended March 31, 2005 due to the decrease inconcessions costs as a percentage of concession revenues, partially offset bythe increase in concessions revenues. As a percentage of concessions revenuesconcession costs were 10.8% in the current period compared with 11.3% in thepro forma prior period. As a percentage of revenues, theatre operating expensewas 25.9% in the current period as compared to 24.0% in the pro forma priorperiod. Rent expense increased 9.6% during the year ended March 30, 2006compared to the pro forma year ended March 31, 2005 primarily due to theMerger which increased rent expense by $18,415,000. The pro forma adjustmentfor $3,229,000 to reduce rent expense results from amortization of step-ups inunfavorable leases recorded in connection with the merger with Marquee. Duringthe year ended March 30, 2006, we recognized $601,000 of theatre and otherclosure expense due primarily to accretion of the closure liability related totheatres closed during prior periods. During the pro forma year endedMarch 31, 2005, we recognized $11,746,000 of theatre and other closure expenserelated primarily to the closure of three theatres with 22 screens.

International theatricalexhibition costs and expenses increased $16,268,000 during the year endedMarch 30, 2006 compared to the pro forma year ended March 31,2005. Film exhibition costs increased $4,897,000 due to the theatres acquiredin Mexico in the Merger. Overall, film exhibition costs increased $4,222,000during the year ended March 30, 2006 compared to the pro forma yearended March 31, 2005 due primarily to the theatres acquired in Mexico.Concession costs increased $1,735,000 due to the theatres acquired in Mexico inthe Merger. Overall, concession costs increased $1,714,000 during the yearended March 30, 2006 compared to the pro forma year endedMarch 31, 2005 due primarily to the theatres acquired in Mexico. As apercentage of revenues, theatre operating expense was 34.3% in the currentperiod compared to 36.9% in the pro forma prior period. Rent expenseincreased 33.0% during the year ended March 30, 2006 compared to thepro forma year ended March 31, 2005 primarily as a result of theMerger. The 2005 pro forma adjustment for $2,231,000 to reduce rent expenseresults from the amortization of step-ups in unfavorable leases recorded inconnection with the merger with Marquee. We continually moniter the performanceof our international theatres and factors such as our ability to obtain filmproduct, changing consumer preferences for filmed entertainment ininternational markets and our ability to sublease vacant retail space which couldnegatively impact operating results and result in future closures, sales,dispositions and theatre closure charges prior to expiration of underlyinglease agreements.

Costs and expenses fromOther decreased 64.3% during the year ended March 30, 2006 compared to thepro forma year ended March 31, 2005 due to the contribution of net assetsby NCN to NCM.

**General and Administrative:**

**Merger and acquisitioncosts.****  **Mergerand acquisition costs decreased $52,513,000 from $65,000,000 to $12,487,000during the year ended March 30, 2006 compared to the pro forma year endedMarch 31, 2005. The prior year costs were higher primarily due to thecosts associated with our merger with Marquee consummated during the thirdquarter of fiscal 2005. Current year costs are primarily comprised of costsrelated to the Merger and other potential acquisition and divestitureactivities.

**Management fees.****  **Management fees were $2,000,000 forthe year ended March 30, 2006 and the pro forma year ended March 31,2005. The 2005 pro forma adjustment for $1,500,000 to management fee expenserepresents the adjustment necessary to record the annual management fee of$2,000,000 which was required to be paid quarterly, in advance, to our Sponsorsin exchange for consulting and other services under an agreement entered intoin connection with the merger with Marquee. For fiscal 2007, management fees of$1,250,000 will be paid quarterly, in advance, to our Sponsors in exchange forconsulting and other services.

**Other.****  **Other general and administrativeexpense decreased 17.3%, or $8,343,000, during the year ended March 30,2006 compared to the pro forma year ended March 31, 2005 primarily due toa $4,648,000 decrease in incentive-based compensation, due to our declinein operating results and a $6,102,000 decrease in salaries and benefits as aresult of our organizational restructuring activities.

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**Restructuring Charge.****  **Restructuring charges were$3,980,000 during the year ended March 30, 2006 as compared to $4,926,000during the pro forma year ended March 31, 2005. These expenses areprimarily related to one-time termination benefits and other costs related tothe displacement of approximately 200 associates related to an organizationalrestructuring, which was completed to create a simplified organizationalstructure and contribution of assets by NCN to NCM. Our organizationalrestructuring is complete.

**Depreciation andAmortization.****  **Depreciationand amortization increased 4.0%, or $6,266,000, compared to the pro forma priorperiod, due primarily to the Merger. The 2005 pro forma adjustment for$27,798,000 to increase depreciation and amortization primarily resulted froman increase in asset basis of approximately $130,000,000 recorded in connectionwith the merger with Marquee.

**Impairment of Long-LivedAssets.****  **Duringfiscal 2006 we recognized a non-cash impairment loss of $11,974,000 on fourtheatres with 66 screens (in Ohio, Illinois, New York and New Jersey). Theentire charge was taken against property. The estimated future cash flows ofthese theatres, undiscounted and without interest charges, were less than thecarrying value of the theatre assets. We continually evaluate the future plansfor certain of our theatres, which may include selling theatres or closingtheatres and terminating the leases. No impairment loss was recorded in fiscal2005.

**Disposition of Assets andOther Gains.****  **Dispositionof assets and other gains were $997,000 in the current period compared to$3,017,000 in the pro forma prior period. The current and pro forma priorperiods include $935,000 and $2,610,000, respectively, of settlements receivedrelated to fireproofing claims at various theatres (see Note 12—Commitmentsand Contingencies to Consolidated Financial Statements). The current periodalso includes miscellaneous disposal gains of $62,000. The pro forma priorperiod also included miscellaneous gains of $407,000.

**Other Income.****  **Other income includes $8,699,000 ofincome related to the derecognition of stored value card liabilities where webelieve future redemption to be remote, insurance recoveries of $3,032,000 forproperty losses related to Hurricane Katrina, net of disposition losses of$346,000 and $1,968,000 of business interruption insurance recoveries relatedto Hurricane Katrina, partially offset by financing costs incurred with thewrite off of our deferred financing charges of $3,535,000. Other income, forthe prior year on a pro forma basis, primarily included $6,745,000 of incomerelated to the derecognition of stored value card liabilities.

**Interest Expense.****  **Interest expense increased$13,666,000 during the year ended March 30, 2006 compared to the pro formayear ended March 31, 2005. The increase primarily relates to increasedborrowings used to fund the Merger. Included in the pro forma period endedMarch 31, 2005 is an adjustment for $7,274,000 of less interest expensewhich primarily records the borrowings from the merger with Marquee as if theyhad occurred at the beginning of the period.

On January 26, 2006,we issued $325,000,000 of 11% senior subordinated notes due 2016 (“Notes due2016”) and secured the new Senior Secured Credit Facility for $850,000,000, ofwhich $650,000,000 is currently outstanding as a variable rate term note.Interest on these notes was $6,528,000 and $7,985,000, respectively duringfiscal 2006. We also incurred interest expense related to debt held by Cinemexof $2,110,000 during fiscal 2006.

**Investment Loss (Income).****  **Investment loss was $4,656,000 forthe Successor period ended March 30, 2006 compared to income of $5,929,000for the pro forma period ended March 31, 2005. Included in the pro formaperiod ended March 31, 2005 is an adjustment for $3,056,000 reducinginterest income which would have been received if the merger with Marquee hadoccurred at the beginning of the period. Equity in losses of non-consolidatedentities were $7,807,000 in the Successor period ended March 30, 2006compared to income of $293,000 in the prior year. Current year equity in lossesrelated to our investment in NCM were $5,476,000. Interest income for theSuccessor period ended March 30, 2006 

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was $2,930,000.Prior year periods interest income was higher primarily due to the escrow fundsand increased cash available for investment during the period.

**Income Tax Provision(Benefit).****  **Theprovision for income taxes from continuing operations was $69,400,000 for theSuccessor period ended March 30, 2006 compared to $1,880,000 for the proforma period ended March 31, 2005. The provision for the Successor periodended March 30, 2006 included a charge for a full valuation allowance onall U.S. tax jurisdiction net deferred tax assets with the exception of thoseU.S. net deferred tax assets acquired in connection with the Merger. The proforma period ended March 31, 2005 includes a pro forma benefit adjustmentof $6,000,000 resulting from the items described above with the merger withMarquee. The pro forma period ended March 31, 2005 included $61,032,000 incosts associated with the merger with Marquee which were treated asnon-deductible. See Note 9 to the Consolidated Financial Statements.

**Loss from DiscontinuedOperations, Net.****  **OnMay 11, 2006, we sold AMC Entertainment España S.A. andActividades Multi-Cinemeas E Espectaculos, LDA (collectively“Iberia”), including 4 theatres with 86 screens in Spain and1 theatre with 20 screens in Portugal. At the date of the sale theseoperations did not meet the criteria for discontinued operations because ofcontinuing involvement in the region through an equity method investmentin Yelmo. In December 2006, we disposed of our investmentin Yelmo, including 27 theatres with 310 screens in Spain,and the results of the operations in Iberia have now been classified asdiscontinued operations. On June 30, 2005, we soldJapan AMC Theatres, Inc., including four theatres in Japan with63 screens, and classified its operations as discontinued operations. Theinformation presented for all periods reflect these as discontinued operations.See Note 3—Discontinued Operations for the components of the loss fromdiscontinued operations.

**Loss for Shares of CommonStock.****  **Lossfor shares of common stock was $188,762,000 and $84,261,000 for the Successorperiod ended March 30, 2006 and the pro forma period ended March 31,2005, respectively.

**Pro Forma Year Ended March 31, 2005 and YearEnded April 1, 2004**

**Revenues.****  **Total revenues increased 1.2%, or $20,500,000,on a pro forma basis, during the year ended March 31, 2005 compared to theyear ended April 1, 2004.

U.S. and Canada theatricalexhibition revenues increased 1.2%, on a pro forma basis, from the prior year.Admissions revenues increased 0.3%, on a pro forma basis, due to a 3.8%increase in average ticket price partially offset by a 3.4% decrease inattendance. The increase in average ticket prices was primarily due to ourpractice of periodically reviewing ticket prices and the discounts we offer andmaking selective adjustments based upon such factors as general inflationarytrends and conditions in local markets. Attendance decreased primarily due to a5.8% decrease in attendance at comparable theatres (theatres opened on orbefore April 4, 2003) related to overall popularity and mix of filmproduct and a decrease in attendance due to theatre closures, partially offsetby an increase in attendance at new theatres. We closed 6 theatres with 42screens and opened three theatres with 44 screens since fiscal 2004.Concessions revenues increased 1.9%, on a pro forma basis, due to a 5.4%increase in average concessions per patron related to price increases partiallyoffset by the decrease in attendance. 

International theatricalexhibition revenues increased 28.1%, on a pro forma basis. Admissions revenuesincreased 21.5%, on a pro forma basis, due to a 20.6% increase in attendanceand a 0.7% increase in average ticket price due primarily to a weaker U.S.dollar. Concession revenues, on a pro forma basis, increased 53.1% due to a26.9% increase concessions per patron and the increase in total attendance.Concessions per patron increased primarily due to the weaker U.S. dollar. 

Revenues from NCN andother decreased 6.1%, on a pro forma basis, from the prior year due to adecrease in advertising revenues resulting from a reduction in screens servedby NCN. This decline resulted from an initiative to improve profitability byeliminating marginally profitable contracts with certain theatre circuits. 

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**Costs and expenses.**   Total costs andexpenses increased 4.2%, on a pro forma basis, or $67,718,000 during the yearended March 31, 2005 compared to the year ended April 1, 2004. 

U.S. and Canada theatricalexhibition costs and expenses increased 1.9%, on a pro forma basis, from theprior year. Film exhibition costs decreased 0.3%, on a pro forma basis, due toa decrease in the percentage of admissions paid to film distributors partiallyoffset by the increase in admissions revenues. As a percentage of admissionsrevenues, film exhibition costs were 53.0% in the current year as compared with53.3% in the prior year. Concession costs increased 7.7%, on a pro forma basis,due to the increase in concession costs as a percentage of concessions revenuesand the increase in concession revenues. As a percentage of concessionsrevenues, concession costs were 11.3%, on a pro forma basis, in the currentyear compared with 10.6% in the prior year. As a percentage of revenues,theatre operating expense was 24.0% in the current year, on a pro forma basis,as compared to 24.2% in the prior year. Rent expense increased 6.0%, on a proforma basis, due primarily to the opening of theatres and screens sinceApril 1, 2004 and the sale and lease back of the real estate assets associatedwith three theatres for proceeds of $63,911,000 on March 30, 2004. The proforma adjustments for $3,229,000 and $4,344,000, respectively, to reduce rentexpense result from the amortization of step-ups in unfavorable leases recordedin connection with the merger with Marquee. During fiscal 2005, on a pro formabasis, we recognized $11,746,000 of theatre and other closure expense relatedprimarily to accruals for future minimum rentals on three theatres with 22screens closed during the current period. During fiscal 2004, on a pro formabasis, we incurred $3,570,000 of theatre and other closure expense relatedprimarily to a payment to a landlord to terminate a lease on a theatre closedduring the current period and due to accruals for future minimum rentals onthree theatres with 20 screens closed during the year. Theatres closed prior totheir lease expiration may require payments to the landlords to terminate theleases, which we estimate could approximate $250,000, in the aggregate, overthe next three years.

International theatricalexhibition costs and expenses increased 17.9%, on a pro forma basis. Filmexhibition costs increased 22.0%, on a pro forma basis, due to the increase inadmissions revenues partially offset by a decrease in the percentage ofadmissions paid to film distributors. As a percentage of admissions revenues,film exhibition costs were 46.9%, on a pro forma basis, in the current periodas compared with 46.7% in the prior period. Concession costs increased 39.6%,on a pro forma basis, due to the increase in concession revenues partiallyoffset by a decrease in concession costs as a percentage of concessionrevenues. As a percentage of concessions revenues, concession costs were 22.8%,on a pro forma basis, in the current year compared with 25.0% in the prioryear. Theatre operating expense increased 21.2%, on a pro forma basis,primarily at new theatres, and rent expense increased 24.5%, on a pro formabasis, primarily due to the operating of new theatres. The pro forma adjustmentsfor $2,231,000 and $3,065,000, respectively, to reduce rent expense result fromthe amortization of step-ups in unfavorable leases recorded in connection withthe merger with Marquee. We continually monitor the performance of ourinternational theatres, and factors such as our ability to obtain film product,changing consumer preferences for filmed entertainment in international marketsand our ability to sublease vacant retail space could negatively impactoperating results and result in future closures, sales, dispositions andtheatre closure charges prior to expiration of underlying lease agreements.International theatrical exhibition costs and expenses were negatively impactedby a weaker U.S. dollar, although this did not contribute materially to consolidatedloss from continuing operations. 

Costs and expenses fromNCN and other decreased 10.6%, on a pro forma basis, due primarily to thereduction in overhead costs associated with the integration of NCN'sadministrative functions into our home office location and decreased revenues. 

**General and Administrative:**

**Merger and acquisition.**   Merger andacquisition costs increased $59,492,000 during the current year, on a pro formabasis. The current period reflects costs associated with the merger with Marqueeof 

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**$63,057,000and $1,943,000 for other strategic initiatives. Prior period costs wereprimarily for professional and consulting expenses directly related to apossible business combination with Loews Cineplex Entertainment Corporationthat did not occur.**

**Management fee.**   The pro formaadjustments for $1,500,000 and $2,000,000, respectively, to increase managementfee expense represent the adjustments necessary to record the annual managementfee of $2,000,000 which is required to be paid quarterly, in advance, to ourSponsors in exchange for consulting and otherservices under an agreement entered into in connection with the merger withMarquee.

**Other.**   Other general andadministrative expense decreased 14.9%, on a pro forma basis. Stock-basedcompensation decreased $7,526,000, during the current year, on a pro formabasis, compared to the prior year. The current pro forma period reflects thatcertain of the performance measures for fiscal 2005 have not been met andrelated discretionary awards under the 2003 Long-Term Incentive Plan("LTIP") will not be made. Accordingly, we recorded no expense oraccrual for fiscal 2005 performance grants under the LTIP. The prior periodreflects expense from the plan approval date, September 18, 2003 throughApril 1, 2004. Current year stock-based compensation expense of $1,201,000relates to options issued by our parent, Holdings, for certain members of ourmanagement. See Note 8 to the Consolidated Financial Statements includedherein.

**Restructuring Charge.**   Restructuringcharges were $4,926,000 during the current pro forma year. These expenses arerelated to one-time termination benefits and other costs related to thedisplacement of approximately 200 associates related to an organizationalrestructuring, which was completed to create a simplified organizationalstructure, and a contribution of assets by NCN to NCM.

**Depreciation and Amortization.**   Depreciation and amortization increased 2.9%, on a pro forma basis, or$4,444,000, due primarily to increases in depreciation resulting from newtheatres. The 2005 pro forma adjustments for $27,798,000 and $38,041,000,respectively, to increase depreciation and amortization primarily resulted froman increase in asset basis of approximately $130,000,000 recorded in connectionwith the merger with Marquee.

**Impairment of Long-Lived Assets.**   No impairment loss was recorded in fiscal 2005. During fiscal 2004, werecognized a non-cash impairment loss of $16,272,000 on 10 theatres with 176screens. We recognized an impairment loss of $9,866,000 on seven U.S. theatreswith 114 screens (in Texas, Maryland, California, Illinois, Wisconsin andMinnesota), $3,525,000 on one theatre in the United Kingdom with 12 screens and$2,881,000 on two Canadian theatres with 50 screens. Our impairment lossincluded $16,209,000 related to property and $63,000 related to intangibleassets. Included in these losses is an impairment of $3,482,000 on 3 theatreswith 70 screens that were included in impairment losses recognized in previousperiods. The estimated future cash flows of these theatres, undiscounted andwithout interest charges, were less than the carrying value of the theatreassets. We continually evaluate the future plans for certain of our theatres,which may include selling theatres or closing theatres and terminating theleases. We have identified 30 multiplex theatres with 261 screens that we mayclose over the next one to three years due to expiration of leases or earlylease terminations. Prior to and including fiscal 2004, $10,763,000 ofimpairment charges have been taken on these theatre assets and the economiclives of these theatre assets have been revised to reflect management's bestestimate of the economic lives of the theatre assets for purposes of recordingdepreciation.

**Disposition of Assets and Other Gains.**   Disposition of assets and other gains increased from a gain of$2,590,000 during the prior year to a gain of $3,017,000 during the currentyear, on a pro forma basis. The pro forma current period includes settlementgains of $2,610,000 related to various fireproofing claims at two theatres anda $111,000 settlement that was received from a construction contractor relatedto one Canadian theatre. The pro forma current period also includes a gain of$334,000 related to a sale of NCN equipment. The prior period includes a$1,298,000 gain on the disposition of three theatres and two parcels 

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**ofreal estate held for sale, settlements of $925,000 received related to variousfireproofing claims at two theatres and $367,000 related to a settlement with aconstruction contractor at one theatre.**

**Other Income and Expense.**   During the current year, on a pro forma basis, werecognized $6,745,000 of income related to the derecognition of stored valuecard liabilities where management believes future redemption to be remote. Inthe prior year, on March 25, 2004, we redeemed $200,000,000 of our 91¤2% senior subordinated notes due 2009 (the"Notes due 2009") for $204,750,000. We recognized a loss of$8,590,000 in connection with the redemption, including a call premium of $4,750,000,unamortized issue costs of $3,291,000 and unamortized discount of $549,000. OnMarch 25, 2004, we redeemed $83,406,000 or our 91¤2% senior subordinated notes due 2011 (the"Notes due 2011") for $87,367,000. We recognized a loss of $5,357,000in connection with the redemption including a call premium of $3,961,000,unamortized issue costs of $1,126,000 and unamortized discount of $270,000. Thelosses are included within other expense in the Consolidated Statements ofOperations for the year ended April 1, 2004.

**Interest Expense.**   Interest expensewas $106,542,000 and $110,417,000 for the pro forma periods endedMarch 31, 2005 and April 1, 2004, respectively. The current yeardecrease is primarily changes in interest rates on outstanding variable ratedebt. Included in the pro forma periods ended March 31, 2005 andApril 1, 2004 are adjustments for $7,274,000 and $34,756,000 of additionalinterest expense which primarily records the borrowings from the merger withMarquee as if they had occurred at the beginning of the periods.

On August 18, 2004,AMCE issued $250,000,000 of our Fixed Notes due 2012 and $205,000,000 of ourFloating Notes due 2010, the interest rate of which is currently 7.04% perannum. On August 18, 2004, Holdings issued $304,000,000 aggregateprincipal amount at maturity of Discount Notes for gross proceeds of$169,917,760. Interest expense associated with the Discount Notes is includedin our Consolidated Statements of Operations through December 23, 2004.

On February 24, 2004,we sold $300,000,000 aggregate principal amount of 8% senior subordinated notesdue 2014 (the "Notes due 2014"). We used the net proceeds(approximately $294,000,000) to redeem the Notes due 2009 and a portion of theNotes due 2011. On March 25, 2004, we redeemed $200,000,000 of our Notesdue 2009 and $83,406,000 of the Notes due 2011. 

**Investment Income.**   Investment incomewas $5,929,000 and $2,837,000 for the pro forma periods ended March 31,2005 and April 1, 2004. Investment income for the pro forma period endedMarch 31, 2005 compared to the pro forma period ended April 1, 2004increased primarily due to the interest income on funds held in escrow relatedto the merger with Marquee and increased cash available for investment duringthe current period and includes a pro forma adjustment to interest income of$3,056,000. No adjustments were necessary for the pro forma period endedApril 1, 2004. 

**Income Tax Provision.**   The benefit forincome taxes from continuing operations for the pro forma period endedMarch 31, 2005 was $6,420,000 after including a pro forma adjustment for$11,900,000. The pro forma period includes $61,032,000 in costs related to themerger with Marquee which are currently being treated as non-deductible. Thedifference in effective rate from the statutory rate of 35% during the proforma period ended March 31, 2005 was primarily due to currentlynon-deductible costs related to the merger with Marquee and increase in foreigndeferred tax assets for which we provided a valuation allowance. The differencein effective rate from the statutory rate of 35% during the pro forma periodended April 1, 2004 was primarily due to foreign deferred tax assets (primarilyin Spain, the United Kingdom and France) for which we provided a $6,681,000valuation allowance. The pro forma periods ended March 31, 2005 andApril 1, 2004 include a pro forma benefit adjustment of $6,000,000 and $24,900,000,respectively, resulting from the items described above in connection with themerger with Marquee.

**Loss From Discontinued Operations, Net.**   On May 11, 2006, we sold AMC Entertainment Espana S.A. andActividades Multi-Cinemeas E Espectaculos, LDA (collectively"Iberia"), including 4 

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**theatreswith 86 screens in Spain and 1 theatre with 20 screens in Portugal. At the dateof the sale these operations did not meet the criteria for discontinuedoperations because of continuing involvement in the region through an equitymethod investment in Yelmo. In December 2006, we disposed of ourinvestment in Yelmo, including 27 theatres with 310 screens in Spain, and theresults of the operations in Iberia have now been classified as discontinuedoperations. On June 30, 2005, we sold Japan AMC Theatres, Inc.,including four theatres in Japan with 63 screens, and classified its operationsas discontinued operations. On December 4, 2003, we sold one theatre inSweden with 18 screens and incurred a loss on sale of $5,591,000. The resultsof operations of the Sweden theatre have been classified as discontinuedoperations. The information presented for all periods reflect these asdiscontinued operations. See Note 3—Discontinued Operations for thecomponents of the loss from discontinued operations.**

**Loss forShares of Common Stock.**   Lossfor shares of common stock for the year was $84,261,000 and $93,479,000 for thepro forma periods ended March 31, 2005 and April 1, 2004. PreferredStock dividends of 19,697 shares of Preferred Stock valued at $40,277,000 wererecorded in fiscal 2004.

**LIQUIDITY ANDCAPITAL RESOURCES**

Our revenues are primarilycollected in cash, principally through box office admissions and theatreconcessions sales. We have an operating “float” which partially finances ouroperations and which generally permits us to maintain a smaller amount ofworking capital capacity. This float exists because admissions revenues arereceived in cash, while exhibition costs (primarily film rentals) areordinarily paid to distributors from 20 to 45 days following receipt of boxoffice admissions revenues. Film distributors generally release the films whichthey anticipate will be the most successful during the summer and holidayseasons. Consequently, we typically generate higher revenues during suchperiods.

**Cash Flows from Operating Activities**

Cash flows provided by(used in) operating activities, as reflected in the Consolidated Statements ofCash Flows, were $23,654,000, $(46,687,000), $145,364,000 and $163,939,000 forthe Successor period ended March 30, 2006, Successor period ended March 31,2005, the Predecessor period ended December 23, 2004 and the Predecessorperiod ended April 1, 2004, respectively. The decrease in cash provided byoperating activities for the Successor period ended March 30, 2006compared with the pro forma combined period for the prior year is primarily dueto declines in attendance and the timing of payments for accrued expenses andother liabilities. The cash used in operating activities for the Successorperiod ended March 31, 2005 was primarily due to payments of $37,061,000in transaction costs related to the merger with Marquee. The decrease inoperating cash flows for the Predecessor period ended December 23, 2004compared to the Predecessor period ended April 1, 2004 was also primarilydue to transaction costs related to the merger with Marquee of which$23,971,000 were paid during the Predecessor period ended December 23,2004. We had a working capital deficit as of March 30, 2006 of$116,201,000 versus a deficit as of March 31, 2005 of $134,961,000. Wehave the ability to borrow against our credit facility to meet obligations asthey come due (subject to limitations on the incurrence of indebtedness in ourvarious debt instruments) and had approximately $90,000,000 and $163,000,000available on our credit facility to meet these obligations for the periodsended March 30, 2006 and March 31, 2005, respectively.

**Cash Flows from Investing Activities**

Cash flows provided by(used in) investing activities, as reflected in the Consolidated Statements ofCash Flows, were $109,323,000, $(1,259,794,000), $(692,395,000) and$(69,378,000) for the Successor period ended March 30, 2006, Successorperiod ended March 31, 2005, the Predecessor period ended December 23,2004 and the Predecessor period ended April 1, 2004, respectively. Cashflows for the Successor period ended March 30, 2006 include cash acquiredfrom the Merger of $142,512,000, proceeds from the sale leaseback of twotheatres of $35,010,000 and proceeds from the sale of the Japan theatres of 

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$53,456,000,partially offset by capital expenditures of $117,668,000. The cash acquiredfrom the Merger represented the cash held by Loews at the date of the Merger.The Merger was non-cash, funded by the issuance of stock by our parent, MarqueeHoldings Inc. Cash outflows for investing activities include a payment tocommon and preferred stockholders net of cash acquired of $1,268,564,000related to the merger with Marquee for the Successor period ended March 31,2005 and an increase of $627,338,000 in restricted cash related to investmentof the proceeds from the Senior Notes issued in order to finance the mergerwith Marquee during the Predecessor period ended December 23, 2004 andcapital expenditures of $18,622,000, $66,155,000 and $95,011,000 during theSuccessor period ended March 31, 2005, Predecessor periods ended December 23,2004 and April 1, 2004, respectively. As of March 30, 2006, we hadconstruction in progress of $34,796,000. We had 8 U.S. theatres with a total of117 screens and two Mexico theatres with a total of 21 screens underconstruction as of March 30, 2006 that we expect to open in fiscal 2007.We expect that our gross capital expenditures in fiscal 2007 will beapproximately $141,000,000.

On December 23, 2004we completed the merger with Marquee and became a wholly owned subsidiary ofHoldings. Pursuant to the terms of the merger agreement, each issued andoutstanding share of our common stock and Class B stock was converted intothe right to receive $19.50 in cash and each issued and outstanding share ofour preferred stock was converted into the right to receive $2,727.27 in cash.The total amount of consideration paid in the merger with Marquee was$1,665,200,000.

Holdings used the netproceeds from the sale of our notes (as described below), together with ourexisting cash balances and the proceeds from the equity contribution fromHoldings (consisting of equity contributed by the Marquee Sponsors, theco-investors and certain members of management and the net proceeds of anoffering of Holdings’ notes), to finance the merger with Marquee.

In connection with and asa result of the merger with Marquee, our stock is no longer publicly traded andwe delisted our common stock, 662¤3¢ par value,from the American Stock Exchange on December 23, 2004.

On December 19, 2003, we acquired certain of theoperations and related assets of MegaStar Cinemas, L.L.C. for an estimatedcash purchase price of $15,037,000. In connection with the acquisition, weassumed leases on three theatres with 48 screens in Minneapolis and Atlanta.All three of the theatres feature stadium seating and have been built since2000.

On March 29, 2002, we acquired GC Companiespursuant to a stock purchase agreement and a plan of reorganization that wasconfirmed by the bankruptcy court on March 18, 2002. Our purchase price of$168,931,000 (net of $6.5 million from the sale of GC Companies’ portfolioof venture capital investments on the effective date) included anticipated cashpayments of $68,472,000, the issuance of $72,880,000 aggregate principal amountof our Notes due 2011 with a fair value of $71,787,000 and the issuance of2,578,581 shares of common stock with an aggregate fair value of $35,172,000based on a fair value of $13.64 per share (the closing price per share on theeffective date of the plan). We used available cash for the cash payments underthe plan of reorganization.

The final purchase price for GC Companies was notdeterminable until all creditor claims disputed by the GC Companiespost-confirmation unsecured creditors committee were consensually resolved ordetermined by the bankruptcy court. The GC Companies bankruptcy case was closedon May 26, 2004. Through March 31, 2005, we had issued $72,880,000aggregate principal amount of our senior subordinated notes due 2011 and2,430,433 shares of our common stock and paid approximately $66,118,000 in cashto creditors of GC Companies.

On March 15, 2002, we acquired the operations andrelated assets of Gulf States Theatres for a cash purchase price ofapproximately $45,800,000. The acquisition includes five theatres with 68screens in the New Orleans, Louisiana area. All five of the theatres featurestadium seating and have been built since 1997 and strengthen our position inthe New Orleans market. Operating results of the acquired theatres are includedin the Consolidated Statements of Operations from March 15, 2002.

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In connection with theacquisition of Gulf States Theatres, we entered into leases of the real estateassets associated with the five theatres with Entertainment Properties Trustfor a term of 20 years with an initial annual base rent of $7,200,000. Ofthe $45,000,000 purchase price, $5,800,000 was paid to Entertainment PropertiesTrust for specified non-real estate assets which Entertainment Properties Trustacquired from Gulf States Theatres and resold to us at cost. We will pay$300,000 annually for five years from the date of acquisition in connectionwith consulting and non-competition agreements related to the acquisition.

On June 30, 2005, wesold one of our wholly-owned subsidiaries, Japan AMC Theatres, Inc.,including four of our five theatres in Japan for $44,861,000 and, on September 1,2005, sold our remaining Japan theatre for a sales price of $8,595,000.

Subsequent to the currentfiscal year, in May 2006, AMCEI and its subsidiary AMC EntertainmentInternational Limited sold its interests in AMC Entertainment España S.A.,which owned and operated four theatres with 86 screens in Spain, andActividades Multi-Cinemas E Espectáculos, LDA, which owned and operatedone theatre with 20 screens in Portugal for a sales price of $35,446,000.

Subsequent to the end offiscal year 2006, we sold four theatres with 42 screens in the U.S. as requiredby and in connection with the approval of the Mergers for an aggregate netsales price of approximately $30.7 million. We expect additional salesproceeds of approximately $40.5 million related to six theatres with78 screens required to be disposed of in connection with the approval ofthe Mergers.

We fund the costs ofconstructing new theatres through existing cash balances, cash generated fromoperations or borrowed funds, as necessary. We generally lease our theatrespursuant to long-term non-cancelable operating leases which may require thedeveloper, who owns the property, to reimburse us for the construction costs.We may decide to own the real estate assets of new theatres and, followingconstruction, sell and leaseback the real estate assets pursuant to long-termnon-cancelable operating leases. During fiscal 2006, we sold and leased backtwo theatres with 32 screens.

During fiscal 1998, wesold the real estate assets associated with 13 theatres to EntertainmentProperties Trust (“EPT”) for an aggregate purchase price of $283,800,000 (the “Saleand Lease Back Transaction”). We leased the real estate assets associated withthe theatres from EPT pursuant to non-cancelable operating leases with termsranging from 13 to 15 years at an initial lease rate of 10.5% with optionsto extend for up to an additional 20 years. The leases are triple netleases that require us to pay substantially all expenses associated with theoperation of the theatres, such as taxes and other governmental charges,insurance, utilities, service, maintenance and any ground lease payments.During fiscal 2000, we sold the building and improvements associated with one ofour theatres to EPT for proceeds of $17,600,000 under terms similar to theabove Sale and Leaseback Transaction. During fiscal 2002, we sold the land atthis theatre to EPT for proceeds of $7,486,000 under terms similar to the aboveSale and Leaseback Transaction and at an initial lease rate of 10.75%. Duringfiscal 2003, we sold the real estate assets associated with 2 theatres to EPTfor proceeds of $43,665,000 and then leased the real estate assets associatedwith these theatres pursuant to non-cancelable operating leases with terms of20 years at an initial lease rate of 11% with options to extend for up toan additional 15 years. On March 30, 2004, we sold the real estateassets associated with 3 theatres to EPT for proceeds of $63,911,000 and thenleased the real estate assets associated with these theatres pursuant tonon-cancelable operating leases with terms of 20 years at an initial leaserate of 9.5% with options to extend for up to 15 additional years. On March 31,2005, we sold the real estate assets associated with one theatre and adjoiningretail space to EPT for proceeds of $50,910,000 and then leased the real estateassets associated with the theatre pursuant to a non-cancelable operating leasewith terms of 20 years at an initial lease rate of 9.24% with options toextend for up to 14 additional years. On March 30, 2006, we sold the realestate assets associated with two theatres to EPT for proceeds of $35,010,000and then leased the real estate assets associated with the 

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theatrespursuant to a non-cancelable operating lease with terms of approximately 15 and17 years at an initial lease rate of 9.25% with options to extend each forup to 15 additional years

Historically, we haveeither paid for or leased the equipment used in a theatre. We may purchaseleased equipment from lessors if prevailing market conditions are favorable.During the Successor period ended March 31, 2005 we purchased certainleased furniture, fixtures and equipment at two theatres for $25,292,000.During fiscal 2004 we purchased certain leased furniture, fixtures andequipment at five Canadian theatres for $15,812,000.

**Cash Flows from Financing Activities**

Cash flows provided by(used in) financing activities, as reflected in the Consolidated Statements ofCash Flows, were $21,434,000, $1,375,583,000, $611,034,000 and $(5,274,000) forthe Successor period ended March 30, 2006, Successor period ended March 31,2005, the Predecessor period ended December 23, 2004 and the Predecessorperiod ended April 1, 2004, respectively. Cash flows from financingactivities for the Successor period ended March 30, 2006 primarily includeproceeds of $325,000,000 from the issuance of the Notes due 2016 and$650,000,000 from the Term Loan B which were used to repurchase $939,363,000 ofdebt, as well as $24,895,000 paid for financing costs which will be deferredand amortized over the life of the debt. On September 29, 2005 we received$6,661,000 additional construction allowance from our landlord EntertainmentProperties Trust related to three of our Canada theatres which allowed for saleleaseback accounting at these locations and reduced our financing leaseobligations by approximately $31,292,000, reduced the net book value ofbuilding assets related to these locations by approximately $15,839,000 andresulted in a deferred gain of $22,114,000. The deferred gain is amortized as areduction of rent expense over the remaining terms of the leases. Cash flowsfrom financing activities for the Successor period ended March 31, 2005include a capital contribution from Holdings related to the merger with Marqueeof $934,901,000 and proceeds of $455,000,000 related to the issuance of SeniorNotes. Cash flows from financing activities for the Predecessor period ended December 23,2004, include proceeds related to the issuance of notes of $624,918,000 tofinalize the merger with Marquee, which includes gross proceeds of $169,918,000from the Holding notes.

For a discussion of ourmost recent financing transactions in fiscal year 2006, see “Merger with LoewsFinancing Transactions” below.

As a result of the mergerwith Marquee, we became the obligor of $250,000,000 in aggregate principalamount of 85¤8%Senior Notes due 2012 (the “Fixed Notes due 2012”) and $205,000,000 inaggregate principal amount of Senior Floating Notes due 2010 (the “FloatingNotes due 2010” and collectively, the “Senior Notes”) that were previouslyissued by Marquee Inc. on August 18, 2004. The Senior Notes (i) ranksenior in right of payment to any of our existing and future subordinatedindebtedness, rank equally in right of payment with any of our existing andfuture senior indebtedness and are effectively subordinated in right of paymentto any of our secured indebtedness and (ii) are fully and unconditionallyguaranteed on a joint and several, senior unsecured basis by each of ourexisting and future wholly owned subsidiaries that is a guarantor or directborrower under our other indebtedness. The Senior Notes are structurallysubordinated to all existing and future liabilities and preferred stock of oursubsidiaries that do not guarantee the notes.

The Fixed Notes due 2012bear interest at the rate of 85¤8% per annum,payable on February 15 and August 15 of each year, commencing February 15,2005. The Fixed Notes due 2012 are redeemable at our option, in whole or inpart, at any time on or after August 15, 2008 at 104.313% of the principalamount thereof, declining ratably to 100% of the principal amount thereof on orafter August 15, 2010. The Floating Notes due 2010 bear interest at a rateper annum, reset quarterly, equal to 41¤4%plus the three-month LIBOR interest rate. Interest on the Floating Notesdue 2010 is payable quarterly on February 15, May 15, August 15and November 15 and interest payments commenced on November 15, 

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2004.The interest rate is 9.01% per annum for the quarterly period ending May 14,2006 and is 9.42% for the quarterly period ending August 14, 2006. TheFloating Notes due 2010 are redeemable, in whole or in part, on or after August 15,2006 at 103.00% of the principal amount thereof, declining ratably to 100% ofthe principal amount thereof on or after August 15, 2009. The Fixed Notesdue 2012 and Floating Notes due 2010 also contain covenants which restrict theincurrence of additional senior indebtedness based on the senior leverage ratioas defined in the indentures.

Holdings issued$304,000,000 principal amount at maturity of its 12% senior discount notes due2014 (“Discount Notes due 2014”) for gross proceeds of $169,917,760. The onlyoperations of Holdings prior to the merger with Marquee were related to thisfinancing. Because we were the primary beneficiary of Holdings, which wasconsidered a variable interest entity as defined in FIN 46(R), *Consolidation of Variable Interest Entities, anInterpretation of ARB No. 51,* the Predecessor was required toconsolidate Holdings’ operations and financial position into its financialstatements as of and through the period ended December 23, 2004.Subsequent to December 23, 2004, the Successor deconsolidated Holdings’assets and liabilities. The results of operations of Holdings included withinthe Predecessor’s Consolidated Statements of Operations for the period from April 2,2004 through December 23, 2004 include interest expense of $7,135,000 andinterest income of $831,000.

Holdings is a holdingcompany with no operations of its own and has no ability to service interest orprincipal on the Discount Notes due 2014 other than through any dividends itmay receive from us. We will be restricted, in certain circumstances, frompaying dividends to Holdings by the terms of the indentures governing the FixedNotes due 2012, the Floating Notes due 2010 and the Existing Subordinated Notesand the amended credit facility. We have not guaranteed the indebtedness ofHoldings nor pledged any of its assets as collateral.

Prior to August 15,2009, unless Holdings elects to pay cash interest as described below, intereston the Discount Notes due 2014 will accrete from the date of issuance of thenotes until August 15, 2009, compounded semiannually. Thereafter, intereston the Discount Notes due 2014 will accrue and be payable in cash semi-annuallyon each February 15 and August 15, commencing on February 15,2010, at a rate of 12% per annum.

On any interest paymentdate prior to August 15, 2009, Holdings may elect to commence paying cashinterest (from and after such interest payment date) in which case (i) Holdingswill be obligated to pay cash interest on each subsequent interest paymentdate, (ii) the notes will cease to accrete after such interest paymentdate and (iii) the outstanding principal amount at the maturity of eachnote will be equal to the accreted value of such note as of such interestpayment date.

Concurrently with theconsummation of the merger with Marquee, we entered into an amendment to ourcredit facility. We refer to this amended credit facility as the “amendedcredit facility.” The amended credit facility modifies our previous SecondAmended and Restated Credit Agreement dated as of March 26, 2004 which wassuperseded in connection with the execution of the “amended credit facility”which was scheduled to mature on April 9, 2009. The amended creditfacility was replaced with the New Credit Facility on January 26, 2006.

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

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On January 16, 2002,we sold $175,000,000 aggregate principal amount of our 97¤8%Senior Subordinated notes due 2012 (the “Notes due 2012”). Net proceeds fromthe issuance of the Notes due 2012 (approximately $168,000,000) were used toreduce borrowings under our credit facility, to pursue our current businessstrategy, including the acquisition of GC Companies, and for general corporatepurposes. The Notes due 2012 bear interest at the rate of 97¤8% per annum,payable February 1 and August 1 of each year. The Notes due 2012 areredeemable at our option, in whole or in part, at any time on or after February 1,2007 at 104.938% of the principal amount thereof, declining ratably to 100% ofthe principal amount thereof on or after February 1, 2010, plus in eachcase interest accrued to the redemption date. The Notes due 2012 are unsecuredand are subordinated to all our existing and future senior indebtedness (asdefined in the indenture governing the Notes due 2012). The Notes due 2012 rankequally with our Notes due 2011 and our Notes due 2014.

On January 27, 1999,we sold $225,000,000 aggregate principal amount of our 91¤2%Senior Subordinated notes due 2011 (the “Notes dues 2011”). Net proceeds fromthe issuance of the Notes due 2011 (approximately $219,000,000) were used toreduce borrowings under our credit facility. On March 29, 2002, we issuedan additional $72,880,000 aggregate principal amount of Notes due 2011 (with afair value of $71,787,000) as part of our acquisition of GC Companies, Inc.The Notes due 2011 bear interest at the rate of 91¤2% per annum,payable February 1 and August 1 of each year. The Notes due 2011 areredeemable at our option, in whole or in part, at any time on or after February 1,2004 at 104.75% of the principal amount thereof, declining ratably to 100% ofthe principal amount thereof on or after February 1, 2007, plus in eachcase interest accrued to the redemption date. The Notes due 2011 are unsecuredand are subordinated to all our existing and future senior indebtedness (asdefined in the indenture governing the Notes due 2011). On March 25, 2004,we redeemed $83,406,000 of our notes due 2011 for $87,367,000. A loss of$5,357,000 was recognized in connection with the redemption including a callpremium of $3,962,000, unamortized issue costs of $1,125,000 and unamortizeddiscount of $270,000. The loss is included within other expense on theConsolidated Statements of Operations.

The merger with Marqueeconstituted a “change of control” under the Notes due 2011 in the aggregateprincipal amount of $214,474,000, which allowed the holders of those notes torequire us to repurchase their notes at 101% of their aggregate principalamount plus accrued and unpaid interest to the date of purchase. We commencedthis change of control offer on January 11, 2005 and were required topurchase the notes no later than 60 days from that date. The change ofcontrol offer was required to remain open for at least 20 business days andexpired on February 10, 2005. Bondholders tendered $1,663,000 of the Notesdue 2011 which were repurchased using existing cash.

On March 19, 1997, wesold $200,000,000 aggregate principal amount of our 91¤2%Senior Subordinated notes due 2009 (the “Notes due 2009”). We used the netproceeds from the issuance of the Notes due 2009 (approximately $194,000,000)to reduce borrowings under our credit facility. The Notes due 2009 wereredeemed on March 25, 2004 for $204,750,000. A loss on redemption of$8,590,000 was recognized in connection with the redemption including a callpremium of $4,750,000, unamortized issue costs of $3,291,000 and unamortizeddiscount of $549,000. The loss is included within other expense on theConsolidated Statements of Operations.

The indentures relating toour outstanding notes allow us to incur all permitted indebtedness (as definedtherein) without restriction, which includes all amounts borrowed under ourcredit facility. The indentures also allow us to incur any amount of additionaldebt as long as we can satisfy the coverage ratio of each indenture, both atthe time of the event (under the indenture for the Notes due 2011) and aftergiving effect thereto on a pro forma basis (under the indentures for the Notesdue 2011, Notes due 2012, Fixed Notes due 2012 and Floating Notes due 2010).Under the indenture relating to the Notes due 2012, Notes due 2014 and 11%Senior Subordinated Notes due 2016 (“Notes due 2016”), the most restrictive ofthe indentures, we could borrow approximately $6.3 million as of March 30,2006 in addition to permitted indebtedness (assuming an interest rate of 11%per annum on the additional borrowings). If we cannot 

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satisfythe coverage ratios of the indentures, generally we can incur, in addition toamounts borrowed under the credit facility, no more than $100.0 million ofnew “permitted indebtedness” under the terms of the indentures relating to the2011, 2012, 2014 and 2016 notes.

The indentures relating tothe above-described notes also contain covenants limiting dividends,purchases or redemptions of stock, transactions with affiliates, and mergersand sales of assets, and require us to make an offer to purchase the notes uponthe occurrence of a change in control, as defined in the indentures. Upon achange of control (as defined in the indentures), we would be required to makean offer to repurchase all of the outstanding, Notes due 2016, Notes due 2011,Notes due 2012, Notes due 2014, Fixed Notes due 2012 and Floating Notes due2010 at a price equal to 101% of the principal amount thereof plus accrued andunpaid interest to the date of repurchase.

**Merger with Loews Financing Transactions**

Inconnection with the Merger with Loews, on January 26, 2006, we enteredinto the following financing transactions:

·       theissuance of $325.0 million in aggregate principal amount of the Notes due2016;

·       theNew Credit Facility, consisting of a $650.0 million term loan facility(which was fully drawn upon at closing) and a $200.0 million revolvingcredit facility (which was unutilized at closing);

·       thetermination of the amended credit facility;

·       therepayment of all outstanding amounts under the Loews Facility; and

·       thecompletion of the Tender Offer for all $315.0 million aggregate principalamount of Loews’ outstanding 9.0% senior subordinated notes due 2014.

In addition, certainsubsidiaries acquired in the Merger with Loews currently have approximately$114 million of borrowings under the Cinemex Credit Facility and$32 million in capital and financing lease obligations.

The proceeds of thefinancing transactions were used to repay amounts outstanding under the LoewsFacility, to fund the Tender Offer, to pay related fees and expenses, and topay fees and expenses related to the Merger with Loews.

*New Credit Facility*

The New Credit Facility iswith a syndicate of banks and other financial institutions and providesfinancing of up to $850.0 million, consisting of a $650.0 millionterm loan facility with a maturity of seven years and a $200.0 million revolvingcredit facility with a maturity of six years. The revolving credit facilitywill include borrowing capacity available for Mexican peso-denominatedrevolving loans, for letters of credit and for swingline borrowings on same-daynotice.

Borrowings under the NewCredit Facility bear interest at a rate equal to an applicable margin plus, atour option, either a base rate or LIBOR. The initial applicable margin forborrowings under the revolving credit facility is 0.75% with respect to baserate borrowings and 1.75% with respect to LIBOR borrowings, and the initialapplicable margin for borrowings under the term loan facility is 1.50% withrespect to base rate borrowings and 2.125% with respect to LIBOR borrowings.The applicable margin for such borrowings may be reduced, subject to AMCEattaining certain leverage ratios. In addition to paying interest onoutstanding principal under the New Credit Facility, we are required to pay acommitment fee to the lenders under the revolving credit facility in respect ofthe unutilized commitments thereunder at a rate equal to 0.375% (subject toreduction upon attainment of certain leverage ratios). We will also paycustomary letter of credit fees. We may voluntarily repay outstanding loansunder the New Credit Facility at any time without premium or penalty, otherthan customary “breakage” costs with respect to LIBOR 

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loans.We are required to repay $1,625,000 of the term loan quarterly, beginning March 30,2006 through September 30, 2012, with any remaining balance due on January 26,2013.

All obligations under theNew Credit Facility are guaranteed by each of our wholly-owned domesticsubsidiaries. All obligations under the New Credit Facility, and the guaranteesof those obligations (as well as cash management obligations and any interesthedging or other swap agreements), are secured by substantially all of ourassets as well as those of each subsidiary guarantor.

The New Credit Facilitycontains a number of covenants that, among other things, restrict, subject tocertain exceptions, our ability, and the ability of our subsidiaries, to sellassets; incur additional indebtedness; prepay other indebtedness (including theNotes); pay dividends and distributions or repurchase our capital stock; createliens on assets; make investments; make certain acquisitions; engage in mergersor consolidations; engage in certain transactions with affiliates; amendcertain charter documents and material agreements governing subordinatedindebtedness, including the Notes; change the business conducted by it and itssubsidiaries; and enter into agreements that restrict dividends fromsubsidiaries.

In addition, the NewCredit Facility requires, commencing with the fiscal quarter ended March 30,2006, that we maintain a maximum net senior secured leverage ratio as long asthe commitments under the revolving credit facility remain outstanding. The NewCredit Facility also contains certain customary affirmative covenants andevents of default.

*11% Senior Subordinated Notes due 2016*

The notes were issuedunder an indenture, dated January 26, 2006, with HSBC Bank USA, NationalAssociation, as trustee, bear interest at a rate of 11% per annum, payable on February 1and August 1 of each year (commencing on August 1, 2006), and have amaturity date of February 1, 2016.

The notes are generalunsecured senior subordinated obligations of AMC Entertainment, fully andunconditionally guaranteed, jointly and severally, on a senior subordinatedbasis by each of our existing and future domestic restricted subsidiaries thatguarantee our other indebtedness.

We may redeem some or allof the notes at any time on or after February 1, 2011 at 105.5% of theprincipal amount thereof, declining ratably to 100% of the principal amountthereof on or after February 1, 2014. In addition, we may redeem up to 35%of the aggregate principal amount of the notes using net proceeds from certainequity offerings completed on or prior to February 1, 2009. If weexperience a change of control (as defined in the Indenture), we will be requiredto make an offer to repurchase the notes at a price equal to 101% of theprincipal amount thereof, plus accrued and unpaid interest, if any, to the dateof purchase.

The Indenture containscovenants limiting other indebtedness, dividends, purchases or redemptions ofstock, transactions with affiliates and mergers and sales of assets. TheIndenture also contains provisions subordinating our obligations under thenotes to our obligations under our New Credit Facility and other seniorindebtedness.

On May 15, 2006, wemade an offer to exchange, by prospectus, up to $325,000,000 in aggregateprincipal amount of 11% Series B Senior Subordinated Notes due 2016, whichhave been registered under the Securities Act of 1933, as amended, for ouroutstanding 11% Series A Senior Subordinated Notes due 2016. We completedthe exchange offer on June 13, 2006.

*Cinemex Credit Facility*

In August 2004,Cadena Mexicana de Exhibición S.A. de C.V., a wholly-owned subsidiary ofCinemex and an indirect wholly-owned subsidiary of Loews, entered into asenior secured credit facility, which remains in place after the consummationof the Merger with Loews. The initial amount drawn under the Cinemex seniorsecured credit facility was 1,026.4 million Mexican pesos (approximately$90.0 million as of 

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August 16,2004). Cinemex drew 106.4 million Mexican pesos (approximately$10 million in August 2005) under the delayed draw feature of itssenior secured credit facility. Approximately $103.9 million wasoutstanding under the senior secured credit facility as of March 30, 2006.In December 2005, Cadena Mexicana entered into an amended and restatedsenior secured revolving credit facility which provides for an availablerevolving credit line of the peso equivalent of $25.0 million with BancoInbursa, S.A. and Scotiabank Inverlat, S.A. (the revolving credit facility ispeso-denominated debt). During January and February of 2006 Cinemexdrew 105.4 million Mexican pesos under the revolving credit facility(approximately $9.8 million was outstanding as of March 30, 2006).All obligations of Cadena Mexicana under the Cinemex senior secured creditfacility and revolving credit facility are guaranteed by Cinemex and eachexisting and future operating subsidiary of Cadena Mexicana, except for specifiedexcluded subsidiaries.

The Cinemex borrowings arenon-recourse to Loews, and thus, are non-recourse to AMCE. Interest on theCinemex term loan is payable in arrears on a monthly basis at the InterbankEquilibrium Interest Rate (Tasa de Interes Interbancaria de Equilibrio) for aperiod of 28 days (the TIIE rate), plus an applicable margin of 1.50% inyears one and two, 1.75% in year three and 2.00% in years four and five. Theinterest rate on the Cinemex term loan as of March 30, 2006 was 9.31%.This rate was adjusted to 8.5% on approximately $68.8 million of theCinemex borrowings by an interest rate swap entered into on July 28, 2003and was redesignated as a hedge of the Cinemex senior secured credit facilityon August 16, 2004. The interest rate on the remaining approximately$35.1 million of the Cinemex borrowings was adjusted to 9.89% by aninterest rate swap entered into on August 5, 2005. The Cinemex term loanmatures on August 16, 2009 and will amortize beginning on February 16,2007 in installments ranging from 10% to 30% per annum over the five-yearperiod.

The Cinemex senior securedcredit facilities contain customary affirmative and negative covenants withrespect to Cadena Mexicana and each of the guarantors and, in certaininstances, Cadena Mexicana’s subsidiaries that are not guarantors, as definedin the credit agreement. Affirmative covenants include the requirement tofurnish periodic financial statements and ensure that the obligations of CadenaMexicana and the guarantors under the Cinemex senior secured credit facilitiesrank at least *pari passu* with allexisting debt of such parties. Negative covenants include limitations ondisposition of assets, capital expenditures, dividends and additionalindebtedness and liens. The senior secured credit facilities also includecertain financial covenants, including, without limitation, a maximum totalleverage ratio, a maximum total net debt to equity ratio, a minimum interestcoverage ratio, a maximum true-lease adjusted leverage ratio and a minimumconsolidated net worth requirement.

For additional informationrelating to covenants contained in the indentures governing the notes, seeNote 7 to our Consolidated Financial Statements under Part II Item 8.of this Annual Report on Form 10-K/A for the fiscal year endedMarch 30, 2006.

As of March 30, 2006,we were in compliance with all financial covenants relating to the New CreditFacility, the Cinemex Credit Facility, the Notes due 2016, the Notes due 2011,the Notes due 2012, Notes due 2014, the Fixed Notes due 2012 and the FloatingNotes due 2010.

We believe that cashgenerated from operations and existing cash and equivalents will be sufficientto fund operations and planned capital expenditures and potential acquisitionsfor at least the next twelve months and enable us to maintain compliance withcovenants related to the new Credit Facility and the notes.

On March 19, 2002, wecompleted a public offering of 9,000,000 shares of Common Stock at a publicoffering price of $10.50 per share and granted the underwriters a 30-dayoption to purchase an additional 1,350,000 shares of common stock at $10.50 pershare to cover over-allotments. On March 28, 2002, the underwritersexercised their option to purchase these shares. Net proceeds from the offeringof the shares of common stock of $100,800,000 were used to fund the acquisitionof GC Companies.

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On April 19, 2001, weissued shares of Series A convertible preferred stock and Series Bexchangeable preferred stock for an aggregate purchase price of $250,000,000.Net proceeds from the sale (including transaction expenses) of approximately$225,000,000 were used to reduce outstanding indebtedness under our creditfacility. On September 13, 2001, pursuant to the certificate ofdesignations relating to the preferred stock, all shares of Series Bexchangeable preferred stock were exchanged for an equal number of shares ofSeries A convertible preferred stock. Dividends on the Series Aconvertible preferred stock accumulated at an annual rate of 6.75% and werepayable in additional shares of Series A convertible preferred stock untilApril 2004. At our option, dividends on Series A convertiblepreferred stock were payable in cash or additional shares of Series Aconvertible preferred stock from April 2004 until April 2008. Alloutstanding shares of preferred stock were redeemed in connection with themerger with Marquee.

**Commitments andContingencies**

Minimumannual cash payments required under existing capital and financing leaseobligations, maturities of corporate borrowings, future minimum rental paymentsunder existing operating leases, FF&E and leasehold purchase provisions,ADA related betterments and pension funding that have initial or remainingnon-cancelable terms in excess of one year as of March 30, 2006 are asfollows:

| **(In thousands)** | ** ** | ** ** | ** ** | **Minimum  Capital and  Financing  Lease  Payments** | ** ** | **Principal  Amount of  Corporate  Borrowings** | ** ** | **Interest  Payments on  Corporate  Borrowings**(1) | ** ** | **Minimum  Operating  Lease  Payments** | ** ** | **Capital  Related  Betterments**(2) | ** ** | **Pension  Funding**(3) | ** ** | **Total  Commitments** | ** ** |
|-------------------------|------------|------------|------------|-----------------------------------------------------------|------------|------------------------------------------------------|------------|----------------------------------------------------------|------------|-----------------------------------------|------------|--------------------------------------|------------|-------------------------|------------|------------------------|------------|
| 2007                    |       |       | $          | 11,056                                                    |       |                                                 | $          | 26,690                                                   |       |                                    | $          | 197,707                              |       |                    | $          | 408,007                |       |   | $ | 67,055 |   |   |   | $ | 1,400 |   |   |   | $ | 711,915 |   |   |
| 2008                    |       |       | 10,333     |                                                      |       | 28,392                                               |       |                                                     | 195,143    |                                    |       | 422,674                              |       |                    | 16,100     |                   |       |   | – |   |   |   | 672,642 |   |   |
| 2009                    |       |       | 9,969      |                                                      |       | 46,283                                               |       |                                                     | 192,323    |                                    |       | 419,634                              |       |                    | 16,100     |                   |       |   | – |   |   |   | 684,309 |   |   |
| 2010                    |       |       | 9,925      |                                                      |       | 40,600                                               |       |                                                     | 185,061    |                                    |       | 416,863                              |       |                    | 4,500      |                   |       |   | – |   |   |   | 656,949 |   |   |
| 2011                    |       |       | 9,975      |                                                      |       | 424,311                                              |       |                                                     | 167,681    |                                    |       | 408,945                              |       |                    | –     |                   |       |   |   |   |   |   | 1,010,912 |   |   |
| Thereafter              |       |       | 85,306     |                                                      |       | 1,684,283                                            |       |                                                     | 346,859    |                                    |       | 3,341,769                            |       |                    | –     |                   |       |   | – |   |   |   | 5,458,217 |   |   |
| Total                   |       |       | $          | 136,564                                                   |       |                                                 | $          | 2,250,559                                                |       |                                    | $          | 1,284,774                            |       |                    | $          | 5,417,892              |       |   | $ | 103,755 |   |   |   | $ | 1,400 |   |   |   | $ | 9,194,944 |   |   |

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(1)                Interest expense on the term loan and thefloating rate notes were estimated at 7.206% and 9.46%, respectively, basedupon the published LIBOR at 5/23/06.

(2)                 Includes committed capital expendituresincluding the estimated cost of ADA related betterments. Does not includeplanned, but non-committed capital expenditures.

(3)                 We fund our pension plan such that the plan is 90%funded. While future funding is anticipated, the funding amount is currentlyunknown. The retiree health plan is not funded.

*Amended andRestated Fee Agreement*

In connection with the Merger with Loews, on January 26,2006, Holdings, AMCE and the Sponsors entered into an Amended and Restated FeeAgreement (the “Management Fee Agreement”), which replaces the December 23,2004 fee agreement among Holdings, AMCE, and the Marquee Sponsors. TheManagement Fee Agreement provides for an annual management fee of$5.0 million, payable quarterly and in advance to each Sponsor, on a prorata basis, for the twelve year duration of the agreement, as well asreimbursements for each Sponsor’s respective out-of-pocket expenses inconnection with the management services provided under the Management FeeAgreement.

In addition, the Management Fee Agreement will providefor reimbursements by Holdings and AMCE to the Sponsors for their out-of-pocketexpenses, and by AMCE to Holdings of up to $3.5 million 

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for fees payable byHoldings in any single fiscal year in order to maintain AMCE’s corporateexistence, corporate overhead expenses and salaries or other compensation ofcertain employees.

Upon the consummation of a change in controltransaction or an IPO, the Sponsors will receive, in lieu of quarterly paymentsof the annual management fee, a fee equal to the net present value of theaggregate annual management fee that would have been payable to the Sponsorsduring the remainder of the term of the fee agreement (assuming a twelve yearterm from the date of the original fee agreement), calculated using thetreasury rate having a final maturity date that is closest to the twelfthanniversary of the date of the original fee agreement date.

The Management FeeAgreement also provides that AMCE will indemnify the Sponsors against alllosses, claims, damages and liabilities arising in connection with themanagement services provided by the Sponsors under the fee agreement.

**Conclusion**

We believe that cashgenerated from operations and existing cash and equivalents will be sufficientto fund operations and planned capital expenditures currently and for at leastthe next 12 months and enable us to maintain compliance with covenantsrelated to the new senior secured credit facility and the notes. We areconsidering various options with respect to the utilization of cash andequivalents in excess of our anticipated operating needs. Such options mightinclude, but are not limited to, acquisitions of theatres or theatre companiesand repayment of corporate borrowings.

**Impact of Inflation**

Historically, theprincipal impact of inflation and changing prices upon us has been to increasethe costs of the construction of new theatres, the purchase of theatreequipment, rent and the utility and labor costs incurred in connection withcontinuing theatre operations. Film exhibition costs, our largest cost ofoperations, are customarily paid as a percentage of admissions revenues andhence, while the film exhibition costs may increase on an absolute basis, thepercentage of admissions revenues represented by such expense is not directlyaffected by inflation. Except as set forth above, inflation and changing priceshave not had a significant impact on our total revenues and results ofoperations.

**New AccountingPronouncements**

In February 2006, the FASB agreed to issue FASBStaff Position (FSP) No. 123(R)-4, *Classificationof Options and Similar Instruments Issued as Employee Compensation That Allowfor Cash Settlement upon the Occurrence of a Contingent Event*, whichrequires companies to consider the probability of the occurrence of acontingent event that is outside the employees’ control (i.e., change incontrol, or death or disability) in determining the classification of anemployee stock option or similar instrument under FASB Statement No. 123(R),*Share-Based Payment*, where theaward requires or permits cash settlement upon the contingent event. The FSPrequires companies to classify employee stock options and similar instrumentswith contingent cash settlement features as equity awards provided thecontingent event that permits or requires cash settlement is not consideredprobable of occurring. As we have already adopted SFAS 123(R), we would berequired to apply the guidance in the first reporting period beginning afterthe date the final FSP is posted to the FASB website and would be required toapply the proposed guidance retrospectively to prior-period results towhich SFAS 123(R) was applied. We do not believe the adoption of FSP123 R-4 will have an impact on our consolidated financial position,results of operations, or cash flows.

In October 2005, the FASB issued FASB StaffPosition (FSP) 13-1, *Accounting forRental Costs Incurred during a Construction Period*. FSP 13-1clarifies there is no distinction between the right to use a leased assetduring the construction period and the right to use that asset after theconstruction period. 

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Accordingly, we will nolonger be able to capitalize rental costs during the construction period andwill begin expensing them as preopening expense prior to the theatre openingdate. This FSP is effective for the first reporting period beginning after December 15,2005. We have adopted this FSP during the fourth quarter of fiscal 2006 whichresults in recognition of preopening expense during the “rent holiday”.

In May 2005, the FASB issued SFAS No. 154, *Accounting Changes and Error Corrections areplacement of APB Opinion No. 20 and FASB Statement No. 3*(SFAS 154), which requires retrospective application to prior periods’financial statements of changes in accounting principle, unless it isimpracticable to determine either the period-specific effects or thecumulative effect of the change. It also requires that a change indepreciation, amortization, or depletion method for long-lived, nonfinancialassets be accounted for as a change in accounting estimate affected by a changein accounting principle. We are not currently contemplating an accountingchange which would be impacted by SFAS 154.

In March 2004, theFASB issued Emerging Issues Task Force Issue No. 03-1. *The Meaning of Other Than Temporary Impairment andits Application to Certain Investments*(“EITF 03-1”). EITF 03-1includes new guidance for evaluating and recording impairment losses on debtand equity investments, as well as new disclosure requirements for investmentsthat are deemed to be temporarily impaired. In September 2004, the FASBissued Staff Position EITF Issue 03-1-1, which delays the effectivedate until additional guidance is issued for the application of the recognitionand measurement provisions of EITF 03-1 to investment in securitiesthat are impaired. We do not believe that the adoption of EITF 03-1 willhave a material impact on our financial condition or result of operations.

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**Item 8.**                     FinancialStatements and Supplementary Data

**RESPONSIBILITY FOR PREPARATION OF FINANCIALSTATEMENTS**

**AMC Entertainment Inc.**

**TO THESTOCKHOLDER OF AMC ENTERTAINMENT INC.**

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

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

The Company identified the following material weaknessin its internal control over financial reporting—Controls over the applicationof Statement of Financial Accounting Standard (“SFAS”) No. 123R *Stock Based Compensation*, SFAS 150 *Accountingfor Certain Financial Instruments with Characteristics of both Liabilities andEquity* and FSP 123(R)-4 *Classification of Optionsand Similar Instruments Issued as Employee Compensation That Allow for CashSettlement upon the Occurrence of a Contingent Event* to StockOptions, their underlying shares and associated “Put” rights which failed toidentify the mis-classification of certain options and shares as liabilitieswhich should have been classified as Permanent Equity and the resultingincorrect expense recognition related thereto. Solely as a result of thismaterial weakness, we concluded that our disclosure controls and procedureswere not effective as of March 30, 2006.

The Audit Committee of theBoard of Directors (consisting solely of Directors not employed by the Company)reviews the process involved in the preparation of the Company’s annual auditedfinancial statements, and in this regard meets (jointly and separately) withthe independent registered public accounting firm, management and internalauditors to review matters relating to financial reporting and accountingprocedures and policies, the adequacy of internal controls and the scope andresults of the audit performed by the independent registered public accountingfirm.

Chairmanof the Board, Chief Executive Officer

and President

ExecutiveVice President and

Chief Financial Officer

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**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM**

TO THE BOARD OF DIRECTORS AND STOCKHOLDER OF AMCENTERTAINMENT INC.:

In our opinion, the accompanying consolidated balancesheets and the related consolidated statements of operations, of stockholder’sequity and of cash flows present fairly, in all material respects, thefinancial position of AMC Entertainment Inc. and its subsidiaries, (the “Successor”),at March 30, 2006 and March 31, 2005, and the results of theiroperations and their cash flows for the fifty-two week period ended March 30,2006 and for the period from July 16, 2004 (date of inception) through March 31,2005, in conformity with accounting principles generally accepted in the UnitedStates of America. These financial statements are the responsibility of theSuccessor’s management. Our responsibility is to express an opinion on thesefinancial statements based on our audits. We conducted our audits of thesestatements in accordance with the standards of the Public Company AccountingOversight Board (United States). Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on atest basis, evidence supporting the amounts and disclosures in the financialstatements, assessing the accounting principles used and significant estimatesmade by management, and evaluating the overall financial statementpresentation. We believe that our audits provide a reasonable basis for ouropinion.

As discussed in Note 1, the Company restated itsfinancial statements for the fifty-two week period ended March 30, 2006.

PricewaterhouseCoopers LLP

Kansas City, Missouri

June 22, 2006, except for Note 3, as to which thedate is February 20, 2007, and except for the effects of the restatementdiscussed in Note 1, as to which the date is April 11, 2007.

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTINGFIRM**

TO THE BOARD OF DIRECTORS AND STOCKHOLDER OF AMCENTERTAINMENT INC.:

In our opinion, the accompanying consolidatedstatements of operations, of stockholders’ equity and of cash flows presentfairly, in all material respects, the results of operations and of cash flowsof AMC Entertainment Inc. and its subsidiaries (the “Predecessor”) for theperiod from April 2, 2004 through December 23, 2004 and for thefiscal year in the period ended April 1, 2004, in conformity withaccounting principles generally accepted in the United States of America. Thesefinancial statements are the responsibility of the Predecessor’s management.Our responsibility is to express an opinion on these financial statements basedon our audits. We conducted our audits of these statements in accordance withthe standards of the Public Company Accounting Oversight Board (United States).Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements, assessing theaccounting principles used and significant estimates made by management, andevaluating the overall financial statement presentation. We believe that ouraudits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP

Kansas City, Missouri

June 21, 2005, except for Note 3, as towhich the date is October 7, 2005

37

----

**AMCEntertainment Inc.CONSOLIDATED STATEMENTS OF OPERATIONS**

| **(In thousands)**                                         | ** ** | ** **      | ** ** | **52 Weeks  Ended  March 30, 2006** | ** ** | **From Inception  July 16, 2004  through  March 31, 2005** | ** ** | ** **        | ** ** | **April 2, 2004  through  December 23, 2004** | ** ** | **52 Weeks Ended  April 1, 2004** | ** ** |
|-----------------------------------------------------------------|------------|-----------------|------------|----------------------------------------------------|------------|-------------------------------------------------------------------------------------|------------|-------------------|------------|-------------------------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                                                      | ** ** | **(restated)**  | ** ** | ** **                                         | ** ** | ** **                                                                          | ** ** | ** **        | ** ** | ** **                                                        | ** ** |
| ** **                                                      | ** ** | **(Successor)** | ** ** | **(Successor)**                                    | ** ** | ** **                                                                          | ** ** | **(Predecessor)** | ** ** | **(Predecessor)**                                                 | ** ** |
| Revenues                                                        |       |            |       |                                               |       |                                                                                |       |              |       |                                                              |       |                                                  |       |   |   |   |   |   |   |
| Admissions                                                      |       |            | $          | 1,138,034                                          |       |                                                                                |       | $                 | 297,310    |                                                              |       |                                                  |       |   | $ | 847,476 |   |   |   | $ | 1,139,108 |   |   |
| Concessions                                                     |       |            | 456,028    |                                               |       |                                                                                | 117,266    |              |       |                                                              |       |                                                  | 328,970    |   |   |   | 436,737 |   |   |
| Other theatre                                                   |       |            | 92,816     |                                               |       |                                                                                | 24,884     |              |       |                                                              |       |                                                  | 82,826     |   |   |   | 102,387 |   |   |
| Total revenues                                                  |       |            | 1,686,878  |                                               |       |                                                                                | 439,460    |              |       |                                                              |       |                                                  | 1,259,272  |   |   |   | 1,678,232 |   |   |
| Costs and Expenses                                              |       |            |       |                                               |       |                                                                                |       |              |       |                                                              |       |                                                  |       |   |   |   |   |   |   |
| Film exhibition costs                                           |       |            | 595,353    |                                               |       |                                                                                | 152,747    |              |       |                                                              |       |                                                  | 452,727    |   |   |   | 605,898 |   |   |
| Concession costs                                                |       |            | 50,581     |                                               |       |                                                                                | 12,801     |              |       |                                                              |       |                                                  | 37,880     |   |   |   | 46,868 |   |   |
| Operating expense                                               |       |            | 451,522    |                                               |       |                                                                                | 115,590    |              |       |                                                              |       |                                                  | 324,427    |   |   |   | 442,974 |   |   |
| Rent                                                            |       |            | 329,878    |                                               |       |                                                                                | 80,776     |              |       |                                                              |       |                                                  | 223,734    |   |   |   | 288,321 |   |   |
| General  and administrative:                                    |       |            |       |                                               |       |                                                                                |       |              |       |                                                              |       |                                                  |       |   |   |   |   |   |   |
| Merger and acquisition costs                                    |       |            | 12,487     |                                               |       |                                                                                | 22,268     |              |       |                                                              |       |                                                  | 42,732     |   |   |   | 5,508 |   |   |
| Management fee                                                  |       |            | 2,000      |                                               |       |                                                                                | 500        |              |       |                                                              |       |                                                  | —     |   |   |   | — |   |   |
| Other                                                           |       |            | 39,984     |                                               |       |                                                                                | 14,600     |              |       |                                                              |       |                                                  | 33,727     |   |   |   | 56,798 |   |   |
| Preopening expense                                              |       |            | 6,607      |                                               |       |                                                                                | 39         |              |       |                                                              |       |                                                  | 1,292      |   |   |   | 3,865 |   |   |
| Theatre and other closure expense                               |       |            | 601        |                                               |       |                                                                                | 1,267      |              |       |                                                              |       |                                                  | 10,758     |   |   |   | 4,068 |   |   |
| Restructuring charges                                           |       |            | 3,980      |                                               |       |                                                                                | 4,926      |              |       |                                                              |       |                                                  | —     |   |   |   | — |   |   |
| Depreciation and amortization                                   |       |            | 164,047    |                                               |       |                                                                                | 43,931     |              |       |                                                              |       |                                                  | 86,052     |   |   |   | 115,296 |   |   |
| Impairment of long-lived assets                                 |       |            | 11,974     |                                               |       |                                                                                | —     |              |       |                                                              |       |                                                  | —     |   |   |   | 16,272 |   |   |
| Disposition of assets and other gains                           |       |            | (997       | )                                                  |       |                                                                                | (302       | )                 |       |                                                              |       |                                                  | (2,715     | ) |   |   | (2,590 | ) |   |
| Total costs and expenses                                        |       |            | 1,668,017  |                                               |       |                                                                                | 449,143    |              |       |                                                              |       |                                                  | 1,210,614  |   |   |   | 1,583,278 |   |   |
| Other expense  (income)                                         |       |            |       |                                               |       |                                                                                |       |              |       |                                                              |       |                                                  |       |   |   |   |   |   |   |
| Other expense (income)                                          |       |            | (9,818     | )                                                  |       |                                                                                | (6,778     | )                 |       |                                                              |       |                                                  | —     |   |   |   | 13,947 |   |   |
| Interest  expense                                               |       |            |       |                                               |       |                                                                                |       |              |       |                                                              |       |                                                  |       |   |   |   |   |   |   |
| Corporate borrowings                                            |       |            | 116,140    |                                               |       |                                                                                | 39,668     |              |       |                                                              |       |                                                  | 66,851     |   |   |   | 66,963 |   |   |
| Capital and financing lease obligations                         |       |            | 4,068      |                                               |       |                                                                                | 1,449      |              |       |                                                              |       |                                                  | 5,848      |   |   |   | 8,698 |   |   |
| Investment expense (income)                                     |       |            | 4,656      |                                               |       |                                                                                | (2,512     | )                 |       |                                                              |       |                                                  | (6,473     | ) |   |   | (2,837 | ) |   |
| Total other expense                                             |       |            | 115,046    |                                               |       |                                                                                | 31,827     |              |       |                                                              |       |                                                  | 66,226     |   |   |   | 86,771 |   |   |
| Earnings (loss) from continuing operations before  income taxes |       |            | (96,185    | )                                                  |       |                                                                                | (41,510    | )                 |       |                                                              |       |                                                  | (17,568    | ) |   |   | 8,183 |   |   |
| Income tax provision (benefit)                                  |       |            | 69,400     |                                               |       |                                                                                | (6,880     | )                 |       |                                                              |       |                                                  | 14,760     |   |   |   | 10,400 |   |   |
| Loss from continuing operations                                 |       |            | (165,585   | )                                                  |       |                                                                                | (34,630    | )                 |       |                                                              |       |                                                  | (32,328    | ) |   |   | (2,217 | ) |   |
| Loss from discontinued operations, net of income tax  benefit   |       |            | (25,291    | )                                                  |       |                                                                                | (133       | )                 |       |                                                              |       |                                                  | (3,550     | ) |   |   | (8,497 | ) |   |
| Net loss                                                        |       |            | $          | (190,876                                           | )          |                                                                                |       | $                 | (34,763    | )                                                                 |       |                                                  |       |   | $ | (35,878 | ) |   |   | $ | (10,714 | ) |   |
| Preferred dividends                                             |       |            | —     |                                               |       |                                                                                | —     |              |       |                                                              |       |                                                  | 104,300    |   |   |   | 40,277 |   |   |
| Loss for shares of  common stock                                |       |            | $          | (190,876                                           | )          |                                                                                |       | $                 | (34,763    | )                                                                 |       |                                                  |       |   | $ | (140,178 | ) |   |   | $ | (50,991 | ) |   |

 

*See Notes to Consolidated Financial Statements.*

38

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**AMCEntertainment Inc.CONSOLIDATED BALANCE SHEETS**

| **(In thousands, except share data)**                                                                                     | ** ** | ** **      | ** ** | **March 30, 2006** | ** ** | **March 31, 2005** | ** ** |
|-----------------------------------------------------------------------------------------------------------------------------------------------|------------|-----------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                                                                                                                                    | ** ** | **(Successor)** | ** ** | **(Successor)**              | ** ** |
| ** **                                                                                                                                    | ** ** | **(restated)**  | ** ** | ** **                   | ** ** |
| **Assets**                                                                                                                                    |       |            |       |                         |       |                         |       |   |   |
| Current assets:                                                                                                                               |       |            |       |                         |       |                         |       |   |   |
| Cash and  equivalents                                                                                                                         |       |            | $          | 230,115                      |       |                         |       | $ | 70,949 |   |   |
| Receivables, net  of allowance for doubtful accounts of $1,339 and $862 as of March 30,  2006 and March 31, 2005, respectively |       |            | 56,611     |                         |       |                         | 42,615     |   |   |
| Other current  assets                                                                                                                         |       |            | 34,647     |                         |       |                         | 65,972     |   |   |
| Current assets  held for sale                                                                                                                 |       |            | 4,726      |                         |       |                         | —     |   |   |
| Total current assets                                                                                                                          |       |            | 326,099    |                         |       |                         | 179,536    |   |   |
| Property, net                                                                                                                                 |       |            | 1,501,048  |                         |       |                         | 854,463    |   |   |
| Intangible  assets, net                                                                                                                       |       |            | 273,308    |                         |       |                         | 189,544    |   |   |
| Goodwill                                                                                                                                      |       |            | 2,018,318  |                         |       |                         | 1,401,740  |   |   |
| Deferred income  taxes                                                                                                                        |       |            | 3,564      |                         |       |                         | 50,619     |   |   |
| Other long-term  assets                                                                                                                       |       |            | 167,916    |                         |       |                         | 114,046    |   |   |
| Non-current  assets held for sale                                                                                                             |       |            | 112,337    |                         |       |                         | —     |   |   |
| Total assets                                                                                                                                  |       |            | $          | 4,402,590                    |       |                         |       | $ | 2,789,948 |   |   |
| **Liabilities  and Stockholder’s Equity**                                                                                                |       |            |       |                         |       |                         |       |   |   |
| Current liabilities:                                                                                                                          |       |            |       |                         |       |                         |       |   |   |
| Accounts payable                                                                                                                              |       |            | $          | 150,383                      |       |                         |       | $ | 121,146 |   |   |
| Accrued expenses and other liabilities                                                                                                        |       |            | 157,068    |                         |       |                         | 119,622    |   |   |
| Deferred revenues and income                                                                                                                  |       |            | 95,812     |                         |       |                         | 70,284     |   |   |
| Current maturities of corporate borrowings and  capital and financing lease obligations                                                  |       |            | 30,804     |                         |       |                         | 3,445      |   |   |
| Current liabilities held for sale                                                                                                             |       |            | 8,233      |                         |       |                         | —     |   |   |
| Total current liabilities                                                                                                                     |       |            | 442,300    |                         |       |                         | 314,497    |   |   |
| Corporate  borrowings                                                                                                                         |       |            | 2,223,869  |                         |       |                         | 1,161,970  |   |   |
| Capital and  financing lease obligations                                                                                                      |       |            | 64,016     |                         |       |                         | 62,025     |   |   |
| Other long-term  liabilities                                                                                                                  |       |            | 416,593    |                         |       |                         | 350,490    |   |   |
| Non-current  liabilities held for sale                                                                                                        |       |            | 11,903     |                         |       |                         | —     |   |   |
| Total liabilities                                                                                                                             |       |            | 3,158,681  |                         |       |                         | 1,888,982  |   |   |
| Commitments and  contingencies                                                                                                                |       |            |       |                         |       |                         |       |   |   |
| Stockholder’s  equity:                                                                                                                   |       |            |       |                         |       |                         |       |   |   |
| Common Stock, 1 share issued as of  March 30, 2006 and March 31, 2005 with 1¢ par value                                   |       |            | —     |                         |       |                         | —     |   |   |
| Additional paid-in capital                                                                                                                    |       |            | 1,480,206  |                         |       |                         | 935,344    |   |   |
| Accumulated other comprehensive income (loss)                                                                                                 |       |            | (10,658    | )                            |       |                         | 385        |   |   |
| Accumulated deficit                                                                                                                           |       |            | (225,639   | )                            |       |                         | (34,763    | ) |   |
| Total stockholder’s equity                                                                                                               |       |            | 1,243,909  |                         |       |                         | 900,966    |   |   |
| Total liabilities  and stockholder’s equity                                                                                              |       |            | $          | 4,402,590                    |       |                         |       | $ | 2,789,948 |   |   |

 

*See Notes to Consolidated Financial Statements.*

39

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**AMC Entertainment Inc.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

| **(In thousands)**                                                                                                  | ** ** | ** **      | ** ** | **52 Weeks Ended**

**March 30, 2006**

**(restated)** | ** ** | **From Inception **

**July 16, 2004 **

**through **

**March 31, 2005** | ** ** | ** **        | ** ** | **April 2, 2004 **

**through **

**December 23, 2004** | ** ** | **52 Weeks Ended**

**April 1, 2004** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------|------------|-----------------|------------|----------------------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------------------------|------------|-------------------|------------|---------------------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                                                                                                               | ** ** | **(Successor)** | ** ** | **(Successor)**                                                            | ** ** | ** **                                                                                                        | ** ** | **(Predecessor)** | ** ** | **(Predecessor)**                                                                     | ** ** |
| **INCREASE  (DECREASE) IN CASH AND EQUIVALENTS**                                                                         |       |            |       |                                                                       |       |                                                                                                              |       |              |       |                                                                                  |       |                                                      |       |   |   |   |   |   |   |
| **Cash  flows from operating activities:**                                                                               |       |            |       |                                                                       |       |                                                                                                              |       |              |       |                                                                                  |       |                                                      |       |   |   |   |   |   |   |
| Net loss                                                                                                                 |       |            | $          | (190,876                                                                   | )          |                                                                                                              |       | $                 | (34,763    | )                                                                                     |       |                                                      |       |   | $ | (35,878 | ) |   |   | $ | (10,714 | ) |   |
| Adjustments to reconcile net loss to net cash  provided by operating activities:                                         |       |            |       |                                                                       |       |                                                                                                              |       |              |       |                                                                                  |       |                                                      |       |   |   |   |   |   |   |
| Depreciation and amortization                                                                                            |       |            | 169,527    |                                                                       |       |                                                                                                              | 46,084     |              |       |                                                                                  |       |                                                      | 92,091     |   |   |   | 124,572 |   |   |
| Non-cash portion of stock-based compensation                                                                             |       |            | 3,433      |                                                                       |       |                                                                                                              | 1,201      |              |       |                                                                                  |       |                                                      | —     |   |   |   | 8,727 |   |   |
| Non-cash portion of pension and postretirement  expense                                                                  |       |            | 4,706      |                                                                       |       |                                                                                                              | 1,815      |              |       |                                                                                  |       |                                                      | 5,273      |   |   |   | 6,029 |   |   |
| Impairment of long-lived assets                                                                                          |       |            | 11,974     |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | 16,272 |   |   |
| Deferred income taxes                                                                                                    |       |            | 88,240     |                                                                       |       |                                                                                                              | (5,182     | )                 |       |                                                                                  |       |                                                      | 10,578     |   |   |   | 14,547 |   |   |
| Equity in (earnings) loss from investments                                                                               |       |            | 7,807      |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | (290       | ) |   |   | 8 |   |   |
| Disposition of assets and other gains                                                                                    |       |            | —     |                                                                       |       |                                                                                                              | (2         | )                 |       |                                                                                  |       |                                                      | (294       | ) |   |   | (2,590 | ) |   |
| Loss on sale-discontinued operations                                                                                     |       |            | —     |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | 5,591 |   |   |
| Loss on repurchase of Notes due 2009 and 2011                                                                       |       |            | —     |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | 13,947 |   |   |
| Change in assets and liabilities, net of effects from  acquisitions:                                                     |       |            |       |                                                                       |       |                                                                                                              |       |              |       |                                                                                  |       |                                                      |       |   |   |   |   |   |   |
| Receivables                                                                                                              |       |            | 9,084      |                                                                       |       |                                                                                                              | 11,228     |              |       |                                                                                  |       |                                                      | (24,219    | ) |   |   | (5,388 | ) |   |
| Other assets                                                                                                             |       |            | 31,053     |                                                                       |       |                                                                                                              | (21,996    | )                 |       |                                                                                  |       |                                                      | 20,438     |   |   |   | (9,525 | ) |   |
| Accounts payable                                                                                                         |       |            | (46,035    | )                                                                          |       |                                                                                                              | 6,145      |              |       |                                                                                  |       |                                                      | 5,250      |   |   |   | (5,368 | ) |   |
| Accrued expenses and other liabilities                                                                                   |       |            | (60,496    | )                                                                          |       |                                                                                                              | (48,944    | )                 |       |                                                                                  |       |                                                      | 60,098     |   |   |   | 3,565 |   |   |
| Other, net                                                                                                               |       |            | (4,763     | )                                                                          |       |                                                                                                              | (2,273     | )                 |       |                                                                                  |       |                                                      | 12,317     |   |   |   | 4,266 |   |   |
| Net cash provided  by (used in) operating activities                                                                     |       |            | 23,654     |                                                                       |       |                                                                                                              | (46,687    | )                 |       |                                                                                  |       |                                                      | 145,364    |   |   |   | 163,939 |   |   |
| **Cash flows from investing activities:**                                                                                |       |            |       |                                                                       |       |                                                                                                              |       |              |       |                                                                                  |       |                                                      |       |   |   |   |   |   |   |
| Capital expenditures                                                                                                     |       |            | (117,668   | )                                                                          |       |                                                                                                              | (18,622    | )                 |       |                                                                                  |       |                                                      | (66,155    | ) |   |   | (95,011 | ) |   |
| Proceeds from sale/leasebacks                                                                                            |       |            | 35,010     |                                                                       |       |                                                                                                              | 50,910     |              |       |                                                                                  |       |                                                      | —     |   |   |   | 63,911 |   |   |
| Net change in reimbursable construction advances                                                                         |       |            | (1,252     | )                                                                          |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | — |   |   |
| Increase in restricted cash                                                                                              |       |            | —     |                                                                       |       |                                                                                                              | (456,762   | )                 |       |                                                                                  |       |                                                      | (627,338   | ) |   |   | — |   |   |
| Release of restricted cash                                                                                               |       |            | —     |                                                                       |       |                                                                                                              | 456,762    |              |       |                                                                                  |       |                                                      | —     |   |   |   | — |   |   |
| Acquisition of Loews, net of cash acquired                                                                               |       |            | 142,512    |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | — |   |   |
| Acquisition of AMCE, net of cash acquired                                                                                |       |            | —     |                                                                       |       |                                                                                                              | (1,268,564 | )                 |       |                                                                                  |       |                                                      | —     |   |   |   | — |   |   |
| Acquisition of MegaStar Cinemas, L.L.C., net of  cash acquired                                                      |       |            | —     |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | (13,374 | ) |   |
| Acquisition of GC Companies, Inc., net of  cash acquired and proceeds from sale of venture capital investments |       |            | —     |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | (2,075 | ) |   |
| Purchase of leased furniture, fixtures and equipment                                                                     |       |            | —     |                                                                       |       |                                                                                                              | (25,292    | )                 |       |                                                                                  |       |                                                      | —     |   |   |   | (15,812 | ) |   |
| Proceeds (payments) on disposal-discontinued  operations                                                                 |       |            | 53,456     |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | (5,252 | ) |   |
| Proceeds from disposition of long-term assets                                                                            |       |            | 3,032      |                                                                       |       |                                                                                                              | 173        |              |       |                                                                                  |       |                                                      | 277        |   |   |   | 9,289 |   |   |
| Other, net                                                                                                               |       |            | (5,767     | )                                                                          |       |                                                                                                              | 1,601      |              |       |                                                                                  |       |                                                      | 821        |   |   |   | (11,054 | ) |   |
| Net cash provided by (used in) investing activities                                                                      |       |            | 109,323    |                                                                       |       |                                                                                                              | (1,259,794 | )                 |       |                                                                                  |       |                                                      | (692,395   | ) |   |   | (69,378 | ) |   |
| **Cash flows from financing activities:**                                                                                |       |            |       |                                                                       |       |                                                                                                              |       |              |       |                                                                                  |       |                                                      |       |   |   |   |   |   |   |
| Proceeds from issuance of 11% Senior Subordinated  Notes due 2016                                                   |       |            | 325,000    |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | — |   |   |
| Proceeds from issuance of Senior Secured Credit  Facility                                                                |       |            | 650,000    |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | — |   |   |
| Proceeds from issuance of 8% Senior Subordinated  Notes due 2014                                               |       |            | —     |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | 294,000 |   |   |
| Repayment of LCE credit facility                                                                                         |       |            | (620,425   | )                                                                          |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | — |   |   |
| Repurchase of LCE 9% Senior Subordinated Notes  due 2014                                                            |       |            | (318,938   | )                                                                          |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | — |   |   |
| Repurchase of Notes due 2009 and 2011                                                                               |       |            | —     |                                                                       |       |                                                                                                              | (1,663     | )                 |       |                                                                                  |       |                                                      | —     |   |   |   | (292,117 | ) |   |
| Borrowing under Cinemex credit facility                                                                                  |       |            | 6,000      |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | — |   |   |
| Capital contribution from Marquee Holdings Inc.                                                                          |       |            | —     |                                                                       |       |                                                                                                              | 934,901    |              |       |                                                                                  |       |                                                      | —     |   |   |   | — |   |   |
| Proceeds from issuance of 8 5¤8% senior unsecured fixed rate notes  due 2012                              |       |            | —     |                                                                       |       |                                                                                                              | 250,000    |              |       |                                                                                  |       |                                                      | 250,000    |   |   |   | — |   |   |
| Proceeds from issuance of senior unsecured floating  rate notes due 2010                                            |       |            | —     |                                                                       |       |                                                                                                              | 205,000    |              |       |                                                                                  |       |                                                      | 205,000    |   |   |   | — |   |   |
| Proceeds from issuance of 12% senior discount notes  due 2014                                                       |       |            | —     |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | 169,918    |   |   |   | — |   |   |
| Proceeds from financing lease obligations                                                                                |       |            | 6,661      |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | — |   |   |
| Principal payments under capital and financing lease  obligations                                                        |       |            | (3,163     | )                                                                          |       |                                                                                                              | (856       | )                 |       |                                                                                  |       |                                                      | (2,020     | ) |   |   | (2,574 | ) |   |
| Principal payments under mortgage obligations                                                                            |       |            | (10        | )                                                                          |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | —     |   |   |   | — |   |   |
| Deferred financing costs                                                                                                 |       |            | (24,895    | )                                                                          |       |                                                                                                              | (16,546    | )                 |       |                                                                                  |       |                                                      | —     |   |   |   | (3,725 | ) |   |
| Change in construction payables                                                                                          |       |            | 1,204      |                                                                       |       |                                                                                                              | 4,747      |              |       |                                                                                  |       |                                                      | (2,234     | ) |   |   | (4,307 | ) |   |
| Cash portion of preferred dividends                                                                                      |       |            | —     |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | (9,349     | ) |   |   | — |   |   |
| Proceeds from exercise of stock options                                                                                  |       |            | —     |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | 52         |   |   |   | 3,894 |   |   |
| Treasury stock purchases and other                                                                                       |       |            | —     |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | (333       | ) |   |   | (445 | ) |   |
| Net cash provided by (used in) financing activities                                                                      |       |            | 21,434     |                                                                       |       |                                                                                                              | 1,375,583  |              |       |                                                                                  |       |                                                      | 611,034    |   |   |   | (5,274 | ) |   |
| Effect of exchange rate changes on cash and  equivalents                                                                 |       |            | 4,755      |                                                                       |       |                                                                                                              | 1,847      |              |       |                                                                                  |       |                                                      | (615       | ) |   |   | (451 | ) |   |
| **Net  increase in cash and equivalents**                                                                                |       |            | 159,166    |                                                                       |       |                                                                                                              | 70,949     |              |       |                                                                                  |       |                                                      | 63,388     |   |   |   | 88,836 |   |   |
| **Cash and  equivalents at beginning of year**                                                                           |       |            | 70,949     |                                                                       |       |                                                                                                              | —     |              |       |                                                                                  |       |                                                      | 333,248    |   |   |   | 244,412 |   |   |
| **Cash and  equivalents at end of year**                                                                                 |       |            | $          | 230,115                                                                    |       |                                                                                                              |       | $                 | 70,949     |                                                                                  |       |                                                      |       |   | $ | 396,636 |   |   |   | $ | 333,248 |   |   |

40

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| **SUPPLEMENTAL  DISCLOSURES OF CASH FLOW INFORMATION:**                                                                                                                       |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| **Cash  paid (refunded) during the period for:**                                                                                                                              |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest (including amounts capitalized of $2,239,  $203, $658 and $2,658 during successor periods 2006 and 2005 and predecessor  periods 2005 and fiscal 2004, respectively) |   |   | $      | 115,753 |   |   |   | $      | 47,788 |   |   |   |   |   | $      | 42,629 |   |   |   | $ | 78,479 |   |   |
| Income taxes, net                                                                                                                                                             |   |   | (4,488 | )       |   |   | 838    |   |   |   |   |   | 2,364  |   |   |   | 3,880  |   |   |
| **Schedule  of non—cash investing and financing activities:**                                                                                                            |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Assets capitalized under EITF 97-10                                                                                                                                      |   |   | $      | —  |   |   |   | $      | 4,941  |   |   |   |   |   | $      | — |   |   |   | $ | — |   |   |
| Preferred dividends                                                                                                                                                           |   |   | — |    |   |   | — |   |   |   |   |   | 93,475 |   |   |   | 40,277 |   |   |

 

Refer to Note 2—Acquisitionsfor discussion of non—cash activities related to acquisitions.

*SeeNotes to Consolidated Financial Statements.*

41

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**AMCEntertainment Inc.CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY**
|                                                                                        | ** ** | **      Preferred Stock** | ** ** | **      Common Stock ** | ** ** |
|----------------------------------------------------------------------------------------|------------|------------------------------------------|------------|---------------------------------------------|------------|
| **(In thousands, except share and per share data)** | ** ** | ** **                               | ** ** | **Shares**                                  | ** ** | **Amount** | ** ** | **Shares** | ** ** | **Amount** | ** ** |
| ** **                                                                             | ** ** | ** **                               | ** ** | ** **                                  | ** ** | ** ** | ** ** | ** ** | ** ** |
| **Successor from Inception on  July 16, 2004 through March 30, 2006**        |       |                                     |       |                                        |       |   |   |   |   |   |   |
| Balance, July 16, 2004                                                            |       | —                                   |       |                                        | $          | — |   |   | — |   | $ | — |   |
| Comprehensive loss:                                                                    |       |                                     |       |                                        |       |   |   |   |   |   |   |
| Net loss                                                                               |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Foreign currency translation adjustment                                                |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Unrealized loss on marketable securities                                               |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Comprehensive loss                                                                     |       |                                     |       |                                        |       |   |   |   |   |   |   |
| Stock-based compensation—options                                                  |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Capital Contribution Marquee Holdings Inc.                                             |       | —                                   |       |                                        | —     |   |   | 1 |   | — |   |
| Balance, March 31, 2005                                                           |       | —                                   |       |                                        | —     |   |   | 1 |   | — |   |
| Comprehensive  loss:                                                                   |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Net  loss (restated)                                                                   |       |                                     |       |                                        |       |   |   |   |   |   |   |
| Foreign currency translation adjustment                                                |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Additional minimum pension liability                                                   |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Unrealized gain on Cinemex swap agreements                                             |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Unrealized loss on marketable securities                                               |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Comprehensive loss  (restated)                                                         |       |                                     |       |                                        |       |   |   |   |   |   |   |
| Stock-based compensation—options (restated)                                       |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Capital Contribution Marquee Holdings Inc.                                             |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Balance, March 30, 2006 (restated)                                                |       | —                                   |       |                                        | $          | — |   |   | 1 |   | $ | — |   |
| **Predecessor  from April 3, 2003 through December 23, 2004**                |       |                                     |       |                                        |       |   |   |   |   |   |   |
| Balance, April 3, 2003                                                            |       | 280,107                                  |       |                                        | $          | 187 |   |   | 33,286,173 |   | $ | 22,191 |   |
| Comprehensive loss:                                                                    |       |                                     |       |                                        |       |   |   |   |   |   |   |
| Net loss                                                                               |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Foreign currency translation adjustment                                                |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Additional minimum pension liability                                                   |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Unrealized gain on marketable securities                                               |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Comprehensive loss                                                                     |       |                                     |       |                                        |       |   |   |   |   |   |   |
| Preferred Stock for dividends                                                          |       | 19,370                                   |       |                                        | 13         |   |   | — |   | — |   |
| Preferred Stock dividends                                                              |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Preferred Stock accretion                                                              |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Stock awards, options exercised and other (net of tax  benefit of $664)                |       | —                                   |       |                                        | —     |   |   | 603,580 |   | 402 |   |
| Deferred compensation—restricted stock awards                                     |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Unissued restricted stock awards                                                       |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Treasury stock purchase                                                                |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Balance, April 1, 2004                                                            |       | 299,477                                  |       |                                        | 200        |   |   | 33,889,753 |   | 22,593 |   |
| Comprehensive loss:                                                                    |       |                                     |       |                                        |       |   |   |   |   |   |   |
| Net loss                                                                               |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Foreign currency translation adjustment                                                |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Unrealized gain on marketable securities                                               |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Comprehensive loss                                                                     |       |                                     |       |                                        |       |   |   |   |   |   |   |
| Preferred Stock for dividends                                                          |       | 39,479                                   |       |                                        | 26         |   |   | — |   | — |   |
| Preferred Stock dividends                                                              |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Preferred Stock accretion                                                              |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Stock awards, options exercised and other (net of tax  benefit of $20)                 |       | —                                   |       |                                        | —     |   |   | 82,565 |   | 51 |   |
| Deferred stock units and awards                                                        |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Stock issued in connection with acquisition of GC                                      |       | —                                   |       |                                        | —     |   |   | 148,148 |   | 99 |   |
| Treasury stock purchase                                                                |       | —                                   |       |                                        | —     |   |   | — |   | — |   |
| Elimination of Predecessor Company stockholders’  equity                          |       | (338,956                                 | )          |                                        | (226       | ) |   | (34,120,466 | ) | (22,743 | ) |
| Balance,  December 23, 2004                                                       |       | —                                   |       |                                        | $          | — |   |   | — |   | $ | — |   |
|                                                                                        |            |                                          |            |                                             |            |  |  |  |  |  |  |  |  |  |  |

 

*See Notes to Consolidated Financial Statements.*

42

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**  **
|                                                                                    | ** ** | **Convertible  Class B Stock** | ** ** | **Additional  Paid in** | ** ** | **Accumulated  Other  Comprehensive** | ** ** | **Retained  Earnings  (Accumulated** | ** ** | **Common Stock  in Treasury** | ** ** | **Total  Stockholder’s** | ** ** |
|------------------------------------------------------------------------------------|------------|------------------------------------------|------------|------------------------------|------------|---------------------------------------|------------|--------------------------------------|------------|-----------------------------------------|------------|-------------------------------|------------|
| (In thousands, except share and per share data) | ** ** | **Shares**                               | ** ** | **Amount**                   | ** ** | **Capital**                           | ** ** | **Income (Loss)**               | ** ** | **Deficit)**                            | ** ** | **Shares**                    | ** ** | **Amount** | ** ** | **Equity** | ** ** |
| ** **                                                                         | ** ** | ** **                               | ** ** | ** **                   | ** ** | **(restated)**                        | ** ** | ** **                           | ** ** | **(restated)**                          | ** ** | ** **                    | ** ** | ** ** | ** ** | **(restated)** | ** ** |
| **Successor  from Inception on July 16, 2004 through March 30, 2006**    |       |                                     |       |                         |       |                                  |       |                                 |       |                                    |       |                          |       |   |   |   |   |   |   |   |   |   |   |
| Balance,  July 16, 2004                                                       |       | —                                   |       | $                            | —     |                                  | $          | —                               |       |                                    | $          | —                        |       |   |   | $ | — |   |   | — |   | $ | — |   |   | $ | — |   |   |
| Comprehensive  loss:                                                               |       |                                     |       |                         |       |                                  |       |                                 |       |                                    |       |                          |       |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                           |       | —                                   |       | —                       |       | —                                |       |                                 | —     |                                    |       |                          | (34,763    | ) |   | — |   | — |   |   | (34,763 | ) |   |
| Foreign  currency translation adjustment                                           |       | —                                   |       | —                       |       | —                                |       |                                 | 430        |                                    |       |                          | —     |   |   | — |   | — |   |   | 430 |   |   |
| Unrealized  loss on marketable securities                                          |       | —                                   |       | —                       |       | —                                |       |                                 | (45        | )                                       |       |                          | —     |   |   | — |   | — |   |   | (45 | ) |   |
| Comprehensive  loss                                                                |       |                                     |       |                         |       |                                  |       |                                 |       |                                    |       |                          |       |   |   |   |   |   |   |   | (34,378 | ) |   |
| Stock-based  compensation—options                                             |       | —                                   |       | —                       |       | 443                                   |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 443 |   |   |
| Capital  Contribution Marquee Holdings Inc.                                        |       | —                                   |       | —                       |       | 934,901                               |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 934,901 |   |   |
| Balance,  March 31, 2005                                                      |       | —                                   |       | —                       |       | 935,344                               |       |                                 | 385        |                                    |       |                          | (34,763    | ) |   | — |   | — |   |   | 900,966 |   |   |
| Comprehensive  loss (restated):                                                    |       |                                     |       |                         |       |                                  |       |                                 |       |                                    |       |                          |       |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                           |       | —                                   |       | —                       |       | —                                |       |                                 | —     |                                    |       |                          | (190,876   | ) |   | — |   | — |   |   | (190,876 | ) |   |
| Foreign  currency translation adjustment                                           |       | —                                   |       | —                       |       | —                                |       |                                 | (11,685    | )                                       |       |                          | —     |   |   | — |   | — |   |   | (11,685 | ) |   |
| Additional  minimum pension liability                                              |       | —                                   |       | —                       |       | —                                |       |                                 | (172       | )                                       |       |                          | —     |   |   | — |   | — |   |   | (172 | ) |   |
| Unrealized  gain on Cinemex swap agreements                                        |       | —                                   |       | —                       |       | —                                |       |                                 | 594        |                                    |       |                          | —     |   |   | — |   | — |   |   | 594 |   |   |
| Unrealized  loss on marketable securities                                          |       | —                                   |       | —                       |       | —                                |       |                                 | 220        |                                    |       |                          | —     |   |   | — |   | — |   |   | 220 |   |   |
| Comprehensive  loss                                                                |       |                                     |       |                         |       |                                  |       |                                 |       |                                    |       |                          |       |   |   |   |   |   |   |   | 201,919 |   |   |
| Stock-based  compensation—options                                             |       | —                                   |       | —                       |       | 4,191                                 |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 4,191 |   |   |
| Capital  Contribution Marquee Holdings Inc.                                        |       | —                                   |       | —                       |       | 540,671                               |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 540,671 |   |   |
| Balance,  March 30, 2006                                                      |       | —                                   |       | $                            | —     |                                  | $          | 1,480,206                            |       |                                    | $          | (10,658                       | )          |   |   | $ | (225,639 | ) |   | — |   | $ | — |   |   | $ | 1,243,909 |   |   |
| **Predecessor  from April 3, 2003 through December 23, 2004**            |       |                                     |       |                         |       |                                  |       |                                 |       |                                    |       |                          |       |   |   |   |   |   |   |   |   |   |   |
| Balance,  April 3, 2003                                                       |       | 3,051,597                                |       | $                            | 2,035      |                                  | $          | 464,663                              |       |                                    | $          | (8,773                        | )          |   |   | $ | (200,002 | ) |   | 35,387 |   | $ | (582 | ) |   | $ | 279,719 |   |   |
| Comprehensive  loss:                                                               |       |                                     |       |                         |       |                                  |       |                                 |       |                                    |       |                          |       |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                           |       | —                                   |       | —                       |       | —                                |       |                                 | —     |                                    |       |                          | (10,714    | ) |   | — |   | — |   |   | (10,714 | ) |   |
| Foreign  currency translation adjustment                                           |       | —                                   |       | —                       |       | —                                |       |                                 | 6,877      |                                    |       |                          | —     |   |   | — |   | — |   |   | 6,877 |   |   |
| Additional  minimum pension liability                                              |       | —                                   |       | —                       |       | —                                |       |                                 | (622       | )                                       |       |                          | —     |   |   | — |   | — |   |   | (622 | ) |   |
| Unrealized  gain on marketable securities                                          |       | —                                   |       | —                       |       | —                                |       |                                 | 525        |                                    |       |                          | —     |   |   | — |   | — |   |   | 525 |   |   |
| Comprehensive  loss                                                                |       |                                     |       |                         |       |                                  |       |                                 |       |                                    |       |                          |       |   |   |   |   |   |   |   | (3,934 | ) |   |
| Preferred  Stock for dividends                                                     |       | —                                   |       | —                       |       | 38,237                                |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 38,250 |   |   |
| Preferred  Stock dividends                                                         |       | —                                   |       | —                       |       | (40,277                               | )          |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | (40,277 | ) |   |
| Preferred  Stock accretion                                                         |       | —                                   |       | —                       |       | 2,006                                 |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 2,006 |   |   |
| Stock  awards, options exercised and other (net of tax benefit of $664)            |       | —                                   |       | —                       |       | 4,114                                 |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 4,516 |   |   |
| Deferred  compensation—restricted stock awards                                |       | —                                   |       | —                       |       | (68                                   | )          |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | (68 | ) |   |
| Unissued  restricted stock awards                                                  |       | —                                   |       | —                       |       | 823                                   |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 823 |   |   |
| Treasury  stock purchase                                                           |       | —                                   |       | —                       |       | —                                |       |                                 | —     |                                    |       |                          | —     |   |   | 42,610 |   | (431 | ) |   | (431 | ) |   |
| Balance,  April 1, 2004                                                       |       | 3,051,597                                |       | 2,035                        |       | 469,498                               |       |                                 | (1,993     | )                                       |       |                          | (210,716   | ) |   | 77,997 |   | (1,013 | ) |   | 280,604 |   |   |
| Comprehensive  loss:                                                               |       |                                     |       |                         |       |                                  |       |                                 |       |                                    |       |                          |       |   |   |   |   |   |   |   |   |   |   |
| Net loss                                                                           |       | —                                   |       | —                       |       | —                                |       |                                 | —     |                                    |       |                          | (35,878    | ) |   | — |   | — |   |   | (35,878 | ) |   |
| Foreign  currency translation adjustment                                           |       | —                                   |       | —                       |       | —                                |       |                                 | 3,241      |                                    |       |                          | —     |   |   | — |   | — |   |   | 3,241 |   |   |
| Unrealized  gain on marketable securities                                          |       | —                                   |       | —                       |       | —                                |       |                                 | 147        |                                    |       |                          | —     |   |   | — |   | — |   |   | 147 |   |   |
| Comprehensive  loss                                                                |       |                                     |       |                         |       |                                  |       |                                 |       |                                    |       |                          |       |   |   |   |   |   |   |   | (32,490 | ) |   |
| Preferred  Stock for dividends                                                     |       | —                                   |       | —                       |       | 93,449                                |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 93,475 |   |   |
| Preferred  Stock dividends                                                         |       | —                                   |       | —                       |       | (104,300                              | )          |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | (104,300 | ) |   |
| Preferred  Stock accretion                                                         |       | —                                   |       | —                       |       | 1,476                                 |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 1,476 |   |   |
| Stock  awards, options exercised and other (net of tax benefit of $20)             |       | —                                   |       | —                       |       | 12                                    |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 63 |   |   |
| Deferred  stock units and awards                                                   |       | —                                   |       | —                       |       | 7,949                                 |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 7,949 |   |   |
| Stock issued in  connection with acquisition of GC                                 |       | —                                   |       | —                       |       | 1,922                                 |       |                                 | —     |                                    |       |                          | —     |   |   | — |   | — |   |   | 2,021 |   |   |
| Treasury  stock purchase                                                           |       | —                                   |       | —                       |       | —                                |       |                                 | —     |                                    |       |                          | —     |   |   | 22,372 |   | (333 | ) |   | (333 | ) |   |
| Elimination of  Predecessor Company stockholders’ equity                      |       | (3,051,597                               | )          | (2,035                       | )          | (470,006                              | )          |                                 | (1,395     | )                                       |       |                          | 246,594    |   |   | (100,369 | ) | 1,346 |   |   | (248,465 | ) |   |
| Balance,  December 23, 2004                                                   |       | —                                   |       | $                            | —     |                                  | $          | —                               |       |                                    | $          | —                        |       |   |   | $ | — |   |   | — |   | $ | — |   |   | $ | — |   |   |

 

43

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**AMC Entertainment Inc.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**Years Ended March 30, 2006, March 31, 2005 and April 1,2004**

**NOTE 1—THE COMPANYAND SIGNIFICANT ACCOUNTING POLICIES**

AMC Entertainment Inc. (“AMCE” or the “Company”)is an intermediate holding company which, through its direct and indirectsubsidiaries, including American Multi-Cinema, Inc. (“AMC”) and itssubsidiaries Grupo Cinemex, S.A. de C.V. (“Cinemex”) and AMC EntertainmentInternational, Inc. (“AMCEI”) and its subsidiaries (collectively withAMCE, unless the context otherwise requires, the “Company”), is principallyinvolved in the theatrical exhibition business and owns, operates or hasinterests in theatres located in the United States and Canada (“U.S. and Canada”formerly, North American theatrical exhibition) and in Mexico, Argentina,Brazil, Chile, Uruguay, China (Hong Kong), France, Spain and the UnitedKingdom. The Company discontinued its operations in Japan during the firstquarter of fiscal 2006. The Company’s U.S. and Canada theatrical exhibitionbusiness is conducted through AMC and AMCEI. The Company’s Internationaltheatrical exhibition business is conducted primarily through Cinemex andAMCEI. See Note 2 for a discussion of the Merger with Loews on January 26,2006.

The Company completed a merger on December 23,2004 in which Marquee Holdings Inc. (“Holdings”) acquired the Company. SeeNote 2—Acquisitions for additional information regarding this merger.Marquee Inc. (“Marquee”) was a company formed on July 16, 2004. On December 23,2004, pursuant to a merger agreement, Marquee merged with AMCE (the “Predecessor”).Upon the consummation of the merger between Marquee and AMCE on December 23,2004, Marquee merged with and into AMCE, with AMCE as the surviving reportingentity (the “Successor”). The merger with Marquee was treated as a purchasewith Marquee being the “accounting acquirer” in accordance with Statement ofFinancial Accounting Standards No. 141 *BusinessCombinations*. As a result, the Successor applied the purchase methodof accounting to the separable assets, including goodwill, and liabilities ofthe accounting acquiree and Predecessor, AMCE, as of December 23, 2004,the merger date. The consolidated balance sheets presented herein are those ofthe Successor and the consolidated statements of operations and cash flowspresented herein are those of the Successor for the fifty-two weeks ended March 30,2006 and the period from inception July 16, 2004 through March 31,2005 and those of its Predecessor, AMCE for the period April 2, 2004through December 23, 2004 and the fifty-two weeks ended April 1,2004.

In association with the merger transaction discussedabove, two merger entities were formed on July 16, 2004, Marquee andHoldings. To finance the merger and related transactions, on August 18,2004, (i) Marquee issued $250,000,000 aggregate principal amount of 85¤8%senior unsecured fixed rate Notes due 2012 (“Fixed Notes due 2012”) and$205,000,000 aggregate principal amount of senior unsecured floating rate Notesdue 2010 (“Floating Notes due 2010”) and (ii) Holdings issued $304,000,000aggregate principal amount at maturity of its 12% senior discount Notes due2014 (“Discount Notes due 2014”) for gross proceeds of $169,917,760. The onlyoperations of Marquee and Holdings prior to the merger with Marquee wererelated to these financings. Because the Company was the primary beneficiary ofthe two merger entities, which were considered variable interest entities asdefined in FIN 46 (R), *Consolidation ofVariable Interest Entities, an Interpretation of ARB No. 51*,the Company was required to consolidate the merger entities’ operations andfinancial position into the Company’s financial statements as of and throughthe period ended December 23, 2004. Upon consummation of the merger,Marquee was merged with and into AMCE and the letters of credit which gave riseto consolidation of the entities under FIN 46 were cancelled. As such, Marquee’soperations and financial position are included within the Company’sConsolidated Financial Statements and Holding’s results of operations areincluded within the Predecessor Company’s Consolidated Financial Statementsfrom its inception on July 16, 2004 through December 23, 2004.Subsequent to December 23, 2004 AMCE deconsolidated Holding’s assets andliabilities.

44

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The results of operations of Holdings included withinthe Predecessor Company’s Consolidated Statements of Operations for the periodfrom April 2, 2004 through December 23, 2004 include interest expenseof $7,135,000 and interest income of $831,000.

Holdings is a holding company with no operations ofits own and has no ability to service interest or principal on the DiscountNotes due 2014 other than through any dividends it may receive from theCompany. The Company is restricted, in certain circumstances, from payingdividends to Holdings by the terms of the indentures governing the Fixed Notesdue 2012, the Floating Notes due 2010 and the Existing Subordinated Notes andthe amended credit facility. The Company has not guaranteed the indebtedness ofHoldings nor pledged any of its assets as collateral.

***Restatement:******  ***In connection with an ongoingreview of its quarterly mark-to-market accounting for its liability classifiedstock option awards, the Company determined that its financial statements as ofand for the fiscal year ended March 30, 2006 needed to be restated tocorrect the following item:

Stock Option Awards

On December 23, 2004, certain members ofmanagement were granted options to purchase Marquee Holdings Inc.(“Holdings”) common stock. Due to the existence of certain put options, at thetime the stock options were granted, the Company determined that the stockoptions for two members of management should be recorded as liabilities withchanges in the estimated fair value of those options recorded through a chargeor credit to the statement of operations. Holdings also has a call optionrelating to the options (and the underlying shares) similar to the call optionreferred to above.

During February 2007, the Company determined thatthe options held by one member of management that were previously recorded as aliability should have been recorded as a component of permanent equity because Holdingsdoes not intend to exercise its call option on the vested options (or sharesobtained upon exercise of the options) and since the put option on the vestedoptions (or shares obtained upon exercise of options) is not within theemployee’s control. Accordingly, the Company has restated its financialstatements as of and for the year ended March 30, 2006 to reverse thepreviously recorded mark to market effects relating to the stock optionsawarded to this member of management that had been incorrectly classified asliabilities and to reflect these options as additional paid-in capital (ratherthan as liabilities). There was no impact on net cash provided by operatingactivities as a result of the above mentioned items.

TheCompany has restated its financial statements as of and for the year ended March 30,2006 to record the net effect of the adjustments referred discussed above. Theimpact of the adjustments for the fiscal year ended March 31, 2005 is notmaterial (and was recorded as part of the 2006 restatement adjustments). Thenet effects of the adjustments recorded to restate the financial statements aresummarized as follows (dollars in thousands):

| ** **                                                        | ** ** | **Stock based** | ** ** |
|-------------------------------------------------------------------|------------|----------------------|------------|
| ** **                                                        | ** ** | **Compensation**     | ** ** |
| **Fifty-Two Weeks Ended March 30, 2006** | ** ** | ** **           | ** ** | **Expense**(1) | ** ** |
| Decrease in Other  Long-Term Liabilities(2)                       |       |                 | $          | 425 |   |   |
| Increase in Additional  Paid-in Capital(2)                        |       |                 | $          | 2,539 |   |   |
| Increase in Net Loss                                              |       |                 | $          | 2,114 |   |   |
|                                                                   |            |                      |            |  |  |  |  |  |

----

(1)                Included withinOther G&A

(2)                Refer todiscussion of the adjustment for stock option awards above

45

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Thefollowing table sets forth the previously reported amounts and the restatedamounts reflected in the accompanying Consolidated Financial Statements(dollars in thousands):

| ** **                                          | ** ** | **52 Weeks Ended March 30, 2006** | ** ** |
|-----------------------------------------------------|------------|------------------------------------------------------------|------------|
| ** **                                          | ** ** | **As previously reported**                       | ** ** | **As restated** | ** ** |
| Statement of Operations  data:                      |       |                                                       |       |   |   |   |   |
| General and administrative: Other                   |       |                                                       | $          | 38,041 |   |   | $ | 39,984 |   |
| Total costs and expenses                            |       |                                                       | 1,710,184  |   |   | 1,668,017 |   |
| Loss from continuing operations before income taxes |       |                                                       | (96,653    | ) |   | (96,185 | ) |
| Income tax provision                                |       |                                                       | 69,700     |   |   | 69,400 |   |
| Net loss                                            |       |                                                       | (188,762   | ) |   | (190,876 | ) |
| Balance Sheet  data (at period end):                |       |                                                       |       |   |   |   |   |
| Other Long-Term Liabilities                         |       |                                                       | $          | 417,018 |   |   | $ | 416,593 |   |
| Total Liabilities                                   |       |                                                       | 3,159,106  |   |   | 3,158,681 |   |
| Additional Paid-in Capital                          |       |                                                       | 1,477,667  |   |   | 1,480,206 |   |
| Accumulated Deficit                                 |       |                                                       | (223,525   | ) |   | (225,639 | ) |
| Total  Stockholders' Equity                         |       |                                                       | 1,243,484  |   |   | 1,243,909 |   |

 

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

46

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The following unauditedtables set forth the impact of the restatements on each previously reportedquarterly and year to date period for 2006.

|            | ** ** | **Thirteen Weeks Ended  September 29, 2005** | ** ** | **Twenty-Six Weeks Ended  September 29, 2005** | ** ** |
|------------|------------|------------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|
| ** ** | ** ** | **As**                                                           | ** ** | ** **                                                         | ** ** | **Discontinued** | ** ** | **As Restated** | ** ** | **As** | ** ** | ** ** | ** ** | **Discontinued** | ** ** | **As Restated** | ** ** |
| ** ** | ** ** | **Reported**                                                     | ** ** | **Restatement**(1)                                                 | ** ** | **Operations**(2) | ** ** | **& Adjusted** | ** ** | **Reported** | ** ** | **Restatement**(1) | ** ** | **Operations**(2) | ** ** | **& Adjusted** | ** ** |
| ** ** | ** ** | **Unaudited**                                                    | ** ** |
| Revenues   |       |                                                             |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|            |            |                                                                  |            |                                                                    |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

| Admissions                                                      |   |   | $       | 270,414 |   |   |   | $      | — |   |    |   | $      | (8,191 | )       |   |   | $      | 262,223 |   |   |   | $      | 546,820 |   |   |    | $      | — |   |    |   | $      | (14,643 | )      |   |   | $ | 532,177 |   |   |
|-----------------------------------------------------------------|--------|--------|---------|---------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|---------|--------|--------|---------|--------|--------|--------|---|---------|--------|--------|
| Concessions                                                     |   |   | 105,679 |    |   |   | — |   |   |   | (2,918  | )      |   |   | 102,761 |   |   |   | 217,012 |   |   |   | — |    |   |   | (5,113  | )      |   |   | 211,899 |   |   |
| Other revenue                                                   |   |   | 22,844  |    |   |   | — |   |   |   | (409    | )      |   |   | 22,435  |   |   |   | 47,887  |   |   |   | — |    |   |   | (742    | )      |   |   | 47,145  |   |   |
| Total revenues                                                  |   |   | 398,937 |    |   |   | — |   |   |   | (11,518 | )      |   |   | 387,419 |   |   |   | 811,719 |   |   |   | — |    |   |   | (20,498 | )      |   |   | 791,221 |   |   |
| Costs and Expenses                                              |   |   |    |    |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Film exhibition costs                                           |   |   | 143,545 |    |   |   | — |   |   |   | (4,054  | )      |   |   | 139,491 |   |   |   | 295,262 |   |   |   | — |    |   |   | (7,144  | )      |   |   | 288,118 |   |   |
| Concession costs                                                |   |   | 12,039  |    |   |   | — |   |   |   | (656    | )      |   |   | 11,383  |   |   |   | 23,768  |   |   |   | — |    |   |   | (864    | )      |   |   | 22,904  |   |   |
| Operating expense                                               |   |   | 107,822 |    |   |   | — |   |   |   | (2,665  | )      |   |   | 105,157 |   |   |   | 214,343 |   |   |   | — |    |   |   | (5,532  | )      |   |   | 208,811 |   |   |
| Rent                                                            |   |   | 78,006  |    |   |   | — |   |   |   | (2,827  | )      |   |   | 75,179  |   |   |   | 156,692 |   |   |   | — |    |   |   | (5,708  | )      |   |   | 150,984 |   |   |
| General and administrative:                                     |   |   |    |    |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Merger and acquisition costs                                    |   |   | 960     |    |   |   | — |   |   |   | —  |   |   |   | 960     |   |   |   | 2,640   |   |   |   | — |    |   |   | —  |   |   |   | 2,640   |   |   |
| Management fee                                                  |   |   | 500     |    |   |   | — |   |   |   | —  |   |   |   | 500     |   |   |   | 1,000   |   |   |   | — |    |   |   | —  |   |   |   | 1,000   |   |   |
| Other                                                           |   |   | 7,982   |    |   |   | 997    |   |   |   | (27     | )      |   |   | 8,952   |   |   |   | 18,161  |   |   |   | 997    |    |   |   | (117    | )      |   |   | 19,041  |   |   |
| Preopening expense                                              |   |   | 728     |    |   |   | — |   |   |   | —  |   |   |   | 728     |   |   |   | 736     |   |   |   | — |    |   |   | —  |   |   |   | 736     |   |   |
| Theatre and other closure expense                               |   |   | 346     |    |   |   | — |   |   |   | —  |   |   |   | 346     |   |   |   | 980     |   |   |   | — |    |   |   | —  |   |   |   | 980     |   |   |
| Restructuring charge                                            |   |   | 839     |    |   |   | — |   |   |   | —  |   |   |   | 839     |   |   |   | 3,908   |   |   |   | — |    |   |   | —  |   |   |   | 3,908   |   |   |
| Depreciation and amortization                                   |   |   | 37,956  |    |   |   | — |   |   |   | (1,356  | )      |   |   | 36,600  |   |   |   | 75,467  |   |   |   | — |    |   |   | (2,920  | )      |   |   | 72,547  |   |   |
| Impairment of long-lived assets                                 |   |   | —  |    |   |   | — |   |   |   | —  |   |   |   | —  |   |   |   | —  |   |   |   | — |    |   |   | —  |   |   |   | —  |   |   |
| Disposition of assets and other gains                           |   |   | (103    | )       |   |   | — |   |   |   | —  |   |   |   | (103    | )      |   |   | (770    | )      |   |   | — |    |   |   | —  |   |   |   | (770    | )      |   |
| Total costs and expenses                                        |   |   | 390,620 |    |   |   | 997    |   |   |   | (11,585 | )      |   |   | 380,032 |   |   |   | 792,187 |   |   |   | 997    |    |   |   | (22,285 | )      |   |   | 770,899 |   |   |
| Other expense (income)                                          |   |   |    |    |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Other income                                                    |   |   | (4,931  | )       |   |   | — |   |   |   | —  |   |   |   | (4,931  | )      |   |   | (6,047  | )      |   |   | — |    |   |   | —  |   |   |   | (6,047  | )      |   |
| Interest expense                                                |   |   |    |    |   |   |   |   |   |   |    |   |   |   |    |   |   |   |    |   |   |   |   |    |   |   |    |   |   |   |    |   |   |
| Corporate borrowings                                            |   |   | 24,412  |    |   |   | — |   |   |   | —  |   |   |   | 24,412  |   |   |   | 49,201  |   |   |   | — |    |   |   | —  |   |   |   | 49,201  |   |   |
| Capital and financing lease obligations                         |   |   | 1,695   |    |   |   | — |   |   |   | (471    | )      |   |   | 1,224   |   |   |   | 3,380   |   |   |   | — |    |   |   | (957    | )      |   |   | 2,423   |   |   |
| Investment income                                               |   |   | (912    | )       |   |   | — |   |   |   | 1       |   |   |   | (911    | )      |   |   | (372    | )      |   |   | — |    |   |   | 1       |   |   |   | (371    | )      |   |
| Total other expense                                             |   |   | 20,264  |    |   |   | — |   |   |   | (470    | )      |   |   | 19,794  |   |   |   | 46,162  |   |   |   | — |    |   |   | (956    | )      |   |   | 45,206  |   |   |
| Earnings (loss) from continuing  operations before income taxes |   |   | (11,947 | )       |   |   | (997   | )      |   |   | 537     |   |   |   | (12,407 | )      |   |   | (26,630 | )      |   |   | (997   | )       |   |   | 2,743   |   |   |   | (24,884 | )      |   |
| Income tax benefit                                              |   |   | (4,000  | )       |   |   | (400   | )      |   |   | (100    | )      |   |   | (4,500  | )      |   |   | (10,300 | )      |   |   | (400   | )       |   |   | (200    | )      |   |   | (10,900 | )      |   |
| Earnings (loss) from continuing  operations                     |   |   | (7,947  | )       |   |   | (597   | )      |   |   | 637     |   |   |   | (7,907  | )      |   |   | (16,330 | )      |   |   | (597   | )       |   |   | 2,943   |   |   |   | (13,984 | )      |   |
| Loss from discontinued operations, net  of income taxes         |   |   | (2,770  | )       |   |   | — |   |   |   | (637    | )      |   |   | (3,407  | )      |   |   | (22,094 | )      |   |   | — |    |   |   | (2,943  | )      |   |   | (25,037 | )      |   |
| Net loss                                                        |   |   | $       | (10,717 | )      |   |   | $      | (597   | )      |    |   | $      | — |    |   |   | $      | (11,314 | )      |   |   | $      | (38,424 | )      |   |    | $      | (597   | )      |    |   | $      | —  |   |   |   | $ | (39,021 | )      |   |

 

47

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| ** **                                     | ** ** | **As of**                   | ** ** |
|------------------------------------------------|------------|----------------------------------|------------|
| ** **                                     | ** ** | **September 29, 2005** | ** ** |
| ** **                                     | ** ** | **As**                           | ** ** | ** ** | ** ** | **As** | ** ** |
| ** **                                     | ** ** | **Reported**                     | ** ** | **Restatement**(1) | ** ** | **Restated** | ** ** |
| ** **                                     | ** ** | **Unaudited**                    | ** ** |
| **Assets**                                     | ** ** | ** **                       | ** ** |   | ** ** | ** ** |   | ** ** | ** ** |
| Current assets:                                |       |                             |       |   |   |   |   |   |   |
| Cash                                           |       | $                                | 71,797     |   |   | $ | — |   |   | $ | 71,797 |   |
| Receivables                                    |       | 53,007                           |       |   | — |   |   | 53,007 |   |
| Other current  assets                          |       | 39,541                           |       |   | — |   |   | 39,541 |   |
| Current assets  held for sale                  |       | —                           |       |   | — |   |   | — |   |
| Total current assets                           |       | 164,345                          |       |   | — |   |   | 164,345 |   |
| Property                                       |       | 814,146                          |       |   | — |   |   | 814,146 |   |
| Intangible assets                              |       | 181,129                          |       |   | — |   |   | 181,129 |   |
| Goodwill                                       |       | 1,313,865                        |       |   | — |   |   | 1,313,865 |   |
| Deferred income  taxes                         |       | 49,625                           |       |   | 400 |   |   | 50,025 |   |
| Other long-term  assets                        |       | 112,556                          |       |   | — |   |   | 112,556 |   |
| Non-current  assets held for sale              |       | —                           |       |   | — |   |   | — |   |
| Total assets                                   |       | $                                | 2,635,666  |   |   | $ | 400 |   |   | $ | 2,636,066 |   |
| **Liabilities  and Stockholders’ Equity** |       |                             |       |   |   |   |   |   |   |
| Current liabilities:                           |       |                             |       |   |   |   |   |   |   |
| Accounts payable                               |       | $                                | 86,217     |   |   | $ | — |   |   | $ | 86,217 |   |
| Accrued expenses  and other liabilities        |       | 108,826                          |       |   | — |   |   | 108,826 |   |
| Deferred revenues  and income                  |       | 62,859                           |       |   | — |   |   | 62,859 |   |
| Current  maturities                            |       | 2,574                            |       |   | — |   |   | 2,574 |   |
| Current  liabilities held for sale             |       | —                           |       |   | — |   |   | — |   |
| Total current liabilities                      |       | 260,476                          |       |   | — |   |   | 260,476 |   |
| Corporate  borrowings                          |       | 1,160,810                        |       |   | — |   |   | 1,160,810 |   |
| Capital and  financing lease obligations       |       | 34,711                           |       |   | — |   |   | 34,711 |   |
| Other long-term  liabilities                   |       | 318,635                          |       |   | (684 | ) |   | 317,951 |   |
| Non-current  liabilities held for sale         |       | —                           |       |   | — |   |   | — |   |
| Total liabilities                              |       | 1,774,632                        |       |   | (684 | ) |   | 1,773,948 |   |
| Stockholders’  equity:                    |       |                             |       |   |   |   |   |   |   |
| Common stock                                   |       | —                           |       |   | — |   |   | — |   |
| Additional  paid-in capital                    |       | 936,166                          |       |   | 1,681 |   |   | 937,847 |   |
| Accumulated other  comprehensive income        |       | (1,945                           | )          |   | — |   |   | (1,945 | ) |
| Accumulated  deficit                           |       | (73,187                          | )          |   | (597 | ) |   | (73,784 | ) |
| Total stockholders’ equity                |       | 861,034                          |       |   | 1,084 |   |   | 862,118 |   |
| Total liabilities  and equity                  |       | $                                | 2,635,666  |   |   | $ | 400 |   |   | $ | 2,636,066 |   |

 

48

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| ** **                                                         | ** ** | **Thirteen Weeks Ended  December 29, 2005** | ** ** | **Thirty-Nine Weeks Ended  December 29, 2005** | ** ** |
|--------------------------------------------------------------------|------------|-----------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|
| ** **                                                         | ** ** | **As  Reported**                                                | ** ** | **Restatement(1)**                                                 | ** ** | **As Restated** | ** ** | **As  Reported** | ** ** | **Restatement(1)** | ** ** | **As Restated** | ** ** |
| ** **                                                         | ** ** | **Unaudited**                                                   | ** ** |
| Revenues                                                           |       |                                                            |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Admissions                                                         |       | $                                                               | 267,683    |                                                               |       | $ | — |   |   |   | $ | 267,683 |   |   | $ | 799,860 |   |   | $ | — |   |   |   | $ | 799,860 |   |   |
| Concessions                                                        |       | 105,553                                                         |       |                                                               | —     |   |   |   | 105,553 |   |   | 317,452 |   |   | — |   |   |   | 317,452 |   |   |
| Other revenue                                                      |       | 25,272                                                          |       |                                                               | —     |   |   |   | 25,272 |   |   | 72,417 |   |   | — |   |   |   | 72,417 |   |   |
| Total revenues                                                     |       | 398,508                                                         |       |                                                               | —     |   |   |   | 398,508 |   |   | 1,189,729 |   |   | — |   |   |   | 1,189,729 |   |   |
| Costs and Expenses                                                 |       |                                                            |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Film exhibition costs                                              |       | 140,334                                                         |       |                                                               | —     |   |   |   | 140,334 |   |   | 428,452 |   |   | — |   |   |   | 428,452 |   |   |
| Concession costs                                                   |       | 11,442                                                          |       |                                                               | —     |   |   |   | 11,442 |   |   | 34,346 |   |   | — |   |   |   | 34,346 |   |   |
| Operating expense                                                  |       | 103,382                                                         |       |                                                               | —     |   |   |   | 103,382 |   |   | 312,193 |   |   | — |   |   |   | 312,193 |   |   |
| Rent                                                               |       | 78,053                                                          |       |                                                               | —     |   |   |   | 78,053 |   |   | 229,037 |   |   | — |   |   |   | 229,037 |   |   |
| General and administrative:                                        |       |                                                            |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Merger and acquisition costs                                       |       | 269                                                             |       |                                                               | —     |   |   |   | 269 |   |   | 2,909 |   |   | — |   |   |   | 2,909 |   |   |
| Management fee                                                     |       | 500                                                             |       |                                                               | —     |   |   |   | 500 |   |   | 1,500 |   |   | — |   |   |   | 1,500 |   |   |
| Other                                                              |       | 10,061                                                          |       |                                                               | 316        |   |   |   | 10,377 |   |   | 28,105 |   |   | 1,313 |   |   |   | 29,418 |   |   |
| Preopening expense                                                 |       | 3,515                                                           |       |                                                               | —     |   |   |   | 3,515 |   |   | 4,251 |   |   | — |   |   |   | 4,251 |   |   |
| Theatre and other closure expense                                  |       | 410                                                             |       |                                                               | —     |   |   |   | 410 |   |   | 1,390 |   |   | — |   |   |   | 1,390 |   |   |
| Restructuring charge                                               |       | 27                                                              |       |                                                               | —     |   |   |   | 27 |   |   | 3,935 |   |   | — |   |   |   | 3,935 |   |   |
| Depreciation and amortization                                      |       | 35,931                                                          |       |                                                               | —     |   |   |   | 35,931 |   |   | 108,478 |   |   | — |   |   |   | 108,478 |   |   |
| Impairment of long-lived assets                                    |       | —                                                          |       |                                                               | —     |   |   |   | — |   |   | — |   |   | — |   |   |   | — |   |   |
| Disposition of assets and other gains                              |       | (297                                                            | )          |                                                               | —     |   |   |   | (297 | ) |   | (1,067 | ) |   | — |   |   |   | (1,067 | ) |   |
| Total costs and expenses                                           |       | 383,627                                                         |       |                                                               | 316        |   |   |   | 383,943 |   |   | 1,153,529 |   |   | 1,313 |   |   |   | 1,154,842 |   |   |
| Other expense (income)                                             |       |                                                            |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income                                                       |       | (5,919                                                          | )          |                                                               | —     |   |   |   | (5,919 | ) |   | (11,966 | ) |   | — |   |   |   | (11,966 | ) |   |
| Interest expense                                                   |       |                                                            |       |                                                               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate borrowings                                               |       | 24,737                                                          |       |                                                               | —     |   |   |   | 24,737 |   |   | 73,938 |   |   | — |   |   |   | 73,938 |   |   |
| Capital and financing lease obligations                            |       | 541                                                             |       |                                                               | —     |   |   |   | 541 |   |   | 2,964 |   |   | — |   |   |   | 2,964 |   |   |
| Investment income                                                  |       | 2,625                                                           |       |                                                               | —     |   |   |   | 2,625 |   |   | 2,254 |   |   | — |   |   |   | 2,254 |   |   |
| Total other expense                                                |       | 21,984                                                          |       |                                                               | —     |   |   |   | 21,984 |   |   | 67,190 |   |   | — |   |   |   | 67,190 |   |   |
| Earnings (loss) from continuing  operations before income taxes    |       | (7,103                                                          | )          |                                                               | (316       | ) |   |   | (7,419 | ) |   | (30,990 | ) |   | (1,313 | ) |   |   | (32,303 | ) |   |
| Income tax benefit                                                 |       | (2,600                                                          | )          |                                                               | (100       | ) |   |   | (2,700 | ) |   | (13,100 | ) |   | (500 | ) |   |   | (13,600 | ) |   |
| Loss from continuing operations                                    |       | (4,503                                                          | )          |                                                               | (216       | ) |   |   | (4,719 | ) |   | (17,890 | ) |   | (813 | ) |   |   | (18,703 | ) |   |
| Earnings (loss) from discontinued  operations, net of income taxes |       | 178                                                             |       |                                                               | —     |   |   |   | 178 |   |   | (24,859 | ) |   | — |   |   |   | (24,859 | ) |   |
| Net loss                                                           |       | $                                                               | (4,325     | )                                                                  |       | $ | (216 | ) |   |   | $ | (4,541 | ) |   | $ | (42,749 | ) |   | $ | (813 | ) |   |   | $ | (43,562 | ) |   |

 

49

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| ** **                                     | ** ** | **As of December 29, 2005** | ** ** |
|------------------------------------------------|------------|-------------------------------------------------|------------|
| ** **                                     | ** ** | **As  Reported**                                | ** ** | **Restatement(1)** | ** ** | **As  Restated** | ** ** |
| ** **                                     | ** ** | **Unaudited**                                   | ** ** |
| **Assets**                                     |       |                                            |       |   |   |   |   |   |   |
| Current assets:                                |       |                                            |       |   |   |   |   |   |   |
| Cash                                           |       | $                                               | 134,522    |   |   | $ | — |   |   | $ | 134,522 |   |
| Receivables                                    |       | 65,812                                          |       |   | — |   |   | 65,812 |   |
| Other current assets                           |       | 40,865                                          |       |   | — |   |   | 40,865 |   |
| Current assets held for  sale                  |       | 950                                             |       |   | — |   |   | 950 |   |
| Total current  assets                          |       | 242,149                                         |       |   | — |   |   | 242,149 |   |
| Property                                       |       | 783,121                                         |       |   | — |   |   | 783,121 |   |
| Intangible assets                              |       | 175,970                                         |       |   | — |   |   | 175,970 |   |
| Goodwill                                       |       | 1,303,976                                       |       |   | — |   |   | 1,303,976 |   |
| Deferred income taxes                          |       | 54,463                                          |       |   | 500 |   |   | 54,963 |   |
| Other long-term assets                         |       | 108,259                                         |       |   | — |   |   | 108,259 |   |
| Non-current assets held  for sale              |       | 33,721                                          |       |   | — |   |   | 33,721 |   |
| Total assets                                   |       | $                                               | 2,701,659  |   |   | $ | 500 |   |   | $ | 2,702,159 |   |
| **Liabilities  and Stockholders’ Equity** |       |                                            |       |   |   |   |   |   |   |
| Current liabilities:                           |       |                                            |       |   |   |   |   |   |   |
| Accounts payable                               |       | $                                               | 119,958    |   |   | $ | — |   |   | $ | 119,958 |   |
| Accrued expenses and  other liabilities        |       | 129,914                                         |       |   | — |   |   | 129,914 |   |
| Deferred revenues and  income                  |       | 87,921                                          |       |   | — |   |   | 87,921 |   |
| Current maturities                             |       | 2,560                                           |       |   | — |   |   | 2,560 |   |
| Current liabilities held  for sale             |       | 4,001                                           |       |   | — |   |   | 4,001 |   |
| Total  current liabilities                     |       | 344,354                                         |       |   | — |   |   | 344,354 |   |
| Corporate borrowings                           |       | 1,160,208                                       |       |   | — |   |   | 1,160,208 |   |
| Capital and financing  lease obligations       |       | 33,792                                          |       |   | — |   |   | 33,792 |   |
| Other long-term  liabilities                   |       | 293,905                                         |       |   | (918 | ) |   | 292,987 |   |
| Non-current liabilities  held for sale         |       | 12,004                                          |       |   | — |   |   | 12,004 |   |
| Total liabilities                              |       | 1,844,263                                       |       |   | (918 | ) |   | 1,843,345 |   |
| Stockholders’  equity:                    |       |                                            |       |   |   |   |   |   |   |
| Common stock                                   |       | —                                          |       |   | — |   |   | — |   |
| Additional paid-in  capital                    |       | 936,577                                         |       |   | 2,231 |   |   | 938,808 |   |
| Accumulated other comprehensive  income        |       | (1,669                                          | )          |   | — |   |   | (1,669 | ) |
| Accumulated deficit                            |       | (77,512                                         | )          |   | (813 | ) |   | (78,325 | ) |
| Total  stockholders’ equity               |       | 857,396                                         |       |   | 1,418 |   |   | 858,814 |   |
| Total liabilities and equity                   |       | $                                               | 2,701,659  |   |   | $ | 500 |   |   | $ | 2,702,159 |   |

`

50

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| ** **                                              | ** ** | **Thirteen Weeks Ended  March 30, 2006** | ** ** | **Fifty-Two Weeks Ended  March 30, 2006** | ** ** |
|---------------------------------------------------------|------------|--------------------------------------------------------------|------------|---------------------------------------------------------------|------------|
| ** **                                              | ** ** | **As**                                                       | ** ** | ** **                                                    | ** ** | **Discontinued** | ** ** | **As** | ** ** | **As** | ** ** | ** ** | ** ** | **Discontinued** | ** ** | **As** | ** ** |
| ** **                                              | ** ** | **Reported**                                                 | ** ** | **Restatement(1)**                                            | ** ** | **Operations (2)** | ** ** | **Restated** | ** ** | **Reported** | ** ** | **Restatement(1)** | ** ** | **Operations (2)** | ** ** | **Restated** | ** ** |
| Revenues                                                |       |                                                         |       |                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Admissions                                              |       | $                                                            | 345,875    |                                                          |       | $ | — |   |   |   | $ | (7,701 | ) |   | $ | 338,174 |   | $ | 1,169,226 |   |   | $ | — |   |   |   | $ | (31,192 | ) |   | $ | 1,138,034 |   |
| Concessions                                             |       | 141,102                                                      |       |                                                          | —     |   |   |   | (2,526 | ) |   | 138,576 |   | 466,679 |   |   | — |   |   |   | (10,651 | ) |   | 456,028 |   |
| Other revenue                                           |       | 20,934                                                       |       |                                                          | —     |   |   |   | (535 | ) |   | 20,399 |   | 94,545 |   |   | — |   |   |   | (1,729) | ) |   | 92,816 |   |
| Total revenues                                          |       | 507,911                                                      |       |                                                          | —     |   |   |   | (10,762 | ) |   | 497,149 |   | 1,730,450 |   |   | — |   |   |   | (43,572 | ) |   | 1,686,878 |   |
| Costs and Expenses                                      |       |                                                         |       |                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Film exhibition costs                                   |       | 170,525                                                      |       |                                                          | —     |   |   |   | (3,624 | ) |   | 166,901 |   | 610,600 |   |   | — |   |   |   | (15,247 | ) |   | 595,353 |   |
| Concession costs                                        |       | 16,717                                                       |       |                                                          | —     |   |   |   | (482 | ) |   | 16,235 |   | 52,584 |   |   | — |   |   |   | (2,003 | ) |   | 50,581 |   |
| Operating expense                                       |       | 141,859                                                      |       |                                                          | —     |   |   |   | (2,530 | ) |   | 139,329 |   | 462,185 |   |   | — |   |   |   | (10,663 | ) |   | 451,522 |   |
| Rent                                                    |       | 103,797                                                      |       |                                                          | —     |   |   |   | (2,956 | ) |   | 100,841 |   | 341,301 |   |   | — |   |   |   | (11,423 | ) |   | 329,878 |   |
| General and administrative:                             |       |                                                         |       |                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Merger and acquisition costs                            |       | 9,578                                                        |       |                                                          | —     |   |   |   | — |   |   | 9,578 |   | 12,487 |   |   | — |   |   |   | — |   |   | 12,487 |   |
| Management fee                                          |       | 500                                                          |       |                                                          | —     |   |   |   | — |   |   | 500 |   | 2,000 |   |   | — |   |   |   | — |   |   | 2,000 |   |
| Other                                                   |       | 9,804                                                        |       |                                                          | 801        |   |   |   | (39 | ) |   | 10,566 |   | 38,041 |   |   | 2,114 |   |   |   | (171 | ) |   | 39,984 |   |
| Preopening expense                                      |       | 2,356                                                        |       |                                                          | —     |   |   |   | — |   |   | 2,356 |   | 6,607 |   |   | — |   |   |   | — |   |   | 6,607 |   |
| Theatre and other closure expense                       |       | (789                                                         | )          |                                                          | —     |   |   |   | — |   |   | (789 | ) | 601 |   |   | — |   |   |   | — |   |   | 601 |   |
| Restructuring charge                                    |       | 45                                                           |       |                                                          | —     |   |   |   | — |   |   | 45 |   | 3,980 |   |   | — |   |   |   | — |   |   | 3,980 |   |
| Depreciation and amortization                           |       | 56,699                                                       |       |                                                          | —     |   |   |   | (1,130 | ) |   | 55,569 |   | 168,821 |   |   | — |   |   |   | (4,774 | ) |   | 164,047 |   |
| Impairment of long-lived assets                         |       | 11,974                                                       |       |                                                          | —     |   |   |   | — |   |   | 11,974 |   | 11,974 |   |   | — |   |   |   | — |   |   | 11,974 |   |
| Disposition of assets and other gains                   |       | 70                                                           |       |                                                          | —     |   |   |   | — |   |   | 70 |   | (997 | ) |   | — |   |   |   | — |   |   | (997 | ) |
| Total costs and expenses                                |       | 523,135                                                      |       |                                                          | 801        |   |   |   | (10,761 | ) |   | 513,175 |   | 1,710,184 |   |   | 2,114 |   |   |   | (44,281 | ) |   | 1,668,017 |   |
| Other expense (income)                                  |       |                                                         |       |                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other income                                            |       | 2,148                                                        |       |                                                          | —     |   |   |   | — |   |   | 2,148 |   | (9,818 | ) |   | — |   |   |   | — |   |   | (9,818 | ) |
| Interest expense                                        |       |                                                         |       |                                                          |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Corporate borrowings                                    |       | 42,202                                                       |       |                                                          | —     |   |   |   | — |   |   | 42,202 |   | 116,140 |   |   | — |   |   |   | — |   |   | 116,140 |   |
| Capital and financing lease obligations                 |       | 1,567                                                        |       |                                                          | —     |   |   |   | (463 | ) |   | 1,104 |   | 5,946 |   |   | — |   |   |   | (1,878 | ) |   | 4,068 |   |
| Investment income                                       |       | 2,400                                                        |       |                                                          | —     |   |   |   | 2 |   |   | 2,402 |   | 4,651 |   |   | — |   |   |   | 5 |   |   | 4,656 |   |
| Total other expense                                     |       | 48,317                                                       |       |                                                          | —     |   |   |   | (461 | ) |   | 47,856 |   | 116,919 |   |   | — |   |   |   | (1,873 | ) |   | 115,046 |   |
| Loss from continuing operations before income taxes     |       | (63,541                                                      | )          |                                                          | (801       | ) |   |   | 460 |   |   | (63,882 | ) | (96,653 | ) |   | (2,114 | ) |   |   | 2,582 |   |   | (96,185 | ) |
| Income tax  provision                                   |       | 82,500                                                       |       |                                                          | 500        |   |   |   | — |   |   | 83,009 |   | 69,700 |   |   | — |   |   |   | (300 | ) |   | 69,400 |   |
| Loss from  continuing operations                        |       | (146,041                                                     | )          |                                                          | (1,301     | ) |   |   | 460 |   |   | (146,891 | ) | (166,353 | ) |   | (2,114 | ) |   |   | 2,882 |   |   | (165,585 | ) |
| Loss from  discontinued operations, net of income taxes |       | 28                                                           |       |                                                          | —     |   |   |   | (460 | ) |   | (432 | ) | (22,409 | ) |   | — |   |   |   | (2,882 | ) |   | (25,291 | ) |
| Net loss                                                |       | $                                                            | (146,013   | )                                                             |       | $ | (1,301 | ) |   |   | $ | — |   |   | $ | (147,323 | ) | $ | (188,762 | ) |   | $ | (2,114 | ) |   |   | $ | — |   |   | $ | (190,876 | ) |

 

51

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| ** **                                    | ** ** | **As of  March 30, 2006** | ** ** |
|-----------------------------------------------|------------|------------------------------------------|------------|
| ** **                                    | ** ** | **As**                                   | ** ** | ** ** | ** ** | **As** | ** ** |
| ** **                                    | ** ** | **Reported**                             | ** ** | **Restatement(1)** | ** ** | **Restated** | ** ** |
| **Assets**                                    |       |                                     |       |   |   |   |   |   |   |
| Current assets:                               |       |                                     |       |   |   |   |   |   |   |
| Cash                                          |       | $                                        | 230,115    |   |   | $ | — |   |   | $ | 230,115 |   |
| Receivables                                   |       | 56,611                                   |       |   | — |   |   | 56,611 |   |
| Other current  assets                         |       | 34,647                                   |       |   | — |   |   | 34,647 |   |
| Current assets  held for sale                 |       | 4,726                                    |       |   | — |   |   | 4,726 |   |
| Total current assets                          |       | 326,099                                  |       |   | — |   |   | 326,099 |   |
| Property                                      |       | 1,501,048                                |       |   | — |   |   | 1,501,048 |   |
| Intangible assets                             |       | 273,308                                  |       |   | — |   |   | 273,308 |   |
| Goodwill                                      |       | 2,018,318                                |       |   | — |   |   | 2,018,318 |   |
| Deferred income  taxes                        |       | 3,564                                    |       |   | — |   |   | 3,564 |   |
| Other long-term  assets                       |       | 167,916                                  |       |   | — |   |   | 167,916 |   |
| Non-current  assets held for sale             |       | 112,337                                  |       |   | — |   |   | 112,337 |   |
| Total assets                                  |       | $                                        | 4,402,590  |   |   | $ | — |   |   | $ | 4,402,590 |   |
| **Liabilities and Stockholders’ Equity** |       |                                     |       |   |   |   |   |   |   |
| Current  liabilities:                         |       |                                     |       |   |   |   |   |   |   |
| Accounts payable                              |       | $                                        | 150,383    |   |   | $ | — |   |   | $ | 150,383 |   |
| Accrued expenses  and other liabilities       |       | 157,068                                  |       |   | — |   |   | 157,068 |   |
| Deferred revenues  and income                 |       | 95,812                                   |       |   | — |   |   | 95,812 |   |
| Current  maturities                           |       | 30,804                                   |       |   | — |   |   | 30,804 |   |
| Current  liabilities held for sale            |       | 8,233                                    |       |   | — |   |   | 8,233 |   |
| Total current liabilities                     |       | 442,300                                  |       |   | — |   |   | 442,300 |   |
| Corporate  borrowings                         |       | 2,223,869                                |       |   | — |   |   | 2,223,869 |   |
| Capital and  financing lease obligations      |       | 64,016                                   |       |   | — |   |   | 64,016 |   |
| Other long-term  liabilities                  |       | 417,018                                  |       |   | (425 | ) |   | 416,593 |   |
| Non-current  liabilities held for sale        |       | 11,903                                   |       |   | — |   |   | 11,903 |   |
| Total liabilities                             |       | 3,159,106                                |       |   | (425 | ) |   | 3,158,681 |   |
| Stockholders’  equity:                   |       |                                     |       |   |   |   |   |   |   |
| Common stock                                  |       | —                                   |       |   | — |   |   | — |   |
| Additional  paid-in capital                   |       | 1,477,667                                |       |   | 2,539 |   |   | 1,480,206 |   |
| Accumulated other  comprehensive income       |       | (10,658                                  | )          |   | — |   |   | (10,658 | ) |
| Accumulated deficit                           |       | (223,525                                 | )          |   | (2,114 | ) |   | (225,639 | ) |
| Total stockholders’ equity               |       | 1,243,484                                |       |   | 425 |   |   | 1,243,909 |   |
| Total liabilities  and equity                 |       | $                                        | 4,402,590  |   |   | $ | — |   |   | $ | 4,402,590 |   |

----

***(1)******         ******As discussed in this Note, theCompany restated its financial statements for stock option awards.***

***(2)******         ******As discussed in Note3—Discontinued Operations, the Company classified the results of operations ofits Iberia theatres as discontinued operations during the thirteen weeks endedDecember 28, 2006. As a result, conforming classifications are made for theseperiods. The reclassification for discontinued operations was not an error inthe prior financial statements, rather it was performed to be consistent withthe treatment in the annual financial statements.***

***DiscontinuedOperations:***   The results of operations forthe Company’s discontinued operations have been eliminated from the Company’scontinuing operations and classified as discontinued operations for each periodpresented within the Company’s Consolidated Statements of Operations. See Note3—Discontinued Operations.

52

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***Assets held forSale:***   In conjunction with the Merger (seeNote 2), the Company entered into a Final Judgment with the AntitrustDivision of the United States Department of Justice and judgments and consentdecrees with various States. These judgments and decrees require the Company tohold separate and divest itself of certain theatres. As a result, the Companyhas classified the assets and liabilities of these theatres as *held for sale.* The Company expects todivest certain of these theatres in the first fiscal quarter of 2007.

Additionally, the Company entered into an agreement tosell its consolidated operations in Spain and Portugal and as a result, theCompany has classified the assets and liabilities of these theatres as *held for sale.* These sales weresubsequently consummated on May 11, 2006.

***Use of Estimates:***   Thepreparation of financial statements in conformity with generally acceptedaccounting principles requires management to make estimates and assumptionsthat affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements andthe reported amounts of revenues and expenses during the reporting period.Actual results could differ from those estimates.

***Principles of Consolidation:***   Theconsolidated financial statements include the accounts of AMCE and allsubsidiaries and the Predecessor accounts include the results of operations ofHoldings and Marquee from their inception on July 16, 2004 throughDecember 23, 2004 due to consolidation under FIN 46 (R), as discussedabove. All significant intercompany balances and transactions have beeneliminated.

***Fiscal Year:***   TheCompany has a 52/53 week fiscal year ending on the Thursday closest to the lastday of March. Fiscal 2006, 2005 and 2004 reflect 52 week periods.

***Revenues:***   Revenuesare recognized when admissions and concessions sales are received at thetheatres. The Company defers 100% of the revenue associated with the sales ofstored value cards, discounted theatre tickets and gift certificates (norevenue or income recognition for non-presentment) until such time as the itemsare redeemed or the gift certificate liabilities are extinguished or managementbelieves future redemption of stored value cards to be remote or the discountedtheatre tickets expire. The Company recognizes revenues related to on-screenadvertising over the period that the related advertising is delivered on-screenor in-theatre pursuant to the specific terms of its agreements withadvertisers. During the Successor periods ended March 30, 2006 andMarch 31, 2005, the Company recognized $8,699,000 and $6,745,000 of incomerelated to the derecognition of stored value card liabilities where managementbelieves future redemption to be remote which was recorded in other expense(income) in the Consolidated Statements of Operations.

***Film ExhibitionCosts:***   Film exhibition costs are accruedbased on the applicable box office receipts and estimates of the finalsettlement to the film licenses. As of March 30, 2006 and March 31,2005, the Company recorded film payables of $65,488,000 and $53,387,000,respectively. The Successor recorded film exhibition costs of $610,600,000 and$157,339,000 for the Successor periods ended March 30, 2006 and March 31,2005, respectively, and the Predecessor reported film exhibition costs of$465,086,000 and $621,848,000 for the Predecessor periods ended December 23,2004 and April 1, 2004, respectively.

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

***NCN and Other:***   TheCompany recognizes revenues related to on-screen advertising over the periodthe related advertising is delivered on-screen or in-theatre pursuant to thespecific terms of its agreements 

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with advertisers. Itson-screen advertising subsidiary (NCN) operates its advertising program throughagreements with other theatre circuits. These circuit agreements stipulate theamount of circuit payments a theatre will receive for running on-screen slides,on-film programs and other related in-theatre products and services. TheCompany’s circuit agreements have terms of 1 to 5 years, with an annualcancellation provision included in select agreements. Certain circuits haveagreements requiring an annual minimum exhibitor share payment. The Companyrecognizes the minimum exhibitor share payments as an expense on astraight-line basis over the terms of the agreements and any excess minimumexhibitor share payments are recognized when earned.

On March 29, 2005, the Company and RegalEntertainment Group combined their respective cinema screen advertisingbusinesses into a new joint venture company called National CineMedia, LLC (“NCM”).The company engages in the marketing and sale of cinema advertising andpromotions products; business communications and training services; and thedistribution of digital alternative content. The Company records its share ofon-screen advertising revenues generated by NCN and NCM in other theatrerevenues. The Company contributed fixed assets, exhibitor agreements andgoodwill (recorded in connection with the merger with Marquee) of its cinemascreen advertising subsidiary NCN to NCM. Additionally, the Company paidtermination benefits related to the displacement of certain NCN associates. Inconsideration of the NCN contributions described above, NCM, issued a 37%interest in its Class A units to NCN. Since that date, NCN’s interest inNCM has declined to 29% due to the entry of new investors.

***Loyalty Program:***   TheCompany records the estimated incremental cost of providing free concession itemsfor awards under its *Moviewatcher*loyalty program when the awards are earned. Historically, the costs of theseawards have not been significant.

***AdvertistingCosts:***   TheCompany expenses advertising costs as incurred and does not have any direct-responseadvertising recorded as assets. Advertising costs were $22.6 million,$5.2 million, $18.9 million and $24.5 million during the 52weeks ended March 30, 2006, the 14 weeks ended March 31, 2005, the38 weeks ended December 23, 2004 and the 52 weeks ended April 1,2004, respectively.

***Cash andEquivalents:***   Cash and equivalents consist ofcash on hand and temporary cash investments with original maturities of threemonths or less. The Company invests excess cash in deposits with major banksand in temporary cash investments. Such investments are made only ininstruments issued or enhanced by high quality financial institutions(investment grade or better). Amounts invested in a single institution arelimited to minimize risk.

Under the Company’s cash management system, checksissued but not presented to banks frequently result in overdraft balances foraccounting purposes and are classified within accounts payable in the balancesheet. The amount of these checks included in accounts payable as of March 30,2006 and March 31, 2005 was $13,829,000 and $35,320,000, respectively.

***Property:***   Propertyis recorded at cost or fair value, in the case of property resulting from theacquisitions. The Company uses the straight-line method in computingdepreciation and amortization for financial reporting purposes and acceleratedmethods, with respect to certain assets, for income tax purposes. The estimateduseful lives for leasehold improvements reflect the shorter of the base termsof the corresponding lease agreements or the useful lives of the assets. Theestimated useful lives are as follows:

| Buildings and  improvements        |   | 5 to 40 years |   |
|------------------------------------|--------|---------------|--------|
| Leasehold  improvements            |   | 1 to 20 years |   |
| Furniture, fixtures and  equipment |   | 1 to 10 years |   |

 

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Expenditures for additions (including interest duringconstruction), major renewals and betterments are capitalized, and expendituresfor maintenance and repairs are charged to expense as incurred. The cost ofassets retired or otherwise disposed of and the related accumulateddepreciation and amortization are eliminated from the accounts in the year ofdisposal. Gains or losses resulting from property disposals are credited orcharged to operations.

***Intangible Assets:***   Intangibleassets are recorded at cost or fair value, in the case of intangible assetsresulting from the acquisitions, and are comprised of lease rights, amountsassigned to theatre leases acquired under favorable terms, customerrelationship intangible assets, non-competition and consulting agreements andtrademarks, each of which are being amortized on a straight-line basis over theestimated remaining useful lives of the assets except for a customerrelationship intangible asset and the AMC and Cinemex Trademark intangibleassets associated with the merger with Marquee. The customer relationshipintangible asset is amortized over eight years based upon the pattern in whichthe economic benefits of the intangible asset are consumed or otherwise used up.This pattern indicates that over 2/3rds of the cash flow generated from theasset is derived during the first five years. The AMC and Cinemex Trademarkintangible assets are considered indefinite lived intangible assets, andtherefore not amortized, but rather evaluated for impairment annually. Therewas no impairment of the Company’s intangible assets as of March 30, 2006.

***Investments:***   TheCompany accounts for its investments in non-consolidated entities using thecost and equity methods of accounting, has recorded the investments withinother long-term assets in its consolidated balance sheets and records equity inearnings or losses of these entities accounted for following the equity methodof accounting within investment income in its consolidated statements ofoperations. As of March 30, 2006, the Company holds a 50% interest inHoyts General Cinemas South America (“HGCSA”) a partnership that operates 18theatres in South America; a 29% interest in NCM, a joint venture that marketsand sells cinema advertising and promotions; a 27% interest inMovietickets.com, a joint venture that provides moviegoers with a convenientway to buy movie tickets online, access local showtime information, viewtrailers and read reviews; a 50% interest in Yelmo Cineplex, a joint venturethat operates 27 theatres in Spain; and a 50% interest in three theatres thatare accounted for following the equity method of accounting. The Company’srecorded investments exceed its proportional ownership of the underlying equityin these entities by approximately $33,806,000. These differences will beamortized to equity in earnings or losses over the estimated useful lives ofthe related assets (1-5 years) or evaluated for impairment. Therewas no impairment of the Company’s investments as of March 30, 2006. As ofMarch 30, 2006 the Company holds a 9% interest in Fandango, a jointventure that provides moviegoers with a convenient way to buy movie ticketsonline, access local showtime information, view trailers and read reviews thatis accounted for following the cost method of accounting.

***Acquisitions:***   TheCompany accounts for its acquisitions of theatrical exhibition businesses usingthe purchase method. The purchase method requires that the Company estimate thefair value of the individual assets and liabilities acquired as well as variousforms of consideration given including cash, common stock, senior subordinatednotes and bankruptcy related claims. The allocation of purchase price is basedon management’s judgment after evaluating several factors, including actuarialestimates for pension liabilities, market prices of its indebtedness andvaluation assessments prepared by a valuation specialist.

***Goodwill:***   Goodwillrepresents the excess of cost over fair value of net tangible and identifiableintangible assets related to acquisitions. The Company is not required toamortize goodwill as a charge to earnings; however, the Company is required toconduct an annual review of goodwill for impairment.

The Company’s recorded goodwill was $2,018,318,000 asof March 30, 2006 and $1,401,740,000 as of March 31, 2005. TheCompany evaluates goodwill for impairment as of the end of the fourth fiscalquarter and any time an event occurs or circumstances change that would reducethe fair value for a reporting unit 

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below its carrying amount.The Company’s goodwill is recorded in its U.S. and Canada theatrical exhibitionoperating segment, in Cinemex and in our Spain and Portugal theatres which arealso the reporting units for purposes of evaluating recorded goodwill forimpairment. If the carrying value of the reporting unit exceeds its fair valuethe Company is required to reallocate the fair value of the reporting unit as ifthe reporting unit had been acquired in a business combination and the fairvalue of the reporting unit was the price paid to acquire the reporting unit.The Company determines fair value by considering multiples applied to cash flowestimates less net indebtedness which it believes is an appropriate method todetermine fair value. There is considerable management judgment with respect tocash flow estimates and appropriate multiples to be used in determining fairvalue. There was no goodwill impairment as of March 30, 2006.

***Other Long-termAssets:***   Other long-term assets are comprisedprincipally of investments in partnerships and joint ventures, costs incurredin connection with the issuance of debt securities, which are being amortizedto interest expense over the respective lives of the issuances, and investmentsin real estate, which are recorded at the lower of historical cost or fairvalue.

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

***Theatre and OtherClosure Expense:***   Theatre and other closureexpense is primarily related to payments made or expected to be made tolandlords to terminate leases on certain of the Company’s closed theatres,other vacant space or theatres where development has been discontinued. Theatreand other closure expense is recognized at the time the theatre closes, spacebecomes vacant or development is discontinued. Expected payments to landlordsare based on actual or discounted contractual amounts. Accretion expenserelates to changes in the Company’s theatre closure liability due to thepassage of time where the Company has based its expected payments to landlordson discounted amounts. The accretion expense for exit activities initiatedafter December 31, 2002 and all accretion expense subsequent to the mergerwith Marquee is included as a component of theatre and other closure expense.The Successor recorded theatre and other closure expense of $601,000 and$1,267,000 for the periods ended March 30, 2006 and March 31, 2005,respectively, and the Predecessor recorded theatre and other closure expense of$10,758,000 and $4,068,000 for the periods ended December 23, 2004 and April 1,2004, respectively. Accrued theatre and other closure expense is generallyclassified as current based upon management’s intention to negotiatetermination of the related lease obligations within one year.

***RestructuringCharge:***   The Company recognizes restructuringcharges based upon the nature of the costs incurred. Costs resulting fromone-time termination benefits where employees are not required to render futureservice to receive the benefits are recognized and a liability is recorded whenmanagement commits to a plan of termination which identifies the number ofemployees to be terminated, their job classifications, locations, expectedtermination dates and when the plan is communicated to the employees andestablishes the detailed terms of the benefits to be received by employees.

If employees are required to render service until theyare terminated in order to receive the termination benefits, the benefits aremeasured at the fair value of the costs and related liabilities at thecommunication date and are recognized ratably over the future service periodfrom the communication date.

On March 24, 2005, the Company commenced anorganizational restructuring related to functions at its Home Office and itsFilm Office. The Company’s new organizational structure flattens managementstructure and aligns systems, resources and areas of expertise to promotefaster communication. The primary goal of the restructuring is to create asimplified organizational structure.

The Company recorded $4,926,000 of expenses, primarilyat its home office and at its NCN and other operating segment, related toone-time termination benefits and other costs for the displacement of 

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approximately 200associates in connection with the organizational restructuring and thecontribution of assets by NCN to NCM during fiscal 2005. The Company incurredan additional $3,139,000 in one-time termination benefits and approximately$841,000 related to closure of offices during fiscal 2006. The Company’srestructuring activities were complete as of March 30, 2006.

The Company recorded a liability of $27,090,000related to one-time termination benefits and other costs for the displacementof approximately 230 associates in connection with the Merger with Loews aspart of purchase accounting. The Company recorded an additional $4,845,000liability related to closures of Loews’ duplicate administrative facilities inconnection with the Merger with Loews as part of purchase accounting.

***Leases:***   Themajority of the Company’s operations are conducted in premises occupied underlease agreements with initial base terms ranging generally from 15 to20 years (see Note 18—Related Party Transactions), with certainleases containing options to extend the leases for up to an additional20 years. The Company does not believe that exercise of the renewaloptions in its leases are reasonably assured at the inception of the leaseagreements and therefore, considers the initial base term as the lease termunder Statement of Financial Accounting Standards No. 13, *Accounting for Leases* (“SFAS No. 13”).The leases provide for fixed and escalating rentals, contingent escalatingrentals based on the Consumer Price Index not to exceed certain specifiedamounts and contingent rentals based on revenues with a guaranteed minimum.

The Company has historically recorded rent expense forits operating leases with reasonably assured rent increases in accordance withFASB Technical Bulletin 85-3 *Accountingfor Operating Leases with Scheduled Rent Increases* on astraight-line basis from the “lease commencement date” (the theatre opening date)as specified in the lease agreement until the end of the base lease term. TheCompany has historically viewed “rent holidays” as an inducement contained inthe lease agreement that provides for a period of “free rent” during the leaseterm and believed that it did not have “rent holidays” in its lease agreements.

During fiscal 2005, the Company determined that itslease terms commence at the time it obtains “control and access” to the leasedpremises which is generally a date prior to the “lease commencement date”contained in the lease agreements. The Company has evaluated the impact of achange in the commencement date of its lease terms based on when it has “controland access” to the leased premises and has determined that the impact wasimmaterial to the prior periods.

The Company records rent expense for its operatingleases on a straight-line basis over the base term of the lease agreementscommencing with the date the Company has “control and access” to the leasedpremises. Rent expense related to the “rent holiday” is recorded as a componentof preopening expense until construction of the leased premises is complete andthe premises are ready for their intended use. Rent charges upon completion ofthe leased premises subsequent to the theatre opening date are expensed as acomponent of rent expense. The estimated useful lives for leaseholdimprovements reflect the shorter of the base terms of the corresponding leaseagreements or the economic life of the leasehold improvements.

Occasionally the Company will receive amounts fromdevelopers in excess of the costs incurred related to the construction of theleased premises. The Company records the excess amounts received fromdevelopers as deferred rent and amortizes the balance as a reduction to rentexpense over the base term of the lease agreement.

The Company evaluates the classification of its leasesfollowing the guidance in SFAS No. 13. Leases that qualify as capitalleases are recorded at the present value of the future minimum rentals over thebase term of the lease using the Company’s incremental borrowing rate. Capitallease assets are assigned an estimated useful life at the inception of thelease that corresponds with the base term of the lease.

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Occasionally, the Company is responsible for theconstruction of leased theatres and for paying project costs that are in excessof an agreed upon amount to be reimbursed from the developer. Emerging IssuesTask Force (EITF) Issue No. 97-10 *TheEffect of Lessee Involvement in Asset Construction* requires theCompany to be considered the owner (for accounting purposes) of these types ofprojects during the construction period and therefore is required to accountfor these projects as sale and leaseback transactions. As a result, the Companyhas recorded $25,144,000 and $43,372,000 as financing lease obligations forfailed sale leaseback transactions on its Consolidated Balance Sheets relatedto these types of projects as of March 30, 2006 and March 31, 2005,respectively.

***Sale and LeasebackTransactions:***   The Company accounts for thesale and leaseback of real estate assets in accordance with Statement ofFinancial Accounting Standards No. 98 *AccountingFor Leases.* Losses on sale leaseback transactions are recognized atthe time of sale if the fair value of the property sold is less than theundepreciated cost of the property. Gains on sale and leaseback transactionsare deferred and amortized over the remaining lease term.

***Impairment ofLong-lived Assets:***   Management reviewslong-lived assets, including intangibles and investments in non-consolidatedentities, for impairment as part of the Company’s annual budgeting process andwhenever events or changes in circumstances indicate that the carrying amountof the assets may not be fully recoverable. Management reviews internalmanagement reports on a quarterly basis as well as monitors current andpotential future competition in the markets where the Company operates forindicators of triggering events or circumstances that indicate potentialimpairment of individual theatre assets. Management evaluates its theatresusing historical and projected data of theatre level cash flow as its primaryindicator of potential impairment and considers the seasonality of its businesswhen evaluating theatres for impairment. Because the Christmas and New Yearsholiday results comprise a significant portion of the Company’s operating cashflow, the actual results from this period, which are available during thefourth quarter of each fiscal year, are an integral part of the Company’simpairment analysis. As a result of these analyses, if the sum of the estimatedfuture cash flows, undiscounted and without interest charges, are less than thecarrying amount of the asset, an impairment loss is recognized in the amount bywhich the carrying value of the asset exceeds its estimated fair value. Assetsare evaluated for impairment on an individual theatre basis, which managementbelieves is the lowest level for which there are identifiable cash flows. Theimpairment evaluation is based on the estimated cash flows from continuing useuntil the expected disposal date or the fair value of furniture, fixtures andequipment. The expected disposal date does not exceed the remaining leaseperiod and is often less than the remaining lease period when management doesnot expect to operate the theatre to the end of its lease term. The fair valueof assets is determined as either the expected selling price less selling costs(where appropriate) or the present value of the estimated future cash flows.Fair value for furniture, fixtures and equipment has been determined usingfactors such as similar asset sales and in some instances third party valuationstudies. There is considerable management judgment necessary to determine thefuture cash flows, fair value and the expected operating period of a theatre,and accordingly, actual results could vary significantly from such estimates.

If theatres currently have sufficient estimated futurecash flows to realize the related carrying amount of theatre assets, butmanagement believes that it is not likely the theatre will be operated to theend of its lease term, the estimated economic life of the theatre assets arerevised to reflect management’s best estimate of the economic life of thetheatre assets for purposes of recording depreciation.

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Impairmentlosses by operating segment are as follows:

| **Impairment of long-lived assets (In thousands)** | ** ** | ** **      | ** ** | **52 weeks  Ended  March 30, 2006** | ** ** | **From Inception  July 16, 2004   through  March 31, 2005** | ** ** | ** **        | ** ** | **April 2, 2004 **

**through  December 23, 2004** | ** ** | **52 weeks **

**Ended  April 1, 2004** | ** ** |
|-----------------------------------------------------------------------------|------------|-----------------|------------|----------------------------------------------------|------------|-------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------------------------------------------------------------|------------|-------------------------------------------------------------|------------|
| ** **                                                                  | ** ** | **(Successor)** | ** ** | **(Successor)**                                    | ** ** | ** **                                                                                | ** ** | **(Predecessor)** | ** ** | **(Predecessor)**                                                           | ** ** |
| U.S. and Canada  theatrical exhibition                                      |       |            | $          | 11,974                                             |       |                                                                                      |       | $                 | –     |                                                                        |       |                                                        |       |   | $ | – |   |   |   | $ | 12,747 |   |   |
| International theatrical  exhibition                                        |       |            | –     |                                               |       |                                                                                      | –     |              |       |                                                                        |       |                                                        | –     |   |   |   | 3,525 |   |   |
| Total impairments of long-lived assets                                      |       |            | $          | 11,974                                             |       |                                                                                      |       | $                 | –     |                                                                        |       |                                                        |       |   | $ | – |   |   |   | $ | 16,272 |   |   |

 

***Foreign CurrencyTranslation:***   Operations outside the UnitedStates are generally measured using the local currency as the functionalcurrency. Assets and liabilities are translated at the rates of exchange at thebalance sheet date. Income and expense items are translated at average rates ofexchange. The resultant translation adjustments are included in foreigncurrency translation adjustment, a separate component of accumulated othercomprehensive income (loss). Gains and losses from foreign currencytransactions, except those intercompany transactions of a long-term investmentnature, are included in net loss and have not been material.

***Stock-basedCompensation:***   The Successor has no stock-basedcompensation arrangements of its own; however its parent, Holdings, grantedoptions on 39,476.72872 shares to certain employees during the Successor periodended March 31, 2005 and March 30, 2006. Because the employees to whomthe options were granted are employed by the Successor, the Successor hasreflected the stock-based compensation expense associated with theoptions within its consolidated statements of operations. The options have aten year term and the options granted during fiscal 2005 step-vest in equalamounts over five years with the final vesting occurring on December 23,2009. The options granted during fiscal 2006 step vest in equal amounts overthree years with final vesting occurring on December 23, 2008, but vestingmay accelerate for certain participants if there is a change of control (asdefined in the plan). The Successor has recorded $3,433,000 of stock-basedcompensation expense during its period ended March 30, 2006 and $1,201,000of stock-based compensation expense during its period endedMarch 31, 2005 and the Predecessor has recorded no stock compensationexpense for its period ended December 23, 2004.

The options have been accounted for using the fairvalue method of accounting for stock-based compensation arrangements asprescribed by Statement of Financial Accounting Standards No. 123 (R), *Share-Based Payment*(“SFAS 123(R)”) and Staff Accounting Bulletin (“SAB”) No. 107, *Share-Based Payment*, and the Companyhas valued the options using the Black-Scholes formula. There is no cashimpact related to the options included in the Successor’s ConsolidatedStatements of Cash Flows.

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The Predecessor accounted for its stock options,restricted stock awards and deferred stock units under plans that it sponsoredfollowing the recognition and measurement provisions of APB Opinion No. 25,*Accounting for Stock issued to Employees*(APB No. 25) and related interpretations. Stock-based employeecompensation expense related to restricted stock awards and deferred stockunits of $8,727,000 was reflected in net loss for fiscal 2004. No stock-basedemployee compensation expense for stock options was reflected in net loss forfiscal 2004, as all stock options granted under those plans had an exerciseprice equal to the fair market value of the underlying common stock on the dateof grant.

Thefollowing table reflects the weighted average fair value per option grantedduring each year, as well as the significant weighted average assumptions usedin determining fair value using the Black-Scholes option-pricingmodel:

| ** **                                 | ** ** | **March 30, 2006**(1) | ** ** | **March 31, 2005**(1) | ** ** | ** ** | ** ** | **April 2, 2004   through   December 23, 2004** | ** ** | **April 1, 2004** | ** ** |
|--------------------------------------------|------------|---------------------------------|------------|---------------------------------|------------|------------|------------|-------------------------------------------------------------------------------|------------|-----------------------------|------------|
| ** **                                 | ** ** | **(Successor)**                 | ** ** | **(Successor)**                 | ** ** | ** ** | ** ** | **(Predecessor)**                                                             | ** ** | **(Predecessor)**           | ** ** |
| Weighted average  fair value on grant date |       |                            | $          | 230.75                          |       |       |       | $                                                                             | 575.48     |                        |       |   |   |   | $ | — |   |   |   | $ | — |   |   |
| Risk—free  interest rate              |       |                            | 4.5        | %                               |       |       | 3.6        | %                                                                             |       |                        |       |   | — |   |   |   | — |   |   |
| Expected life  (years)                     |       |                            | 3          |                            |       |       | 5          |                                                                          |       |                        |       |   | — |   |   |   | — |   |   |
| Expected  volatility                       |       |                            | 25.8       | %                               |       |       | 65.3       | %                                                                             |       |                        |       |   | — |   |   |   | — |   |   |
| Expected dividend yield                    |       |                            | —     |                            |       |       | —     |                                                                          |       |                        |       |   | — |   |   |   | — |   |   |

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(1)                Representsassumptions for stock options granted to certain employees of the Company bythe Company’s parent, Holdings.

(2)                The Company uses acombination of historical AMC Entertainment Inc. share values for the periodswhen the Company was publicly traded as well as those of its competitor peergroup for purposes of calculating volatility. The options issued by the Companyduring the year ended March 31, 2005 had an expected life of 5 years while theoptions issued during the year ended March 31, 2006 had an expected life of 3years. The volatility was calculated from the same source of prices but was fordifferent expected terms thus providing different volatility factors.

Thefollowing table illustrates the effect on net loss as if the fair value methodhad been applied to all stock awards and outstanding and unvested options ineach period:

| **(In thousands)**                                                                           | ** ** | ** **        | ** ** | **April 2, 2004**

**through**

**December 23, 2004** | ** ** | **52 Weeks**

**Ended**

**April 1, 2004** | ** ** |
|---------------------------------------------------------------------------------------------------|------------|-------------------|------------|---------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                                                                                        | ** ** | **(Predecessor)** | ** ** | **(Predecessor)**                                                         | ** ** |
| Net loss:                                                                                         |       |              |       |                                                                      |       |                                                      |       |   |   |
| As reported                                                                                       |       |              | $          | (35,878                                                                   | )          |                                                      |       | $ | (10,714 | ) |   |
| Add: Stock based  compensation expense included in reported net loss, net of related tax  effects |       |              | —     |                                                                      |       |                                                      | 5,236      |   |   |
| Deduct: Total stock-based  compensation expense determined under fair value method for all awards |       |              | —     |                                                                      |       |                                                      | (5,930     | ) |   |
| Pro forma                                                                                         |       |              | $          | (35,878                                                                   | )          |                                                      |       | $ | (11,408 | ) |   |

 

***Income Taxes:***   TheSuccessor joins with Holdings in filing a consolidated U.S. Corporation IncomeTax return and, in certain states, consolidated state income tax returns. Withrespect to the consolidated federal and state income tax returns, the Successorremits income taxes to the applicable taxing jurisdiction and records incometaxes payable and receivable from other members of the group as if each memberfiled separate federal and state income tax returns. Additionally, theSuccessor’s provision for income taxes is computed as if it filed separateincome tax returns. The Company accounts for income taxes in accordance 

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with Statement ofFinancial Accounting Standards No. 109 (“SFAS 109”) *Accounting for Income Taxes*. UnderSFAS 109, deferred income tax effects of transactions reported indifferent periods for financial reporting and income tax return purposes arerecorded by the liability method. This method gives consideration to the futuretax consequences of deferred income or expense items and immediately recognizeschanges in income tax laws upon enactment. The income statement effect isgenerally derived from changes in deferred income taxes on the balance sheet.

The Company entered into a tax sharing agreement withHoldings under which the Company agreed to make cash payments to Holdings toenable it to pay any (i) federal, state or local income taxes to theextent that such income taxes are directly attributable to the Company or itssubsidiaries’ income and (ii) franchise taxes and other fees required tomaintain Holdings’ legal existence.

***Casualty Insurance:***   TheCompany is self-insured for general liability up to $400,000 per occurrence andcarries a $400,000 deductible limit per occurrence for workers compensationclaims. The Company utilizes actuarial projections of its ultimate losses thatit will be responsible for paying. The actuarial method includes an allowancefor adverse developments on known claims and an allowance for claims which havebeen incurred but which have not yet been reported. As of March 30, 2006and March 31, 2005, the Company had recorded casualty insurance reservesof $26,373,000 and $22,080,000, respectively. The Successor recorded expensesrelated to general liability and workers compensation claims of $10,936,000 and$2,088,000 for the periods ended March 30, 2006 and March 31, 2005,respectively, and the Predecessor recorded $8,288,000 and $10,581,000 for theperiods ended December 23, 2004 and April 1, 2004, respectively.

***New AccountingPronouncements:***   In February 2006, theFASB agreed to issue FASB Staff Position (FSP) No. 123(R)-4,Classification of Options and Similar Instruments Issued as EmployeeCompensation That Allow for Cash Settlement upon the Occurrence of a ContingentEvent, which requires companies to consider the probability of the occurrenceof a contingent event that is outside the employees’ control (i.e., change incontrol, or death or disability) in determining the classification of anemployee stock option or similar instrument under FASB Statement No. 123(R),Share-Based Payment, where the award requires or permits cash settlementupon the contingent event. The FSP requires companies to classify employeestock options and similar instruments with contingent cash settlement featuresas equity awards provided the contingent event that permits or requires cashsettlement is not considered probable of occurring. As the Company has alreadyadopted SFAS 123(R), the Company would be required to apply the guidancein the first reporting period beginning after the date the final FSP is postedto the FASB website and would be required to apply the proposed guidanceretrospectively to prior-period results to which SFAS 123(R) wasapplied. The Company does not believe the adoption of FSP 123 R-4 willhave an impact on the consolidated financial position, results of operations, orcash flows.

In October 2005, the FASB issued FASB StaffPosition (FSP) 13-1, *Accounting forRental Costs Incurred during a Construction Period*. FSP 13-1clarifies there is no distinction between the right to use a leased assetduring the construction period and the right to use that asset after theconstruction period. Accordingly, the Company will no longer be able tocapitalize rental costs during the construction period and will begin expensingthem as preopening expense prior to the theatre opening date. This FSP waseffective for the first reporting period beginning after December 15,2005. The Company early adopted this FSP during the fourth quarter of fiscal2006 which results in recognition of preopening expense during the “rentholiday”.

In May 2005, the FASB issued SFAS No. 154, *Accounting Changes and Error Corrections areplacement of APB Opinion No. 20 and FASB Statement No. 3*(SFAS 154), which requires retrospective application to prior periods’financial statements of changes in accounting principle, unless it isimpracticable to determine either the period-specific effects or thecumulative effect of the change. It also requires that a change indepreciation, amortization, or depletion method for long-lived, nonfinancialassets be accounted 

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for as a change inaccounting estimate affected by a change in accounting principle. The Companyis not currently contemplating an accounting change which would be impacted bySFAS 154.

In March 2004, the FASB issued Emerging IssuesTask Force Issue No. 03-1, *TheMeaning of Other Than Temporary Impairment and Its Application to CertainInvestments*(“EITF 03-1”). EITF 03-1 includesnew guidance for evaluating and recording impairment losses on debt and equityinvestments, as well as new disclosure requirements for investments that aredeemed to be temporarily impaired. In September 2004, the FASB issuedStaff Position EITF Issue 03-1-1, which delays the effective dateuntil additional guidance is issued for the application of the recognition andmeasurement provisions of EITF 03-1 to investments in securities that areimpaired. The Company does not believe that the adoption of EITF 03-1will have a material impact on our financial condition or results ofoperations.

***Presentation:***   Certainamounts have been reclassified from prior period consolidated financialstatements to conform with the current year presentation. As a result of themerger with Marquee, the Successor applied the purchase method of accounting tothe separable assets, including goodwill, and liabilities of the accountingacquiree, Loews as of January 26, 2006 and AMCE, as of December 23,2004. The purchase method of accounting requires that the assets andliabilities be recorded at their fair values on the date of the purchase. Theconsolidated financial statements presented herein are those of the Successorfrom its inception on July 16, 2004 through March 30, 2006, and thoseof its Predecessor, AMCE, for all prior periods through the date of the mergerwith Marquee.

**NOTE 2—ACQUISITIONS**

**Merger with Loews**

On June 20, 2005, Holdings entered into a mergeragreement with LCE Holdings, Inc. (“LCE Holdings”), the parent of LoewsCineplex Entertainment Corporation (“Loews”), pursuant to which LCE Holdingsmerged with and into Holdings, with Holdings continuing as the holding companyfor the merged businesses, and Loews merged with and into the Company, with theCompany continuing after the merger (the “Merger” and collectively, the “Mergers”).The transaction closed on January 26, 2006. Upon completion of theMergers, the existing stockholders of Holdings, including affiliates of J.P.Morgan Partners, LLC and Apollo Management, L.P., currently hold approximately60% of its outstanding capital stock, and the previous stockholders of LCEHoldings, including affiliates of Bain Capital Partners, LLC, The Carlyle Groupand Spectrum Equity Investors (collectively with J.P. Morgan Partners, LLC and Apollo Management,L.P., the “Sponsors”), hold approximately 40% of the outstanding capital stockof Holdings.

The purchase price paid by the Company on the Mergerresulted in the recognition of goodwill because it exceeded the fair value ofthe assets acquired. The Company paid a price in excess of fair value of theassets acquired because it anticipated that the Merger would enhance itsposition as one of the world’s leading theatrical exhibition companies based onrevenues and believed that it would be able to achieve corporate overheadsavings by eliminating duplicative facilities and services, enhance operatingefficiencies in areas such as advertising and field support and theatre-levelstaffing and realize economies of scale in several areas, most notably inpurchasing and contracting services and supplies.

Marquee Holdings Inc. issued 256,085.61252 shares ofClass L-1 common stock and 256,085.61252 shares of Class L-2 common stock tothe Stockholders of LCE Holdings. The Company has accounted for the Merger as apurchase in accordance with SFAS No. 141, *BusinessCombinations,* for an estimated purchase price of $540,671,000. Theacquisition included 112 theatres with 1,308 screens in the United States, 40theatres with 443 screens in Mexico (Cinemex), 4 managed/joint venture theatreswith 55 screens in the United States and a 50% interest in Yelmo Cineplex, S.L.operating 27 theatres with 311 screens in Spain that is accounted for using theequity method. The financing of the Merger is described in Note 7. TheMerger did not constitute a change in control.

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Thefollowing is a summary of the preliminary allocation of the purchase price tothe assets and liabilities of LCE Holdings based on management’s judgment afterevaluating several factors, including actuarial estimates for pensionliabilities, estimates of fair value for issuance of common stock and avaluation assessment prepared by a valuation specialist:

| **(In thousands)**                  | ** ** | ** ** | ** ** | ** ** | ** ** |
|------------------------------------------|------------|------------|------------|------------|------------|
| Cash and  equivalents                    |       | $          | 142,512    |       |
| Current assets                           |       | 46,879     |       |
| Property, net                            |       | 838,172    |       |
| Intangible  assets, net                  |       | 107,561    |       |
| Goodwill                                 |       | 738,739    |       |
| Deferred income  taxes                   |       | 6,740      |       |
| Other long-term  assets                  |       | 50,362     |       |
| Current  liabilities                     |       | (196,389   | )          |
| Corporate  borrowings                    |       | (1,054,192 | )          |
| Capital and  financing lease obligations |       | (32,524    | )          |
| Other long-term  liabilities             |       | (107,189   | )          |
| Total estimated purchase  price          |       | $          | 540,671    |       |

 

Amounts recorded for goodwill were not subject toamortization, and were not considered deductible for income tax purposes.Goodwill in the amount of $609,578,000 and $129,161,000 was recorded at theCompany’s U.S. and Canada theatrical exhibition operating segment and at theCinemex reporting unit in the International operating segment, respectively.The preliminary allocation of purchase price and estimates of fair values maypotentially change in the future as additional information becomes available.

The Merger included theacquisition of intangible assets including; $43,145,000 related to favorableleases with remaining lease terms ranging from one to thirteen years,$9,595,000 related to Loews and Cinemex trademark and tradenames, $52,452,000related to advertising and management contracts, and $6,805,000 related toCinemex non-compete agreement. The Loews’ tradename amortization period is5 years. These fair values are based on management’s best estimate usingavailable evidence including a study performed by a valuation specialist. TheCinemex trademark and tradename are indefinite-lived intangible assetswhich are not subject to amortization, but do require impairment evaluationduring each reporting period to determine whether events and circumstancescontinue to support an indefinite useful life. The weighted averageamortization period for LCE and Cinemex favorable leases was approximatelyeight years. Acquired intangible assets are more fully discussed inNote 5.

**Merger with Marquee**

On December 23, 2004, the Company completed amerger in which Holdings acquired the Company pursuant to an Agreement and Planof Merger, dated as of July 22, 2004, by and among the Company, Holdingsand Marquee. Marquee, a wholly owned subsidiary of Holdings, merged with andinto the Company, with the Company remaining as the surviving entity andbecoming a wholly owned subsidiary of Holdings. The merger was voted on andapproved by the Company’s shareholders on December 23, 2004.

Pursuant to the terms of the merger agreement, eachissued and outstanding share of the Company’s Common Stock and Convertible Class Bstock was converted into the right to receive $19.50 in cash and each issuedand outstanding share of the Company’s Series A Convertible PreferredStock was converted into the right to receive $2,727.27 in cash. The totalamount of consideration paid in the merger with Marquee was approximately$1,665,200,000. The Company made payments to holders of its Common Stock,Convertible Class B Stock and Series A Convertible Preferred Stock inthe aggregate amount of $1,647,300,000 and Holdings made payments of$17,900,000 to the holders of 1,451,525 vested in-the-

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money options and holdersof 520,350 deferred stock units that vested upon consummation of the merger.The Company has recorded $63,057,000 ($20,325,000 Successor and $42,732,000Predecessor) of general and administrative expenses related to the merger withMarquee all of which were paid as of March 31, 2005. Included in theseamounts are $20,000,000 of Successor transaction fees paid to J.P. MorganPartners (BHCA), L.P. and Apollo Investment Fund V, L.P. and certain relatedinvestment funds.

Marquee used the net proceeds from the sale of theCompany notes (as described in Note 7), together with existing cashbalances of the Company and the proceeds from the equity contribution fromHoldings (consisting of equity contributed by the former sponsors, theco-investors and certain members of management and the net proceeds of anoffering of Holdings notes), to finance the merger with Marquee.

The Company has accounted for the merger with Marqueeas a purchase in accordance with SFAS No. 141, *Business Combinations,* with Marquee being the accountingacquiror and AMCE being the acquired entity. As such the financial informationpresented herein represents (i) the Consolidated Statements of Operationsof the Successor for the period from inception on July 16, 2004 through March 30,2006, the Consolidated Statements of Operations of the Predecessor for thethirty-eight weeks ended December 23, 2004 and the fifty-two weeksended April 1, 2004, (ii) the Consolidated Balance Sheet of theSuccessor as of March 30, 2006 and March 31, 2005, and (iii) theConsolidated Statements of Cash Flows of the Successor for the fifty-two weeksended March 30, 2006 and the period from inception on July 16, 2004through March 31, 2005, and the Consolidated Statements of Cash Flows ofthe Predecessor for the thirty-eight weeks ended December 23, 2004and the fifty-two weeks ended April 1, 2004.

Thefollowing is a summary of the allocation of the purchase price to the estimatedfair values of assets and liabilities acquired in the merger with Marquee. Theallocation of purchase price is based on management’s judgment after evaluatingseveral factors, including actuarial estimates for pension liabilities, marketprices of our indebtedness and a valuation assessment prepared by a valuationspecialist (in thousands):

| Cash and  equivalents                    |   | $         | 396,636   |   |
|------------------------------------------|--------|-----------|-----------|--------|
| Other current  assets                    |   | 99,794    |      |
| Property, net                            |   | 894,293   |      |
| Intangible assets                        |   | 205,148   |      |
| Goodwill                                 |   | 1,377,196 |      |
| Deferred income  taxes                   |   | 64,106    |      |
| Other long-term  assets                  |   | 61,006    |      |
| Current  liabilities                     |   | (344,908  | )         |
| Corporate  borrowings                    |   | (709,283  | )         |
| Capital and  financing lease obligations |   | (66,525   | )         |
| Other long-term  liabilities             |   | (312,263  | )         |
| Total estimated purchase  price          |   | $         | 1,665,200 |   |

 

The merger with Marquee included the acquisition ofintangible assets including; $74,000,000 related to the AMC trademark andtradename, $54,993,000 related to favorable leases, and $46,000,000 related tothe Company’s Moviewatcher customer loyalty program (A customer relationshipintangible asset). These fair values are based on management’s best estimateusing available evidence including a study performed by a valuation specialist.The AMC trademark and tradename is an indefinite-lived intangible assetwhich is not subject to amortization, but does require impairment evaluationduring each reporting period to determine whether events and circumstancescontinue to support an indefinite useful life. The weighted averageamortization period for favorable leases was approximately fourteen years. Indetermining the useful life of the Moviewatcher customer relationshipintangible asset, the Company utilized information tracking the behaviorpattern of the customers participating in this program. The data suggests thatthe 

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Moviewatcher customersexhibit a higher frequency of trips to the theatres and many of themembers remain active within the program for extended periods. The membershipdata was utilized in developing an attrition/retention rate used in thevaluation analysis. The analysis indicates that an active base of memberscontribute incremental cash flow to the business over a period of at least8 years. However, it should be noted that over two-thirds of the cash flowgenerated from this asset is derived in the first 5 years. Theamortization of the fair value of this asset reflects the pattern in which theeconomic benefits of the intangible asset are consumed or otherwise used up.Accordingly the Company has calculated the consumption pattern of this asset bycomparing the undiscounted cash flows for each year with the sum of theundiscounted cash flows generated by this asset to develop the ratio of thefair value of the asset that would be amortized during the period.

Amounts recorded forgoodwill are not subject to amortization, are not expected to be deductible fortax purposes and have been allocated to the Company’s U.S. and Canadatheatrical exhibition operating segment, Other operating segment, Japan AMCTheatres Inc., the Company’s Japan branch and the Company’s consolidatedSpain and Portugal operations conducted through AMC Entertainment Espana S.A.and Actividades Multi-Cinemas E Espectaculos, LDA (the reporting units).The Company has performed it annual impairment test for goodwill and recordedno impairment as of March 30, 2006. The goodwill of $29,973,000, allocatedto the Other operating segment, was contributed to a cinema screen advertisingjoint venture between the Company and Regal Entertainment Group, NationalCineMedia LLC (“NCM”), and is included in the Company’s investment in NCMtogether with certain of NCN’s other contributed assts. Goodwill of $44,774,000was allocated to Japan AMC Theatres Inc., which was disposed of in connectionwith the consummation of the sale of that entity on June 30, 2005, andgoodwill of $6,599,000 was allocated to the remaining Japan location, which wasdisposed of in connection with the consummation of the sale of that entity on September 1,2005. Goodwill of $11,712,000 was allocated to the Spain and Portugal theatresand is included in non-current assets held for sale.

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**Pro Forma Effect of Merger Transactions**

The unaudited proforma financial information presented below sets forth the Company’s and Loews’historical consolidated statements of operations for the periods indicated andgive effect to the merger transactions with Loews and Marquee, the contributionof NCN assets to NCM and the related debt issuances as adjusted for therespective purchase price allocations as if each transaction occurred on April 2,2004 and April 1, 2005. Because the pro forma financial information giveseffect to the transactions described above as of the beginning of fiscal 2005,all pro forma information is for the Successor. Such information is presentedfor comparative purposes only and does not purport to represent what theCompany’s results of operations would actually have been had these transactionsoccurred on the date indicated or to project its results of operations for anyfuture period or date.

| ** **                                           | ** ** | **Fifty-two week periods** | ** ** |
|------------------------------------------------------|------------|--------------------------------------|------------|
| **(In thousands)**                              | ** ** | ** **                           | ** ** | **Pro Forma **

**April 1, 2005 **

**through **

**March 30, 2006**

**(restated)** | ** ** | **Pro Forma **

**April 2, 2004 **

**through **

**March 31, 2005** | ** ** |
| ** **                                           | ** ** | **(Successor)**                      | ** ** | **(Successor)** | ** ** |
| Revenues                                             |       |                                 | $          | 2,388,052 |   |   |   | $ | 2,531,990 |   |   |
| Cost of  operations                                  |       |                                 | 1,534,504  |   |   |   | 1,606,952 |   |   |
| Rent                                                 |       |                                 | 434,204    |   |   |   | 421,873 |   |   |
| General and  administrative:                         |       |                                 |       |   |   |   |   |   |   |
| Merger and acquisition costs*                        |       |                                 | 18,023     |   |   |   | 8,098 |   |   |
| Management fee                                       |       |                                 | 5,000      |   |   |   | 5,000 |   |   |
| Other                                                |       |                                 | 78,661     |   |   |   | 89,935 |   |   |
| Preopening  expense                                  |       |                                 | 10,635     |   |   |   | 2,553 |   |   |
| Theatre and other  closure expense                   |       |                                 | 601        |   |   |   | 12,025 |   |   |
| Restructuring  charge                                |       |                                 | 3,980      |   |   |   | 5,053 |   |   |
| Depreciation and  amortization                       |       |                                 | 282,285    |   |   |   | 291,936 |   |   |
| Impairment of  long-lived assets                     |       |                                 | 11,974     |   |   |   | — |   |   |
| Disposition of  assets and other gains               |       |                                 | (1,300     | ) |   |   | (5,274 | ) |   |
| Total costs and expenses                             |       |                                 | 2,334,457  |   |   |   | 2,438,151 |   |   |
| Other expense  (income)                              |       |                                 | (9,818     | ) |   |   | (6,778 | ) |   |
| Interest expense                                     |       |                                 | 205,616    |   |   |   | 209,483 |   |   |
| Investment  expense (income)                         |       |                                 | 5,385      |   |   |   | (5,880 | ) |   |
| Total other  expense                                 |       |                                 | 201,183    |   |   |   | 196,825 |   |   |
| Loss from  continuing operations before income taxes |       |                                 | (189,287   | ) |   |   | (102,986 | ) |   |
| Income tax  provision                                |       |                                 | 10,055     |   |   |   | 11,461 |   |   |
| Loss from  continuing operations                     |       |                                 | (199,042   | ) |   |   | (114,447 | ) |   |
| Loss from  discontinued operations                   |       |                                 | (22,409    | ) |   |   | (230 | ) |   |
| Net loss                                             |       |                                 | $          | (224,333 | ) |   |   | $ | (114,677 | ) |   |
|                                                      |            |                                      |            |  |  |  |  |  |  |  |  |  |  |

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*                    Primarilyrepresents non recurring costs for the Merger Transactions.

**Acquisition of MegaStar Cinemas, L.L.C.**

On December 19,2003, the Company acquired certain of the operations and related assets ofMegaStar Cinemas, L.L.C. (“MegaStar”) for an estimated cash purchase price of$15,037,000. In connection with the acquisition, the Company assumed leases onthree theatres with 48 screens in Minneapolis and Atlanta. All three of thetheatres feature stadium seating and have been built since 2000. The results ofoperations are included in the Consolidated Statements of Operations from December 19,2003. The Company believes the results of operations of the acquired theatresare not material to the Company’s Consolidated Statements of Operations and proforma information for fiscal 2004 is not included herein.

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The following is a summary of the allocation of thepurchase price to the estimated fair values of assets acquired from MegaStar.The allocation of purchase price is based on management’s judgment including avaluation assessment prepared by a valuation specialist.

| **(In thousands)**      | ** ** | ** ** | ** ** | ** ** | ** ** |
|------------------------------|------------|------------|------------|------------|------------|
| Cash and equivalents         |       | $          | 40         |       |
| Current assets               |       | 94         |       |
| Property                     |       | 6,762      |       |
| Other long-term  assets      |       | 84         |       |
| Other long-term  liabilities |       | (3,297     | )          |
| Goodwill                     |       | 11,354     |       |
| Total purchase price         |       | $          | 15,037     |       |

 

Amounts recorded forgoodwill are not subject to amortization, were recorded at the Company’s U.S.and Canada theatrical exhibition operating segment (the reporting unit) and areexpected to be deductible for tax purposes.

**NOTE 3—DISCONTINUEDOPERATIONS**

On May 11, 2006, the Company sold two of itswholly-owned subsidiaries, AMC Entertainment España S.A. andActividades Multi-Cinemeas E Espectaculos, LDA (collectively “Iberia”),which owned and operated 4 theatres with 86 screens in Spain and1 theatre with 20 screens in Portugal, for a cash sales price of$35,446,000. At the date of the sale these operations did not meet the criteriafor discontinued operations because of continuing involvement in the regionthrough an equity method investment in Yelmo. In December 2006, thecompany disposed of its investment in Yelmo, which owned and operated27 theatres with 310 screens in Spain, for proceeds of $52,137,000.There was no gain or loss recorded on the sale of Yelmo. The investment inYelmo was reported within other long-term assets at March 30, 2006. TheCompany no longer has continuing involvement in the region as a result of thesale of Yelmo and the results of the operations in Iberia have been classifiedas discontinued operations as the Company no longer has operations orsignificant cash flows from the Iberia component.

Information presented for all periods reflects thediscontinued classification. All affected amounts within the consolidatedfinancial statements have been adjusted accordingly. The results of operationsof the Iberia theatres were previously reported in the Company’s Internationaltheatrical exhibition operating segment. The Company has recorded a gain onsale of Iberia of approximately $2,609,000 during fiscal 2007 which is includedin discontinued operations. Goodwill of $11.7 million was allocated to theIberia theatres in connection with the sale. The Iberia assets and liabilitieswere classified as held for sale at March 30, 2006.

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Components of amountsreflected as earnings (loss) from discontinued operations for Iberia in theCompany’s Consolidated Statements of Operations are presented in the followingtable:

**Statements of operations data:**

| ** **                                    | ** ** | **52 Weeks Ended  March 30, 2006** | ** ** | **From Inception  July 16, 2004  through  March 31, 2005** | ** ** | ** ** | ** ** | **From April 2, 2004  through  December 23, 2004** | ** ** | **52 Weeks Ended  April 1, 2004** | ** ** |
|-----------------------------------------------|------------|--------------------------------------------------------|------------|-------------------------------------------------------------------------------------|------------|------------|------------|-----------------------------------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                                    | ** ** | **(Successor)**                                        | ** ** | **(Successor)**                                                                     | ** ** | ** ** | ** ** | **(Predecessor)**                                                           | ** ** | **(Predecessor)**                                     | ** ** |
| Revenues                                      |       |                                                   |       |                                                                                |       |       |       |                                                                        |       |                                                  |       |   |   |   |   |   |   |   |   |
| Admissions                                    |       |                                                   | $          | 31,192                                                                              |       |       |       | $                                                                           | 9,632      |                                                  |       |   |   |   | $ | 24,723 |   |   |   | $ | 32,072 |   |   |
| Concessions                                   |       |                                                   | 10,651     |                                                                                |       |       | 3,300      |                                                                        |       |                                                  |       |   | 8,633 |   |   |   | 10,507 |   |   |
| Other revenue                                 |       |                                                   | 1,729      |                                                                                |       |       | 508        |                                                                        |       |                                                  |       |   | 1,340 |   |   |   | 1,628 |   |   |
| Total revenues                                |       |                                                   | 43,572     |                                                                                |       |       | 13,440     |                                                                        |       |                                                  |       |   | 34,696 |   |   |   | 44,207 |   |   |
| Costs and Expenses                            |       |                                                   |       |                                                                                |       |       |       |                                                                        |       |                                                  |       |   |   |   |   |   |   |   |   |
| Film exhibition costs                         |       |                                                   | 15,247     |                                                                                |       |       | 4,592      |                                                                        |       |                                                  |       |   | 12,359 |   |   |   | 15,950 |   |   |
| Concession costs                              |       |                                                   | 2,003      |                                                                                |       |       | 547        |                                                                        |       |                                                  |       |   | 1,845 |   |   |   | 2,344 |   |   |
| Operating expense                             |       |                                                   | 10,663     |                                                                                |       |       | 3,480      |                                                                        |       |                                                  |       |   | 8,852 |   |   |   | 11,216 |   |   |
| Rent                                          |       |                                                   | 11,423     |                                                                                |       |       | 3,128      |                                                                        |       |                                                  |       |   | 8,474 |   |   |   | 10,624 |   |   |
| General and administrative—other         |       |                                                   | 171        |                                                                                |       |       | 116        |                                                                        |       |                                                  |       |   | 181 |   |   |   | (298 | ) |   |
| Preopening expense                            |       |                                                   | —     |                                                                                |       |       | —     |                                                                        |       |                                                  |       |   | — |   |   |   | (7 | ) |   |
| Depreciation and amortization                 |       |                                                   | 4,774      |                                                                                |       |       | 1,332      |                                                                        |       |                                                  |       |   | 4,207 |   |   |   | 5,571 |   |   |
| Impairment of long-lived assets               |       |                                                   | —     |                                                                                |       |       | —     |                                                                        |       |                                                  |       |   | — |   |   |   | — |   |   |
| Total costs and expenses                      |       |                                                   | 44,281     |                                                                                |       |       | 13,195     |                                                                        |       |                                                  |       |   | 35,918 |   |   |   | 45,400 |   |   |
| Interest expense                              |       |                                                   | 1,878      |                                                                                |       |       | 598        |                                                                        |       |                                                  |       |   | 1,560 |   |   |   | 2,056 |   |   |
| Investment income                             |       |                                                   | (5         | )                                                                                   |       |       | 1          |                                                                        |       |                                                  |       |   | (3 | ) |   |   | (24 | ) |   |
| Total other expense                           |       |                                                   | 1,873      |                                                                                |       |       | 599        |                                                                        |       |                                                  |       |   | 1,557 |   |   |   | 2,032 |   |   |
| Earnings (loss)  before income taxes          |       |                                                   | (2,582     | )                                                                                   |       |       | (354       | )                                                                           |       |                                                  |       |   | (2,779 | ) |   |   | (3,225 | ) |   |
| Income tax  provision                         |       |                                                   | 300        |                                                                                |       |       | 80         |                                                                        |       |                                                  |       |   | 240 |   |   |   | 600 |   |   |
| Earnings (loss) from  discontinued operations |       |                                                   | $          | (2,882                                                                              | )          |       |       | $                                                                           | (434       | )                                                     |       |   |   |   | $ | (3,019 | ) |   |   | $ | (3,825 | ) |   |

 

On June 30, 2005, the Company sold one of itswholly-owned subsidiaries Japan AMC Theatres Inc., including four ofits five theatres in Japan. The Company sold its remaining Japanese theatreduring the second fiscal quarter of 2006. The Company opened its first theatrein Japan during fiscal 1997 and since that time the Company has incurredcumulative pre-tax losses of $38,689,000, including a $4,999,000 impairmentcharge in fiscal 2003.

The operations and cashflows of the Japan theatres have been eliminated from the Company’s ongoingoperations as a result of the disposal transactions. The Company will not haveany significant continuing involvement in the operations of the Japan theatresafter the disposal transactions. The results of operations of the Japantheatres have been classified as discontinued operations, and informationpresented for all periods reflects the new classification. The operations ofthe Japan theatres were previously reported in the Company’s Internationaltheatrical exhibition operating segment. Components of amounts reflected asloss from discontinued operations in the Company’s Consolidated Statements ofOperations are presented in the following table:

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**Statements of operations data:**

| **(In thousands)**                       | ** ** | ** **      | ** ** | **52 Weeks Ended  March 30, 2006** | ** ** | **From Inception  July 16, 2004  through  March 31, 2005** | ** ** | ** **        | ** ** | **From April 2, 2004  through  December 23, 2004** | ** ** | **52 Weeks Ended  April 1, 2004** | ** ** |
|-----------------------------------------------|------------|-----------------|------------|--------------------------------------------------------|------------|-------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------------------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                                    | ** ** | **(Successor)** | ** ** | **(Successor)**                                        | ** ** | ** **                                                                          | ** ** | **(Predecessor)** | ** ** | **(Predecessor)**                                                           | ** ** |
| Revenues                                      |       |            |       |                                                   |       |                                                                                |       |              |       |                                                                        |       |                                                  |       |   |   |   |   |   |   |
| Admissions                                    |       |            | $          | 11,293                                                 |       |                                                                                |       | $                 | 13,083     |                                                                        |       |                                                  |       |   | $ | 35,310 |   |   |   | $ | 48,213 |   |   |
| Concessions                                   |       |            | 2,134      |                                                   |       |                                                                                | 2,551      |              |       |                                                                        |       |                                                  | 7,082      |   |   |   | 9,746 |   |   |
| Other revenue                                 |       |            | 363        |                                                   |       |                                                                                | 268        |              |       |                                                                        |       |                                                  | 1,485      |   |   |   | 2,422 |   |   |
| Total revenues                                |       |            | 13,790     |                                                   |       |                                                                                | 15,902     |              |       |                                                                        |       |                                                  | 43,877     |   |   |   | 60,381 |   |   |
| Costs and  Expenses                           |       |            |       |                                                   |       |                                                                                |       |              |       |                                                                        |       |                                                  |       |   |   |   |   |   |   |
| Film exhibition costs                         |       |            | 6,076      |                                                   |       |                                                                                | 7,534      |              |       |                                                                        |       |                                                  | 19,932     |   |   |   | 27,519 |   |   |
| Concession costs                              |       |            | 323        |                                                   |       |                                                                                | 352        |              |       |                                                                        |       |                                                  | 1,519      |   |   |   | 2,047 |   |   |
| Operating expense                             |       |            | 3,243      |                                                   |       |                                                                                | 2,944      |              |       |                                                                        |       |                                                  | 8,976      |   |   |   | 12,286 |   |   |
| Rent                                          |       |            | 3,918      |                                                   |       |                                                                                | 3,744      |              |       |                                                                        |       |                                                  | 11,503     |   |   |   | 15,079 |   |   |
| General and administrative—other         |       |            | 1,833      |                                                   |       |                                                                                | 206        |              |       |                                                                        |       |                                                  | 646        |   |   |   | 588 |   |   |
| Depreciation and amortization                 |       |            | 706        |                                                   |       |                                                                                | 821        |              |       |                                                                        |       |                                                  | 1,832      |   |   |   | 3,705 |   |   |
| Impairment of long-lived assets               |       |            | –     |                                                   |       |                                                                                | –     |              |       |                                                                        |       |                                                  | –     |   |   |   | – |   |   |
| Total costs and expenses                      |       |            | 16,099     |                                                   |       |                                                                                | 15,601     |              |       |                                                                        |       |                                                  | 44,408     |   |   |   | 61,224 |   |   |
| Investment income                             |       |            | –     |                                                   |       |                                                                                | –     |              |       |                                                                        |       |                                                  | –     |   |   |   | 2 |   |   |
| Earnings (loss)  before income taxes          |       |            | (2,309     | )                                                      |       |                                                                                | 301        |              |       |                                                                        |       |                                                  | (531       | ) |   |   | (841 | ) |   |
| Income tax  provision                         |       |            | 20,100     |                                                   |       |                                                                                | –     |              |       |                                                                        |       |                                                  | –     |   |   |   | – |   |   |
| Earnings (loss) from  discontinued operations |       |            | $          | (22,409                                                | )          |                                                                                |       | $                 | 301        |                                                                        |       |                                                  |       |   | $ | (531 | ) |   |   | $ | (841 | ) |   |

 

Goodwill of $44,774,000 was allocated to Japan AMCTheatres Inc. and goodwill of $6,599,000 was allocated to the Company’sJapan branch and disposed of in connection with the consummation of the sale ofthose entities and there was no gain or loss on the sales. The goodwill is notdeductible for tax purposes and is discussed in Note 9.

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

69

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The operations andcash flows of the Sweden theatre have been eliminated from the Company’songoing operations as a result of the disposal transaction and the Company doesnot have any significant continuing involvement in the operations of the Swedentheatre after the disposal transaction. The results of operations of the Swedentheatre have been classified as discontinued operations, and informationpresented for all periods reflects the new classification. The operations ofthe Sweden theatre were previously reported in the Company’s Internationaloperating segment. Components of amounts reflected as loss from discontinuedoperations in the Company’s Consolidated Statements of Operations are presentedin the following table:

| **(In thousands)**                       | ** ** | ** **        | ** ** | **52 Weeks Ended  April 1, 2004** | ** ** |
|-----------------------------------------------|------------|-------------------|------------|-------------------------------------------------------|------------|
| ** **                                    | ** ** | **(Predecessor)** | ** ** |
| Revenues                                      |       |              |       |                                                  |       |
| Admissions                                    |       |              | $          | 3,378                                                 |       |   |
| Concessions                                   |       |              | 949        |                                                  |       |
| Other revenue                                 |       |              | 198        |                                                  |       |
| Total revenues                                |       |              | 4,525      |                                                  |       |
| Expense                                       |       |              |       |                                                  |       |
| Film exhibition costs                         |       |              | 1,698      |                                                  |       |
| Concession costs                              |       |              | 321        |                                                  |       |
| Operating expense                             |       |              | 1,572      |                                                  |       |
| Rent                                          |       |              | 1,678      |                                                  |       |
| General and administrative expense—other |       |              | 54         |                                                  |       |
| Depreciation and amortization                 |       |              | 42         |                                                  |       |
| Disposition of assets and other gains         |       |              | 5,591      |                                                  |       |
| Total costs and expenses                      |       |              | 10,956     |                                                  |       |
| Investment income                             |       |              | –     |                                                  |       |
| Loss before  income taxes                     |       |              | (6,431     | )                                                     |       |
| Income tax  benefit                           |       |              | (2,600     | )                                                     |       |
| Loss from discontinued  operations            |       |              | $          | (3,831                                                | )          |   |

 

**NOTE 4—PROPERTY**

A summary ofproperty is as follows:

| **(In thousands)**                         | ** ** | ** **      | ** ** | **March 30, 2006** | ** ** | **March 31, 2005** | ** ** |
|-------------------------------------------------|------------|-----------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                                      | ** ** | **(Successor)** | ** ** | **(Successor)**              | ** ** |
| Property owned:                                 |       |            |       |                         |       |                         |       |   |   |
| Land                                            |       |            | $          | 38,361                       |       |                         |       | $ | 8,804 |   |   |
| Buildings and  improvements                     |       |            | 252,640    |                         |       |                         | 208,888    |   |   |
| Leasehold improvements                          |       |            | 918,740    |                         |       |                         | 482,308    |   |   |
| Furniture, fixtures and  equipment              |       |            | 1,116,763  |                         |       |                         | 988,845    |   |   |
|                                            |       |            | 2,326,504  |                         |       |                         | 1,688,845  |   |   |
| Less-accumulated  depreciation and amortization |       |            | 828,574    |                         |       |                         | 840,587    |   |   |
|                                            |       |            | 1,497,930  |                         |       |                         | 848,258    |   |   |
| Property leased under  capital leases:          |       |            |       |                         |       |                         |       |   |   |
| Buildings and  improvements                     |       |            | 23,725     |                         |       |                         | 28,459     |   |   |
| Less-accumulated  amortization                  |       |            | 20,607     |                         |       |                         | 22,254     |   |   |
|                                            |       |            | 3,118      |                         |       |                         | 6,205      |   |   |
|                                            |       |            | $          | 1,501,048                    |       |                         |       | $ | 854,463 |   |   |

 

Included in property is $34,796,000 and $29,078,000 ofconstruction in progress as of March 30, 2006 and March 31, 2005,respectively.

70

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**NOTE 5—GOODWILL ANDOTHER INTANGIBLE ASSETS**

Activityof goodwill by operation segment is presented below.

| **(In thousands)**                                                  | ** ** | ** ** | ** ** | **U.S. and Canada** | ** ** | **International** | ** ** | **Other** | ** ** | **Total** | ** ** |
|--------------------------------------------------------------------------|------------|------------|------------|-------------------------------|------------|-------------------|------------|-----------|------------|-----------|------------|
| Merger on  December 23, 2004                                        |       |       | $          | 1,401,740                     |       |              |       | $         | –     |      |       | $ | 29,973 |   | $ | 1,431,713 |   |
| Goodwill contributed to  NCM                                             |       |       | –     |                          |       |              | –     |      |       | (29,973   | )          | (29,973 | ) |
| Balance as of  March 31, 2005                                       |       |       | 1,401,740  |                          |       |              | –     |      |       | –    |       | 1,401,740 |   |
| Goodwill allocated to  sale of Japan theatres                            |       |       | (51,373    | )                             |       |              | 51,373     |      |       | –    |       | – |   |
| Sale of Japan theatres                                                   |       |       | –     |                          |       |              | (51,373    | )         |       | –    |       | (51,373 | ) |
| Merger with LCE                                                          |       |       | 609,578    |                          |       |              | 129,161    |      |       | –    |       | 738,739 |   |
| Currency translation  adjustment                                         |       |       | –     |                          |       |              | (4,559     | )         |       | –    |       | (4,559 | ) |
| Goodwill allocated to  pending sale of Spain and Portugal theatres       |       |       | (11,712    | )                             |       |              | 11,712     |      |       | –    |       | – |   |
| Reclassification of  Spain and Portugal theatres to assets held for sale |       |       | –     |                          |       |              | (11,712    | )         |       | –    |       | (11,712 | ) |
| Fair value adjustments(1)                                                |       |       | (54,517    | )                             |       |              | –     |      |       | –    |       | (54,517 | ) |
| Balance as of March 30, 2006                                        |       |       | $          | 1,893,716                     |       |              |       | $         | 124,602    |      |       | $ | – |   | $ | 2,018,318 |   |

----

(1)                Adjustmentsto fair value relate primarily to the release of valuation allowances fordeferred tax assets and assets and liabilities disposed of or classified asheld for sale during fiscal 2006. The adjustments relate to goodwill recordedin the merger with Marquee.

| ** **                                        | ** ** | ** ** | ** **     | ** **                      | ** ** | **March 30,  2006**        | ** ** | **March 31,  2005**      | ** ** |
|---------------------------------------------------|------------|------------|----------------|---------------------------------|------------|---------------------------------|------------|-------------------------------|------------|
| **(In thousands)**                           | ** ** | ** ** | ** **     | **Remaining  Useful Life** | ** ** | **Gross Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** | **Gross Carrying  Amount** | ** ** | **Accumulated  Amortization** | ** ** |
| Acquired Intangible  Assets:                      |       |       |           |                            |       |                            |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Amortizable  Intangible Assets:                   |       |       |           |                            |       |                            |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Favorable leases                                  |       |       | 1 to 13  years |                            |       |                            | $          | 116,047                       |       |   |   | $ | (13,079 | ) |   |   | $ | 74,890 |   |   |   | $ | (7,371 | ) |   |
| Loyalty program                                   |       |       | 4 years        |                            |       |                            | 46,000     |                          |       |   | (14,950 | ) |   |   | 46,000 |   |   |   | (3,864 | ) |   |
| LCE trade name                                    |       |       | 5 years        |                            |       |                            | 2,300      |                          |       |   | (80 | ) |   |   | – |   |   |   | – |   |   |
| LCE/Cinemex  advertising and management contracts |       |       | 3 to 25  years |                            |       |                            | 48,951     |                          |       |   | (2,841 | ) |   |   | – |   |   |   | – |   |   |
| Cinemex non-compete                               |       |       | 2 years        |                            |       |                            | 6,462      |                          |       |   | (313 | ) |   |   | – |   |   |   | – |   |   |
| Other intangible  assets                          |       |       | 1 to 16  years |                            |       |                            | 30,701     |                          |       |   | (26,922 | ) |   |   | 31,399 |   |   |   | (25,510 | ) |   |
| Total,  amortizable                               |       |       |           |                            |       |                            | $          | 250,461                       |       |   |   | $ | (58,185 | ) |   |   | $ | 152,289 |   |   |   | $ | (36,745 | ) |   |
| Unamortized  Intangible Assets:                   |       |       |           |                            |       |                            |       |                          |       |   |   |   |   |   |   |   |   |   |   |   |   |
| AMC trademark                                     |       |       |           |                            |       |                            | $          | 74,000                        |       |   |   |   |   |   |   | $ | 74,000 |   |   |   |   |   |   |
| Cinemex trademark                                 |       |       |           |                            |       |                            | 7,032      |                          |       |   |   |   |   |   | – |   |   |   |   |   |   |
| Total, unamortized                                |       |       |           |                            |       |                            | $          | 81,032                        |       |   |   |   |   |   |   | $ | 74,000 |   |   |   |   |   |   |

 

71

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Amortizationexpense associated with the intangible assets noted above is as follows:

| ** **             | ** ** | **52 Weeks Ended  March 30, 2006** | ** ** | **From Inception  July 16, 2004  through  March 31, 2005** | ** ** | ** ** | ** ** | **April 2, 2004  through  December 23, 2004** | ** ** | **52 Weeks Ended  April 1, 2004** | ** ** |
|------------------------|------------|--------------------------------------------------------|------------|-------------------------------------------------------------------------------------|------------|------------|------------|-------------------------------------------------------------------|------------|-------------------------------------------------------|------------|
| ** **             | ** ** | **(Successor)**                                        | ** ** | **(Successor)**                                                                     | ** ** | ** ** | ** ** | **(Predecessor)**                                                 | ** ** | **(Predecessor)**                                     | ** ** |
| Recorded  Amortization |       |                                                   | $          | 21,440                                                                              |       |       |       | $                                                                 | 6,273      |                                                  |       |   |   |   | $ | 2,936 |   |   |   | $ | 6.290 |   |   |
|                        |            |                                                        |            |                                                                                     |            |            |            |                                                                   |            |                                                       |            |  |  |  |  |  |  |  |  |  |  |  |  |

 

Estimated amortization expense for the next fivefiscal years for intangible assets owned as of March 30, 2006 is projectedbelow:

 

| **(In thousands)**         | ** ** | ** ** | ** ** | **2007** | ** ** | **2008** | ** ** | **2009** | ** ** | **2010** | ** ** | **2011** | ** ** |
|---------------------------------|------------|------------|------------|----------|------------|----------|------------|----------|------------|----------|------------|----------|------------|
| Projected  amortization expense |       | $          | 39,034     |     | $          | 31,709   |       | $        | 25,574     |     | $          | 18,658   |       | $ | 12,878 |   |
|                                 |            |            |            |          |            |          |            |          |            |          |            |          |            |  |  |  |  |  |

 

72

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**NOTE 6—SUPPLEMENTALBALANCE SHEET INFORMATION**

Otherassets and liabilities consist of the following:

| **(In thousands)**                  | ** ** | ** **      | ** ** | **March 30, 2006  (restated)** | ** ** | **March 31, 2005** | ** **       |
|------------------------------------------|------------|-----------------|------------|------------------------------------------|------------|------------------------------|------------------|
| ** **                               | ** ** | **(Successor)** | ** ** | **(Successor)**                          | ** ** |
| Other current  assets:                   |       |            |       |                                     |       |                         |             |   |   |
| Prepaid rent                             |       |            | $          | 3,166                                    |       |                         |             | $ | 27,955 |   |   |
| Deferred income taxes                    |       |            | 5,416      |                                     |       |                         | 18,560           |   |   |
| Income taxes receivable                  |       |            | 6,830      |                                     |       |                         | 6,345            |   |   |
| Prepaid Insurance                        |       |            | 5,089      |                                     |       |                         | 2,156            |   |   |
| Merchandise Inventory                    |       |            | 8,204      |                                     |       |                         | 4,526            |   |   |
| Other                                    |       |            | 5,942      |                                     |       |                         | 6,430            |   |   |
|                                     |       |            | $          | 34,647                                   |       |                         |             | $ | 65,972 |   |   |
| Other long-term  assets:                 |       |            |       |                                     |       |                         |             |   |   |
| Investments in real estate               |       |            | $          | 7,100                                    |       |                         |             | $ | 10,458 |   |   |
| Deferred financing costs                 |       |            | 37,849     |                                     |       |                         | 18,440           |   |   |
| Investments in joint ventures            |       |            | 89,952     |                                     |       |                         | 57,862           |   |   |
| Other                                    |       |            | 33,015     |                                     |       |                         | 27,286           |   |   |
|                                     |       |            | $          | 167,916                                  |       |                         |             | $ | 114,046 |   |   |
| Accrued expenses  and other liabilities: |       |            |       |                                     |       |                         |             |   |   |
| Taxes other than income                  |       |            | $          | 44,621                                   |       |                         |             | $ | 31,598 |   |   |
| Interest                                 |       |            | 19,970     |                                     |       |                         | 12,695           |   |   |
| Payroll and vacation                     |       |            | 12,536     |                                     |       |                         | 10,375           |   |   |
| Casualty claims and premiums             |       |            | 8,850      |                                     |       |                         | 8,930            |   |   |
| Accrued bonus                            |       |            | 4,192      |                                     |       |                         | 11,761           |   |   |
| Theatre and other closure                |       |            | 16,193     |                                     |       |                         | 26,506           |   |   |
| Merger exit costs                        |       |            | 4,618      |                                     |       |                         | **–**       |   |   |
| Rent                                     |       |            | 10,455     |                                     |       |                         | 2,285            |   |   |
| Merger severance liability               |       |            | 10,571     |                                     |       |                         | **–**       |   |   |
| Restructuring reserve                    |       |            | **–** |                                     |       |                         | 4,926            |   |   |
| Group Insurance                          |       |            | 3,046      |                                     |       |                         | 2,038            |   |   |
| Merger and acquisition costs             |       |            | 4,300      |                                     |       |                         | 952              |   |   |
| Other                                    |       |            | 17,716     |                                     |       |                         | 7,556            |   |   |
|                                     |       |            | 157,068    |                                     |       |                         | $                | 119,622 |   |   |
| Other long-term  liabilities:            |       |            |       |                                     |       |                         |             |   |   |
| Unfavorable lease obligations            |       |            | $          | 229,893                                  |       |                         |             | $ | 249,207 |   |   |
| Deferred rent                            |       |            | 23,921     |                                     |       |                         | 4,234            |   |   |
| Casualty claims and premiums             |       |            | 17,523     |                                     |       |                         | 13,150           |   |   |
| Pension and other benefits               |       |            | 71,784     |                                     |       |                         | 55,020           |   |   |
| Deferred income                          |       |            | 21,877     |                                     |       |                         | 12,414           |   |   |
| Deferred gain                            |       |            | 21,426     |                                     |       |                         | **–**       |   |   |
| Advance sale leaseback proceeds          |       |            | 6,178      |                                     |       |                         | 6,916            |   |   |
| Theatre and other closure                |       |            | 5,523      |                                     |       |                         | 2,000            |   |   |
| Deferred compensation liability          |       |            | 5,307      |                                     |       |                         | 5,517            |   |   |
| Deferred rebates                         |       |            | 9,269      |                                     |       |                         | **– ** |   |   |
| Other (restated)                         |       |            | 3,892      |                                     |       |                         | 2,032            |   |   |
|                                     |       |            | $          | 416,593                                  |       |                         |             | $ | 350,490 |   |   |

 

73

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**NOTE 7—CORPORATEBORROWINGS AND CAPITAL AND FINANCING LEASE OBLIGATIONS**

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

| **(In thousands)**                                               | ** ** | ** **      | ** ** | **March 30, 2006** | ** ** | **March 31, 2005** | ** ** |
|-----------------------------------------------------------------------|------------|-----------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                                                            | ** ** | **(Successor)** | ** ** | **(Successor)**              | ** ** |
| New Senior  Secured Credit Facility (6.9% as of March 30, 2006)  |       |            | $          | 650,000                      |       |                         |       | $ | – |   |   |
| 8 5¤8% Senior Fixed Rate Notes due  2012                         |       |            | 250,000    |                         |       |                         | 250,000    |   |   |
| Senior Floating  Rate Notes due 2010 (9.0% as of March 30, 2006) |       |            | 205,000    |                         |       |                         | 205,000    |   |   |
| 8% Senior  Subordinated Notes due 2014                                |       |            | 298,648    |                         |       |                         | 298,530    |   |   |
| 9 7¤8% Senior Subordinated Notes  due 2012                       |       |            | 187,808    |                         |       |                         | 189,455    |   |   |
| 9 1¤2% Senior Subordinated Notes  due 2011                       |       |            | 218,138    |                         |       |                         | 218,985    |   |   |
| 11% Senior  Subordinated Notes due 2016                               |       |            | 325,000    |                         |       |                         | –     |   |   |
| Capital and  financing lease obligations, 10 3¤4%                |       |            | 68,130     |                         |       |                         | 65,470     |   |   |
| Cinemex Credit  Facility                                              |       |            | 113,665    |                         |       |                         | –     |   |   |
| Mortgage Payable                                                      |       |            | 2,300      |                         |       |                         | –     |   |   |
|                                                                  |       |            | 2,318,689  |                         |       |                         | 1,227,440  |   |   |
| Less: current  maturities                                             |       |            | 30,804     |                         |       |                         | 3,445      |   |   |
|                                                                  |       |            | $          | 2,287,885                    |       |                         |       | $ | 1,223,995 |   |   |

 

Minimumannual payments required under existing capital and financing lease obligations(net present value thereof) and maturities of corporate borrowings as of March 30,2006 are as follows:

| ** **              | ** ** | ** ** | ** ** | ** **                                   | ** ** | ** **             | ** ** | ** **    | ** ** | **Principal**  | ** ** | ** ** | ** ** |
|-------------------------|------------|------------|------------|----------------------------------------------|------------|------------------------|------------|---------------|------------|----------------|------------|------------|------------|
| ** **              | ** ** | ** ** | ** ** | **Capital  and Financing Lease Obligations** | ** ** | **Amount of**     | ** ** | ** **    | ** ** |
| ** **              | ** ** | ** ** | ** ** | **Minimum Lease**                       | ** ** | ** **             | ** ** | ** **    | ** ** | **Corporate**  | ** ** | ** ** | ** ** |
| **(In thousands)** | ** ** | ** ** | ** ** | **Payments**                                 | ** ** | **Less Interest** | ** ** | **Principal** | ** ** | **Borrowings** | ** ** | **Total**  | ** ** |
| 2007                    |       |       | $          | 11,056                                       |       |                   |       | $             | 6,942      |           |       | $          | 4,114      |   | $ | 26,690 |   | $ | 30,804 |   |
| 2008                    |       |       | 10,333     |                                         |       |                   | 6,705      |          |       | 3,628          |       | 28,392     |       | 32,020 |   |
| 2009                    |       |       | 9,969      |                                         |       |                   | 6,250      |          |       | 3,719          |       | 46,283     |       | 50,002 |   |
| 2010                    |       |       | 9,925      |                                         |       |                   | 5,826      |          |       | 4,099          |       | 40,600     |       | 44,699 |   |
| 2011                    |       |       | 9,975      |                                         |       |                   | 5,355      |          |       | 4,620          |       | 424,311    |       | 428,931 |   |
| Thereafter              |       |       | 85,306     |                                         |       |                   | 37,356     |          |       | 47,950         |       | 1,684,283  |       | 1,732,233 |   |
| Total                   |       |       | $          | 136,564                                      |       |                   |       | $             | 68,434     |           |       | $          | 68,130     |   | $ | 2,250,559 |   | $ | 2,318,689 |   |

 

**New Senior SecuredCredit Facility**

Concurrently with the consummation of the Mergers, theCompany entered into a new credit facility. The new senior secured creditfacility is with a syndicate of banks and other financial institutions andprovides financing of up to $850.0 million, consisting of a$650.0 million term loan facility with a maturity of seven years and a$200.0 million revolving credit facility with a maturity of six years. Therevolving credit facility will include borrowing capacity available for Mexicanpeso-denominated revolving loans, for letters of credit and for swinglineborrowings on same-day notice. The Company’s ability to borrow against therevolving credit facility is limited to approximately $90.0 million as of March 30,2006 due to restrictions imposed by our various debt agreements.

Borrowings under the new senior secured credit facilitybear interest at a rate equal to an applicable margin plus, at the Company’soption, either a base rate or LIBOR. The initial applicable margin forborrowings under the revolving credit facility is 0.75% with respect to baserate borrowings and 1.75% with respect to LIBOR borrowings, and the initialapplicable margin for borrowings under the term loan facility 

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is 1.50% with respect tobase rate borrowings and 2.125% with respect to LIBOR borrowings. Theapplicable margin for such borrowings may be reduced, subject to the Companyattaining certain leverage ratios. As of March 30, 2006 the annualinterest rate on the term loan was 6.9%. In addition to paying interest onoutstanding principal under the new senior secured credit facility, the Companyis required to pay a commitment fee to the lenders under the revolving creditfacility in respect of the unutilized commitments thereunder at a rate equal to0.375% (subject to reduction upon attainment of certain leverage ratios). TheCompany will also pay customary letter of credit fees. The Company mayvoluntarily repay outstanding loans under the new senior secured creditfacility at any time without premium or penalty, other than customary “breakage”costs with respect to LIBOR loans. The Company is required to repay $1,625,000of the term loan quarterly, beginning March 31, 2006 through September 30,2012, with any remaining balance due on January 26, 2013.

All obligations under the new senior secured creditfacility are guaranteed by each of the Company’s 100% owned domesticsubsidiaries. All obligations under the new senior secured credit facility, andthe guarantees of those obligations (as well as cash management obligations andany interest hedging or other swap agreements), are secured by substantiallyall of the Company’s assets as well as those of each subsidiary guarantor.

The new senior secured credit facility contains anumber of covenants that, among other things, restrict, subject to certainexceptions, the Company’s ability, and the ability of the Company’ssubsidiaries, to sell assets; incur additional indebtedness; prepay otherindebtedness (including the Notes); pay dividends and distributions orrepurchase its capital stock; create liens on assets; make investments; makecertain acquisitions; engage in mergers or consolidations; engage in certaintransactions with affiliates; amend certain charter documents and materialagreements governing subordinated indebtedness, including the Notes; change thebusiness conducted by it and its subsidiaries; and enter into agreements thatrestrict dividends from subsidiaries.

In addition, the newsenior secured credit facility requires the Company, commencing with the fiscalquarter ended September 30, 2006, to maintain a maximum net senior securedleverage ratio as long as the commitments under the revolving credit facilityremain outstanding. The new senior secured credit facility also containscertain customary affirmative covenants and events of default. Costs related tothe issuance of the New Senior Secured Credit Facility were capitalized and arecharged to interest expense following the interest method, over the lives ofthe facilities. Unamortized issuance costs were $14,408,000 as of March 30,2006.

**Cinemex CreditFacility**

In August 2004, Cadena Mexicana de ExhibiciónS.A. de C.V., a 100% owned subsidiary of Cinemex and an indirect 100%subsidiary of AMCE, entered into a senior secured credit facility, whichremains in place after the consummation of the Merger with Loews. The initialamount drawn under the Cinemex senior secured credit facility was1,026.4 million Mexican pesos (approximately $90.0 million as of August 16,2004). Cinemex drew 106.4 million Mexican pesos (approximately$10 million in August 2005) under the delayed draw feature of itssenior secured credit facility. Approximately $103.9 million wasoutstanding under the senior secured credit facility as of March 30, 2006.In December 2005, Cadena Mexicana entered into an amended and restatedsenior secured revolving credit facility which provides for an availablerevolving credit line of the peso equivalent of $25.0 million with BancoInbursa, S.A. and Scotiabank Inverlat, S.A. (the revolving credit facility ispeso-denominated debt). During January and February of 2006, Cinemexdrew 105.4 million Mexican pesos under the revolving credit facility(approximately $9.8 million was outstanding as of March 30, 2006).All obligations of Cadena Mexicana under the Cinemex senior secured creditfacility and revolving credit facility are guaranteed by Cinemex and eachexisting and future operating subsidiary of Cadena Mexicana, except forspecified excluded subsidiaries.

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The Cinemex borrowings are non-recourse to AMCE.Interest on the Cinemex term loan is payable in arrears on a monthly basis atthe Interbank Equilibrium Interest Rate (Tasa de Interes Interbancaria deEquilibrio) for a period of 28 days (the TIIE rate), plus an applicablemargin of 1.50% in years one and two, 1.75% in year three and 2.00% in yearsfour and five. The interest rate on the Cinemex term loan as of March 30,2006 was 9.31%. This rate was adjusted to 8.5% on approximately$68.8 million of the Cinemex borrowings by an interest rate swap enteredinto on July 28, 2003 and was redesignated as a hedge of the Cinemexsenior secured credit facility on August 16, 2004. The interest rate onthe remaining approximately $35.1 million of the Cinemex borrowings wasadjusted to 9.89% by an interest rate swap entered into on August 5, 2005.The Cinemex term loan matures on August 16, 2009 and will amortizebeginning on February 16, 2007 in installments ranging from 10% to 30% perannum over the five-year period.

The Cinemex senior securedcredit facilities contain customary affirmative and negative covenants withrespect to Cadena Mexicana and each of the guarantors and, in certaininstances, Cadena Mexicana’s subsidiaries that are not guarantors, as definedin the credit agreement. Affirmative covenants include the requirement tofurnish periodic financial statements and ensure that the obligations of CadenaMexicana and the guarantors under the Cinemex senior secured credit facilitiesrank at least *pari passu* with allexisting debt of such parties. Negative covenants include limitations ondisposition of assets, capital expenditures, dividends and additionalindebtedness and liens. The senior secured credit facilities also includecertain financial covenants, including, without limitation, a maximum totalleverage ratio, a maximum total net debt to equity ratio, a minimum interestcoverage ratio, a maximum true-lease adjusted leverage ratio and a minimumconsolidated net worth requirement.

**Notes Due 2011**

On January 27, 1999, the Company sold$225,000,000 aggregate principal amount of its 9 1¤2% Senior Subordinated Notes due 2011 (“Notesdue 2011”) and on March 29, 2002, the Company issued an additional$72,880,000 aggregate principal amount of Notes due 2011 in connection with theacquisition of GC Companies. The Notes due 2011 bear interest at the rate of 9 1¤2% per annum, payable in February andAugust. The Notes due 2011 are redeemable at the option of the Company, inwhole or in part, at any time on or after February 1, 2004 at 104.75% ofthe principal amount thereof, declining ratably to 100% of the principal amountthereof on or after February 1, 2007, plus in each case interest accruedto the redemption date. Upon a change of control (as defined in the indenturegoverning the Notes due 2011), the Company will be required to make an offer torepurchase each holder’s notes at a price equal to 101% of the principal amountthereof, plus accrued and unpaid interest to the date of repurchase. The Notesdue 2011 are subordinated to all existing and future senior indebtedness of theCompany. The Notes due 2011 are unsecured senior subordinated indebtedness ofthe Company ranking equally with the Company’s Notes due 2012 and Notes due2014.

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

The merger with Marquee constituted a “change ofcontrol” under the Notes due 2011 which allowed the holders of those notes torequire the Company to repurchase their notes at 101% of their aggregateprincipal amount plus accrued and unpaid interest to the date of purchase.Noteholders tendered $1,663,000 aggregate principal amount of the Notes due2011, which were repurchased using existing cash.

The indenture governing the Notes due 2011 containscertain covenants that, among other things, may limit the ability of theCompany and its subsidiaries to incur additional indebtedness and pay dividendsor make distributions in respect of their capital stock. If the Notes due 2011attain “investment grade status”, 

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the covenants in theindenture governing the Notes due 2001 limiting the Company’s ability to incuradditional indebtedness and pay dividends will cease to apply.

In connection with themerger with Marquee, the carrying value of the Notes due 2011 was adjusted tofair value. As a result, a premium of $7,073,000 was recorded and will beamortized to interest expense over the remaining term of the notes. Theunamortized premium as of March 30, 2006 is $5,327,000. Unamortizedissuance costs were $0 as of March 30, 2006.

**Notes Due 2012**

On January 16, 2002, the Company sold$175,000,000 aggregate principal amount of 9 7¤8% Senior Subordinated Notes due 2012 (the“Notes due 2012”). The Notes due 2012 bear interest at the rate of 9 7¤8% per annum, payable in February andAugust. The Notes due 2012 are redeemable at the option of the Company, inwhole or in part, at any time on or after February 1, 2007 at 104.938% ofthe principal amount thereof, declining ratably to 100% of the principal amountthereof on or after February 1, 2010, plus in each case interest accruedto the redemption date. Upon a change of control (as defined in the indenturegoverning the Notes due 2012), the Company will be required to make an offer torepurchase each holder’s notes at a price equal to 101% of the principal amountthereof, plus accrued and unpaid interest to the date of repurchase. The Notesdue 2012 are subordinated to all existing and future senior indebtedness of theCompany. The Notes due 2012 are unsecured senior subordinated indebtedness ofthe Company ranking equally with the Company’s Notes due 2011 and Notes due2014.

The indenture governing the Notes due 2012 containscertain covenants that, among other things, may limit the ability of theCompany and its subsidiaries to incur additional indebtedness and pay dividendsor make distributions in respect of their capital stock.

In connection with themerger with Marquee, the carrying value of the Notes due 2012 was adjusted tofair value. As a result, a premium of $17,078,000 was recorded and will beamortized to interest expense over the remaining term of the notes. Theunamortized premium as of March 30, 2006 is $12,808,000. Unamortizedissuance costs were $0 as of March 30, 2006.

**Notes Due 2014**

On February 24, 2004, the Company sold$300,000,000 aggregate principal amount of 8% Senior Subordinated Notes due2014 (the “Notes due 2014”). The Company applied the net proceeds from the saleof Notes due 2014, plus cash on hand, to redeem all outstanding $200,000,000aggregate principal amount of its 9 1¤2% Senior Subordinated Notes due 2009 and$83,406,000 aggregate principal amount of its Notes due 2011. The Notes due2014 bear interest at the rate of 8% per annum, payable in March andSeptember. The Notes due 2014 are redeemable at the option of the Company, inwhole or in part, at any time on or after March 1, 2009 at 104.000% of theprincipal amount thereof, declining ratably to 100% of the principal amountthereof on or after March 1, 2012, plus in each case interest accrued tothe redemption date. Upon a change of control (as defined in the indenturegoverning the Notes due 2014), the Company will be required to make an offer torepurchase each holder’s notes at a price equal to 101% of the principal amountthereof plus accrued and unpaid interest to the date of repurchase. The Notesdue 2014 are subordinated to all existing and future senior indebtedness of theCompany. The Notes due 2014 are unsecured senior subordinated indebtedness ofthe Company ranking equally with the Company’s Notes due 2011 and Notes due2012.

The indenture governing the Notes due 2014 containscertain covenants that, among other things, may limit the ability of theCompany and its subsidiaries to incur additional indebtedness and pay dividendsor make distributions in respect of their capital stock.

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In connection with themerger with Marquee the carrying value of the Notes due 2014 was adjusted tofair value. As a result, a discount of $1,500,000 was recorded and will beamortized to interest expense over the remaining term of the notes. Theunamortized discount as of March 30, 2006 is $1,352,000. Unamortizedissuance costs were $0 as of March 30, 2006.

**Fixed Notes andFloating Notes.**

In connection with the merger with Marquee, theCompany became the obligor of $250,000,000 aggregate principal amount of 8 5¤8% Senior Notes due 2012 (the “FixedNotes due 2012”) and $205,000,000 aggregate principal amount of Senior FloatingNotes due 2010 (the “Floating Notes due 2010” and, together with the FixedNotes due 2012, the “Senior Notes”) that were each previously issued by Marqueeon August 18, 2004. The Senior Notes (i) rank senior in right ofpayment to any of the Company’s existing and future subordinated indebtedness,rank equally in right of payment with any of the Company’s existing and futuresenior indebtedness and are effectively subordinated in right of payment to anyof the Company’s secured senior indebtedness, including the amended credit facility,and (ii) are fully and unconditionally guaranteed on a joint and several,senior unsecured basis by each of the Company’s existing and future 100% ownedsubsidiaries that is a guarantor or direct borrower under the Company’s otherindebtedness. The Senior Notes are structurally subordinated to all existingand future liabilities and preferred stock of the Company’s subsidiaries thatdo not guarantee the notes.

The Fixed Notes due 2012 bear interest at the rate of8 5¤8% per annum, payable on February 15and August 15 of each year, commencing February 15, 2005. The FixedNotes due 2012 are redeemable at the Company’s option, in whole or in part, atany time on or after August 15, 2008 at 104.313% of the principal amountthereof, declining ratably to 100% of the principal amount thereof on or after August 15,2010. Costs related to the issuance of the Fixed Notes due 2012 werecapitalized and are charged to interest expense, following the interest method,over the life of the notes. Unamortized issuance costs of $7,080,000 as of March 30,2006, are included in other long-term assets.

The Floating Notes due2010 bear interest at a rate per annum, reset quarterly, equal to 4 1¤4% plus the three-monthLIBOR interest rate. Interest on the Floating Notes due 2010 is payablequarterly on February 15, May 15, August 15, and November 15of each year and interest payments commenced on November 15, 2004. Theinterest rate is currently 9.0% per annum for the quarterly period ending May 14,2006 and the interest rate is 9.42% per annum for the quarterly period ending August 14,2006. The Floating Notes due 2010 are redeemable, in whole or in part, on orafter August 15, 2006 at 103.000% of the principal amount thereof,declining ratably to 100% of the principal amount thereof on or after August 15,2009. Costs related to the issuance of the Fixed Notes due 2010 werecapitalized and are charged to interest expense, following the interest method,over the life of the notes. Unamortized issuance costs were $5,534,000 as of March 30,2006.

**11% SeniorSubordinated Notes Due 2016**

On January 26, 2006, the Company issued$325,000,000 aggregate principal amount of 11% Senior Subordinated Notes (the “Notesdue 2016”) issued under an indenture (the “Indenture”), with HSBC Bank USA,National Association, as trustee. The Notes due 2016 will bear interest at arate of 11% per annum, payable on February 1 and August 1 of eachyear (commencing on August 1, 2006), and have a maturity date of February 1,2016.

The Notes due 2016 are general unsecured seniorsubordinated obligations of the Company, fully and unconditionally guaranteed,jointly and severally, on a senior subordinated basis by each of the Company’sexisting and future domestic restricted subsidiaries that guarantee the Company’sother indebtedness.

The Company may redeem some or all of the Notes due2016 at any time on or after February 1, 2011 at 105.5% of the principalamount thereof, declining ratably to 100% of the principal amount thereof on or

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after February 1,2014. In addition, the Company may redeem up to 35% of the aggregate principalamount of the notes using net proceeds from certain equity offerings completedon or prior to February 1, 2009. If the Company experiences a change ofcontrol (as defined in the indenture governing the Notes due 2016), the Companywill be required to make an offer to repurchase the Notes due 2016 at a priceequal to 101% of the principal amount thereof, plus accrued and unpaidinterest, if any, to the date of purchase.

The indenture governing the Notes due 2016 containscovenants limiting other indebtedness, dividends, purchases or redemptions ofstock, transactions with affiliates and mergers and sales of assets. It alsocontains provisions subordinating the Company’s obligations under the Notes due2016 to the Company’s obligations under its senior secured credit facility andother senior indebtedness. Costs related to the issuance of the Notes due 2016were capitalized and are charged to interest expense, following the interestmethod, over the life of the notes. Unamortized issuance costs were $8,766,000as of March 30, 2006.

As of March 30, 2006,the Company was in compliance with all financial covenants relating to the NewSenior Secured Credit Facility, the Cinemex Credit Facility, the 11% SeniorSubordinated Notes due 2016, the 9 1¤2% Senior Subordinated Notes due 2011, the9 7¤8% Senior Subordinated Notes due2012, the 8% Senior Subordinated Notes due 2014, the Fixed Notes due 2012 andthe Floating Notes due 2010.

**Holdings DiscountNotes Due 2014**

To help finance the merger with Marquee, Holdingsissued $304,000,000 aggregate principal amount at maturity of its 12% SeniorDiscount Notes due 2014 (“Discount Notes due 2014”) for gross proceeds of$169,917,760. The Discount Notes due 2014 with Holdings are not recorded in theCompany’s financial statements. The only operations of Holdings prior to themerger were related to this financing. Because the Company was the primarybeneficiary of Holdings, which was considered a variable interest entity asdefined in FIN 46(R), *Consolidation ofVariable Interest Entities, an Interpretation of ARB No. 51,*the Predecessor was required to consolidate Holdings’ operations and financialposition into the Company’s financial statements as of and through the periodended December 23, 2004. Subsequent to December 23, 2004, theSuccessor deconsolidated Holdings’ assets and liabilities. The results ofoperations of Holdings included within the Predecessor’s ConsolidatedStatements of Operations for the period from April 2, 2004 through December 23,2004 include interest expense of $7,135,000 and interest income of $831,000.

Holdings is a holding company with no operations ofits own and has no ability to service interest or principal on the DiscountNotes due 2014 other than through any dividends it may receive from theCompany. The Company will be restricted, in certain circumstances, from payingdividends to Holdings by the terms of the indentures governing the Fixed Notesdue 2012, the Floating Notes due 2010, the Notes due 2011, the Notes due 2012,the Notes due 2014 and the new senior secured credit facility. The Company hasnot guaranteed the indebtedness of Holdings nor pledged any of its assets ascollateral.

Prior to August 15, 2009, unless Holdings electsto pay cash interest as described below, interest on the Discount Notes due2014 will accrete from the date of issuance of the notes until August 15,2009, compounded semiannually.

On any interest paymentdate prior to August 15, 2009, Holdings may elect to commence paying cashinterest (from and after such interest payment date) in which case (i) Holdingswill be obligated to pay cash interest on each subsequent interest paymentdate, (ii) the notes will cease to accrete after such interest payment dateand (iii) the outstanding principal amount at the maturity of each notewill be equal to the accreted value of such notes as of such interest paymentdate.

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**Derivatives**

On July 28, 2003, Cinemex entered into aninterest rate swap agreement with a maturity of December 26, 2007 tomanage its exposure to interest rate movements by effectively converting itsprevious long-term senior secured credit facility from a variable to a fixedrate. The notional amount of the interest rate swap reduces in accordance withthe repayment provisions of Cinemex’s previous long-term senior secured creditfacility. Although this senior secured facility was repaid on August 13,2004, the swap agreement remains outstanding and was redesignated as a hedge ofthe Cinemex term loan.

The face amount of the interest rate swap on March 30,2006 was 750 million Mexican pesos ($68.8 million). The swapagreement provides for the exchange of variable rate payments for fixed ratepayments without the effect of leverage and without the exchange of theunderlying face amount. The variable rate is based on the 28-day TIIErate and the fixed rate is 8.5%. The fair market value of the interest rateswap was $444,000 as of March 30, 2006.

On August 5, 2005,Cinemex entered into a new interest rate swap with a face amount of382.8 million Mexican pesos ($35.1 million) as a complement to the July 28,2003 interest rate swap noted above. The new interest rate swap was enteredinto in order to hedge the outstanding debt balance not covered by the July 28,2003 interest rate swap. This new interest rate swap provides for the exchangeof variable rate payments for fixed rate payments. The variable rate is basedon the 28-day TIIE rate and the fixed rate is 9.89%. The fair marketvalue of this interest rate swap was $2,257,000 as of March 30, 2006.

**NOTE 8—STOCKHOLDER’SEQUITY**

Pursuant to the terms of the Merger Agreement, on January 26,2006, in connection with the consummation of the Merger, Holdings issued256,085.61252 voting shares of Class L-1 Common Stock, par value$0.01 per share (“Class L-1 Common Stock”), 256,085.61252 votingshares of Class L-2 Common Stock, par value $0.01 per share (“Class L-2Common Stock” and, together with the Class L-1 Common Stock, the “Class LCommon Stock”), 382,475 voting shares of Class A-1 Common Stock, parvalue $0.01 per share (the “Class A-1 Common Stock”), 382,475 votingshares of Class A-2 Common Stock, par value $0.01 per share (the “Class A-2Common Stock” and, together with the Class A-1 Common Stock, the “Class ACommon  Stock”), and 5,128.77496nonvoting shares of Class N Common Stock, par value $0.01 per share (the Class NCommon Stock”), such that (i) the former non-management stockholdersof LCE Holdings, including the Bain Investors, the Carlyle Investors and theSpectrum Investors (collectively, the “Former LCE Sponsors”), hold all of theoutstanding shares of Class L Common Stock, (ii) the pre-existingnon-management stockholders of Holdings, including the JPMP Investors andthe Apollo Investors (collectively, the “Pre-Existing Holdings Sponsors”and, the Pre-Existing Holdings Sponsors together with the Former LCESponsors, the “Sponsors”) and other co-investors (the “Coinvestors”),hold all of the outstanding shares of Class A Common Stock, and (iii) managementstockholders of Holdings (the “Management Stockholders” and, together with theSponsors and Coinvestors, the “Stockholders”) hold all of the non-voting Class NCommon Stock.

In addition to the shares issued above, Holdings hasauthorized 7,000,000 shares of Common Stock, $.01 par value, of whichthere were no shares issued or outstanding as of March 30, 2006.

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The Class L CommonStock, Class A Common Stock and Class N Common Stock willautomatically convert on a one-for-one basis into shares ofresidual voting common stock, par value $0.01 per share, upon (i) writtenconsent of each of the Sponsors or (ii) the completion of an initialpublic offering of capital stock of Holdings or AMCE (an “IPO”).

The issuance of the equitysecurities was exempt from registration under the Securities Act of 1933 andthe rules promulgated thereunder (the “Securities Act”) in reliance on Section 4(2) ofthe Securities Act, as transactions by an issuer not involving a publicoffering.

The fair value of theshares issued by Holdings for LCE Holdings in connections with the Merger wasestimated to be $540,671,000. The estimated fair value of the shares issued byHoldings was treated as a capital contribution to AMCE in connection with theMerger.

In connection with themerger with Marquee, each issued and outstanding share of the Predecessor’scommon stock and class B stock was converted into the right to receive$19.50 in cash and each issued and outstanding share of the Predecessor’spreferred stock was converted into the right to receive $2,727.27 in cash.

See Note 2—Acquisitionsand the Consolidated Statements of Stockholder’s Equity within this Form 10-K/Afor additional information regarding the impact on stockholder’s equity ofthese mergers.

**PREDECESSOR DISCUSSION**

The Company had twoclasses of common stock outstanding, Common Stock and Class B Stock, whichdid not provide for different dividend rates or other preferences, other thanvoting rights, between the two classes of common stock.

**Voting Rights**

The holders of CommonStock were entitled to one vote per share and, except for the election ofdirectors, voted together as a single class with the holders of the Company’sClass B Stock and holders of the Company’s Series A ConvertiblePreferred Stock who were entitled to vote their shares, on an as-convertedbasis, subject to the right to vote as a separate class as required by law andon certain charter amendments affecting the number of authorized shares ofCommon Stock or the par value or relative powers, preferences or special rightsthereof.

The holders ofClass B Stock were entitled to ten votes per share and, except for theelection of directors, voted together as a single class with the holders ofCommon Stock and holders of the Company’s Series A Convertible PreferredStock who were entitled to vote their shares, on an as-converted basis, subjectto the right to vote as a separate class as required by law and on certaincharter amendments affecting the number of authorized shares of Class BStock or the par value or relative powers, preferences or special rightsthereof.

Under the Company’sinvestment agreement with the initial purchasers of the Company’s PreferredStock, the Company could not change the size of the Board of Directors, whichhad eight members, without the approval of the initial purchasers as long asthey continued to own at least 117,500 shares of Preferred Stock. Also, so longas the initial purchasers continued to hold this and other preferred stockapproval rights, the initial purchasers had the right to elect three directorsto the Company’s Board of Directors. The remaining members of the board were electedby the holders of Common Stock and Class B stock. Under the Company’srestated and amended certificate of incorporation, holders of Common Stock,voting separately as a class, had the right to elect two directors, and theholders of Common Stock and Class B Stock, voting together as a singleclass, with each share of Common Stock having one vote per share and each shareof Class B Stock having ten votes per share, had the right to elect threedirectors. In the event that no shares of Class B Stock remainedoutstanding, the holders of Common Stock could elect all of the members of theBoard of Directors to be elected by holders other than holders of Preferred 

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Stock,with each share having one vote for such purpose. Holders of Common Stock andClass B Stock do not have cumulative voting rights in elections ofdirectors.

Upon transfer of shares ofSeries A Convertible Preferred Stock to a transferee that is not anaffiliate of the initial purchasers, the transferee holder of Series AConvertible Preferred Stock was entitled to vote on an as-converted basis withthe holders of the Company’s Common Stock and Class B Stock on all mattersexcept the election of directors and any matter reserved by law or theCompany’s restated and amended certificate of incorporation for considerationexclusively by the holders of Common Stock or Class B Stock. Holders ofthe Series A Convertible Preferred Stock also had the right to vote as aclass on the creation, authorization or issuance of any class, series or sharesof senior stock, parity stock or junior stock (if the junior stock may beredeemed at the option of the holders thereof prior to April 19, 2011) andon any adverse change to the preference, rights and powers of the Series AConvertible Preferred Stock.

If an event of defaultwith respect to the Company’s Preferred Stock (as defined below) occurred andwas not cured or waived within 45 days, then the holders of PreferredStock would have had the right to elect that number of directors that, whenadded to those directors already elected by the holders of Series AConvertible Preferred Stock, constituted a majority of the Board of Directors.An “event of default” is defined as (i) an event of default under theCompany’s credit facility, the note indentures or any other indebtedness inexcess of $10 million, (ii) the Company’s failure to pay cashdividends on the Preferred Stock when required under the terms thereof or(iii) the Company’s violation of the provisions of the investmentagreement relating to the preferred stock approval rights.

**Equity Securities**

The authorized commonstock of AMCE consisted of two classes of stock: Common Stock (662¤3¢par value; 200,000,000 shares authorized) and Class B Stock (662¤3¢par value; 30,000,000 shares authorized). Holders of Class B Stock couldhave elected to convert at any time on a share-for-share basis into CommonStock.

The Company had authorized10,000,000 shares of Preferred Stock (662¤3¢ par value),of which 2,000,000 shares had been designated under the Company’s Certificatehad Designations as Series A Convertible Preferred Stock (“Series APreferred”) and 2,000,000 shares had been designated as Series BExchangeable Preferred Stock (“Series B Preferred”, and collectively withthe Series A Preferred, the “Preferred Stock”). As of April 1, 2004,299,477 Series A Preferred shares were issued and outstanding.

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

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

Dividends on the Series APreferred accumulated at an annual rate of 6.75% and were payable when, as andif declared by the Company’s Board of Directors. Dividends on the Series APreferred must have been paid with additional Series A Preferred sharesfor the first three years from April 19, 2001. Between April 20, 2004and April 19, 2008, dividends could have been paid in either additionalSeries A Preferred shares or cash, at the Company’s option, and must havebeen paid in cash after April 19, 2008, unless prohibited by theIndentures for the Notes due 2011, in which case such dividends were payable inadditional Series A Preferred shares.

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Preferred Stock dividendspaid in shares of Preferred Stock were recorded at their estimated fair valueon the date of declaration. The carrying value of Series A Preferred wasaccreted to its redemption price (including any accrued and unpaid dividends)over ten years (the period from initial issuance until redemption first becomesavailable to the holder of the security) using the interest method. Preferredstock dividends of 1,023 shares of Preferred Stock valued at $2,362,000for the period from April 1, 2004 to April 19, 2004, cash dividendsof $9,349,000 for the period from April 19, 2004 through September 30,2004, special Preferred Stock dividends and 33,408 shares of PreferredStock valued at $91,113,000 and accretion of $1,476,000 were recorded duringthe Predecessor period ended December 23, 2004. During fiscal 2004, theCompany recorded dividends of 19,697 shares of Series A Preferred valuedat $40,277,000.

The holders ofSeries A Preferred shares were also entitled to a special dividend ofadditional Series A Preferred shares if a Change of Control (as defined inthe Certificate of Designations) of the Company occurred prior to April 19,2006 equal to the dividends that they would have received throughApril 19, 2006 if the Change of Control had not occurred. If dividendswere paid on the Common Stock in any fiscal period, the holders ofSeries A Preferred shares were entitled to receive dividends on an “asconverted” basis to the extent such dividends were greater than theSeries A Preferred dividends otherwise payable in such fiscal period.

The Preferred Stock mayhave been redeemed in whole and not in part by the Company at the Company’soption at any time after April 19, 2006 for cash equal to the liquidationpreference, provided that the average Common Stock closing price for the 20trading days preceding the notice of redemption exceeded 150% of the ConversionPrice. The Series A Preferred must have been redeemed by the Company atthe option of a holder at any time after April 19, 2011 for cash or CommonStock, at the Company’s option, at a price equal to the Series A Preferredliquidation preference.

The initial purchasers ofthe Preferred Stock had the right to approve the payment of dividends on theCompany’s other capital stock.

Inaddition, during the period that they are entitled to elect three Directors,the initial purchasers of the Company’s Preferred Stock must have approvedcertain corporate actions before the Company could take them. These PreferredStock Approval Rights included but were not limited to, limitations on theCompany’s ability to:

·                    amend theCompany’s restated and amended certificate of incorporation or bylaws;

·                    create,authorize or issue any class, series or shares of capital stock;

·                    merge,consolidate or consummate a similar transaction;

·                    incur debt oramend or alter the material terms of any existing or future material seniordebt; and

·                    acquire or disposeof any material business or assets.

**Stock-Based Compensation**

The Successor has no stock-basedcompensation arrangements of its own, but its parent, Holdings, has adopted astock-based compensation plan that permits grants of up to 49,107.44682options on Holdings stock and has granted options on 600.00000 and 38,876.72872of its shares to certain employees during the Successor periods ended March 30,2006 and March 31, 2005, respectively. As of March 30, 2006, therewas $13,740,000 of total estimated unrecognized compensation cost related tononvested stock-based compensation arrangements under the Holdings plan.

Since the employees towhom the options were granted are employed by the Successor, the Successor isrequired to reflect the stock-based compensation expense associated withthe options within its consolidated statements of operations. The options havea ten year term, the options granted during fiscal 2005 step-vest in equalamounts over five years with the final vesting occurring on December 23,2009, the 

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optionsgranted during fiscal 2006 step vest in equal amounts over three years withfinal vesting occurring on December 23, 2008, but vesting may acceleratefor certain participants if there is a change of control (as defined in theplan). The Successor has recorded $3,433,000 and $1,201,000 of stock-basedcompensation expense related to these options and has recognized an income taxbenefit of approximately $0 and $492,000 in its Consolidated Statements ofOperations during the Successor periods ended March 30, 2006 and March 31,2005, respectively. One of the holders of stock options has put rights deemedto be in the holder’s control associated with his options whereby he canrequire Holdings to repurchase his options and as such $142,000 of the Stock-basedCompensation obligation is recorded in additional paid-in capital in ourConsolidated Balance Sheets at March 30, 2006. The Successor accounts forstock options using the fair value method of accounting as prescribed bySFAS 123 (R) and SAB 107 and has valued the options using the Black-Scholesformula. See Note 1—The Company and Significant Accounting Policies, Stock-basedCompensation for more information regarding Holdings stock option plan.

During the second quarterof fiscal 2004 the Predecessor’s shareholders approved and the Predecessoradopted the 2003 AMC Entertainment Inc. Long-Term Incentive Plan (the “2003LTIP”). The 2003 LTIP provides for five basic types of awards: (i) grantsof stock options which are either incentive or non-qualified stock options, (ii) grantsof restricted stock awards, (iii) grants of deferred stock units, (iv) grantsof deferred cash awards and (v) performance grants which may be settled instock options, shares of common stock, restricted stock, deferred stock units,deferred cash awards, or cash, or any combination thereof. The number of sharesof Common Stock which could have been sold or granted under the plan was not toexceed 6,500,000 shares. The 2003 LTIP provided that the option exercise pricefor stock options was not to be less than the fair market value of stock at thedate of grant, options may not have been repriced and unexercised optionsexpired no later than ten years after date of grant.

On June 11, 2004, theBoard of Directors made performance grants for fiscal 2005 with awardopportunities having an aggregate value of $12,606,000. These grants weresubject to the satisfaction of performance measures during fiscal 2005 and/orthe exercise of discretion by the Compensation Committee of the Board ofDirectors. The Company did not meet the performance measures for fiscal 2005.Accordingly, the Company had no expense or accrual recorded for the fiscal 2005performance grants.

On June 11, 2004, theCompensation Committee of the Board of Directors awarded 527,398 deferred stockunits with a fair value of $7,917,000 and deferred cash award of $1,606,000, toemployees, which represented a 100% award based on achievement of all target-basedgrants made on September 18, 2003. Holdings made payments of $10,150,000to the holders of 520,350 deferred stock units that vested upon closing themerger with Marquee which was considered as a part of the purchase price inconnection with this merger.

The Predecessor accountedfor the stock options, restricted stock awards and deferred stock units underplans that it sponsored following the recognition and measurement provisions ofAPB No. 25, *Accounting for Stock issuedto Employees* and related interpretations. No stock-basedemployee compensation expense related to restricted stock awards and deferredstock units was recorded during the Predecessor period ended December 23,2004 and $8,727,000 was reflected in net earnings for the Predecessor periodended April 1, 2004. No stock-based employee compensation expensefor stock options was reflected in net earnings for the period, as all stockoptions granted under those plans had an exercise price equal to the fairmarket value of the underlying common stock on the date of grant. Holdings madepayments of $7,750,000 to the holders of 1,451,525 vested in-the-money optionsthat vested upon closing the merger with Marquee which was considered as a partof the purchase price in connection with this merger.

There are currently nooutstanding share-based awards under the Company’s 2003 LTIP subsequentto the merger with Marquee.

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Asummary of stock option activity under all plans is as follows:

| ** **                         | ** ** | ** **                        | ** ** | **From Inception  July 16, 2004 through**                                 | ** ** | ** **                     | **April 2,  2004 through** | ** **                                                                         | ** **             | ** ** |
|------------------------------------|------------|-----------------------------------|------------|-----------------------------------------------------------------------------------------------|------------|--------------------------------|---------------------------------|------------------------------------------------------------------------------------|------------------------|------------|
| ** **                         | ** ** | **March 30, 2006**      | ** ** | **March 31, 2005**                                                                  | ** ** | ** **                     | **December 23, 2004** | ** **                                                                         | **April 1, 2004** | ** ** |
| ** **                         | ** ** | **Number of**

**Shares**(2) | ** ** | **Weighted   Average**

** Exercise**

** Price Per**

** Share**(2) | ** ** | **Number of**

**Shares** | ** **                      | **Weighted**

** Average**

** Exercise**

**Price Per**

**Share** | ** **             | ** ** | **Number of**

**Shares** | ** ** | **Weighted**

**Average**

**Exercise**

**Price Per**

**Share** | ** ** | **Number of**

**Shares** | ** ** | **Weighted**

** Average**

** Exercise**

**Price Per**

** Share** | ** ** |
| ** **                         | ** ** | **(Successor)**                   | ** ** | **(Successor)**                                                                               | ** ** | ** **                     | **(Predecessor)**               | ** **                                                                         | **(Predecessor)**      | ** ** |
| Outstanding at beginning  of year  |       | 38,876.72872                      |       |                                                                                          | $          | 1,000                          |                            |                                                                               | —                 |       |   | $ | — |   |   |   |   | 1,500,640 |   |   |   | $ | 14.19 |   |   |   | 1,978,165 |   |   |   | $ | 12.98 |   |   |
| Granted(3)                         |       | 600.0000                          |       |                                                                                          | $          | 1,000                          |                            |                                                                               | 38,876.72872           |       |   | 1,000 |   |   |   |   | — |   |   |   | — |   |   |   | — |   |   |   | — |   |   |
| Canceled                           |       | —                            |       |                                                                                          | —     |                           |                            | —                                                                             |                   |       | — |   |   |   |   | (42,200 | ) |   |   | — |   |   |   | (20,940 | ) |   |   | 13.09 |   |   |
| Exercised(1)                       |       | —                            |       |                                                                                          | —     |                           |                            | —                                                                             |                   |       | — |   |   |   |   | (1,458,440 | ) |   |   | — |   |   |   | (456,585 | ) |   |   | 8.54 |   |   |
| Outstanding at end of  year(4)     |       | 39,476.72872                      |       |                                                                                          | $          | 1,000                          |                            |                                                                               | 38,876.72872           |       |   | $ | 1,000 |   |   |   |   | — |   |   |   | $ | 14.19 |   |   |   | 1,500,640 |   |   |   | $ | 14.32 |   |   |
| Exercisable at end of  year        |       | 7,775.34574                       |       |                                                                                          | $          | —                         |                            |                                                                               | —                 |       |   | $ | — |   |   |   |   | — |   |   |   | $ | — |   |   |   | 1,292,650 |   |   |   | $ | 14.19 |   |   |
| Available for grant at end of year |       | 9,630.71809                       |       |                                                                                          |       |                           |                            | 10,230.71809                                                                       |                   |       |   |   |   |   |   | — |   |   |   |   |   |   |   | 5,969,497 |   |   |   |   |   |   |

----

(1)                The Predecessorperiod ended December 23, 2004, includes 1,451,525 options automaticallyvested and purchased as a result of the merger with Marquee, and 6,915 optionsexercised during the period.

(2)                Represents optionsgranted by the Company’s parent, Holdings, to certain employees of the Company.The compensation expense related to the options is included in the Company’sConsolidated Statements of Operations because the employees to whom the optionswere granted are employed by the Company.

(3)                The weightedaverage fair value per option granted was $230.75 and $575.48 during fiscal2006 and 2005, respectively.

(4)                The weightedaverage remaining contractual life for outstanding options was 8.7 years, 9.7years and 6.2 years for fiscal 2006, 2005 and 2004, respectively.

***Stock Appreciation Rights***

In November 2004, Loews entered into a StockAppreciation Rights Agreement (the “SAR Agreement”) with the Chief ExecutiveOfficer of Cinemex under which stock appreciation rights (“SARs”) based uponthe equity value of Cinemex were granted. The SARs granted allow for thereceipt of cash payments equivalent to the increase in value of 4,405 units(representing 4,405 shares of Cinemex Common Stock and 67,737 shares of CinemexPreferred Stock) from July 30, 2004. The SARs equity valuation is basedupon the equity of Cinemax.

No stock-basedcompensation expense related to the SARs granted is reflected for the fifty-twoweeks ended March 30, 2006, as there has been no appreciation in theequity value (as defined in the SARs Agreement) of Cinemex from the date of theMerger.

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**NOTE 9—INCOME TAXES**

Incometax provision reflected in the Consolidated Statements of Operations for theperiods in the three years ended March 30, 2006 consists of the followingcomponents:

| **(In thousands)**                               | ** ** | ** **      | ** ** | **March 30, 2006** | ** ** | **From Inception   July 16, 2004   through   March 31, 2005** | ** ** | ** **        | ** ** | **April 2, 2004  through   December 23, 2004** | ** ** | **April 1, 2004** | ** ** |
|-------------------------------------------------------|------------|-----------------|------------|------------------------------|------------|-------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-------------------------------------------------------------------------|------------|-----------------------------|------------|
| ** **                                            | ** ** | **(Successor)** | ** ** | **(Successor)**              | ** ** | ** **                                                                                            | ** ** | **(Predecessor)** | ** ** | **(Predecessor)**                                                       | ** ** |
| Current:                                              |       |            |       |                         |       |                                                                                                  |       |              |       |                                                                    |       |                        |       |   |   |   |   |   |   |
| Federal                                               |       |            | $          | (232                         | )          |                                                                                                  |       | $                 | (1,416     | )                                                                       |       |                        |       |   | $ | 851 |   |   |   | $ | (6,130 | ) |   |
| Foreign                                               |       |            | 562        |                         |       |                                                                                                  | —     |              |       |                                                                    |       |                        | —     |   |   |   | — |   |   |
| State                                                 |       |            | 1,230      |                         |       |                                                                                                  | (202       | )                 |       |                                                                    |       |                        | 3,571      |   |   |   | (17 | ) |   |
| Total current                                         |       |            | 1,560      |                         |       |                                                                                                  | (1,618     | )                 |       |                                                                    |       |                        | 4,422      |   |   |   | (6,147 | ) |   |
| Deferred:                                             |       |            |       |                         |       |                                                                                                  |       |              |       |                                                                    |       |                        |       |   |   |   |   |   |   |
| Federal                                               |       |            | 77,255     |                         |       |                                                                                                  | (5,426     | )                 |       |                                                                    |       |                        | 9,046      |   |   |   | 11,635 |   |   |
| Foreign                                               |       |            | 834        |                         |       |                                                                                                  | 80         |              |       |                                                                    |       |                        | 240        |   |   |   | 1,619 |   |   |
| State                                                 |       |            | 10,151     |                         |       |                                                                                                  | 164        |              |       |                                                                    |       |                        | 1,292      |   |   |   | 1,293 |   |   |
| Total deferred                                        |       |            | 88,240     |                         |       |                                                                                                  | (5,182     | )                 |       |                                                                    |       |                        | 10,578     |   |   |   | 14,547 |   |   |
| Total provision                                       |       |            | 89,800     |                         |       |                                                                                                  | (6,800     | )                 |       |                                                                    |       |                        | 15,000     |   |   |   | 8,400 |   |   |
| Tax benefit  (provision) of discontinued operations   |       |            | (20,400    | )                            |       |                                                                                                  | (80        | )                 |       |                                                                    |       |                        | (240       | ) |   |   | 2,000 |   |   |
| Total provision  (benefit) from continuing operations |       |            | $          | 69,400                       |       |                                                                                                  |       | $                 | (6,880     | )                                                                       |       |                        |       |   | $ | 14,760 |   |   |   | $ | 10,400 |   |   |

 

Incomefrom pre-tax losses before income taxes consisted of the following:

| **(In thousands)** | ** ** | ** **      | ** ** | **March 30, 2006**

**(restated)** | ** ** | **From Inception   July 16, 2004   through   March 31, 2005** | ** ** | ** **        | ** ** | **April 2, 2004  through   December 23, 2004** | ** ** | **April 1, 2004** | ** ** |
|-------------------------|------------|-----------------|------------|----------------------------------------------|------------|-------------------------------------------------------------------------------------------------------|------------|-------------------|------------|-------------------------------------------------------------------------|------------|-----------------------------|------------|
| ** **              | ** ** | **(Successor)** | ** ** | **(Successor)**                              | ** ** | ** **                                                                                            | ** ** | **(Predecessor)** | ** ** | **(Predecessor)**                                                       | ** ** |
| Domestic                |       |            | $          | (84,545                                      | )          |                                                                                                  |       | $                 | (39,998    | )                                                                       |       |                        |       |   | $ | (3,689 | ) |   |   | $ | 18,586 |   |   |
| Foreign                 |       |            | (16,531    | )                                            |       |                                                                                                  | (1,565     | )                 |       |                                                                    |       |                        | (17,189    | ) |   |   | (20,900 | ) |   |
| Total                   |       |            | $          | (101,076                                     | )          |                                                                                                  |       | $                 | (41,563    | )                                                                       |       |                        |       |   | $ | (20,878 | ) |   |   | $ | (2,314 | ) |   |

 

Thedifference between the effective tax rate on earnings (loss) before incometaxes and the U.S. federal income tax statutory rate is as follows:

| ** **                                         | ** ** | **March 30, 2006**

**(restated)** | ** ** | **From Inception**

**July 16, 2004**

**through **

**March 31, 2005** | ** ** | ** ** | ** ** | **April 2, 2004**

**through**

**December 23, 2004** | ** ** | **April 4, 2003**

**through **

**April 1, 2004** | ** ** |
|----------------------------------------------------|------------|----------------------------------------------|------------|-------------------------------------------------------------------------------------------------------|------------|------------|------------|---------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------|------------|
| ** **                                         | ** ** | **(Successor)**                              | ** ** | **(Successor)**                                                                                       | ** ** | ** ** | ** ** | **(Predecessor)**                                                         | ** ** | **(Predecessor)**                                                           | ** ** |
| Federal statutory  rate                            |       |                                         | 35.0       | %                                                                                                     |       |       | 35.0       | %                                                                         |       |                                                                        |       |   | 35.0 | % |   |   | 35.0 | % |   |
| Merger costs                                       |       |                                         | —     |                                                                                                  |       |       | (16.8      | )                                                                         |       |                                                                        |       |   | (68.8 | ) |   |   | — |   |   |
| State income  taxes, net of federal tax benefit    |       |                                         | 4.9        |                                                                                                  |       |       | 0.1        |                                                                      |       |                                                                        |       |   | (7.0 | ) |   |   | (35.8 | ) |   |
| Valuation  allowance                               |       |                                         | (106.0     | )                                                                                                     |       |       | (1.3       | )                                                                         |       |                                                                        |       |   | (28.8 | ) |   |   | (358.3 | ) |   |
| Non-deductible  goodwill and other permanent items |       |                                         | (20.8      | )                                                                                                     |       |       | —     |                                                                      |       |                                                                        |       |   | — |   |   |   | — |   |   |
| Other, net                                         |       |                                         | (1.9       | )                                                                                                     |       |       | (0.6       | )                                                                         |       |                                                                        |       |   | (2.2 | ) |   |   | (3.9 | ) |   |
| Effective tax rate                                 |       |                                         | (88.8      | )%                                                                                                    |       |       | 16.4       | %                                                                         |       |                                                                        |       |   | (71.8 | )% |   |   | (363.0 | )% |   |

 

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Non-deductible goodwill relates to the goodwilldisposed of in connection with the sale of the Japan theatres, which is discussedin Note 2.

Successor merger and acquisitions costs of $20,000,000during the period from inception July 16, 2004 through March 31, 2005and Predecessor merger and acquisitions costs of $41,032,000 during the period April 2,2004 through December 23, 2004 are being treated as non-deductible.

Thesignificant components of deferred income tax assets and liabilities as of March 30,2006 and March 31, 2005 are as follows:

| ** **                                | ** ** | **March 30,  2006** | ** ** | **March 31,  2005** | ** ** |
|-------------------------------------------|------------|--------------------------|------------|--------------------------|------------|
| ** **                                | ** ** | **Deferred  Income Tax** | ** ** | **Deferred  Income Tax** | ** ** |
| ** **                                | ** ** | **(Successor)**          | ** ** | **(Successor)**          | ** ** |
| **(In thousands)**                   | ** ** | ** **               | ** ** | **Assets**               | ** ** | **Liabilities** | ** ** | **Assets** | ** ** | **Liabilities** | ** ** |
| Property                                  |       | $                        | 62,037     |                     | $          | (135,030 | ) | $ | 50,416 |   | $ | (169,537 | ) |
| Capital lease  obligations                |       | 1,808                    |       | —                   |       | 5,176 |   | — |   |
| Accrued reserves  and liabilities         |       | 78,556                   |       | —                   |       | 65,096 |   | — |   |
| Deferred rents                            |       | 84,670                   |       | —                   |       | 97,877 |   | — |   |
| Alternative  minimum tax credit carryover |       | 11,581                   |       | —                   |       | 11,932 |   | — |   |
| Capital loss  carryforward                |       | 27,128                   |       | —                   |       | 38,698 |   | — |   |
| Net operating  loss carryforward          |       | 280,424                  |       | —                   |       | 40,547 |   | — |   |
| Other                                     |       | 55,247                   |       | (27,191                  | )          | 53,929 |   | (6,236 | ) |
| Total                                     |       | $                        | 601,451    |                     | $          | (162,221 | ) | $ | 363,671 |   | $ | (175,773 | ) |
| Less: Valuation  allowance                |       | (430,250                 | )          | —                   |       | (118,719 | ) | — |   |
| Net                                       |       | 171,201                  |       | (162,221                 | )          | 244,952 |   | (175,773 | ) |
| Less: Current  deferred income taxes      |       | 5,416                    |       | —                   |       | 18,560 |   | — |   |
| Total noncurrent  deferred income taxes   |       | $                        | 165,785    |                     | $          | (162,221 | ) | $ | 226,392 |   | $ | (175,773 | ) |
| Net noncurrent deferred  income taxes     |       | $                        | 3,564      |                     |       |   | $ | 50,619 |   |   |   |
|                                           |            |                          |            |                          |            |  |  |  |  |  |  |  |  |  |  |

 

The Company’s federal income tax loss carryforward of$648,000,000 will begin to expire in 2008 and will completely expire in 2026and will be limited to approximately $23,000,000 annually due to the sale ofPreferred Stock, the acquisition of GC and the acquisition of Loews. TheCompany’s state income tax loss carryforwards of $672,000,000 may be used overvarious periods ranging from 5 to 20 years.

As of March 30, 2006, management believed it wasmore likely than not that net deferred tax assets related to tax net operatingloss carryforwards and certain deferred tax assets of foreign subsidiarieswould not be realized due to uncertainties as to the timing and amounts offuture taxable income as a result of the Mergers. The Successor has recorded afull valuation allowance against its net deferred tax assets in U.S. andcertain foreign jurisdictions of $428,560,000 and a partial valuation allowanceof $1,690,000 related to deferred tax assets in the Mexico tax jurisdiction asof March 30, 2006.

Management believes it is more likely than not thatthe Company will generate future taxable income in the Mexico tax jurisdictionto realize its remaining recorded deferred tax assets. However, the amount ofthe deferred tax asset considered realizable could be reduced in the future ifestimates of future taxable income during the carryforward period are reduced.

The Company had avaluation allowance of $430,250,000, $118,719,200, $26,485,000, $20,592,000 and$10,254,000 as of March 30, 2006, March 31, 2005, April 1, 2004,April 3, 2003 and March 28, 2002, respectively. All changes in thevaluation allowance were recorded in the income tax provision except for$206,647,000 which was recorded during the Successor period ended March 30,2006 as part of the purchase price allocation in connection with the Merger andmerger with Marquee, $40,062,000 which was recorded during the Successor periodended March 31, 2005 as part of the purchase price allocation in 

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connectionwith the merger with Marquee and $2,600,000 which was recorded in loss fromdiscontinued operations in the year ended March 28, 2002.

**NOTE 10—LEASES**

During fiscal 1998, the Company sold the real estateassets associated with 13 theatres to Entertainment Properties Trust (“EPT”)for an aggregate purchase price of $283,800,000 (the “Sale and Lease BackTransaction”). The Company leased the real estate assets associated with thetheatres from EPT pursuant to non-cancelable operating leases with termsranging from 13 to 15 years at an initial lease rate of 10.5% with optionsto extend for up to an additional 20 years. The leases are triple netleases that require the Company to pay substantially all expenses associatedwith the operation of the theatres, such as taxes and other governmentalcharges, insurance, utilities, service, maintenance and any ground leasepayments. The Company has accounted for this transaction as a sale andleaseback in accordance with Statement of Financial Accounting Standards No. 98*Accounting for Leases*. The landand building improvements have been removed from the Consolidated BalanceSheets. During fiscal 2000, the Company sold the building and improvementsassociated with one of the Company’s theatres to EPT for proceeds of$17,600,000 under terms similar to the above Sale and Leaseback Transaction.During fiscal 2002, the Company sold the land at this theatre to EPT forproceeds of $7,500,000 under terms similar to the above Sale and LeasebackTransaction and at an initial lease rate of 10.75%. During fiscal 2003, theCompany sold the real estate assets associated with 2 theatres to EPT forproceeds of $43,665,000 and then leased the real estate assets associated withthese theatres pursuant to non-cancelable operating leases with terms of20 years at an initial lease rate of 11% with options to extend for up toan additional 15 years. On March 30, 2004, the Company sold the realestate assets associated with 3 theatres to EPT for proceeds of $63,911,000 andthen leased the real estate assets associated with these theatres pursuant tonon-cancelable operating leases with terms of 20 years at an initial leaserate of 9.5% with options to extend for up to 15 additional years. On March 31,2005, the Company sold the real estate assets associated with one theatre andadjoining retail space to EPT for proceeds of $50,910,000 and then leased thereal estate assets associated with this theatre pursuant to non-cancelableoperating lease with a term of 20 years at an initial lease rate of 9.2%with options to extend for up to 14 additional years. On March 30, 2006,the Company sold the real estate assets associated with 2 theatres to EPT forproceeds of $35,010,000 and then leased the real estate assets associated withthese theatres pursuant to non-cancelable operating leases with terms of 15 and18 years at an initial lease rate of 9.25% with options to extend for upto 20 additional years.

Followingis a schedule, by year, of future minimum rental payments required underexisting operating leases that have initial or remaining non-cancelable termsin excess of one year as of March 30, 2006 (Cinemex operating lease totalsinclude an inflationary factor in the annual minimum lease commitments for allapplicable leases):

| **(In thousands)**          | ** ** | ** ** | ** ** | **Minimum operating  lease payments** | ** ** |
|----------------------------------|------------|------------|------------|-------------------------------------------------|------------|
| 2007                             |       |       | $          | 408,007                                         |       |   |
| 2008                             |       |       | 422,674    |                                            |       |
| 2009                             |       |       | 419,634    |                                            |       |
| 2010                             |       |       | 416,863    |                                            |       |
| 2011                             |       |       | 408,945    |                                            |       |
| Thereafter                       |       |       | 3,341,769  |                                            |       |
| Total minimum payments  required |       |       | $          | 5,417,892                                       |       |   |

 

The Company has also entered into agreements to leasespace for the operation of 13 theatres with 206 screens not yet fullyconstructed. The future minimum rental payments required under the terms ofthese leases included above total approximately $438,000,000. The Companyrecords rent expense on a 

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straight-line basis overthe base term of the lease commencing with the date the Company has “controland access” to the leased premises.

Included in long-term liabilities as of March 30,2006 and March 31, 2005 is $253,814,000 and $253,441,000, respectively, ofdeferred rent representing future minimum rental payments for leases withscheduled rent increases and unfavorable lease liabilities including thoserelated to the Merger transaction.

Rentexpense is summarized as follows:

| **(In thousands)**                    | ** ** | ** **      | ** ** | **March 30, 2006** | ** ** | **From Inception  July 16, 2004  through  March 31, 2005** | ** ** | ** **        | ** ** | **From April 2, 2004  through  December 23, 2004** | ** ** | **52 Weeks  April 1, 2004** | ** ** |
|--------------------------------------------|------------|-----------------|------------|------------------------------|------------|-------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------------------------------------------------------------|------------|--------------------------------------------|------------|
| ** **                                 | ** ** | **(Successor)** | ** ** | **(Successor)**              | ** ** | ** **                                                                          | ** ** | **(Predecessor)** | ** ** | **(Predecessor)**                                                           | ** ** |
| Minimum rentals                            |       |            | $          | 292,732                      |       |                                                                                |       | $                 | 71,189     |                                                                        |       |                                       |       |   | $ | 195,932 |   |   |   | $ | 252,047 |   |   |
| Common area  expenses                      |       |            | 32,711     |                         |       |                                                                                | 8,007      |              |       |                                                                        |       |                                       | 21,207     |   |   |   | 26,317 |   |   |
| Percentage  rentals based on revenues      |       |            | 4,435      |                         |       |                                                                                | 1,130      |              |       |                                                                        |       |                                       | 3,827      |   |   |   | 4,373 |   |   |
| Furniture,  fixtures and equipment rentals |       |            | —     |                         |       |                                                                                | 450        |              |       |                                                                        |       |                                       | 2,768      |   |   |   | 5,584 |   |   |
| Theatre Rent                               |       |            | 329,878    |                         |       |                                                                                | 80,776     |              |       |                                                                        |       |                                       | 223,734    |   |   |   | 288,321 |   |   |
| NCN and other                              |       |            | —     |                         |       |                                                                                | 38         |              |       |                                                                        |       |                                       | 587        |   |   |   | 1,021 |   |   |
| G & A  and other                  |       |            | 1,559      |                         |       |                                                                                | 443        |              |       |                                                                        |       |                                       | 954        |   |   |   | 3,084 |   |   |
| Total                                      |       |            | $          | 331,437                      |       |                                                                                |       | $                 | 81,257     |                                                                        |       |                                       |       |   | $ | 225,275 |   |   |   | $ | 292,426 |   |   |

 

**NOTE 11—EMPLOYEEBENEFIT PLANS**

The Company sponsors a non-contributory qualifieddefined benefit pension plan generally covering all employees age 21 or olderwho have completed at least 1,000 hours of service in their first twelvemonths of employment, or in a calendar year ending thereafter, and who are notcovered by a collective bargaining agreement.

Under the plan, benefits are integrated with SocialSecurity and paid to participants at retirement based primarily upon years ofcredited service with the Company (not exceeding thirty-five) and the employee’shighest five year average compensation. Contributions to the plan reflectbenefits attributed to employee’s services to date, as well as servicesexpected to be earned in the future. The Company expects to contribute$1,400,000 to the defined benefit pension plan during fiscal 2007. Plan assetsare invested in pooled separate accounts with an insurance company pursuant towhich the plan’s benefits are paid to retired and terminated employees and the beneficiariesof deceased employees. The Company also sponsors two non-contributorynonqualified deferred compensation plans which provide additional pensionbenefits to certain eligible employees.

As a result of the Merger, the Company acquired twopension plans in the U.S and one in Mexico. One of the U.S. plans is a frozencash balance plan and neither of the U.S. plans have admitted new participantspost-merger. The future existence of the U.S. plans will serve to pay benefitsto the current participants under the requirements of the plan. In Mexico, aSeniority Premium and Termination Indemnity for Retirement Plan (the “MexicoPlan”) is provided to all eligible employees of Servicios CinematograficosEspecializados, S.A. de C.V. (“SCE”) and a Termination Indemnity RetirementPlan to all eligible employees of Servino, S.A. de C.V. (“Servino”). Both SCEand Servino are wholly owned subsidiaries of Cinemex. The Mexico Planestablishes compensation upon retirement (pension and seniority premium) basedon years of service rendered and the employee’s age and salary at the date ofretirement. This plan has not been funded as of March 30, 2006.

89

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The Company currently offers eligible retirees theopportunity to participate in a health plan (medical, dental, vision andprescription) and a life insurance plan. Employees may become eligible forthese benefits at retirement provided the employee is at least age 55 and hasat least 15 years of credited service after age 40 and is participating inthe American Multi-Cinema, Inc. Employee Benefits Welfare Plan as ofthe date of termination. The health plan is contributory, with retireecontributions adjusted annually; the life insurance plan is noncontributory.The accounting for the health plan currently anticipates future modificationsto the cost-sharing provisions to provide for retiree premium contributions ofapproximately 20% of total premiums, increases in deductibles and co-insuranceat the medical inflation rate and coordination with Medicare. The retireehealth plan is not funded.

The Company’s reorganization activities commencingduring fiscal 2005 resulted in a partial curtailment of the Company’spostretirement and one of its non-contributory nonqualified deferredcompensation plans. The Company defers curtailment gains until they arerealized and, as such, curtailment gains of $2,251,000 were recognized for theyear ended March 30, 2006.

The reorganization activities also prompted anamendment to the non-contributory nonqualified deferred compensation planwhereby participants who are terminated as a result of reorganizationactivities and who have at least 15 years of service are eligible toreceive benefits under the plan. Prior to this amendment, participants wererequired to have reached age 55 and have 15 years of service to beeligible for benefits.

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Themeasurement date used to determine pension and other postretirement benefits isJanuary 1 of the fiscal year for which measurements are made. Theassumptions to determine benefit obligations and net periodic benefit cost areas follows:

| ** **                                                              | ** ** | **LCE**            | ** ** | **AMCE**             | ** ** | ** ** | ** ** | **LCE**            | ** ** | **AMCE**           | ** ** |
|-------------------------------------------------------------------------|------------|--------------------|------------|----------------------|------------|------------|------------|--------------------|------------|--------------------|------------|
| ** **                                                              | ** ** | **Pension**        | ** ** | ** **           | ** ** | ** ** | ** ** | ** **         | ** ** | ** **         | ** ** | ** ** | ** ** | **Post-** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** | ** ** |
| ** **                                                              | ** ** | **Benefits**       | ** ** | **Pension Benefits** | ** ** | ** ** | ** ** | **retirement**     | ** ** | **Other Benefits** | ** ** |
| ** **                                                              | ** ** | **March 30,** | ** ** | **March 30,**   | ** ** | ** ** | ** ** | **March 31,** | ** ** | **April 1,**  | ** ** | ** ** | ** ** | **March 30,** | ** ** | **March 30,** | ** ** | **March 31,** | ** ** | ** ** | ** ** | **April 1,** | ** ** |
| ** **                                                              | ** ** | **2006**           | ** ** | **2006**             | ** ** | ** ** | ** ** | **2005**           | ** ** | **2004**           | ** ** | ** ** | ** ** | **2006** | ** ** | **2006** | ** ** | **2005** | ** ** | ** ** | ** ** | **2004** | ** ** |
| ** **                                                              | ** ** | **(Successor)**    | ** ** | **(Successor)**      | ** ** | ** ** | ** ** | **(Successor)**    | ** ** | **(Predecessor)**  | ** ** | ** ** | ** ** | **(Successor)** | ** ** | **(Successor)** | ** ** | **(Successor)** | ** ** | ** ** | ** ** | **(Predecessor)** | ** ** |
| Weighted-average  assumptions used to determine benefit obligations at: |       |               |       |                 |       |       |       |               |       |               |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount  rate                                                          |       |               | 5.50       | %                    |       |       | 5.75       | %                  |       |               |       |   | 5.75 | % |   |   | 6.25 | % |   |   |   |   | 5.50 | % |   |   | 5.75 | % |   |   | 5.75 | % |   |   |   |   | 6.25 | % |   |
| Rate of compensation  increase                                          |       |               | 4.79       | %                    |       |       | 3.5%-6.0%  |               |       |               |       |   | 5.50 | % |   |   | 5.97 | % |   |   |   |   | N/A |   |   |   | 5.00 | % |   |   | 5.00 | % |   |   |   |   | 5.00 | % |   |
|                                                                         |            |                    |            |                      |            |            |            |                    |            |                    |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

| ** ** | ** ** | **LCE**                                            | ** ** | **AMCE**                                       | ** ** | ** ** | ** ** | **LCE**                                                                 | ** ** | **AMCE**           | ** ** |
|------------|------------|----------------------------------------------------|------------|------------------------------------------------|------------|------------|------------|-------------------------------------------------------------------------|------------|--------------------|------------|
| ** ** | ** ** | **Pension  Benefits**                              | ** ** | **Pension Benefits**                           | ** ** | ** ** | ** ** | **Other  Benefits**                                                     | ** ** | **Other Benefits** | ** ** |
| ** ** | ** ** | **January 26  through  March 30,  2006** | ** ** | **52 Weeks  ended  March 30,  2006** | ** ** | ** ** | ** ** | **From  Inception  July 16,  2004  through  March 31,  2005** | ** ** | ** **         | ** ** | **April 2,  2004  through  Dec. 23,  2004** | ** ** | **52 Weeks  ended  April 1,  2004** | ** ** | ** ** | ** ** | **January 26  through  March 30,  2006** | ** ** | **52 Weeks  ended  March 30,  2006** | ** ** | **From  Inception  July 16,  2004  through  March 31,  2005** | ** ** | ** ** | ** ** | **April 2,  2004  through  Dec. 23,  2004** | ** ** | **52 Weeks  ended  April 1,  2004** | ** ** |
| ** ** | ** ** | **(Successor)**                                    | ** ** | **(Successor)**                                | ** ** | ** ** | ** ** | **(Successor)**                                                         | ** ** | ** **         | ** ** | **(Predecessor)** | ** ** | **(Predecessor)** | ** ** | ** ** | ** ** | **(Successor)** | ** ** | **(Successor)** | ** ** | **(Successor)** | ** ** | ** ** | ** ** | **(Predecessor)** | ** ** | **(Predecessor)** | ** ** |

| Weighted-average  assumptions used to determine net periodic benefit cost: |   |   |       |   |   |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Discount  rate                                                             |   |   | 5.50       | %      |   |   | 5.75     | %      |   |   |   |   | 6.25   | %      |   |   |   |   | 6.25   | %      |   |   | 6.75   | %      |   |   |   |   | 5.50   | %      |   |   | 5.75   | %      |   |   | 6.25   | %      |   |   |   |   | 6.25   | %      |   |   | 6.25   | %      |   |
| Expected  long-term return on plan assets                                  |   |   | 5.00  8.25 | -%     |   |   | 8.25     | %-     |   |   |   |   | 8.25   | %      |   |   |   |   | 8.25   | %      |   |   | 8.50   | %      |   |   |   |   | n/a    |   |   |   | n/a    |   |   |   | n/a    |   |   |   |   |   | n/a    |   |   |   | n/a    |   |   |
| Rate of compensation  increase                                             |   |   | 4.79       | %      |   |   | 3.5  6.0 | %-  %  |   |   |   |   | 5.50   | %      |   |   |   |   | 5.50   | %      |   |   | 5.97   | %      |   |   |   |   | n/a    |   |   |   | 5.00   | %      |   |   | 5.00   | %      |   |   |   |   | 5.00   | %      |   |   | 5.00   | %      |   |

 

Netperiodic benefit cost for the four plans consists of the following:

| ** **                                | ** ** | **Pension Benefits**                      | ** ** | ** **                                                              | ** ** | **Other Benefits** | ** ** |
|-------------------------------------------|------------|------------------------------------------------|------------|-------------------------------------------------------------------------|------------|-------------------------|------------|
| **(In thousands)**                   | ** ** | **52 Weeks  ended  March 30,  2006** | ** ** | **From  Inception  July 16,  2004  through  March 31,  2005** | ** ** | ** **              | ** ** | **April 2,  2004  through  December 23,  2004** | ** ** | **52 Weeks  Ended  April 1,  2004** | ** ** | ** ** | ** ** | **52 Weeks  ended  March 30,  2006** | ** ** | **From  Inception  July 16,  2004  through  March 31,  2005** | ** ** | ** ** | ** ** | **April 2,  2004  through  December 23,  2004** | ** ** | **52 Weeks  Ended  April 1,  2004** | ** ** |
| ** **                                | ** ** | **(Successor)**                                | ** ** | **(Successor)**                                                         | ** ** | ** **              | ** ** | **(Predecessor)** | ** ** | **(Predecessor)** | ** ** | ** ** | ** ** | **(Successor)** | ** ** | **(Successor)** | ** ** | ** ** | ** ** | **(Predecessor)** | ** ** | **(Predecessor)** | ** ** |
| Components of net  periodic benefit cost: |       |                                           |       |                                                                    |       |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                           |            |                                                |            |                                                                         |            |                         |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

| Service  cost                                       |   |   | $      | 3,918  |   |   |   | $      | 941    |   |   |   |   |   | $      | 2,318  |   |   |   | $      | 2,574  |   |   |   |   |   | $      | 514    |   |   |   | $      | 185    |   |   |   |   |   | $      | 444   |   |   |   | $ | 605   |   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|-------|--------|--------|--------|---|-------|--------|--------|
| Interest  cost                                      |   |   | 4,703  |   |   |   | 1,256  |   |   |   |   |   | 3,063  |   |   |   | 3,641  |   |   |   |   |   | 1,054  |   |   |   | 325    |   |   |   |   |   | 772    |   |   |   | 1,042  |   |   |
| Expected  return on plan assets                     |   |   | (3,737 | )      |   |   | (892   | )      |   |   |   |   | (2,426 | )      |   |   | (2,985 | )      |   |   |   |   | – |   |   |   | – |   |   |   |   |   | – |   |   |   | – |   |   |
| Recognized  net actuarial loss                      |   |   | 50     |   |   |   | – |   |   |   |   |   | 760    |   |   |   | 691    |   |   |   |   |   | – |   |   |   | – |   |   |   |   |   | 87     |   |   |   | 111    |   |   |
| Amortization  of unrecognized transition obligation |   |   | – |   |   |   | – |   |   |   |   |   | 129    |   |   |   | 176    |   |   |   |   |   | – |   |   |   | – |   |   |   |   |   | 36     |   |   |   | 50     |   |   |
| Amortization  of prior service cost                 |   |   | – |   |   |   | – |   |   |   |   |   | 70     |   |   |   | 95     |   |   |   |   |   | – |   |   |   | – |   |   |   |   |   | 20     |   |   |   | 29     |   |   |
| Plan  amendment                                     |   |   | 455    |   |   |   | – |   |   |   |   |   | – |   |   |   | – |   |   |   |   |   | – |   |   |   | – |   |   |   |   |   | – |   |   |   | – |   |   |
| Curtailment                                         |   |   | (1,141 | )      |   |   | – |   |   |   |   |   | – |   |   |   | – |   |   |   |   |   | (1,110 | )      |   |   | – |   |   |   |   |   | – |   |   |   | – |   |   |
| Net periodic benefit cost                           |   |   | $      | 4,248  |   |   |   | $      | 1,305  |   |   |   |   |   | $      | 3,914  |   |   |   | $      | 4,192  |   |   |   |   |   | $      | 458    |   |   |   | $      | 510    |   |   |   |   |   | $      | 1,359 |   |   |   | $ | 1,837 |   |   |

 

91

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Thefollowing tables set forth the plan’s change in benefit obligations and planassets and the accrued liability for benefit costs included in the ConsolidatedBalance Sheets for the years ended March 30, 2006 and March 31, 2005:

| ** **                     | ** ** | **Pension Benefits**                      | ** ** | ** **                                                              | ** ** | **Other Benefits** | ** ** |
|--------------------------------|------------|------------------------------------------------|------------|-------------------------------------------------------------------------|------------|-------------------------|------------|
| **(In thousands)**        | ** ** | **52 Weeks  Ended  March 30,  2006** | ** ** | **From  Inception  July 16,  2004  through  March 31,  2005** | ** ** | ** **              | ** ** | **April 2,  2004  through  December 23,  2004** | ** ** | ** ** | ** ** | **52 Weeks  Ended  March 30,  2006** | ** ** | **From  Inception  July 16,  2004  through  March 31,  2005** | ** ** | ** ** | ** ** | **April 2,  2004  through  December 23,  2004** | ** ** |
| ** **                     | ** ** | **(Successor)**                                | ** ** | **(Successor)**                                                         | ** ** | ** **              | ** ** | **(Predecessor)** | ** ** | ** ** | ** ** | **(Successor)** | ** ** | **(Successor)** | ** ** | ** ** | ** ** | **(Predecessor)** | ** ** |
| Change in benefit  obligation: |       |                                           |       |                                                                    |       |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                |            |                                                |            |                                                                         |            |                         |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

| Benefit obligation at beginning of period        |   |   | $      | 80,446 |   |   |   | $      | – |   |   |   |   |   | $      | 67,477 |   |   |   |   |   | $      | 18,563 |   |   |   | $      | – |   |   |   |   |   | $ | 17,144 |   |   |
|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---|--------|--------|--------|
| Benefit obligation related to acquisition of LCE |   |   | 12,345 |   |   |   | – |   |   |   |   |   | – |   |   |   |   |   | 9,704  |   |   |   | – |   |   |   |   |   | – |   |   |
| Transferred balance from Predecessor             |   |   | – |   |   |   | 78,270 |   |   |   |   |   | – |   |   |   |   |   | – |   |   |   | 17,740 |   |   |   |   |   | – |   |   |
| Service cost                                     |   |   | 3,918  |   |   |   | 941    |   |   |   |   |   | 2,318  |   |   |   |   |   | 514    |   |   |   | 185    |   |   |   |   |   | 444    |   |   |
| Interest cost                                    |   |   | 4,703  |   |   |   | 1,256  |   |   |   |   |   | 3,063  |   |   |   |   |   | 1,054  |   |   |   | 325    |   |   |   |   |   | 772    |   |   |
| Plan participant’s contributions            |   |   | – |   |   |   | – |   |   |   |   |   | – |   |   |   |   |   | 204    |   |   |   | – |   |   |   |   |   | 165    |   |   |
| Actuarial (gain) loss                            |   |   | (5,864 | )      |   |   | (9     | )      |   |   |   |   | 7,445  |   |   |   |   |   | 266    |   |   |   | 313    |   |   |   |   |   | 35     |   |   |
| Benefits paid                                    |   |   | (2,458 | )      |   |   | (12    | )      |   |   |   |   | (2,033 | )      |   |   |   |   | (905   | )      |   |   | – |   |   |   |   |   | (820   | )      |   |
| Plan amendment                                   |   |   | 455    |   |   |   | – |   |   |   |   |   | – |   |   |   |   |   | – |   |   |   | – |   |   |   |   |   | – |   |   |
| Curtailment                                      |   |   | (1,141 | )      |   |   | – |   |   |   |   |   | – |   |   |   |   |   | (1,423 | )      |   |   | – |   |   |   |   |   | – |   |   |
| Currency translation adjustment                  |   |   | 48     |   |   |   | – |   |   |   |   |   | – |   |   |   |   |   | – |   |   |   | – |   |   |   |   |   | – |   |   |
| Benefit obligation  at end of period             |   |   | $      | 92,452 |   |   |   | $      | 80,446 |   |   |   |   |   | $      | 78,270 |   |   |   |   |   | $      | 27,977 |   |   |   | $      | 18,563 |   |   |   |   |   | $ | 17,740 |   |   |

 

92

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| ** **              | ** ** | **Pension Benefits**                      | ** ** | ** **                                                              | ** ** | **Other Benefits** | ** ** |
|-------------------------|------------|------------------------------------------------|------------|-------------------------------------------------------------------------|------------|-------------------------|------------|
| **(In thousands)** | ** ** | **52 Weeks  Ended  March 30,  2006** | ** ** | **From  Inception  July 16,  2004  through  March 31,  2005** | ** ** | ** **              | ** ** | **April 2,  2004  through  December 23,  2004** | ** ** | ** ** | ** ** | **52 Weeks  Ended  March 30,  2006** | ** ** | **From  Inception  July 16,  2004  through  March 31,  2005** | ** ** | ** ** | ** ** | **April 2,  2004  through  December 23,  2004** | ** ** |
| ** **              | ** ** | **(Successor)**                                | ** ** | **(Successor)**                                                         | ** ** | ** **              | ** ** | **(Predecessor)** | ** ** | ** ** | ** ** | **(Successor)** | ** ** | **(Successor)** | ** ** | ** ** | ** ** | **(Predecessor)** | ** ** |
| Change in plan  assets: |       |                                           |       |                                                                    |       |                    |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                         |            |                                                |            |                                                                         |            |                         |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

| Fair value of plan assets at beginning of period |   |   | $      | 43,789  |   |   |   | $      | –  |   |   |   |   |   | $      | 39,833  |   |   |   |   |   | $      | –  |   |   |   | $      | –  |   |   |   |   |   | $ | –  |   |   |
|--------------------------------------------------|--------|--------|--------|---------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|--------|---------|--------|--------|--------|--------|---------|--------|--------|--------|--------|--------|---|---------|--------|--------|
| Transferred balance from Predecessor             |   |   | – |    |   |   | 43,642 |   |    |   |   |   | – |   |   |    |   |   | – |   |   |   | –  |   |   |   |   |    | – |   |   |
| Plan assets related to acquisition of LCE        |   |   | 7,893  |    |   |   | – |   |    |   |   |   | – |   |   |    |   |   | – |   |   |   | –  |   |   |   |   |    | – |   |   |
| Actual return on plan assets                     |   |   | 3,171  |    |   |   | 159    |   |    |   |   |   | 4,006  |   |   |    |   |   | – |   |   |   | –  |   |   |   |   |    | – |   |   |
| Employer contribution                            |   |   | 1,615  |    |   |   | – |   |    |   |   |   | 1,836  |   |   |    |   |   | 700    |   |   |   | –  |   |   |   |   |    | 655    |   |   |
| Plan participant’s contributions            |   |   | – |    |   |   | – |   |    |   |   |   | – |   |   |    |   |   | 205    |   |   |   | –  |   |   |   |   |    | 165    |   |   |
| Benefits paid                                    |   |   | (2,458 | )       |   |   | (12    | )      |    |   |   |   | (2,033 | )      |   |    |   |   | (905   | )      |   |   | –  |   |   |   |   |    | (820   | )      |   |
| Fair value of plan assets at end of period       |   |   | $      | 54,010  |   |   |   | $      | 43,789  |   |   |   |   |   | $      | 43,642  |   |   |   |   |   | $      | –  |   |   |   | $      | –  |   |   |   |   |   | $ | –  |   |   |
| Net liability for benefit cost:                  |   |   |   |    |   |   |   |   |    |   |   |   |   |   |   |    |   |   |   |   |   |   |    |   |   |   |   |    |   |   |   |
| Funded status                                    |   |   | $      | (38,442 | )      |   |   | $      | (36,657 | )      |   |   |   |   | $      | (34,628 | )      |   |   |   |   | $      | (27,977 | )      |   |   | $      | (18,563 | )      |   |   |   |   | $ | (17,740 | )      |   |
| Unrecognized net actuarial (gain) loss           |   |   | (5,459 | )       |   |   | (113   | )      |    |   |   |   | 20,125 |   |   |    |   |   | 266    |   |   |   | 313     |   |   |   |   |    | 289    |   |   |
| Unrecognized transition obligation               |   |   | – |    |   |   | – |   |    |   |   |   | – |   |   |    |   |   | – |   |   |   | –  |   |   |   |   |    | 197    |   |   |
| Unrecognized prior service cost                  |   |   | – |    |   |   | – |   |    |   |   |   | 685    |   |   |    |   |   | – |   |   |   | –  |   |   |   |   |    | 2,252  |   |   |
| Net liability  recognized                        |   |   | $      | (43,901 | )      |   |   | $      | (36,770 | )      |   |   |   |   | $      | (13,818 | )      |   |   |   |   | $      | (27,711 | )      |   |   | $      | (18,250 | )      |   |   |   |   | $ | (15,002 | )      |   |

 

| ** **                                | ** ** | **Pension Benefits**    | ** ** | **Other Benefits**      | ** ** |
|-------------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| **(In thousands)**                   | ** ** | **March 30, 2006** | ** ** | **March 31, 2005** | ** ** | **March 30, 2006** | ** ** | **March 31, 2005** | ** ** |
| ** **                                | ** ** | **(Successor)**              | ** ** | **(Successor)**              | ** ** | **(Successor)** | ** ** | **(Successor)** | ** ** |
| Amounts recognized  in the balance sheet: |       |                         |       |                         |       |   |   |   |   |   |   |   |   |   |   |   |   |
| Accrued benefit liability                 |       |                         | $          | (44,073                      | )          |   |   | $ | (36,770 | ) |   |   | $ | (27,711 | ) |   |   | $ | (18,250 | ) |   |
| Accumulated other comprehensive income    |       |                         | 172        |                         |       |   | – |   |   |   | – |   |   |   | – |   |   |
| Net liability  recognized                 |       |                         | $          | (43,901                      | )          |   |   | $ | (36,770 | ) |   |   | $ | (27,711 | ) |   |   | $ | (18,250 | ) |   |

 

The projected benefit obligation, accumulated benefitobligation and fair value of plan assets were $92,452,000, $77,407,000 and$54,010,000 respectively, as of March 30, 2006; and, $80,446,000,$61,288,000 and $43,789,000 respectively, as of March 31, 2005 for thethree qualified and three nonqualified pension plans with accumulated benefitobligations in excess of plan assets.

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Forits Defined Benefit Pension Plan investments, the Company employs a long-termrisk-controlled approach using diversified investment options with minimalexposure to volatile investment options like derivatives. The Company uses adiversified allocation of equity, debt, short-term and real estate exposuresthat are customized to the Plan’s cash flow benefit needs. The percentage ofplan assets by category for fiscal 2006 and 2005 are as follows:

| ** **                                | ** ** | **March 30,  2006** | ** ** | **March 31,  2005** | ** ** |
|-------------------------------------------|------------|--------------------------|------------|--------------------------|------------|
| ** **                                | ** ** | **(Successor)**          | ** ** | **(Successor)**          | ** ** |
| Equity Securities                         |       |                     | 61         | %                        |       |   | 60 | % |   |
| Debt Securities                           |       |                     | 31         | %                        |       |   | 32 | % |   |
| Real Estate  Investments & Other |       |                     | 8          | %                        |       |   | 8 | % |   |
|                                      |       |                     | 100        | %                        |       |   | 100 | % |   |

 

The expected rate of return on plan assets was 8.25%for fiscal 2006 and 2005 and 8.5% for fiscal 2004. The rate used is based uponanalysis of actual returns on plan assets in prior years including analysisprovided by the Plan Administrator.

For measurement purposes, the annual rate of increasein the per capita cost of covered health care benefits assumed for 2006 was 8.0%-10.0%for medical, 3.5% for dental and vision, and 10.5% for prescription drug. Therates were assumed to decrease gradually to 5.0% for medical in 2009, remain at3.5% for dental, and gradually decrease to 5.0% for prescription drug in 2013.The health care cost trend rate assumption has a significant effect on theamounts reported. Increasing the assumed health care cost trend rates by onepercentage point in each year would increase the accumulated postretirementbenefit obligation as of March 30, 2006 by $4,302,000 and the aggregate ofthe service and interest cost components of postretirement expense for fiscal2006 by $352,000. Decreasing the assumed health care cost trend rates by onepercentage point in each year would decrease the accumulated postretirementobligation for fiscal 2006 by $3,549,000 and the aggregate service and interestcost components of postretirement expense for fiscal 2006 by $286,000.

Thefollowing table provides the benefits expected to be paid (inclusive ofbenefits attributable to estimated future employee service) in each of the nextfive fiscal years, and in the aggregate for the five fiscal years thereafter:

| **(in thousands** | ** ** | **Pension  Benefits** | ** ** | **Other Benefits** | ** ** |
|------------------------|------------|-----------------------|------------|-------------------------|------------|
| 2007                   |       | $                     | 2,155      |                    |       | $ | 1,270 |   |   |
| 2008                   |       | 2,105                 |       |                    | 1,363      |   |   |
| 2009                   |       | 2,216                 |       |                    | 1,478      |   |   |
| 2010                   |       | 2,299                 |       |                    | 1,535      |   |   |
| 2011                   |       | 2,955                 |       |                    | 1,608      |   |   |
| Years 2012-2016        |       | 22,732                |       |                    | 8,461      |   |   |
|                        |            |                       |            |                         |            |  |  |  |  |

 

The Company’s retiree health plan provides a benefitto its retirees that is at least actuarially equivalent to the benefit providedby the *Medicare Prescription Drug,Improvement and Modernization Act of 2003* (“Medicare Part D”).Since the Company’s plan is more generous than Medicare Part D, it isconsidered at least actuarially equivalent to Medicare Part D and thegovernment provides a federal subsidy to the plan. The Company made noadjustment to its participation rates due to Medicare Part D and estimateda $400 per year subsidy at age 75 for the initial year of 2006, with the amountof the subsidy moving in direct relation to the participant’s age.

The Plan’s accumulated plan benefit obligation as ofJanuary 1, 2006 was reduced by $1,934,000 for the subsidy related tobenefits attributed to past service. The Company recognized a reduction of$140,000 

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in net periodicpostretirement benefit cost during the period ended March 30, 2006 and thesubsidy will in the future also continue to reduce net periodic postretirementbenefit cost by adjusting the interest cost, service cost and actuarial gain orloss to reflect the effects of the subsidy. The Company estimates that it willreceive annual subsidies of $50,000 during fiscal 2007 increasing to $80,000during fiscal 2011 and an additional $500,000 through fiscal 2016.

The Company sponsors a voluntary 401(k) savingsplan covering employees age 21 or older who have completed at least1,000 hours of service in their first twelve months of employment, or in acalendar year thereafter, and who are not covered by a collective bargainingagreement. The Company matches 100% of each eligible employee’s electivecontributions up to 3% of the employee’s compensation and 50% of each eligibleemployee’s elective contributions on the next 2% of the employee’s pay. TheSuccessor’s expense under the 401(k) savings plan was $1,919,000 and$633,000 for the periods ended March 30, 2006 and March 31, 2005,respectively, and the Predecessor’s expense under the plan was $1,490,000 and$2,175,000 for the periods ended December 23, 2004 and April 1, 2004,respectively. The Company acquired the LCE defined contribution Profit Sharingand Savings Plan which was frozen as of the Merger date.

Certain theatre employeesare covered by union-sponsored pension and health and welfare plans.Company contributions into these plans are determined in accordance withprovisions of negotiated labor contracts. Contributions aggregated $358,000 and$82,000, for the Successor periods ended March 30, 2006 and March 31,2005, respectively, and $242,000 and $380,000 for the Predecessor periods endedDecember 23, 2004 and April 1, 2004, respectively. As ofMarch 30, 2006, the Company estimates potential complete withdrawalliabilities for certain of these plans of approximately $4.1 million. Asof March 30, 2006, no demand has been received by the Company related tothese plans asserting either a complete or partial withdrawal liability.

**NOTE 12—COMMITMENTSAND CONTINGENCIES**

The Company, in the normal course of business, isparty to various legal actions. Except as described below, management believesthat the potential exposure, if any, from such matters would not have amaterial adverse effect on the financial condition, cash flows or results ofoperations of the Company.

*JoseVargas and Maria Victoria Vargas v. R.K. Butler and EPT DOWNREIT II andAmerican Multi-Cinema, Inc. d/b/a AMC Theatres Studio 30 and HoustonPolice Department*   (No. 2003-61045filed in the District Court of Harris County, Texas). On November 3, 2003,Jose Vargas and Maria Victoria Vargas as beneficiaries of Jose Vargas, Jr.filed a wrongful death action seeking damages related to the death of theirminor son. The case arises from a shooting death that occurred approximatelyone and a half blocks away from the premises of the AMC Studio 30 in Houston,Texas on October 31, 2003. The Vargas youth was shot by a Houston Policeofficer who was working as an off-duty security officer at the AMC Studio 30.The Vargas youth had been driving around the AMC parking lot with friends in anautomobile prior to the shooting. The plaintiffs are seeking unspecifieddamages on a variety of legal theories. Liability arising from this incident isan insured risk subject to our regular retention.

*UnitedStates of America v. AMC Entertainment Inc. and American Multi-Cinema, Inc.*   (No. 99-01034FMC (SHx), filed in the U.S. District Court for the Central District ofCalifornia). On January 29, 1999, the Department of Justice (the“Department”) filed suit alleging that AMCE’s stadium-style theatresviolate the ADA and related regulations. The Department alleged that AMCE hadfailed to provide persons in wheelchairs seating arrangements with lines ofsight comparable to the general public. The Department alleged various non-lineof sight violations as well. The Department sought declaratory and injunctiverelief regarding existing and future theatres with stadium-style seating,compensatory damages in the approximate amount of $75,000 and a civil penaltyof $110,000.

On November 20, 2002 the trial court enteredsummary judgment in favor of the Justice Department on the line of sightaspects of this case. The trial court ruled that wheelchair spaces locatedsolely on the 

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sloped floor portion ofthe stadium-style auditoriums fail to provide lines of sight comparableto the general public. The trial court did not address specific changes thatmight be required of AMCE’s existing stadium-style auditoriums, holdingthat *per se* rules are simplynot possible because the requirements of comparable lines of sight will varybased on theatre layout.

On January 10, 2006, the trial court ruled infavor of the Department regarding the appropriate remedy in the line of sightaspects of this case. In its decision, the court issued a comprehensive orderregarding line of sight and other related remedies, which covers the remainingline of sight issues at the majority of the Company’s existing and all of itsfuture construction stadium-style theatres nationwide, as well as otherrelated forms of relief sought by the United States in this action.

AMCE estimates that the cost of the bettermentsrelated to the remedies for line of sight violations of the ADA will be $20 million,which is expected to be incurred over a 4-5 year term. Additionally,the order calls for payments of $300,000 to the United States and individualcomplainants. AMCE has appealed the court’s order.

AMCE previously recorded a liability related to estimatedlosses for the Department of Justice line of sight aspect of the case in theamount of $179,350 (comprised primarily of compensatory damages and the civilpenalty) and had estimated the range of loss to be between $179,350 and$273,938. As a result of the new order the loss is estimated to be between$349,350 and $443,938. Accordingly, AMCE has increased the related liability to$349,350.

On January 21, 2003, the trial court enteredsummary judgment in favor of the Department on non-line of sight aspects of thecase, which involve such matters as parking areas, signage, ramps, location oftoilets, counter heights, ramp slopes, companion seating and the location andsize of handrails. In its non-line of sight decision, the trial court concludedthat AMCE has violated numerous sections of the ADA and engaged in a patternand practice of violating the ADA.

On December 5, 2003, the trial court entered aconsent order and final judgment on non-line of sight issues under which AMCEagreed to remedy certain violations at twelve of its stadium-styletheatres and to survey and make required betterments for its patrons withdisabilities at its stadium-style theatres and at certain theatres it mayopen in the future. Currently AMCE estimates that these betterments will berequired at approximately 140 stadium-style theatres. AMC estimates thatthe total cost of these betterments will be $47.5 million, which isexpected to be incurred over the remaining term of the consent order of2.7 years. Through March 30, 2006 AMCE has incurred approximately$7.1 million of these costs. The estimate is based on actual costsincurred on remediation work completed to date. The actual costs of bettermentsmay vary based on the results of surveys of the remaining theatres.

*AmericanMulti-Cinema, Inc. v. Midwest Drywall Company, Inc., HaskellConstructors, Ltd. etal.*   (CaseNo. 00CV84908, Circuit Court of Platte County, Missouri) and American Multi-Cinema, Inc. v.Bovis Construction Corp. et al. (Civil Action No. 0207139, Court ofCommon Pleas of Bucks County, Pennsylvania). AMCE is the plaintiff in these andrelated suits in which it seeks to recover damages from the constructionmanager, certain fireproofing applicators and other parties to correct thedefective application of certain fireproofing materials at 21 theatres. AMCEcurrently estimates its claim for repair costs at these theatres will aggregateapproximately $33.6 million of which it has expended approximately$27.4 million through March 30, 2006. The remainder is for projectedcosts of repairs yet to be performed. AMCE also is seeking additional damagesfor lost profits, interest and legal and other expenses incurred.

AMCE has received settlement payments from variousparties in connection with this matter of $935,000, $2,610,000 and $925,000during fiscal 2006, 2005 and 2004, respectively. AMCE received additionalsettlement payments of $1,350,000 from various parties in connection with thismatter subsequent to March 30, 2006 and has entered into settlementagreements with various parties providing for additional settlement payments toAMCE aggregating $3,850,000. Gain contingencies are recognized 

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upon receipt and recordedin disposition of assets and other gains in the Consolidated Statements ofOperations.

*MetreonArbitration.**  *InMay 1997, Loews entered into a 21-year lease with Metreon, Inc.(“Metreon”) to operate a megaplex theatre in an entertainment/retail centerdeveloped by Metreon in San Francisco. Since that theatre opened inJune 1999, Loews has had a dispute with Metreon with respect to(1) construction costs that Metreon claims are Loews’ responsibility underthe lease and (2) the percentage of the center occupied by the theatre andthe nature, magnitude and allocation of the costs that Metreon is seeking toinclude as operating expenses under the lease. The amount of operating expensesclaimed by Metreon to be allocable to this theatre is based upon the landlord’sassertion that Loews occupies at least 48.5% of the center. Loews asserted thatit occupied substantially less of the center and that various expenses includedin operating expenses charged to Loews were improper. Loews arbitrated thisdispute in June 2003 and prevailed but the award was later vacated by theCalifornia Court of Appeals. Westfield Group purchased the property inApril 2006 and renewed settlement discussions with AMCE.

We are a party to variousother legal proceedings in the ordinary course of business, none of which isexpected to have a material adverse effect on us.

In November 2003, the Cineplex Galaxy Income Fund(the “Fund”), a Canadian income trust, was established to indirectly holdsubstantially all the assets of Cineplex Odeon Corporation (“COC”), a formerwholly-owned subsidiary of Loews, and all of the capital stock of GalaxyEntertainment, Inc., another Canadian film exhibitor controlled by Onex,one of Loews’ former Stockholders. On November 26, 2003, the Fundcompleted an initial public offering of Fund Units in Canada. As a result ofthese transactions, Loews, through COC, indirectly owned 44.4% of the Fund andagreed to indemnify the Fund, the holders of Fund Units and the underwriters,among others, for liabilities resulting from misrepresentations in theprospectus used in the offering of Fund Units and breaches of therepresentations and warranties made by COC in the various agreements enteredinto in connection with the sale of COC’s assets and the offering. Loew’s totalmaximum liability under this indemnity was limited to the net cash proceeds ofthe offering plus amounts drawn under the Cineplex Galaxy Term Loan facilitythat was put in place in connection with the offering ($164.5 million). Inconnection with the sale of COC to affiliates of Onex and OCM Cinema, theseaffiliates agreed to indemnify Loews for any and all liabilities resulting fromLoew’s indemnification obligations.

In January 2004, Loew’s issued a corporateguaranty on behalf of Neue Filmpalast, its former German partnership, forcertain acquisition related costs that the partnership was required to pay. InApril 2004, Loews made an additional contribution of $1.2 million toNeue Filmpalast, its German partnership, which the Company believes satisfied asignificant portion of the guaranty. Additionally, a subsidiary of Loews wasguarantor of several of the theatre leases of Neue Filmpalast. In connectionwith the sale of Loews interest in the German operations to affiliates of Onexand OCM Cinema, these affiliates have agreed to indemnify the Company for anyand all liabilities resulting from Loew’s indemnification obligations.

Based upon the Company’shistorical experience and information known as of March 30, 2006, theCompany believes its potential liability related to its guarantees andindemnities is not material.

**NOTE 13—THEATRE ANDOTHER CLOSURE AND DISPOSITION OF ASSETS**

The Company has provided reserves for estimated lossesfrom theatres which have been closed, vacated office space, and fromterminating the operation of fast food and other restaurants operated adjacentto certain of the Company’s theatres. As of March 30, 2006, the Companyhas reserved $26,334,000 for lease terminations which have either not beenconsummated or paid, related primarily to 10 U.S. and Canada theatres with 73screens and vacant restaurant and office space. In connection with the Merger,the Company accrued $4,845,000 for future lease obligations at facilities thathad been closed or 

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were duplicate facilitiesthat were planned to be closed following the Merger. The accrual was primarilyrelated to the planned closing of the New York City home office. The Company isobligated under long-term lease commitments with remaining terms of up to14 years for theatres which have been closed. As of March 30, 2006,base rents aggregated approximately $7,651,000 annually and $27,435,000 overthe remaining terms of the leases. The estimated future lease obligation of theLoews’ properties were discounted at the estimated borrowing rate at the dateof the Merger of 8.82%. In connection with the merger with Marquee, thecarrying value of the theatre closure liability was remeasured by using theCompany’s estimated borrowing rate on the date of the Merger of 7.55%.

Arollforward of reserves for theatre and other closure is as follows (inthousands):

| ** **                                               | ** ** | **Fifty-two Week Period** | ** ** | ** **                     | ** ** | ** **      | ** ** | ** **                                                                          | ** ** | ** ** |
|----------------------------------------------------------|------------|-------------------------------------|------------|--------------------------------|------------|-----------------|------------|-------------------------------------------------------------------------------------|------------|------------|
| ** **                                               | ** ** | **March 30, 2006**        | ** ** | ** **                     | ** ** | ** **      | ** ** | ** **                                                                          | ** ** | ** ** |
| ** **                                               | ** ** | **Theatre and  Other**         | ** ** | **Merger  Exit costs**(1) | ** ** | **Total**       | ** ** | **From Inception  July 16, 2004  through  March 31, 2005** | ** ** | ** ** | **April 2, 2004  through  December 23,  2004** | ** ** | **52 weeks  Ended  April 1, 2004** | ** ** |
| ** **                                               | ** ** | **(Successor)**                     | ** ** | **(Successor)**                | ** ** | **(Successor)** | ** ** | **(Successor)**                                                                     | ** ** | ** ** | **(Predecessor)** | ** ** | **(Predecessor)** | ** ** |
| Beginning Balance                                        |       |                                | $          | 28,506                         |       |            |       | $                                                                                   | –     |       |   |   | $ | 28,506 |   |   |   | $ | – |   |   |   |   | $ | 17,870 |   |   |   | $ | 22,499 |   |   |
| Transferred balance from Predecessor                     |       |                                | –     |                           |       |            | –     |                                                                                |       |       | – |   |   |   | 25,909 |   |   |   |   | – |   |   |   | – |   |   |
| Merger adjustment                                        |       |                                | –     |                           |       |            | 4,845      |                                                                                |       |       | 4,845 |   |   |   | – |   |   |   |   | – |   |   |   | – |   |   |
| Theatre and other closure expense                        |       |                                | 557        |                           |       |            | 44         |                                                                                |       |       | 601 |   |   |   | 1,267 |   |   |   |   | 10,758 |   |   |   | 4,068 |   |   |
| Restructuring charge                                     |       |                                | 841        |                           |       |            | –     |                                                                                |       |       | 841 |   |   |   | – |   |   |   |   | – |   |   |   | – |   |   |
| Interest expense                                         |       |                                | –     |                           |       |            | –     |                                                                                |       |       | – |   |   |   | – |   |   |   |   | 1,585 |   |   |   | 2,736 |   |   |
| General and administrative expense                       |       |                                | –     |                           |       |            | –     |                                                                                |       |       | – |   |   |   | – |   |   |   |   | 73 |   |   |   | 50 |   |   |
| Transfer of deferred rent and capital lease  obligations |       |                                | 677        |                           |       |            | –     |                                                                                |       |       | 677 |   |   |   | 2,112 |   |   |   |   | 1,610 |   |   |   | 6,014 |   |   |
| Acquisition remeasurement                                |       |                                | –     |                           |       |            | –     |                                                                                |       |       | – |   |   |   | 2,806 |   |   |   |   | – |   |   |   | – |   |   |
| Payments                                                 |       |                                | (8,865     | )                              |       |            | (271       | )                                                                                   |       |       | (9,136 | ) |   |   | (3,588 | ) |   |   |   | (5,987 | ) |   |   | (17,497 | ) |   |
| Ending balance                                           |       |                                | $          | 21,716                         |       |            |       | $                                                                                   | 4,618      |       |   |   | $ | 26,334 |   |   |   | $ | 28,506 |   |   |   |   | $ | 25,909 |   |   |   | $ | 17,870 |   |   |

----

(1)             There were no merger exit costs recorded during theSuccessor period ended March 31, 2005 or the Predecessor periods endedDecember 23, 2004 or April 1, 2004.

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Theatreand other closure reserves for leases that have not been terminated arerecorded at the present value of the future contractual commitments for thebase rents, taxes and maintenance. Theatre closure reserves at March 30,2006 and March 31, 2005 by operating segment are as follows (inthousands):

| ** **                             | ** ** | **March 30, 2006** | ** ** | **March 31, 2005** | ** ** |
|----------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                             | ** ** | **(Successor)**              | ** ** | **(Successor)**              | ** ** |
| U.S. and Canada  Theatrical Exhibition |       |                         | $          | 20,811                       |       |   |   | $ | 26,507 |   |   |
| International Theatrical  Exhibition   |       |                         | 471        |                         |       |   | 1,384 |   |   |
| Other                                  |       |                         | 315        |                         |       |   | 295 |   |   |
| Total segment  reserves                |       |                         | 21,597     |                         |       |   | 28,186 |   |   |
| Corporate                              |       |                         | 4,737      |                         |       |   | 320 |   |   |
|                                   |       |                         | $          | 26,334                       |       |   |   | $ | 28,506 |   |   |

 

**NOTE 14—RESTRUCTURING**

TheCompany’s restructuring activities are described in Note 1 of the Notes tothe Consolidated Financial Statements. A summary of restructuring and Mergerseverance payable activity during the fifty-two weeks ending March 30,2006 and March 31, 2005, is set forth below (in thousands):

| ** **              | ** ** | **Fifty-two  Week Period**

**March 30,  2006** | ** ** | **From Inception**

**July 16,  2004**

**through**

**March 31, 2005** | ** ** |
|-------------------------|------------|------------------------------------------------------|------------|----------------------------------------------------------------------------------------|------------|
| **(In thousands)** | ** ** | ** **                                           | ** ** | **Restructuring **

**Severance**

**Benefits**                                   | ** ** | **Merger**

**Severance**

**Benefits** | ** ** | **Total** | ** ** | **Restructuring **

**Severance**

**Benefits** | ** ** |
| ** **              | ** ** | **(Successor)**                                      | ** ** | **(Successor)**                                                                        | ** ** | **(Successor)** | ** ** | **(Successor)** | ** ** |
| Beginning Balance       |       |                                                 | $          | 4,926                                                                                  |       |   |   | $ | — |   |   |   | $ | 4,926 |   |   |   | $ | — |   |   |
| Restructuring  charge   |       |                                                 | 3,139      |                                                                                   |       |   | — |   |   |   | 3,139 |   |   |   | 4,926 |   |   |
| Merger adjustment       |       |                                                 | —     |                                                                                   |       |   | 27,090 |   |   |   | 27,090 |   |   |   | — |   |   |
| Payments                |       |                                                 | (8,065     | )                                                                                      |       |   | (16,519 | ) |   |   | (24,584 | ) |   |   | — |   |   |
| Ending balance          |       |                                                 | $          | —                                                                                 |       |   |   | $ | 10,571 |   |   |   | $ | 10,571 |   |   |   | $ | 4,926 |   |   |
|                         |            |                                                      |            |                                                                                        |            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

 

Restructuringand merger severance reserves at March 30, 2006 and March 31, 2005 byoperating segment are as follows (in thousands):

| ** **                             | ** ** | **March 30, 2006** | ** ** | **March 31, 2005** | ** ** |
|----------------------------------------|------------|------------------------------|------------|------------------------------|------------|
| ** **                             | ** ** | **(Successor)**              | ** ** | **(Successor)**              | ** ** |
| U.S. and Canada  Theatrical Exhibition |       |                         | $          | —                       |       |   |   | $ | — |   |   |
| International Theatrical  Exhibition   |       |                         | —     |                         |       |   | — |   |   |
| Other                                  |       |                         | —     |                         |       |   | 817 |   |   |
| Total segment  reserves                |       |                         | —     |                         |       |   | 817 |   |   |
| Corporate                              |       |                         | 10,571     |                         |       |   | 4,109 |   |   |
|                                   |       |                         | $          | 10,571                       |       |   |   | $ | 4,926 |   |   |

 

**NOTE 15—FAIR VALUEOF FINANCIAL INSTRUMENTS**

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

The carrying value of cash and equivalentsapproximates fair value because of the short duration of those instruments. Thefair value of publicly held corporate borrowings was based upon quoted marketprices.

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Theestimated fair values of the Company’s financial instruments are as follows:

| ** **              | ** ** | **March 30, 2006** | ** ** | **March 31, 2005** | ** ** |
|-------------------------|------------|------------------------------|------------|------------------------------|------------|
| **(In thousands)** | ** ** | ** **                   | ** ** | **Carrying**

**Amount**     | ** ** | **Fair**

**Value** | ** ** | **Carrying**

**Amount** | ** ** | **Fair**

**Value** | ** ** |
| ** **              | ** ** | **(Successor)**              | ** ** | **(Successor)**              | ** ** |
| Financial assets:       |       |                         |       |                         |       |   |   |   |   |
| Cash and equivalents    |       | $                            | 230,115    |                         | $          | 230,115 |   | $ | 70,949 |   | $ | 70,949 |   |
| Financial  liabilities: |       |                         |       |                         |       |   |   |   |   |
| Cash overdrafts         |       | $                            | 13,829     |                         | $          | 13,829 |   | $ | 35,320 |   | $ | 35,320 |   |
| Corporate borrowings    |       | 2,250,559                    |       | 2,227,975                    |       | 1,161,970 |   | 1,168,831 |   |
| Interest rate  swaps    |       | 2,701                        |       | 2,701                        |       | — |   | — |   |
|                         |            |                              |            |                              |            |  |  |  |  |  |  |  |  |  |  |

 

**NOTE 16—OPERATINGSEGMENTS**

The Company has identified three reportable segmentsaround differences in products and services and geographical areas. UnitedStates, Canada and International theatrical exhibition operations areidentified as separate segments based on dissimilarities in internationalmarkets from United States and Canada. Other is identified as a separatesegment due to differences in products and services offered.

The Company evaluates the performance of its segmentsand allocates resources based on several factors, of which the primary measureis Adjusted EBITDA. The Company defines Adjusted EBITDA as earnings (loss) fromcontinuing operations before interest expense, income taxes and depreciationand amortization and adjusted for preopening expense, theatre and other closureexpense, disposition of assets and other gains, investment income, otherexpense, stock-based compensation expense, merger and acquisition costs,management fees, impairment of long-lived assets and special compensation expense.The Company evaluates Adjusted EBITDA generated by its segments in a number ofmanners, of which the primary measure is a comparison of segment AdjustedEBITDA to segment property, intangibles and goodwill.

The Company’s segments follow the same accountingpolicies as discussed in Note 1 to the Consolidated Financial Statements.

Informationabout the Company’s operations by operating segment is as follows:

| **Revenues (In thousands)**   | ** ** | ** **      | ** ** | **52 Weeks**

**Ended**

**March 30, 2006** | ** ** | **From Inception**

**July 16, 2004**

**through**

**March 31, 2005** | ** **        | ** ** | **April 2, 2004**

**through**

**December 23, 2004** | ** ** | **52 Weeks**

**Ended**

**April 1, 2004** | ** ** |
|-----------------------------------------|------------|-----------------|------------|------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|-------------------|------------|---------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                              | ** ** | **(Successor)** | ** ** | **(Successor)**                                            | ** ** | ** **                                                                                      | **(Predecessor)** | ** ** | **(Predecessor)**                                                         | ** ** |
| U. S. and Canada  theatrical exhibition |       |            | $          | 1,630,529                                                  |       |                                                                                            |              | $          | 422,563                                                                   |       |                                                      |       |   | $ | 1,205,646 |   |   |   | $ | 1,609,187 |   |   |
| International  theatrical exhibition    |       |            | 43,442     |                                                       |       |                                                                                            | 6,430             |       |                                                                      |       |                                                      | 14,815     |   |   |   | 16,591 |   |   |
| Other                                   |       |            | 31,962     |                                                       |       |                                                                                            | 16,108            |       |                                                                      |       |                                                      | 57,711     |   |   |   | 71,476 |   |   |
| Intersegment  elimination               |       |            | (19,055    | )                                                          |       |                                                                                            | (5,641            | )          |                                                                      |       |                                                      | (18,900    | ) |   |   | (19,022 | ) |   |
| Total revenues                          |       |            | $          | 1,686,878                                                  |       |                                                                                            |              | $          | 439,460                                                                   |       |                                                      |       |   | $ | 1,259,272 |   |   |   | $ | 1,678,232 |   |   |

 

| **Segment Adjusted EBITDA (In thousands)** | ** ** | ** **      | ** ** | **52 Weeks**

**Ended**

**March 30, 2006** | ** ** | **From Inception**

**July 16, 2004**

**through**

**March 31, 2005** | ** **        | ** ** | **April 2, 2004**

**through**

**December 23, 2004** | ** ** | **52 Weeks**

**Ended**

**April 1, 2004** | ** ** |
|----------------------------------------------------------------|------------|-----------------|------------|------------------------------------------------------------|------------|-------------------------------------------------------------------------------------------------|-------------------|------------|---------------------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                                                     | ** ** | **(Successor)** | ** ** | **(Successor)**                                            | ** ** | ** **                                                                                      | **(Predecessor)** | ** ** | **(Predecessor)**                                                         | ** ** |
| ** **                                                     | ** ** | **(restated)**  | ** ** | ** **                                                 | ** ** | ** **                                                                                      | ** **        | ** ** | ** **                                                                | ** ** |
| U.S. and Canada  theatrical exhibition                         |       |            | $          | 270,802                                                    |       |                                                                                            |              | $          | 84,794                                                                    |       |                                                      |       |   | $ | 219,440 |   |   |   | $ | 296,001 |   |   |
| International  theatrical exhibition                           |       |            | 1,471      |                                                       |       |                                                                                            | (509              | )          |                                                                      |       |                                                      | (6,307     | ) |   |   | (7,437 | ) |   |
| Other(1)                                                       |       |            | (2,062     | )                                                          |       |                                                                                            | 6                 |       |                                                                      |       |                                                      | 7,371      |   |   |   | 5,607 |   |   |
| Total segment Adjusted  EBITDA                                 |       |            | $          | 270,211                                                    |       |                                                                                            |              | $          | 84,291                                                                    |       |                                                      |       |   | $ | 220,504 |   |   |   | $ | 294,171 |   |   |

 

100

----

Areconciliation of earnings (loss) from continuing operations before incometaxes to segment Adjusted EBITDA is as follows:

| **(In thousands)**                                         | ** ** | **52 Weeks  Ended  March 30, 2006  (restated)** | ** ** | **From Inception  July 16, 2004  through  March 31, 2005** | ** ** | ** ** | **April 2, 2004  through  December 23, 2004** | ** ** | **52 Weeks  Ended  April 1, 2004** | ** ** |
|-----------------------------------------------------------------|------------|----------------------------------------------------------------|------------|-------------------------------------------------------------------------------------|------------|------------|-------------------------------------------------------------------|------------|---------------------------------------------------|------------|
| ** **                                                      | ** ** | **(Successor)**                                                | ** ** | **(Successor)**                                                                     | ** ** | ** ** | **(Predecessor)**                                                 | ** ** | **(Predecessor)**                                 | ** ** |
| Earnings (loss) from  continuing operations before income taxes |       |                                                           | $          | (96,185                                                                             | )          |       |                                                              | $          | (41,510                                           | )          |   |   |   | $ | (17,568 | ) |   |   | $ | 8,183 |   |   |
| Plus:                                                           |       |                                                           |       |                                                                                |       |       |                                                              |       |                                              |       |   |   |   |   |   |   |   |   |
| Interest expense                                                |       |                                                           | 120,208    |                                                                                |       |       | 41,117                                                            |       |                                              |       |   | 72,699 |   |   |   | 75,661 |   |   |
| Depreciation and  amortization                                  |       |                                                           | 164,047    |                                                                                |       |       | 43,931                                                            |       |                                              |       |   | 86,052 |   |   |   | 115,296 |   |   |
| Impairment of  long-lived assets                                |       |                                                           | 11,974     |                                                                                |       |       | –                                                            |       |                                              |       |   | – |   |   |   | 16,272 |   |   |
| Preopening  expense                                             |       |                                                           | 6,607      |                                                                                |       |       | 39                                                                |       |                                              |       |   | 1,292 |   |   |   | 3,858 |   |   |
| Theatre and other  closure expense                              |       |                                                           | 601        |                                                                                |       |       | 1,267                                                             |       |                                              |       |   | 10,758 |   |   |   | 4,068 |   |   |
| Restructuring  charge                                           |       |                                                           | 3,980      |                                                                                |       |       | 4,926                                                             |       |                                              |       |   | – |   |   |   | – |   |   |
| Disposition of  assets and other gains                          |       |                                                           | (997       | )                                                                                   |       |       | (302                                                              | )          |                                              |       |   | (2,715 | ) |   |   | (2,590 | ) |   |
| Investment loss  (income)                                       |       |                                                           | 4,656      |                                                                                |       |       | (2,512                                                            | )          |                                              |       |   | (6,473 | ) |   |   | (2,837 | ) |   |
| Other income(2)                                                 |       |                                                           | 849        |                                                                                |       |       | (33                                                               | )          |                                              |       |   | – |   |   |   | 13,947 |   |   |
| General and  administrative expense—unallocated:           |       |                                                           |       |                                                                                |       |       |                                                              |       |                                              |       |   |   |   |   |   |   |   |   |
| Management fee                                                  |       |                                                           | 2,000      |                                                                                |       |       | 500                                                               |       |                                              |       |   | – |   |   |   | – |   |   |
| Merger and  acquisition costs                                   |       |                                                           | 12,487     |                                                                                |       |       | 22,268                                                            |       |                                              |       |   | 42,732 |   |   |   | 5,508 |   |   |
| Other(3)                                                        |       |                                                           | 39,984     |                                                                                |       |       | 14,600                                                            |       |                                              |       |   | 33,727 |   |   |   | 56,798 |   |   |
| Total Segment Adjusted EBITDA                                   |       |                                                           | $          | 270,211                                                                             |       |       |                                                              | $          | 84,291                                            |       |   |   |   | $ | 220,504 |   |   |   | $ | 294,171 |   |   |

 

| **Long–term Assets (In thousands)**    | ** ** | **March 30, 2006** | ** ** | **March 31, 2005** | ** ** | ** ** | **April 1, 2004** | ** ** |
|------------------------------------------------------------|------------|------------------------------|------------|------------------------------|------------|------------|-----------------------------|------------|
| ** **                                                 | ** ** | **(Successor)**              | ** ** | **(Successor)**              | ** ** | ** ** | **(Predecessor)**           | ** ** |
| U.S. and Canada  theatrical exhibition                     |       |                         | $          | 4,169,212                    |       |       |                        | $          | 3,136,730 |   |   |   |   | $ | 1,431,036 |   |   |
| International theatrical  exhibition                       |       |                         | 396,329    |                         |       |       | 151,401                     |       |   |   |   | 147,009 |   |   |
| Other                                                      |       |                         | –     |                         |       |       | –                      |       |   |   |   | 14,869 |   |   |
| Total segment long-term  assets                            |       |                         | 4,565,541  |                         |       |       | 3,288,131                   |       |   |   |   | 1,592,914 |   |   |
| Construction in progress                                   |       |                         | 34,796     |                         |       |       | 29,078                      |       |   |   |   | 15,007 |   |   |
| Corporate                                                  |       |                         | 249,794    |                         |       |       | 225,449                     |       |   |   |   | 283,647 |   |   |
| Accumulated  depreciation—property                    |       |                         | (783,882   | )                            |       |       | (856,392                    | )          |   |   |   | (753,523 | ) |   |
| Accumulated  amortization—intangible assets           |       |                         | (60,759    | )                            |       |       | (39,999                     | )          |   |   |   | (33,801 | ) |   |
| Accumulated  amortization—other long–term assets |       |                         | (41,336    | )                            |       |       | (35,855                     | )          |   |   |   | (33,446 | ) |   |
| Noncurrent assets held  for sale                           |       |                         | 112,337    |                         |       |       | –                      |       |   |   |   | – |   |   |
| Consolidated long-term assets, net(4)                      |       |                         | $          | 4,076,491                    |       |       |                        | $          | 2,610,412 |   |   |   |   | $ | 1,070,798 |   |   |

 

| **Long–term Assets, net of accumulated depreciation and amortization  (In thousands)** | ** ** | **March 30, 2006** | ** ** | **March 31, 2005** | ** ** | ** ** | **April 1, 2004** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------|------------|------------------------------|------------|------------|-----------------------------|------------|
| ** **                                                                                                                          | ** ** | **(Successor)**              | ** ** | **(Successor)**              | ** ** | ** ** | **(Predecessor)**           | ** ** |
| U.S. and Canada  theatrical exhibition                                                                                              |       |                         | $          | 3,347,777                    |       |       |                        | $          | 2,360,480 |   |   |   |   | $ | 766,929 |   |   |
| International  theatrical exhibition                                                                                                |       |                         | 364,630    |                         |       |       | 61,303                      |       |   |   |   | 68,232 |   |   |
| Other                                                                                                                               |       |                         | –     |                         |       |       | –                      |       |   |   |   | 2,868 |   |   |
| Total segment  long-term assets(4)                                                                                                  |       |                         | 3,712,407  |                         |       |       | 2,421,783                   |       |   |   |   | 838,029 |   |   |
| Construction in  progress                                                                                                           |       |                         | 34,796     |                         |       |       | 29,078                      |       |   |   |   | 15,007 |   |   |
| Corporate                                                                                                                           |       |                         | 216,951    |                         |       |       | 159,551                     |       |   |   |   | 217,762 |   |   |
| Noncurrent assets  held for sale                                                                                                    |       |                         | 112,337    |                         |       |       | –                      |       |   |   |   | – |   |   |
| Consolidated long-term  assets, net(4)                                                                                              |       |                         | $          | 4,076,491                    |       |       |                        | $          | 2,610,412 |   |   |   |   | $ | 1,070,798 |   |   |

 

101

----

Thecomponents of the reportable segments’ long-term assets to long-term assetspresented in the Consolidated Balance Sheet are as follows:

| **Consolidated Balance Sheet (In thousands)** | ** ** | **March 30, 2006** | ** ** | **March 31, 2005** | ** ** | ** ** | **April 1, 2004** | ** ** |
|-------------------------------------------------------------------|------------|------------------------------|------------|------------------------------|------------|------------|-----------------------------|------------|
| ** **                                                        | ** ** | **(Successor)**              | ** ** | **(Successor)**              | ** ** | ** ** | **(Predecessor)**           | ** ** |
| Property, net                                                     |       |                         | $          | 1,501,048                    |       |       |                        | $          | 854,463 |   |   |   |   | $ | 777,277 |   |   |
| Intangible  assets, net                                           |       |                         | 273,308    |                         |       |       | 189,544                     |       |   |   |   | 23,918 |   |   |
| Goodwill                                                          |       |                         | 2,018,318  |                         |       |       | 1,401,740                   |       |   |   |   | 71,727 |   |   |
| Deferred income  taxes                                            |       |                         | 3,564      |                         |       |       | 50,619                      |       |   |   |   | 143,944 |   |   |
| Other long-term  assets                                           |       |                         | 167,916    |                         |       |       | 114,046                     |       |   |   |   | 53,932 |   |   |
| Noncurrent assets  held for sale                                  |       |                         | 112,337    |                         |       |       | –                      |       |   |   |   | – |   |   |
| Consolidated long-term  assets, net(4)                            |       |                         | $          | 4,076,491                    |       |       |                        | $          | 2,610,412 |   |   |   |   | $ | 1,070,798 |   |   |

 

| **Additions to long-term assets, net of acquisitions (In thousands)** | ** ** | **52 Weeks  Ended  March 30,  2006** | ** ** | **From Inception  July 16, 2004  through  March 31,  2005** | ** ** | ** ** | **April 2, 2004  through  December 23,  2004** | ** ** | **52 Weeks  Ended  April 1,  2004** | ** ** |
|---------------------------------------------------------------------------------------------------------------|------------|------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|------------|---------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                                                                                                    | ** ** | **(Successor)**                                | ** ** | **(Successor)**                                                                 | ** ** | ** ** | **(Predecessor)**                                             | ** ** | **(Predecessor)**                             | ** ** |
| U.S. and Canada  theatrical exhibition                                                                        |       |                                           | $          | 90,356                                                                          |       |       |                                                          | $          | 40,271                                        |       |   |   |   | $ | 55,980 |   |   |   | $ | 96,467 |   |   |
| International  theatrical exhibition                                                                          |       |                                           | 7,570      |                                                                            |       |       | 366                                                           |       |                                          |       |   | 2,999 |   |   |   | 1,524 |   |   |
| Other                                                                                                         |       |                                           | 1          |                                                                            |       |       | 4                                                             |       |                                          |       |   | 26 |   |   |   | 7,510 |   |   |
| Total segment  capital expenditures                                                                           |       |                                           | 97,927     |                                                                            |       |       | 40,641                                                        |       |                                          |       |   | 59,005 |   |   |   | 105,501 |   |   |
| Construction in  progress                                                                                     |       |                                           | 13,634     |                                                                            |       |       | 1,468                                                         |       |                                          |       |   | 5,782 |   |   |   | 5,312 |   |   |
| Corporate                                                                                                     |       |                                           | 6,107      |                                                                            |       |       | 1,805                                                         |       |                                          |       |   | 1,368 |   |   |   | 10 |   |   |
| Total additions to  long-term assets, net of acquisitions(2)                                                  |       |                                           | $          | 117,668                                                                         |       |       |                                                          | $          | 43,914                                        |       |   |   |   | $ | 66,155 |   |   |   | $ | 110,823 |   |   |

 

Areconciliation of the reportable segments’ additions to net assets to theConsolidated Statements of Cash Flow is as follows:

| **Consolidated Statements of Cash Flows  (In thousands)** | ** ** | **52 Weeks  Ended  March 30,  2006** | ** ** | **From Inception  July 16, 2004  through  March 31,  2005** | ** ** | ** ** | **April 2, 2004  through  December 23,  2004** | ** ** | **April 2, 2004  through  April 1,  2004** | ** ** |
|------------------------------------------------------------------------------------|------------|------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|------------|---------------------------------------------------------------|------------|-----------------------------------------------------------|------------|
| ** **                                                                         | ** ** | **(Successor)**                                | ** ** | **(Successor)**                                                                 | ** ** | ** ** | **(Predecessor)**                                             | ** ** | **(Predecessor)**                                         | ** ** |
| Cash Flows from  investing activities:                                             |       |                                           |       |                                                                            |       |       |                                                          |       |                                                      |       |   |   |   |   |   |   |   |   |
| Capital  expenditures(5)                                                           |       |                                           | $          | 117,668                                                                         |       |       |                                                          | $          | 18,622                                                    |       |   |   |   | $ | 66,155 |   |   |   | $ | 95,011 |   |   |
| Construction  project costs:                                                       |       |                                           |       |                                                                            |       |       |                                                          |       |                                                      |       |   |   |   |   |   |   |   |   |
| Reimbursable by landlord                                                           |       |                                           | –     |                                                                            |       |       | –                                                        |       |                                                      |       |   | – |   |   |   | – |   |   |
| Purchase of leased furniture, fixtures and equipment                               |       |                                           | –     |                                                                            |       |       | 25,292                                                        |       |                                                      |       |   | – |   |   |   | 15,812 |   |   |
| Total additions to  long-term assets, net of acquisitions(5)                       |       |                                           | $          | 117,668                                                                         |       |       |                                                          | $          | 43,914                                                    |       |   |   |   | $ | 66,155 |   |   |   | $ | 110,823 |   |   |

 

102

----

Informationabout the Company’s revenues and assets by geographic area is as follows:

| **Revenues (In thousands)** | ** ** | **52 Weeks  Ended  March 30,  2006** | ** ** | **From Inception  July 16, 2004  through  March 31,  2005** | ** ** | ** ** | **April 2, 2004  through  December 23,  2004** | ** ** | **52 Weeks  Ended  April 1,  2004** | ** ** |
|---------------------------------------|------------|------------------------------------------------|------------|---------------------------------------------------------------------------------|------------|------------|---------------------------------------------------------------|------------|-----------------------------------------------|------------|
| ** **                            | ** ** | **(Successor)**                                | ** ** | **(Successor)**                                                                 | ** ** | ** ** | **(Predecessor)**                                             | ** ** | **(Predecessor)**                             | ** ** |
| United States                         |       | $                                              | 1,593,976  |                                                                            |       | $          | 418,977                                                       |       |                                          |       |   | $ | 1,206,690 |   |   |   | $ | 1,612,663 |   |   |
| Canada                                |       | 49,460                                         |       |                                                                            | 14,054     |       |                                                          |       |                                          | 37,766     |   |   |   | 48,964 |   |   |
| China (Hong Kong)                     |       | 5,567                                          |       |                                                                            | 2,522      |       |                                                          |       |                                          | 5,632      |   |   |   | 8,166 |   |   |
| France                                |       | 4,492                                          |       |                                                                            | 1,338      |       |                                                          |       |                                          | 3,270      |   |   |   | 3,813 |   |   |
| United Kingdom                        |       | 10,465                                         |       |                                                                            | 2,569      |       |                                                          |       |                                          | 5,915      |   |   |   | 4,625 |   |   |
| Mexico                                |       | 22,918                                         |       |                                                                            | –     |       |                                                          |       |                                          | –     |   |   |   | – |   |   |
| Total revenues                        |       | $                                              | 1,686,878  |                                                                            |       | $          | 439,460                                                       |       |                                          |       |   | $ | 1,259,272 |   |   |   | $ | 1,678,232 |   |   |

 

| **Long-term assets (In thousands), Gross** | ** ** | **March 30, 2006** | ** ** | **March 31, 2005** | ** ** | ** ** | **April 1, 2004** | ** ** |
|----------------------------------------------------------------|------------|------------------------------|------------|------------------------------|------------|------------|-----------------------------|------------|
| ** **                                                     | ** ** | **(Successor)**              | ** ** | **(Successor)**              | ** ** | ** ** | **(Predecessor)**           | ** ** |
| United States                                                  |       |                         | $          | 4,423,827                    |       |       |                        | $          | 3,282,442 |   |   |   |   | $ | 1,651,506 |   |   |
| Canada                                                         |       |                         | 56,717     |                         |       |       | 100,909                     |       |   |   |   | 91,900 |   |   |
| China (Hong Kong)                                              |       |                         | –     |                         |       |       | 11,863                      |       |   |   |   | 11,282 |   |   |
| Japan                                                          |       |                         | –     |                         |       |       | 46,393                      |       |   |   |   | 40,158 |   |   |
| France                                                         |       |                         | 9,229      |                         |       |       | 9,797                       |       |   |   |   | 7,825 |   |   |
| Portugal                                                       |       |                         | 16,343     |                         |       |       | 17,315                      |       |   |   |   | 14,729 |   |   |
| Spain                                                          |       |                         | 68,559     |                         |       |       | 60,899                      |       |   |   |   | 61,738 |   |   |
| United Kingdom                                                 |       |                         | 12,603     |                         |       |       | 13,040                      |       |   |   |   | 12,430 |   |   |
| Mexico                                                         |       |                         | 375,190    |                         |       |       | –                      |       |   |   |   | – |   |   |
| Total long-term assets(4)                                      |       |                         | $          | 4,962,468                    |       |       |                        | $          | 3,542,658 |   |   |   |   | $ | 1,891,568 |   |   |

----

(1)                Revenues fromOther decreased due to the contribution of NCN’s assets to NCM on March 29,2005. The revenues of NCN during fiscal 2006 are related to run–off of customercontracts entered into prior to March 29, 2005. The Company’s share ofadvertising revenues generated by NCM are included in U.S. and Canadatheatrical exhibition.

(2)                Other income iscomprised of the write off of deferred financing charges and net recoveries forproperty loss related to Hurricane Katrina.

(3)                Including stock-basedcompensation expense of $3,433,000 and $1,201,000 for the Successor periodsended March 30, 2006 and March 31, 2005 and $0 and $8,727,000 for thePredecessor periods ended December 23, 2004 and April 1, 2004,respectively.

(4)                Consolidated long-termassets are comprised of property, intangible assets, deferred income taxes,goodwill and other long-term assets. Segment long term assets are comprised ofproperty intangibles and goodwill.

(5)                See Note 2Acquisitions for additions to property, intangible assets, deferred incometaxes, goodwill, and other long-term assets resulting from acquisitions.

103

----

**NOTE 17—CONDENSEDCONSOLIDATING FINANCIAL INFORMATION**

The accompanyingcondensed consolidating financial information has been prepared and presentedpursuant to SEC Regulation S-X Rule 3-10 “Financial statementsof guarantors and issuers of guaranteed securities registered or beingregistered.” This information is not necessarily intended to present thefinancial position, results of operations and cash flows of the individualcompanies or groups of companies in accordance with accounting principlesgenerally accepted in the United States of America. Each of the subsidiaryguarantors are 100% owned by AMCE. The subsidiary guarantees of AMCE’s debtsare full and unconditional and joint and several. The Company’s investments inits consolidated subsidiaries are presented under the equity method ofaccounting.

**52 Weeks endedMarch 30, 2006 (Successor) (restated):**

| **(In thousands)**                                       | ** ** | ** ** | ** ** | **Parent  Obligor** | ** ** | **Subsidiary  Guarantors** | ** ** | **Subsidiary  Non-Guarantors** | ** ** | **Consolidating  Adjustments** | ** ** | **Consolidated AMC  Entertainment, Inc.** | ** ** |
|---------------------------------------------------------------|------------|------------|------------|---------------------|------------|----------------------------|------------|--------------------------------|------------|--------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                    | ** ** | ** ** | ** ** | ** **          | ** ** | ** **                 | ** ** | ** **                     | ** ** | **(Successor)**                | ** ** |
| **Revenues**                                                  |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Admissions                                                    |       | $          | –     |                | $          | 1,111,550                  |       |                           | $          | 26,484                         |       |                                                |       | $ | – |   |   |   | $ | 1,138,034 |   |   |
| Concessions                                                   |       | –     |       | 442,604             |       |                       | 13,424     |                           |       |                           | –     |                                                |       |   | 456,028 |   |   |
| Other theatre                                                 |       | –     |       | 88,575              |       |                       | 4,241      |                           |       |                           | –     |                                                |       |   | 92,816 |   |   |
| Total revenues                                                |       | –     |       | 1,642,729           |       |                       | 44,149     |                           |       |                           | –     |                                                |       |   | 1,686,878 |   |   |
| Costs and Expenses:                                           |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Film exhibition costs                                         |       | –     |       | 584,050             |       |                       | 11,303     |                           |       |                           | –     |                                                |       |   | 595,353 |   |   |
| Concession costs                                              |       | –     |       | 47,799              |       |                       | 2,782      |                           |       |                           | –     |                                                |       |   | 50,581 |   |   |
| Theatre operating expense                                     |       | –     |       | 435,471             |       |                       | 16,051     |                           |       |                           | –     |                                                |       |   | 451,522 |   |   |
| Rent                                                          |       | –     |       | 317,376             |       |                       | 12,502     |                           |       |                           | –     |                                                |       |   | 329,878 |   |   |
| NCN and other                                                 |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| General and  administrative:                                  |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Merger and acquisition  costs                                 |       | –     |       | 12,487              |       |                       | –     |                           |       |                           | –     |                                                |       |   | 12,487 |   |   |
| Management fee                                                |       | –     |       | 2,000               |       |                       | –     |                           |       |                           | –     |                                                |       |   | 2,000 |   |   |
| Other                                                         |       | (8         | )          | 37,576              |       |                       | 2,416      |                           |       |                           | –     |                                                |       |   | 39,984 |   |   |
| Preopening expense                                            |       | –     |       | 5,768               |       |                       | 839        |                           |       |                           | –     |                                                |       |   | 6,607 |   |   |
| Theatre and other closure  expense                            |       | –     |       | 1,313               |       |                       | (712       | )                              |       |                           | –     |                                                |       |   | 601 |   |   |
| Restructuring charge                                          |       | –     |       | 3,980               |       |                       | –     |                           |       |                           | –     |                                                |       |   | 3,980 |   |   |
| Depreciation and  amortization                                |       | –     |       | 157,187             |       |                       | 6,860      |                           |       |                           | –     |                                                |       |   | 164,047 |   |   |
| Impairment of long-lived  assets                              |       | –     |       | 11,974              |       |                       | –     |                           |       |                           | –     |                                                |       |   | 11,974 |   |   |
| Disposition of assets and  other gains                        |       | –     |       | (805                | )          |                       | (192       | )                              |       |                           | –     |                                                |       |   | (997 | ) |   |
| Total costs and expenses                                      |       | (8         | )          | 1,616,176           |       |                       | 51,849     |                           |       |                           | –     |                                                |       |   | 1,668,017 |   |   |
| Other expense (income)                                        |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Equity in net losses of  subsidiaries                         |       | 162,499    |       | 33,502              |       |                       | –     |                           |       |                           | (196,001   | )                                                   |       |   | – |   |   |
| Other income                                                  |       | –     |       | (9,818              | )          |                       | –     |                           |       |                           | –     |                                                |       |   | (9,818 | ) |   |
| Interest expense                                              |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Corporate borrowings  (including intercompany)                |       | 115,327    |       | 73,270              |       |                       | 5,064      |                           |       |                           | (77,521    | )                                                   |       |   | 116,140 |   |   |
| Capital and financing  lease obligations                      |       | –     |       | 3,816               |       |                       | 252        |                           |       |                           | –     |                                                |       |   | 4,068 |   |   |
| Investment income                                             |       | (68,042    | )          | (3,473              | )          |                       | (1,350     | )                              |       |                           | 77,521     |                                                |       |   | 4,656 |   |   |
| Total other expense                                           |       | 209,784    |       | 97,297              |       |                       | 3,966      |                           |       |                           | (196,001   | )                                                   |       |   | 115,046 |   |   |
| Loss before income taxes                                      |       | (209,776   | )          | (70,744             | )          |                       | (11,666    | )                              |       |                           | 196,001    |                                                |       |   | (96,185 | ) |   |
| Income tax provision (benefit)                                |       | (18,900    | )          | 87,116              |       |                       | 1,184      |                           |       |                           | –     |                                                |       |   | 69,400 |   |   |
| Loss from continuing operations                               |       | (190,876   | )          | (157,860            | )          |                       | (12,850    | )                              |       |                           | 196,001    |                                                |       |   | (165,585 | ) |   |
| Loss from discontinued operations, net of income tax          |       | –     |       | (4,639              | )          |                       | (20,652    | )                              |       |                           | –     |                                                |       |   | (25,291 | ) |   |
| Net loss                                                      |       | $          | (190,876   | )                   | $          | (162,499                   | )          |                           | $          | (33,502                        | )          |                                                |       | $ | 196,001 |   |   |   | $ | (190,876 | ) |   |
| Preferred dividends and allocation of undistributed  earnings |       | –     |       |                |       |                       |       |                           |       |                           |       |                                                |       |   | – |   |   |
| Loss for shares of  common stock                              |       | $          | (190,876   | )                   |       |                       |       |                           |       |                           |       |                                                |       |   |   | $ | (190,876 | ) |   |

 

104

----

**From Inception July 16, 2004 through March 31, 2005(Successor):**

| **(In thousands)**                                                  | ** ** | ** ** | ** ** | **Parent  Obligor** | ** ** | **Subsidiary  Guarantors** | ** ** | **Subsidiary  Non-Guarantors** | ** ** | **Consolidating  Adjustments** | ** ** | **Consolidated AMC  Entertainment, Inc.** | ** ** |
|--------------------------------------------------------------------------|------------|------------|------------|---------------------|------------|----------------------------|------------|--------------------------------|------------|--------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                               | ** ** | ** ** | ** ** | ** **          | ** ** | ** **                 | ** ** | ** **                     | ** ** | **(Successor)**                | ** ** |
| **Revenues**                                                             |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |   |   |
| Admissions                                                               |       | $          | –     |                |       | $                          | 294,692    |                           |       |                           | $          | 2,618                                               |       |   |   | $ | – |   |   |   | $ | 297,310 |   |   |
| Concessions                                                              |       | –     |       |                | 116,302    |                       |       |                           | 964        |                           |       |                                                | –     |   |   |   | 117,266 |   |   |
| Other theatre                                                            |       | –     |       |                | 24,196     |                       |       |                           | 688        |                           |       |                                                | –     |   |   |   | 24,884 |   |   |
| Total revenues                                                           |       | –     |       |                | 435,190    |                       |       |                           | 4,270      |                           |       |                                                | –     |   |   |   | 439,460 |   |   |
| Costs and  Expenses:                                                     |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |   |   |
| Film exhibition costs                                                    |       | –     |       |                | 151,606    |                       |       |                           | 1,141      |                           |       |                                                | –     |   |   |   | 152,747 |   |   |
| Concession costs                                                         |       | –     |       |                | 12,621     |                       |       |                           | 180        |                           |       |                                                | –     |   |   |   | 12,801 |   |   |
| Theatre operating expense                                                |       | –     |       |                | 113,533    |                       |       |                           | 2,057      |                           |       |                                                | –     |   |   |   | 115,590 |   |   |
| Rent                                                                     |       | –     |       |                | 78,301     |                       |       |                           | 2,475      |                           |       |                                                | –     |   |   |   | 80,776 |   |   |
| General and administrative:                                              |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |   |   |
| Merger and acquisition costs                                             |       | –     |       |                | 22,268     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 22,268 |   |   |
| Management fee                                                           |       | –     |       |                | 500        |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 500 |   |   |
| Other                                                                    |       | 52         |       |                | 14,468     |                       |       |                           | 80         |                           |       |                                                | –     |   |   |   | 14,600 |   |   |
| Preopening expense                                                       |       | –     |       |                | 39         |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 39 |   |   |
| Theatre and other closure expense                                        |       | –     |       |                | 1,267      |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 1,267 |   |   |
| Restructuring charge                                                     |       | –     |       |                | 4,926      |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 4,926 |   |   |
| Depreciation and amortization                                            |       | –     |       |                | 43,476     |                       |       |                           | 455        |                           |       |                                                | –     |   |   |   | 43,931 |   |   |
| Disposition of assets and other gains                                    |       | –     |       |                | (302       | )                          |       |                           | –     |                           |       |                                                | –     |   |   |   | (302 | ) |   |
| Total costs and expenses                                                 |       | 52         |       |                | 442,703    |                       |       |                           | 6,388      |                           |       |                                                | –     |   |   |   | 449,143 |   |   |
| Other expense (income)                                                   |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |   |   |
| Equity in net losses of subsidiaries                                     |       | 13,936     |       |                | 3,691      |                       |       |                           | –     |                           |       |                                                | (17,627    | ) |   |   | – |   |   |
| Other income                                                             |       | –     |       |                | (6,778     | )                          |       |                           | –     |                           |       |                                                | –     |   |   |   | (6,778 | ) |   |
| Interest expense                                                         |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |   |   |
| Corporate borrowings (including intercompany)                            |       | 38,480     |       |                | 6,038      |                       |       |                           | 2,625      |                           |       |                                                | (7,475     | ) |   |   | 39,668 |   |   |
| Capital and financing lease obligations                                  |       | –     |       |                | 1,446      |                       |       |                           | 3          |                           |       |                                                | –     |   |   |   | 1,449 |   |   |
| Investment income                                                        |       | (7,805     | )          |                | (774       | )                          |       |                           | (1,408     | )                              |       |                                                | 7,475      |   |   |   | (2,512 | ) |   |
| Total other  expense                                                     |       | 44,611     |       |                | 3,623      |                       |       |                           | 1,220      |                           |       |                                                | (17,627    | ) |   |   | 31,827 |   |   |
| Loss before income  taxes                                                |       | (44,663    | )          |                | (11,136    | )                          |       |                           | (3,338     | )                              |       |                                                | 17,627     |   |   |   | (41,510 | ) |   |
| Income tax  provision (benefit)                                          |       | (9,900     | )          |                | 2,800      |                       |       |                           | 220        |                           |       |                                                | –     |   |   |   | (6,880 | ) |   |
| Loss from  continuing operations                                         |       | (34,763    | )          |                | (13,936    | )                          |       |                           | (3,558     | )                              |       |                                                | 17,627     |   |   |   | (34,630 | ) |   |
| Earnings (loss)  from discontinued operations, net of income tax benefit |       | –     |       |                | –     |                       |       |                           | (133       | )                              |       |                                                | –     |   |   |   | (133 | ) |   |
| Net loss                                                                 |       | $          | (34,763    | )                   |       | $                          | (13,936    | )                              |       |                           | $          | (3,691                                              | )          |   |   | $ | 17,627 |   |   |   | $ | (34,763 | ) |   |
| Preferred  dividends and allocation of undistributed earnings            |       | –     |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   | – |   |   |
| Loss for shares of common  stock                                         |       | $          | (34,763    | )                   |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   | $ | (34,763 | ) |   |

 

105

----

**April 2, 2004 through December 23, 2004(Predecessor):**

| **(In thousands)**                                       | ** ** | ** ** | ** ** | **Parent  Obligor** | ** ** | **Subsidiary  Guarantors** | ** ** | **Subsidiary  Non-Guarantors** | ** ** | **Consolidating  Adjustments** | ** ** | **Consolidated AMC  Entertainment, Inc.** | ** ** |
|---------------------------------------------------------------|------------|------------|------------|---------------------|------------|----------------------------|------------|--------------------------------|------------|--------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                    | ** ** | ** ** | ** ** | ** **          | ** ** | ** **                 | ** ** | ** **                     | ** ** | **(Predecessor)**              | ** ** |
| **Revenues**                                                  |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Admissions                                                    |       | $          | –     |                | $          | 841,183                    |       |                           | $          | 6,293                          |       |                                                |       | – |   |   |   | $ | 847,476 |   |   |
| Concessions                                                   |       | –     |       | 326,715             |       |                       | 2,255      |                           |       |                           | –     |                                                |       |   | 328,970 |   |   |
| Other theatre                                                 |       | –     |       | 81,204              |       |                       | 1,622      |                           |       |                           | –     |                                                |       |   | 82,826 |   |   |
| Total revenues                                                |       | –     |       | 1,249,102           |       |                       | 10,170     |                           |       |                           |       |                                                |       |   | 1,259,272 |   |   |
| Costs and  Expenses:                                          |       |       |       |                |       |                       |       |                           |       |                           | –     |                                                |       |   |   |   |   |
| Film exhibition costs                                         |       | –     |       | 449,781             |       |                       | 2,946      |                           |       |                           | –     |                                                |       |   | 452,727 |   |   |
| Concession costs                                              |       | –     |       | 37,298              |       |                       | 582        |                           |       |                           | –     |                                                |       |   | 37,880 |   |   |
| Operating expense                                             |       | –     |       | 319,118             |       |                       | 5,309      |                           |       |                           | –     |                                                |       |   | 324,427 |   |   |
| Rent                                                          |       | –     |       | 217,240             |       |                       | 6,494      |                           |       |                           |       |                                                |       |   | 223,734 |   |   |
| General and administrative expense                            |       |       |       |                |       |                       |       |                           |       |                           | –     |                                                |       |   |   |   |   |
| Merger and acquisition costs                                  |       | –     |       | 42,732              |       |                       |       |                           |       |                           | –     |                                                |       |   | 42,732 |   |   |
| Other                                                         |       | 143        |       | 33,093              |       |                       | 491        |                           |       |                           | –     |                                                |       |   | 33,727 |   |   |
| Preopening expense                                            |       | –     |       | 1,292               |       |                       | –     |                           |       |                           | –     |                                                |       |   | 1,292 |   |   |
| Theatre and other closure expense                             |       | –     |       | 10,758              |       |                       | –     |                           |       |                           | –     |                                                |       |   | 10,758 |   |   |
| Depreciation and amortization                                 |       | –     |       | 85,108              |       |                       | 944        |                           |       |                           | –     |                                                |       |   | 86,052 |   |   |
| Disposition of assets and other gains                         |       | –     |       | (2,715              | )          |                       | –     |                           |       |                           | –     |                                                |       |   | (2,715 | ) |   |
| Total costs and expenses                                      |       | 143        |       | 1,193,705           |       |                       | 16,766     |                           |       |                           | –     |                                                |       |   | 1,210,614 |   |   |
| Other expense  (income)                                       |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Equity in net losses of subsidiaries                          |       | 21,531     |       | 13,816              |       |                       | –     |                           |       |                           | (35,347    | )                                                   |       |   | – |   |   |
| Interest expense                                              |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Corporate borrowings (including intercompany)                 |       | 62,691     |       | 36,817              |       |                       | 4,473      |                           |       |                           | (37,130    | )                                                   |       |   | 66,851 |   |   |
| Capital and financing lease obligations                       |       | –     |       | 5,758               |       |                       | 90         |                           |       |                           | –     |                                                |       |   | 5,848 |   |   |
| Investment income                                             |       | (38,987    | )          | (3,563              | )          |                       | (1,053     | )                              |       |                           | 37,130     |                                                |       |   | (6,473 | ) |   |
| Total other  expense                                          |       | 45,235     |       | 52,828              |       |                       | 3,510      |                           |       |                           | (35,347    | )                                                   |       |   | 66,226 |   |   |
| Loss from  continuing operations before income taxes          |       | (45,378    | )          | 2,569               |       |                       | (10,106    | )                              |       |                           | 35,347     |                                                |       |   | (17,568 | ) |   |
| Income tax provision  (benefit)                               |       | (9,500     | )          | 24,100              |       |                       | 160        |                           |       |                           | –     |                                                |       |   | 14,760 |   |   |
| Loss from  continuing operations                              |       | $          | (35,878    | )                   | $          | (21,531                    | )          |                           | $          | (10,266                        | )          |                                                |       | $ | 35,347 |   |   |   | $ | (32,328 | ) |   |
| Loss from  discontinued operations, net of income tax benefit |       | –     |       | –              |       |                       | (3,550     | )                              |       |                           | –     |                                                |       |   | (3,550 | ) |   |
| Net loss                                                      |       | $          | (35,878    | )                   | $          | (21,531                    | )          |                           | $          | (13,816                        | )          |                                                |       | $ | 35,347 |   |   |   | $ | (35,878 | ) |   |
| Preferred  dividends                                          |       | 104,300    |       |                |       |                       |       |                           |       |                           |       |                                                |       |   | 104,300 |   |   |
| Net loss for shares of  common stock                          |       | $          | (140,178   | )                   |       |                       |       |                           |       |                           |       |                                                |       |   |   | $ | (140,178 | ) |   |

 

106

----

**52 weeks ended April 1, 2004 (Predecessor):**

| **(In thousands)**                                         | ** ** | ** ** | ** ** | **Parent  Obligor** | ** ** | **Subsidiary  Guarantors** | ** ** | **Subsidiary  Non-Guarantors** | ** ** | **Consolidating  Adjustments** | ** ** | **Consolidated AMC  Entertainment, Inc.** | ** ** |
|-----------------------------------------------------------------|------------|------------|------------|---------------------|------------|----------------------------|------------|--------------------------------|------------|--------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                      | ** ** | ** ** | ** ** | ** **          | ** ** | ** **                 | ** ** | ** **                     | ** ** | **(Predecessor)**              | ** ** |
| **Revenues**                                                    |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Admissions                                                      |       | $          | –     |                | $          | 1,133,170                  |       |                           | $          | 5,938                          |       |                                                |       | $ | – |   |   |   | $ | 1,139,108 |   |   |
| Concessions                                                     |       | –     |       | 434,857             |       |                       | 1,880      |                           |       |                           | –     |                                                |       |   | 436,737 |   |   |
| Other  theatre                                                  |       | –     |       | 100,745             |       |                       | 1,642      |                           |       |                           | –     |                                                |       |   | 102,387 |   |   |
| Total  revenues                                                 |       | –     |       | 1,668,772           |       |                       | 9,460      |                           |       |                           | –     |                                                |       |   | 1,678,232 |   |   |
| Costs and Expenses:                                             |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Film  exhibition costs                                          |       | –     |       | 603,129             |       |                       | 2,769      |                           |       |                           | –     |                                                |       |   | 605,898 |   |   |
| Concession  costs                                               |       | –     |       | 46,380              |       |                       | 488        |                           |       |                           | –     |                                                |       |   | 46,868 |   |   |
| Theatre  operating expense                                      |       | –     |       | 437,468             |       |                       | 5,506      |                           |       |                           | –     |                                                |       |   | 442,974 |   |   |
| Rent                                                            |       | –     |       | 280,621             |       |                       | 7,700      |                           |       |                           | –     |                                                |       |   | 288,321 |   |   |
| General  and administrative expense                             |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Merger  and acquisition costs                                   |       | –     |       | 5,508               |       |                       | –     |                           |       |                           | –     |                                                |       |   | 5,508 |   |   |
| Other                                                           |       | 195        |       | 56,117              |       |                       | 486        |                           |       |                           | –     |                                                |       |   | 56,798 |   |   |
| Preopening  expense                                             |       | –     |       | 2,921               |       |                       | 944        |                           |       |                           | –     |                                                |       |   | 3,865 |   |   |
| Theatre  and other closure expense                              |       | –     |       | 4,068               |       |                       | –     |                           |       |                           | –     |                                                |       |   | 4,068 |   |   |
| Depreciation  and amortization                                  |       | –     |       | 113,683             |       |                       | 1,613      |                           |       |                           | –     |                                                |       |   | 115,296 |   |   |
| Impairment  of long-lived assets                                |       | –     |       | 12,747              |       |                       | 3,525      |                           |       |                           | –     |                                                |       |   | 16,272 |   |   |
| Disposition  of assets and other gains                          |       | –     |       | (2,223              | )          |                       | (367       | )                              |       |                           | –     |                                                |       |   | (2,590 | ) |   |
| Total  costs and expenses                                       |       | 195        |       | 1,560,419           |       |                       | 22,664     |                           |       |                           | –     |                                                |       |   | 1,583,278 |   |   |
| Other expense (income)                                          |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Equity  in net losses of subsidiaries                           |       | 2,621      |       | 19,277              |       |                       | –     |                           |       |                           | (21,898    | )                                                   |       |   | – |   |   |
| Other  expense                                                  |       | –     |       | 13,947              |       |                       | –     |                           |       |                           | –     |                                                |       |   | 13,947 |   |   |
| Interest  expense                                               |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Corporate  borrowings (including intercompany)                  |       | 67,928     |       | 53,633              |       |                       | 3,488      |                           |       |                           | (58,086    | )                                                   |       |   | 66,963 |   |   |
| Capital  and financing lease obligations                        |       | –     |       | 8,579               |       |                       | 119        |                           |       |                           | –     |                                                |       |   | 8,698 |   |   |
| Investment  income                                              |       | (54,630    | )          | (3,993              | )          |                       | (2,300     | )                              |       |                           | 58,086     |                                                |       |   | (2,837 | ) |   |
| Total other expense                                             |       | 15,919     |       | 91,443              |       |                       | 1,307      |                           |       |                           | (21,898    | )                                                   |       |   | 86,771 |   |   |
| Earnings (loss) from  continuing operations before income taxes |       | (16,114    | )          | 16,910              |       |                       | (14,511    | )                              |       |                           | 21,898     |                                                |       |   | 8,183 |   |   |
| Income tax provision  (benefit)                                 |       | (5,400     | )          | 15,700              |       |                       | 100        |                           |       |                           | –     |                                                |       |   | 10,400 |   |   |
| Earnings (loss) from  continuing operations                     |       | (10,714    | )          | 1,210               |       |                       | (14,611    | )                              |       |                           | 21,898     |                                                |       |   | (2,217 | ) |   |
| Loss from discontinued  operations, net of income tax benefit   |       | –     |       | (3,831              | )          |                       | (4,666     | )                              |       |                           | –     |                                                |       |   | (8,497 | ) |   |
| Net loss                                                        |       | $          | (10,714    | )                   | $          | (2,621                     | )          |                           | $          | (19,277                        | )          |                                                |       | $ | 21,898 |   |   |   | $ | (10,714 | ) |   |
| Preferred dividends                                             |       | 40,277     |       |                |       |                       |       |                           |       |                           |       |                                                |       |   | 40,277 |   |   |
| Net loss for shares of common stock                             |       | $          | (50,991    | )                   |       |                       |       |                           |       |                           |       |                                                |       |   |   | $ | (50,991 | ) |   |

 

 

107

----

**March 30, 2006 (Successor) (restated):**

| **(In thousands)**                                                                 | ** ** | ** ** | ** ** | **Parent  Obligor** | ** ** | **Subsidiary  Guarantors** | ** ** | **Subsidiary  Non-Guarantors** | ** ** | **Consolidating  Adjustments** | ** ** | **Consolidated AMC  Entertainment, Inc.** | ** ** |
|-----------------------------------------------------------------------------------------|------------|------------|------------|---------------------|------------|----------------------------|------------|--------------------------------|------------|--------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                                              | ** ** | ** ** | ** ** | ** **          | ** ** | ** **                 | ** ** | ** **                     | ** ** | **(Successor)**                | ** ** |
| **Assets**                                                                              |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Current assets:                                                                         |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Cash and equivalents                                                                    |       | $          | –     |                | $          | 196,445                    |       |                           | $          | 33,670                         |       |                                                |       | $ | – |   |   |   | $ | 230,115 |   |   |
| Receivables, net                                                                        |       | 1,893      |       | 37,497              |       |                       | 17,221     |                           |       |                           | –     |                                                |       |   | 56,611 |   |   |
| Other current assets                                                                    |       | (8,346     | )          | 26,751              |       |                       | 16,242     |                           |       |                           | –     |                                                |       |   | 34,647 |   |   |
| Current assets held for  sale                                                           |       | –     |       | 529                 |       |                       | 4,197      |                           |       |                           | –     |                                                |       |   | 4,726 |   |   |
| Total  current assets                                                                   |       | (6,453     | )          | 261,222             |       |                       | 71,330     |                           |       |                           | –     |                                                |       |   | 326,099 |   |   |
| Investment in equity of  subsidiaries                                                   |       | (227,657   | )          | 233,618             |       |                       | –     |                           |       |                           | (5,961     | )                                                   |       |   | – |   |   |
| Property, net                                                                           |       | –     |       | 1,279,899           |       |                       | 221,149    |                           |       |                           | –     |                                                |       |   | 1,501,048 |   |   |
| Intangible assets, net                                                                  |       | –     |       | 242,058             |       |                       | 31,250     |                           |       |                           | –     |                                                |       |   | 273,308 |   |   |
| Intercompany advances                                                                   |       | 3,591,713  |       | (3,554,609          | )          |                       | (37,104    | )                              |       |                           | –     |                                                |       |   | – |   |   |
| Goodwill                                                                                |       | –     |       | 1,893,716           |       |                       | 124,602    |                           |       |                           | –     |                                                |       |   | 2,018,318 |   |   |
| Deferred income taxes                                                                   |       | –     |       | –              |       |                       | 3,564      |                           |       |                           | –     |                                                |       |   | 3,564 |   |   |
| Other long-term  assets                                                                 |       | 40,802     |       | 101,909             |       |                       | 25,205     |                           |       |                           | –     |                                                |       |   | 167,916 |   |   |
| Noncurrent assets held  for sale                                                        |       | –     |       | 61,340              |       |                       | 50,997     |                           |       |                           | –     |                                                |       |   | 112,337 |   |   |
| Total  assets                                                                           |       | $          | 3,398,405  |                | $          | 519,153                    |       |                           | $          | 490,993                        |       |                                                |       | $ | (5,961 | ) |   |   | $ | 4,402,590 |   |   |
| **Liabilities and Stockholder’s  Equity**                                          |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Current liabilities:                                                                    |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Accounts payable                                                                        |       | $          | –     |                | $          | 133,143                    |       |                           | $          | 17,240                         |       |                                                |       | $ | – |   |   |   | $ | 150,383 |   |   |
| Accrued expenses and  other liabilities                                                 |       | 19,902     |       | 126,022             |       |                       | 11,144     |                           |       |                           | –     |                                                |       |   | 157,068 |   |   |
| Deferred revenues and  income                                                           |       | –     |       | 88,578              |       |                       | 7,234      |                           |       |                           | –     |                                                |       |   | 95,812 |   |   |
| Current maturities of  corporate borrowings and capital and financing lease obligations |       | 6,500      |       | 3,119               |       |                       | 21,185     |                           |       |                           | –     |                                                |       |   | 30,804 |   |   |
| Current liabilities held  for sale                                                      |       | –     |       | 3,560               |       |                       | 4,673      |                           |       |                           | –     |                                                |       |   | 8,233 |   |   |
| Total  current liabilities                                                              |       | 26,402     |       | 354,422             |       |                       | 61,476     |                           |       |                           | –     |                                                |       |   | 442,300 |   |   |
| Corporate borrowings                                                                    |       | 2,128,094  |       | 2,188               |       |                       | 93,587     |                           |       |                           | –     |                                                |       |   | 2,223,869 |   |   |
| Capital and financing  lease obligations                                                |       | –     |       | 32,868              |       |                       | 31,148     |                           |       |                           | –     |                                                |       |   | 64,016 |   |   |
| Other long-term  liabilities                                                            |       | –     |       | 345,429             |       |                       | 71,164     |                           |       |                           | –     |                                                |       |   | 416,593 |   |   |
| Noncurrent liabilities  held for sale                                                   |       | –     |       | 11,903              |       |                       | –     |                           |       |                           | –     |                                                |       |   | 11,903 |   |   |
| Total  liabilities                                                                      |       | 2,154,496  |       | 746,810             |       |                       | 257,375    |                           |       |                           | –     |                                                |       |   | 3,158,681 |   |   |
| Stockholder’s equity  (deficit)                                                    |       | 1,243,909  |       | (227,657            | )          |                       | 233,618    |                           |       |                           | (5,961     | )                                                   |       |   | 1,243,909 |   |   |
| Total liabilities and  stockholder’s equity (deficit)                              |       | $          | 3,398,405  |                | $          | 519,153                    |       |                           | $          | 490,993                        |       |                                                |       | $ | (5,961 | ) |   |   | $ | 4,402,590 |   |   |

 

108

----

**March 31, 2005 (Successor):**

| **(In thousands)**                                                                 | ** ** | ** ** | ** ** | **Parent  Obligor** | ** ** | **Subsidiary  Guarantors** | ** ** | **Subsidiary  Non-Guarantors** | ** ** | **Consolidating  Adjustments** | ** ** | **Consolidated AMC  Entertainment, Inc.** | ** ** |
|-----------------------------------------------------------------------------------------|------------|------------|------------|---------------------|------------|----------------------------|------------|--------------------------------|------------|--------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                                              | ** ** | ** ** | ** ** | ** **          | ** ** | ** **                 | ** ** | ** **                     | ** ** | **(Successor)**                | ** ** |
| **Assets**                                                                              |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Current assets:                                                                         |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Cash and  equivalents                                                                   |       | $          | –     |                | $          | 42,524                     |       |                           | $          | 28,425                         |       |                                                |       | $ | – |   |   |   | $ | 70,949 |   |   |
| Receivables, net                                                                        |       | 1,172      |       | 33,135              |       |                       | 8,308      |                           |       |                           | –     |                                                |       |   | 42,615 |   |   |
| Other current  assets                                                                   |       | (7,680     | )          | 67,212              |       |                       | 6,440      |                           |       |                           | –     |                                                |       |   | 65,972 |   |   |
| Total current assets                                                                    |       | (6,508     | )          | 142,871             |       |                       | 43,173     |                           |       |                           | –     |                                                |       |   | 179,536 |   |   |
| Investment in  equity of subsidiaries                                                   |       | (95,746    | )          | 28,326              |       |                       | –     |                           |       |                           | 67,420     |                                                |       |   | – |   |   |
| Property, net                                                                           |       | –     |       | 792,754             |       |                       | 61,709     |                           |       |                           | –     |                                                |       |   | 854,463 |   |   |
| Intangible assets,  net                                                                 |       | –     |       | 189,544             |       |                       | –     |                           |       |                           | –     |                                                |       |   | 189,544 |   |   |
| Intercompany  advances                                                                  |       | 2,159,060  |       | (2,182,985          | )          |                       | 23,925     |                           |       |                           | –     |                                                |       |   | – |   |   |
| Goodwill                                                                                |       | –     |       | 1,401,740           |       |                       | –     |                           |       |                           | –     |                                                |       |   | 1,401,740 |   |   |
| Deferred income  taxes                                                                  |       | –     |       | 50,619              |       |                       | –     |                           |       |                           | –     |                                                |       |   | 50,619 |   |   |
| Other long-term  assets                                                                 |       | 19,057     |       | 71,608              |       |                       | 23,381     |                           |       |                           | –     |                                                |       |   | 114,046 |   |   |
| Total assets                                                                            |       | $          | 2,075,863  |                | $          | 494,477                    |       |                           | $          | 152,188                        |       |                                                |       | $ | 67,420 |   |   |   | $ | 2,789,948 |   |   |
| **Liabilities and Stockholder’s Equity**                                           |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Current  liabilities                                                                    |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |
| Accounts payable                                                                        |       | $          | –     |                | $          | 112,314                    |       |                           | $          | 8,832                          |       |                                                |       | $ | – |   |   |   | $ | 121,146 |   |   |
| Accrued expenses  and other liabilities                                                 |       | 12,927     |       | 102,787             |       |                       | 3,908      |                           |       |                           | –     |                                                |       |   | 119,622 |   |   |
| Deferred revenues  and income                                                           |       | –     |       | 68,957              |       |                       | 1,327      |                           |       |                           | –     |                                                |       |   | 70,284 |   |   |
| Current maturities  of corporate borrowings and capital and financing lease obligations |       | –     |       | 3,060               |       |                       | 385        |                           |       |                           | –     |                                                |       |   | 3,445 |   |   |
| Total current liabilities                                                               |       | 12,927     |       | 287,118             |       |                       | 14,452     |                           |       |                           | –     |                                                |       |   | 314,497 |   |   |
| Corporate  borrowings                                                                   |       | 1,161,970  |       | –              |       |                       | –     |                           |       |                           | –     |                                                |       |   | 1,161,970 |   |   |
| Capital and  financing lease obligations                                                |       | –     |       | 43,659              |       |                       | 18,366     |                           |       |                           | –     |                                                |       |   | 62,025 |   |   |
| Other long-term  liabilities                                                            |       | –     |       | 259,446             |       |                       | 91,044     |                           |       |                           | –     |                                                |       |   | 350,490 |   |   |
| Total liabilities                                                                       |       | 1,174,897  |       | 590,223             |       |                       | 123,862    |                           |       |                           | –     |                                                |       |   | 1,888,982 |   |   |
| Stockholder’s  equity                                                              |       | 900,966    |       | (95,746             | )          |                       | 28,326     |                           |       |                           | 67,420     |                                                |       |   | 900,966 |   |   |
| Total liabilities  and stockholder’s equity                                        |       | $          | 2,075,863  |                | $          | 494,477                    |       |                           | $          | 152,188                        |       |                                                |       | $ | 67,420 |   |   |   | $ | 2,789,948 |   |   |

 

109

----

**52 Weeks ended March 30, 2006 (Successor)(restated):**

| **(In thousands)**                                           | ** ** | ** ** | ** ** | **Parent  Obligor** | ** ** | **Subsidiary  Guarantors** | ** ** | **Subsidiary  Non-Guarantors** | ** ** | **Consolidating  Adjustments** | ** ** | **Consolidated AMC  Entertainment, Inc.** | ** ** |
|-------------------------------------------------------------------|------------|------------|------------|---------------------|------------|----------------------------|------------|--------------------------------|------------|--------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                        | ** ** | ** ** | ** ** | ** **          | ** ** | ** **                 | ** ** | ** **                     | ** ** | **(Successor)**                | ** ** |
| Net cash (used in)  provided by operating activities              |       | $          | (20,567    | )                   |       | $                          | 83,702     |                           |       |                           | $          | (39,481                                             | )          |   |   | $ | – |   |   |   | $ | 23,654 |   |   |
| Cash flows from investing  activities:                            |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |   |   |
| Capital  expenditures                                             |       | –     |       |                | (109,647   | )                          |       |                           | (8,021     | )                              |       |                                                | –     |   |   |   | (117,668 | ) |   |
| Proceeds  from sale/leasebacks                                    |       | –     |       |                | 35,010     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 35,010 |   |   |
| Net  change in reimbursable construction advances                 |       | –     |       |                | (1,252     | )                          |       |                           | –     |                           |       |                                                | –     |   |   |   | (1,252 | ) |   |
| Cash  acquired from Loews Cineplex Entertainment                  |       | –     |       |                | 138,672    |                       |       |                           | 3,840      |                           |       |                                                | –     |   |   |   | 142,512 |   |   |
| Payment  on disposal—discontinued operations                 |       | –     |       |                | 8,595      |                       |       |                           | 44,861     |                           |       |                                                | –     |   |   |   | 53,456 |   |   |
| Proceeds  from disposition of long-term assets                    |       | –     |       |                | 3,032      |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 3,032 |   |   |
| Other,  net                                                       |       | (116       | )          |                | (8,959     | )                          |       |                           | 3,308      |                           |       |                                                | –     |   |   |   | (5,767 | ) |   |
| Net cash (used in)  provided by investing activities              |       | (116       | )          |                | 65,451     |                       |       |                           | 43,988     |                           |       |                                                | –     |   |   |   | 109,323 |   |   |
| Cash flows from financing  activities:                            |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |   |   |
| Proceeds  from issuance of 11% Senior Subordinated Notes due 2016 |       | 325,000    |       |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 325,000 |   |   |
| Proceeds  from issuance of Term Loan B                            |       | 650,000    |       |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 650,000 |   |   |
| Repayment  of LCE credit facility                                 |       | (620,425   | )          |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | (620,425 | ) |   |
| Repurchase  of LCE 9% Senior Subordinated Notes due 2014          |       | (318,938   | )          |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | (318,938 | ) |   |
| Net  borrowing under revolver credit facility                     |       | –     |       |                | –     |                       |       |                           | 6,000      |                           |       |                                                | –     |   |   |   | 6,000 |   |   |
| Proceeds  from financing lease obligations                        |       | –     |       |                | 6,661      |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 6,661 |   |   |
| Principal  payments under capital and finance lease obligations   |       | –     |       |                | (2,805     | )                          |       |                           | (358       | )                              |       |                                                | –     |   |   |   | (3,163 | ) |   |
| Principal  payments under mortgage obligations                    |       | –     |       |                | (10        | )                          |       |                           | –     |                           |       |                                                | –     |   |   |   | (10 | ) |   |
| Change  in intercompany advances                                  |       | 9,941      |       |                | (282       | )                          |       |                           | (9,659     | )                              |       |                                                | –     |   |   |   | – |   |   |
| Change  in construction payables                                  |       | –     |       |                | 1,204      |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 1,204 |   |   |
| Deferred  financing costs                                         |       | (24,895    | )          |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | (24,895 | ) |   |
| Net cash provided by  (used in) financing activities              |       | 20,683     |       |                | 4,768      |                       |       |                           | (4,017     | )                              |       |                                                | –     |   |   |   | 21,434 |   |   |
| Effect of exchange rate  changes on cash and equivalents          |       | –     |       |                | –     |                       |       |                           | 4,755      |                           |       |                                                | –     |   |   |   | 4,755 |   |   |
| Net increase (decrease)  in cash and equivalents                  |       | –     |       |                | 153,921    |                       |       |                           | 5,245      |                           |       |                                                | –     |   |   |   | 159,166 |   |   |
| Cash and equivalents at  beginning of period                      |       | –     |       |                | 42,524     |                       |       |                           | 28,425     |                           |       |                                                | –     |   |   |   | 70,949 |   |   |
| Cash and equivalents at end of period                             |       | $          | –     |                |       | $                          | 196,445    |                           |       |                           | $          | 33,670                                              |       |   |   | $ | – |   |   |   | $ | 230,115 |   |   |

 

110

----

**From Inception July 16, 2004 through March 31,2005 (Successor):**

| **(In thousands)**                                                          | ** ** | ** ** | ** ** | **Parent  Obligor** | ** ** | **Subsidiary  Guarantors** | ** ** | **Subsidiary  Non-Guarantors** | ** ** | **Consolidating  Adjustments** | ** ** | **Consolidated AMC  Entertainment, Inc.** | ** ** |
|----------------------------------------------------------------------------------|------------|------------|------------|---------------------|------------|----------------------------|------------|--------------------------------|------------|--------------------------------|------------|-----------------------------------------------------|------------|
| ** **                                                                       | ** ** | ** ** | ** ** | ** **          | ** ** | ** **                 | ** ** | ** **                     | ** ** | **(Successor)**                | ** ** |
| Net cash (used in)  provided by operating activities                             |       | $          | (12,429    | )                   |       | $                          | (56,093    | )                              |       |                           | $          | 21,835                                              |       |   |   | $ | – |   |   |   | $ | (46,687 | ) |   |
| Cash flows from  investing activities:                                           |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |   |   |
| Capital expenditures                                                             |       | –     |       |                | (19,137    | )                          |       |                           | 515        |                           |       |                                                | –     |   |   |   | (18,622 | ) |   |
| Proceeds from sale/leasebacks                                                    |       | –     |       |                | 50,910     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 50,910 |   |   |
| Increase in restricted cash                                                      |       | (456,762   | )          |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | (456,762 | ) |   |
| Release of restricted cash                                                       |       | 456,762    |       |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 456,762 |   |   |
| Acquisition of AMCE, net of cash acquired                                        |       | (1,268,564 | )          |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | (1,268,564 | ) |   |
| Purchase of leased furniture, fixtures and equipment                             |       | –     |       |                | (25,292    | )                          |       |                           | –     |                           |       |                                                | –     |   |   |   | (25,292 | ) |   |
| Proceeds from  disposition of long-term assets                                   |       | –     |       |                | 143        |                       |       |                           | 30         |                           |       |                                                |       |   |   |   | 173 |   |   |
| Other, net                                                                       |       | (173       | )          |                | 2,259      |                       |       |                           | (485       | )                              |       |                                                | –     |   |   |   | 1,601 |   |   |
| Net cash (used in)  provided by investing activities                             |       | (1,268,737 | )          |                | 8,883      |                       |       |                           | 60         |                           |       |                                                | –     |   |   |   | (1,259,794 | ) |   |
| Cash flows from  financing activities:                                           |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |   |   |
| Repurchase of Notes due 2011                                                     |       | (1,663     | )          |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | (1,663 | ) |   |
| Capital contribution from Marquee Holdings Inc.                                  |       | 934,901    |       |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 934,901 |   |   |
| Proceeds from issuance of 8 5¤8% Senior Unsecured Fixed Rate Notes due 2012 |       | 250,000    |       |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 250,000 |   |   |
| Proceeds from issuance of Senior Unsecured Floating  Rate Notes due 2010         |       | 205,000    |       |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 205,000 |   |   |
| Principal payments under capital and financing lease  obligations                |       | –     |       |                | (772       | )                          |       |                           | (84        | )                              |       |                                                | –     |   |   |   | (856 | ) |   |
| Deferred financing costs                                                         |       | (16,546    | )          |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | (16,546 | ) |   |
| Change in intercompany advances                                                  |       | (90,526    | )          |                | 85,759     |                       |       |                           | 4,767      |                           |       |                                                | –     |   |   |   | – |   |   |
| Change in construction payables                                                  |       | –     |       |                | 4,747      |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | 4,747 |   |   |
| Net cash provided  by financing activities                                       |       | 1,281,166  |       |                | 89,734     |                       |       |                           | 4,683      |                           |       |                                                | –     |   |   |   | 1,375,583 |   |   |
| Effect of exchange  rate changes on cash and equivalents                         |       | –     |       |                | –     |                       |       |                           | 1,847      |                           |       |                                                | –     |   |   |   | 1,847 |   |   |
| Net increase  (decrease) in cash and equivalents                                 |       | –     |       |                | 42,524     |                       |       |                           | 28,425     |                           |       |                                                | –     |   |   |   | 70,949 |   |   |
| Cash and  equivalents at beginning of period                                     |       | –     |       |                | –     |                       |       |                           | –     |                           |       |                                                | –     |   |   |   | – |   |   |
| Cash and equivalents at  end of period                                           |       | $          | –     |                |       | $                          | 42,524     |                           |       |                           | $          | 28,425                                              |       |   |   | $ | – |   |   |   | $ | 70,949 |   |   |

 

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April 2, 2004through December 23, 2004 (Predecessor):

| **(In thousands)**                                                            | ** ** | ** ** | ** ** | **Parent**

**Obligor** | ** ** | **Subsidiary**

**Guarantors** | ** ** | **Subsidiary **

**Non-Guarantors** | ** ** | **Consolidating**

**Adjustments** | ** ** | **Consolidated AMC**

**Entertainment, Inc.** | ** ** |
|------------------------------------------------------------------------------------|------------|------------|------------|-------------------------|------------|--------------------------------|------------|------------------------------------------|------------|------------------------------------|------------|---------------------------------------------------------|------------|
| Net cash provided  by (used in) operating activities                               |       | $          | 13,042     |                    |       | $                              | 130,915    |                                     |       |                               | $          | 1,407                                                   |       |   |   | $ | — |   |   |   | $ | 145,364 |   |   |
| Cash flows from investing  activities:                                             |       |       |       |                    |       |                           |       |                                     |       |                               |       |                                                    |       |   |   |   |   |   |   |
| Capital  expenditures                                                              |       | —     |       |                    | (63,857    | )                              |       |                                     | (2,298     | )                                  |       |                                                    | —     |   |   |   | (66,155 | ) |   |
| Increase  in restricted cash                                                       |       | (627,338   | )          |                    | —     |                           |       |                                     | —     |                               |       |                                                    | —     |   |   |   | (627,338 | ) |   |
| Proceeds  from disposition of long-term assets                                     |       | —     |       |                    | 307        |                           |       |                                     | (30        | )                                  |       |                                                    | —     |   |   |   | 277 |   |   |
| Other,  net                                                                        |       | —     |       |                    | (2,570     | )                              |       |                                     | 3,391      |                               |       |                                                    | —     |   |   |   | 821 |   |   |
| Net cash (used in)  provided by investing activities                               |       | (627,338   | )          |                    | (66,120    | )                              |       |                                     | 1,063      |                               |       |                                                    | —     |   |   |   | (692,395 | ) |   |
| Cash flows from financing  activities:                                             |       |       |       |                    |       |                           |       |                                     |       |                               |       |                                                    |       |   |   |   |   |   |   |
| Proceeds  from issuance of 8  5¤8% Senior Unsecured Fixed Rate Notes due 2012 |       | 250,000    |       |                    | —     |                           |       |                                     | —     |                               |       |                                                    | —     |   |   |   | 250,000 |   |   |
| Proceeds  from issuance of Senior Unsecured Floating Rate Notes due 2010           |       | 205,000    |       |                    | —     |                           |       |                                     | —     |                               |       |                                                    | —     |   |   |   | 205,000 |   |   |
| Proceeds  from issuance of 12% Senior Discount Notes due 2014                      |       | 169,918    |       |                    | —     |                           |       |                                     | —     |                               |       |                                                    | —     |   |   |   | 169,918 |   |   |
| Principal payments under  capital and financing lease obligations                  |       | —     |       |                    | (1,807     | )                              |       |                                     | (213       | )                                  |       |                                                    | —     |   |   |   | (2,020 | ) |   |
| Change in intercompany  advances                                                   |       | (992       | )          |                    | (6,379     | )                              |       |                                     | 7,371      |                               |       |                                                    | —     |   |   |   | — |   |   |
| Change in construction  payables                                                   |       | —     |       |                    | (2,234     | )                              |       |                                     | —     |                               |       |                                                    | —     |   |   |   | (2,234 | ) |   |
| Cash portion of preferred  dividends                                               |       | (9,349     | )          |                    | —     |                           |       |                                     | —     |                               |       |                                                    | —     |   |   |   | (9,349 | ) |   |
| Proceeds from exercise of  stock options                                           |       | 52         |       |                    | —     |                           |       |                                     | —     |                               |       |                                                    | —     |   |   |   | 52 |   |   |
| Treasury stock purchases  and other                                                |       | (333       | )          |                    | —     |                           |       |                                     | —     |                               |       |                                                    | —     |   |   |   | (333 | ) |   |
| Net cash provided by  (used in) financing activities                               |       | 614,296    |       |                    | (10,420    | )                              |       |                                     | 7,158      |                               |       |                                                    | —     |   |   |   | 611,034 |   |   |
| Effect of exchange rate  changes on cash and equivalents                           |       | —     |       |                    | —     |                           |       |                                     | (615       | )                                  |       |                                                    | —     |   |   |   | (615 | ) |   |
| Net increase (decrease)  in cash and equivalents                                   |       | —     |       |                    | 54,375     |                           |       |                                     | 9,013      |                               |       |                                                    | —     |   |   |   | 63,388 |   |   |
| Cash and equivalents at  beginning of period                                       |       | —     |       |                    | 304,409    |                           |       |                                     | 28,839     |                               |       |                                                    | —     |   |   |   | 333,248 |   |   |
| Cash and equivalents at end of period                                              |       | $          | —     |                    |       | $                              | 358,784    |                                     |       |                               | $          | 37,852                                                  |       |   |   | $ | — |   |   |   | $ | 396,636 |   |   |

 

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**52 weeks ended April 1, 2004 (Predecessor):**

| **(In thousands)**                                                                                              | ** ** | ** ** | ** ** | **Parent  Obligor** | ** ** | **Subsidiary  Guarantors** | ** ** | **Subsidiary  Non-Guarantors** | ** ** | **Consolidating  Adjustments** | ** ** | **Consolidated AMC  Entertainment, Inc.** | ** ** |
|----------------------------------------------------------------------------------------------------------------------|------------|------------|------------|---------------------|------------|----------------------------|------------|--------------------------------|------------|--------------------------------|------------|-----------------------------------------------------|------------|
| Net cash provided by  operating activities                                                                           |       | $          | 2,456      |                |       | $                          | 160,723    |                           |       |                           | $          | 760                                                 |       |   |   | $ | — |   |   |   | $ | 163,939 |   |   |
| Cash flows from investing  activities:                                                                               |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |   |   |
| Capital  expenditures                                                                                                |       | —     |       |                | (93,957    | )                          |       |                           | (1,054     | )                              |       |                                                | —     |   |   |   | (95,011 | ) |   |
| Proceeds from  sale/leasebacks                                                                                       |       | —     |       |                | 63,911     |                       |       |                           | —     |                           |       |                                                | —     |   |   |   | 63,911 |   |   |
| Acquisition of  Megastar Cinemas L.L.C., net of cash acquired                                                        |       | —     |       |                | (13,374    | )                          |       |                           | —     |                           |       |                                                | —     |   |   |   | (13,374 | ) |   |
| Acquisition of GC  Companies, Inc., net of cash acquired and proceeds from sale of venture  capital investments |       | —     |       |                | (2,075     | )                          |       |                           | —     |                           |       |                                                | —     |   |   |   | (2,075 | ) |   |
| Purchase of leased  furniture, fixtures and equipment                                                                |       | —     |       |                | (15,812    | )                          |       |                           | —     |                           |       |                                                | —     |   |   |   | (15,812 | ) |   |
| Payment on  disposal-discontinued operations                                                                         |       | —     |       |                | (5,252     | )                          |       |                           | —     |                           |       |                                                | —     |   |   |   | (5,252 | ) |   |
| Proceeds from  disposition of long-term assets                                                                       |       | —     |       |                | 9,289      |                       |       |                           | —     |                           |       |                                                | —     |   |   |   | 9,289 |   |   |
| Other, net                                                                                                           |       | —     |       |                | (7,557     | )                          |       |                           | (3,497     | )                              |       |                                                | —     |   |   |   | (11,054 | ) |   |
| Net cash used in investing  activities                                                                               |       | —     |       |                | (64,827    | )                          |       |                           | (4,551     | )                              |       |                                                | —     |   |   |   | (69,378 | ) |   |
| Cash flows from financing  activities:                                                                               |       |       |       |                |       |                       |       |                           |       |                           |       |                                                |       |   |   |   |   |   |   |
| Proceeds from  issuance of 8% Senior Subordinated Notes due 2014                                                     |       | 300,000    |       |                | (6,000     | )                          |       |                           | —     |                           |       |                                                | —     |   |   |   | 294,000 |   |   |
| Repurchase of  Notes due 2009 and 2011                                                                               |       | (292,117   | )          |                | —     |                       |       |                           | —     |                           |       |                                                | —     |   |   |   | (292,117 | ) |   |
| Principal payments  under capital and financing lease obligations                                                    |       | —     |       |                | (2,339     | )                          |       |                           | (235       | )                              |       |                                                | —     |   |   |   | (2,574 | ) |   |
| Deferred financing  costs on credit facility due 2009                                                                |       | —     |       |                | (3,725     | )                          |       |                           | —     |                           |       |                                                | —     |   |   |   | (3,725 | ) |   |
| Change in  intercompany advances                                                                                     |       | (13,788    | )          |                | (2,864     | )                          |       |                           | 16,652     |                           |       |                                                | —     |   |   |   | — |   |   |
| Change in  construction payables                                                                                     |       | —     |       |                | (4,307     | )                          |       |                           | —     |                           |       |                                                | —     |   |   |   | (4,307 | ) |   |
| Proceeds from  exercise of stock options                                                                             |       | 3,894      |       |                | —     |                       |       |                           | —     |                           |       |                                                | —     |   |   |   | 3,894 |   |   |
| Treasury stock  purchases and other                                                                                  |       | (445       | )          |                | —     |                       |       |                           | —     |                           |       |                                                | —     |   |   |   | (445 | ) |   |
| Net cash (used in)  provided by financing activities                                                                 |       | (2,456     | )          |                | (19,235    | )                          |       |                           | 16,417     |                           |       |                                                | —     |   |   |   | (5,274 | ) |   |
| Effect of exchange rate  changes on cash and equivalents                                                             |       | —     |       |                | —     |                       |       |                           | (451       | )                              |       |                                                | —     |   |   |   | (451 | ) |   |
| Net increase in cash and  equivalents                                                                                |       | —     |       |                | 76,661     |                       |       |                           | 12,175     |                           |       |                                                | —     |   |   |   | 88,836 |   |   |
| Cash and equivalents at  beginning of year                                                                           |       | —     |       |                | 227,748    |                       |       |                           | 16,664     |                           |       |                                                | —     |   |   |   | 244,412 |   |   |
| Cash and equivalents at end of year                                                                                  |       | $          | —     |                |       | $                          | 304,409    |                           |       |                           | $          | 28,839                                              |       |   |   | $ | — |   |   |   | $ | 333,248 |   |   |

 

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**NOTE 18—RELATEDPARTY TRANSACTIONS**

**Governance Agreements**

In connection with the Mergers, Holdings, the Sponsorsand the other pre-existing stockholders of Holdings, as applicable,entered into various agreements defining the rights of Holdings’ stockholderswith respect to voting, governance and ownership and transfer of the stock ofHoldings, including a Second Amended and Restated Certificate of Incorporationof Holdings, a Second Amended and Restated Stockholders Agreement, a VotingAgreement among Holdings and the pre-existing stockholders of Holdings, aVoting Agreement among Holdings and the former stockholders of LCE Holdings andan Amended and Restated Management Stockholders Agreement among Holdings andcertain members of management of Holdings who are stockholders of Holdings(collectively, the “Governance Agreements”).

The Governance Agreements provide that the Board ofDirectors for Holdings will consist of up to nine directors, two of whom shallbe designated by JPMP, two of whom shall be designated by Apollo, one of whomshall be the Chief Executive Officer of Holdings, one of whom shall bedesignated by Carlyle, one of whom shall be designated by Bain, one of whomshall be designated by Spectrum and one of whom shall be designated by Bain,Carlyle and Spectrum, voting together, so long as such designee is consented toby each of Bain and Carlyle. Each of the directors respectively designated byJPMP, Apollo, Carlyle, Bain and Spectrum shall have three votes on all mattersplaced before the Board of Directors of Holdings and AMCE and the ChiefExecutive Office of Holdings and the director designated by Carlyle, Bain andSpectrum voting together will have one vote each. The number of directorsrespectively designated by the Sponsors will be reduced upon a decrease in suchSponsors’ ownership in Holdings below certain thresholds.

The Voting Agreement among Holdings and the pre-existingstockholders of Holdings provides that, until fifth anniversary of the Mergers(the “Blockout Period”), the former continuing stockholders of Holdings (otherthan Apollo and JPMP) will generally vote their voting shares of capital stockof Holdings in favor of any matter in proportion to the shares of capital stockof Apollo and JPMP voted in favor of such matter, except in certain specifiedinstances. The Voting Agreement among Holdings and the former stockholders ofLCE Holdings further provides that during the Blockout Period, the former LCEHoldings stockholders will generally vote their voting shares of capital stockof Holdings on any matter as directed by any two of Carlyle, Bain and Spectrum,except in certain specified instances. In addition, certain actions ofHoldings, including, but not limited to, change in control transactions,acquisition or disposition transactions with a value in excess of$10.0 million, the settlement of claims or litigation in excess of$2.5 million, an initial public offering of Holdings, hiring or firing achief executive officer, chief financial officer or chief operating officer,incurring or refinancing indebtedness in excess of $5.0 million orengaging in new lines of business, require the approval of either (i) anythree of JPMP, Apollo, Carlyle or Bain or (ii) Spectrum and(a) either JPMP or Apollo and (b) either Carlyle or Bain (the“Requisite Stockholder Majority”) if at such time the Sponsors collectivelyhold at least a majority of Holdings’ voting shares.

Prior to the earlier of the end of the Blockout Periodand the completion of an initial public offering of the capital stock ofHoldings or AMCE, the Governance Agreements will prohibit the Sponsors and theother pre-existing stockholders of Holdings from transferring any oftheir interests in Holdings, other than (i) certain permitted transfers toaffiliates or to persons approved of by the Sponsors and (ii) transfersafter the Blockout Period subject to the rights described below.

The Governance Agreements set forth additionaltransfer provisions for the Sponsors and the other pre-existingstockholders of Holdings with respect to the interests in Holdings, includingthe following:

*Rightof first offer.**  *Afterthe Blockout Date and prior to an initial public offering, Holdings and, in theevent Holdings does not exercise its right of first offer, each of the Sponsorsand the other pre-existing 

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stockholders of Holdings,has a right of first offer to purchase (on a pro rata basis in the case of thestockholders) all or any portion of the shares of Holdings that a Sponsor orother former continuing stockholder of Holdings is proposing to sell to a thirdparty at the price and on the terms and conditions offered by such third party.

*Drag-alongrights.**  *If,prior to an initial public offering, Sponsors constituting a RequisiteStockholder Majority propose to transfer shares of Holdings to an independentthird party in a bona fide arm’s-length transaction or series oftransactions that results in a sale of all or substantially all of Holdings,such Sponsors may elect to require each of the other stockholders of Holdingsto transfer to such third party all of its shares at the purchase price andupon the other terms and subject to the conditions of the sale.

*Tag-alongrights.**  *Subjectto the right of first offer described above, if any Sponsor or other formercontinuing stockholder of Holdings proposes to transfer shares of Holdings heldby it, then such stockholder shall give notice to each other stockholder, whoshall each have the right to participate on a pro rata basis in the proposedtransfer on the terms and conditions offered by the proposed purchaser.

*Participantrights.**  *Onor prior to an initial public offering, the Sponsors and the other pre-existingstockholders of Holdings have the pro rata right to subscribe to any issuanceby Holdings or any subsidiary of shares of its capital stock or any securitiesexercisable, convertible or exchangeable for shares of its capital stock,subject to certain exceptions.

The Governance Agreements also provide for certainregistration rights in the event of an initial public offering of Holdings,including the following:

*Demandrights.**  *Subjectto the consent of at least two of any of JPMP, Apollo, Carlyle and Bain duringthe first two years following an initial public offering, each Sponsor has theright at any time following an initial public offering to make a writtenrequest to Holdings for registration under the Securities Act of part or all ofthe registrable equity interests held by such stockholders at Holdings’expense, subject to certain limitations. Subject to the same consentrequirement, the other pre-existing stockholders of Holdings as a groupshall have the right at any time following an initial public offering to makeone written request to Holdings for registration under the Securities Act ofpart or all of the registrable equity interests held by such stockholders withan aggregate offering price to the public of at least $200 million.

*Piggybackrights.**  *IfHoldings at any time proposes to register under the Securities Act any equityinterests on a form and in a manner which would permit registration of theregistrable equity interests held by stockholders of Holdings for sale to thepublic under the Securities Act, Holdings shall give written notice of theproposed registration to each stockholder, who shall then have the right torequest that any part of its registrable equity interests be included in suchregistration, subject to certain limitations.

*Holdback agreements.**  *Each stockholder has agreed that itwill not offer for public sale any equity interests during a period not toexceed 90 days (180 days in the case of an initial public offering)after the effective date of any registration statement filed by Holdings in connectionwith an underwritten public offering (except as part of such underwrittenregistration or as otherwise permitted by such underwriters), subject tocertain limitations.

**Amended andRestated Fee Agreement**

In connection with the Mergers, Holdings, AMCE and theSponsors entered into an Amended and Restated Fee Agreement, which provides foran annual management fee of $5.0 million, payable quarterly and in advanceto each Sponsor, on a pro rata basis, for the twelve year duration of theagreement, as well as reimbursements for each Sponsor’s respectiveout-of-pocket expenses in connection with the management services providedunder the agreement. In addition, the fee agreement will provide forreimbursements by AMCE to the Sponsors for their out-of-pocket expenses and toHoldings of up to 

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$3.5 million for feespayable by Holdings in any single fiscal year in order to maintain AMCE’scorporate existence, corporate overhead expenses and salaries or othercompensation of certain employees.

Upon the consummation of a change in controltransaction or an initial public offering, each of the Sponsors will receive,in lieu of quarterly payments of the annual management fee, a fee equal to thenet present value of the aggregate annual management fee that would have beenpayable to the Sponsors during the remainder of the term of the fee agreement(assuming a twelve year term from the date of the original fee agreement),calculated using the treasury rate having a final maturity date that is closestto the twelfth anniversary of the date of the original fee agreement date.

The fee agreement also provides that AMCE willindemnify the Sponsors against all losses, claims, damages and liabilitiesarising in connection with the management services provided by the Sponsorsunder the fee agreement.

Holdings is owned by the Sponsors, other co-investorsand by certain members of management as follows: JPMP (20.784%); Apollo(20.784%); Bain Capital Partners (15.090%); The Carlyle Group (15.090%);Spectrum Equity Investors (9.764%); Weston Presidio Capital IV, L.P. and WPCEntrepreneur Fund II, L.P. (3.899%); Co-Investment Partners, L.P. (3.899%);Caisse de Depot et Placement du Quebec (3.120%); AlpInvest Partners CSInvestments 2003 C.V., AlpInvest Partners Later Stage Co-Investments CustodianII B.V. and AlpInvest Partners Later Stage Co-Investments Custodian IIA B.V.(2.730%); SSB Capital Partners (Master Fund) I, L.P. (1.950%); CSFB StrategicPartners Holdings II, L.P., CSFB Strategic Partners Parallel Holdings II, L.P.,CSFB Credit Opportunities Fund (Employee), L.P. and CSFB Credit OpportunitiesFund (Helios), L.P. (1.560%); Credit Suisse Anlagestiftung, Pearl HoldingLimited, Vega Invest (Guernsey) Limited and Partners Group Private EquityPerformance Holding Limited (0.780%); Screen Investors 2004, LLC (0.152%); andmembers of management (0.400%)(1).

----

(1)        All percentage ownerships are approximate.

**Control Arrangement**

The sponsors will have theability to control the Company’s affairs and policies and the election ofdirectors and appointment of management both before and after the Holdingsproposed IPO.

**Continuing ServiceAgreement**

In connection with thetermination of his current employment agreement with Loews, the Company ispaying Mr. Travis Reid severance of $87,500 per month for 18 monthsfollowing the closing of the Mergers, has paid him a lump sum payment of$1,575,000, and will provide outplacement assistance and automobile benefitsthrough December 31, 2006. In addition, in order to facilitate integrationfollowing the Mergers, the Company has entered into an agreement with Mr. Reid,whereby Mr. Reid is providing certain transitional consulting services tothe Company and reports to Mr. Peter C. Brown, the Company’s ChiefExecutive Officer. Pursuant to the continuing service agreement, which may beterminated by Mr. Reid at any time or by the Company after December 31,2006, the Company is paying Mr. Reid a consulting fee for each month ofservice at the following rate: $50,000 for each of the first four months, $33,333for each of the next four months and $16,667 for any month thereafter. Undercertain circumstances, Mr. Reid will have the right to require Holdings topurchase, and Holdings will have the right to require Mr. Reid to sell, onone occasion, all shares of common stock of Holdings that Mr. Reidreceived in the Merger in exchange for payment to him of his original purchaseprice for his shares of Loews common stock. The continuing service agreement isnot intended to create an employment relationship between Mr. Reid and theCompany and his services are being provided on an independent contractor basis.

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**Option Grant toTravis Reid**

Pursuant to his ContinuingService Agreement, effective as of January 26, 2006, Holdings has granted Mr. Reidan option under the Holdings 2004 Stock Option Plan to acquire Class NCommon Stock at an exercise price not less than the fair market value (asdetermined by the Board of Directors of Holdings) on the date of grant. Theoption is subject to other terms and conditions substantially similar to theterms of Holdings options currently held by employees and is also subject tothe Management Stockholders Agreement. The option vests in three installmentson December 23, 2006, 2007 and 2008, and vests in full upon a change ofcontrol of Holdings or AMCE.

**Cinemex**

Cinemex from time to timepurchases services or enters into arrangements with parties related to itsemployees. For example, Miguel Angel Dávila, Chief Executive Officer andPresident of Cinemex and on the board of Cinemex, and Adolfo Fastlicht Kurián,a Director of Cinemex, are minority investors in the construction of the newshopping center where one of Cinemex’s new theatres opened in December 2004.Mr. Kurián’s father is the general manager of three construction companiesthat provide theatre construction services to Cinemex and Mr. Kurián is aninvestor in these companies. In addition, Cinemex signed a waiver to allow aMcDonald’s restaurant owned by Mr. Kurián’s wife to open in a shoppingcenter where, under the lease, the landlord was prohibited from leasing spaceto a business that would compete with the theatre’s concessions. A relative of Mr. Dávilais the manager of Consultores en Información Electrónica, S.A. de C.V., thecompany which renders web hosting, electronic marketing, e-mail and softwareservices to one of Cinemex’s subsidiaries. This arrangement may be terminatedby Cinemex upon 30-days notice.

**Market MakingTransactions**

On August 18, 2004, Holdings sold $304,000,000 inaggregate principal amount at maturity of its 12% Senior Discount Notes due2014 (the “Holdco Notes”). On the same date, Marquee sold $250,000,000 inaggregate principal amount of its 8 5¤8% Senior Notes due 2012 and $205,000,000in aggregate principal amount of its Senior Floating Notes due 2010(Collectively, the “Senior Notes”). J.P. Morgan Securities Inc., anaffiliate of JPMP which owns approximately 20.8% of Holdings, was an initialpurchaser of both the Holdco Notes and the Senior Notes.

On January 26, 2006AMCE sold $325,000,000 in aggregate principal amount of its 11% SeniorSubordinated Notes due 2016. JP Morgan Securities Inc., an affiliate ofJPMP which owns approximately 20.8% of Holdings, was an initial purchaser ofthese notes. Credit Suisse Securities (USA) LLC, whose affiliates ownapproximately 1.6% of Holdings, was also an initial purchaser of these notes.

**StockholderTransactions**

On December 23, 2003 the Company’s Board ofDirectors approved payment by the Company of legal fees in the amount of$590,000 and reimbursement of other out-of-pocket expenses in the amount of$170,000 on behalf of the initial purchasers of our preferred stock. On November 18,2003 and December 23, 2003 the Company’s Board of Directors approvedpayment by the Company of legal fees in the amount of $190,000 on behalf of theCompany’s Class B Stockholder. The costs were incurred in connection withthe consideration of a possible business combination between the Company andLoews Cineplex Entertainment Corporation.

In connection with themerger with Marquee, Apollo received an aggregate amount of cash proceeds forits shares of approximately (i) $869.8 million, including$91.1 million attributable to the special change in control distributionpayable to Apollo pursuant to the terms of the Series A convertiblepreferred stock. The Company was required to pay the Marquee Sponsors an annualmanagement fee of up to $2.0 million 

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in theaggregate, payable quarterly, under the Management Fee Agreement. In connectionwith the merger with Marquee, Holdings, Marquee and the Marquee Sponsorsentered into a management fee agreement pursuant to which AMCE, as thesurviving corporation in the merger with Marquee, paid to each of JPMP andApollo a one-time sponsorship fee of $10.0 million in consideration of thecompletion of the merger with Marquee and the capitalization of Holdings. Themanagement fee agreement also provided for an annual management fee of$2.0 million, payable quarterly and in advance to each Marquee Sponsor forthe duration of the agreement, as well as reimbursements for each Marqueesponsor’s respective out-of-pocket expenses in connection with the managementservices provided under the agreement. In addition, the management feeagreement provided for reimbursements of up to $3.5 million for feespayable by Holdings in any single fiscal year in order to maintain itscorporate existence, corporate overhead expenses and salaries or othercompensation of certain employees. AMCE made cash payments of $1.0 millionto the Marquee Sponsors for the annual management fee during the fourth quarterof fiscal 2005. Also in connection with the merger with Marquee, the Companypaid legal fees on behalf of JPMP and Apollo of $6.0 million each and paidlegal fees on behalf of the Company’s Class B Stockholder of $170,000.Following consummation of the merger with Marquee, the Company became aprivately-held company, wholly owned by Holdings.

**NOTE 19—SUBSEQUENTEVENTS**

In May 2006, AMCEI and its subsidiary AMCEntertainment International Limited sold its interests in AMC EntertainmentEspaña S.A., which owned and operated 4 theatres with 86 screens in Spain, andActividades Multi-Cinemas E Espectáculos, LDA, which owned and operated 1theatre with 20 screens in Portugal for a sales price of approximately$40.0 million. These operations did not meet the criteria for reporting asdiscontinued operations.

In December 2006, the Company disposed of its equitymethod investment in Yelmo which owned and operated 27 theatres with 310screens on the date of sale.

Subsequent to March 30, 2006 the Company soldfour theatres with 42 screens in the U.S. as required by and in connection withthe approval of the Mergers for an aggregate net sales price of approximately$30.7 million. As of March 30, 2006, the assets and liabilitiesrelated to these theatres are classified as held for sale.

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**Item 9. Changes inDisagreements With Accountants on Accounting and Financial Disclosure**

**None**

**Item 9A. Controlsand Procedures**

(a)   Evaluation of disclosure controls and procedures.

***Disclosure Controls and Procedures***

Our senior management is responsible for establishingand maintaining disclosure controls and procedures (as defined in Rule 13a-15(e) and15d-15(e) under the Securities Exchange Act of 1934, or the ExchangeAct) designed to ensure that information required to be disclosed by MarqueeHoldings Inc. in the reports that it files or submits under the ExchangeAct is recorded, processed, summarized and reported, within the time periodsspecified in the Securities and Exchange Commission’s rules and forms.Disclosure controls and procedures include, without limitation, controls andprocedures designed to ensure that information required to be disclosed by anissuer in the reports that it files or submits under the Exchange Act isaccumulated and communicated to the issuer’s management, including its principalexecutive officer or officers and principal financial officer or officers, orpersons performing similar functions, as appropriate to allow timely decisionsregarding required disclosure.

We have evaluated theeffectiveness of our disclosure controls and procedures (as defined inRules 13a-15(e) and 15d-15(e) under the ExchangeAct) as of March 30, 2006, with the participation of our Chief ExecutiveOfficer and Chief Financial Officer, as well as other key members of ourmanagement. As a result of the identification of the material weakness in ourinternal control over financial reporting discussed below, we have concludedthat our disclosure controls and procedures were not effective as of March 30,2006.

***Material Weakness in Internal Control Over FinancialReporting***

Amaterial weakness is a control deficiency, or combination of controldeficiencies, that results in more than a remote likelihood that a materialmisstatement of the annual or interim financial statements will not beprevented or detected. As of March 30, 2006, we identified the followingmaterial weakness in our internal control over financial reporting:

·       TheCompany did not maintain effective internal controls to ensure that itsstock-based compensation awards and management-purchased shares areappropriately recorded in its financial statements in accordance with generallyaccepted accounting principles. Specifically, the Company did not appropriatelyand timely identify the relevant characteristic of certain put rights whichresulted in the Company’s failure to properly identify the appropriatefinancial statement classification of certain options and shares as a componentof equity (as opposed to liabilities) which resulted in the inappropriateapplication of mark-to-market accounting and incorrect expense recognition inthe income statement. This control deficiency resulted in misstatements in theconsolidated financial statements for the annual and interim periods includedin this filing. Additionally, this control deficiency could result in materialmisstatements to annual or interim financial statements that would not beprevented or detected.

***Remediation of Material Weaknesses***

The Company will takeactions to remediate the material weakness in our internal control overfinancial reporting surrounding the application of generally acceptedaccounting principles with respect to stock-based compensation andmanagement-purchased shares for the reporting period ending March 29,2007. Specifically, the Company will make improvements with respect to thedesign, precision and rigor of review controls over the application ofstock-based compensation and management-purchased shares 

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accountingin that appropriate levels of management and legal counsel now review proposedaccounting for all newly issued stock-based compensation awards andmanagement-purchased shares. Further, management will consider using aqualified independent third-party advisor, as deemed appropriate, with respectto more complex stock-based compensation transactions. In addition, the putrights associated with the stock options and underlying shares which resultedin previous awards being inappropriately classified as liabilities and subjectto mark-to-mark accounting in the income statement were cancelled andterminated during the period ended March 29, 2007.

(b)   Changes ininternal controls.

As discussed within the *Material Weakness in Internal Control Over FinancialReporting***and***Remediation of Material Weakness* above,the Company has identified a change in our internal control over financialreporting during the quarter ended March 29, 2007, that materiallyaffected, or is reasonably likely to materially affect, our internal controlover financial reporting during the year ended March 30, 2006.

**Item 9B. Other Information**

**None**

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**PART IV**

**Item 15. Exhibits,Financial Statement Schedules**

(a)          (1)The followingfinancial statements are included in Part II Item 8.:

|                                                                                                                                                                                                                   | ** ** | **Page** | ** ** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|----------|------------|
| Reports of Independent Registered Public Accounting  Firm                                                                                                                                                         |       |     | 37         |   |   |
| Consolidated Statements of Operations—Successor  periods ended March 30, 2006 and March 31, 2005 and Predecessor  periods ended December 23, 2004 and April 1, 2004                      |       |     | 38         |   |   |
| Consolidated Balance Sheets—March 30, 2006 and  March 31, 2005 Successor                                                                                                                           |       |     | 39         |   |   |
| Consolidated  Statements of Cash Flows—Successor periods ended March 30, 2006 and  March 31, 2005 and Predecessor periods ended December 23, 2004 and  April 1, 2004                     |       |     | 40         |   |   |
| Consolidated Statements of Stockholder’s Equity  (Deficit)—Periods ended March 30, 2006 and March 31, 2005  Successor, December 23, 2004 Predecessor and April 1, 2004  Predecessor |       |     | 42         |   |   |
| Notes to Consolidated Financial Statements—Fiscal  years ended March 30, 2006, March 31, 2005 and April 1, 2004                                                                               |       |     | 44         |   |   |

 

(a)          (2) Financial StatementSchedules—All schedules have been omitted because the necessary information isincluded in the Notes to the Consolidated Financial Statements.

(b)         Exhibits

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

 

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**SIGNATURES**

Pursuantto the requirements of Section 13 or 15(d) of the Securities ExchangeAct of 1934, the registrant has duly caused this report to be signed on itsbehalf by the undersigned, thereunto duly authorized.

|        |   | AMC ENTERTAINMENT INC. |
|--------|--------|------------------------|
|   |   | By:                    |   | /s/   CHRIS A. COX |
|   |   |                   |   | Chris A. Cox |
|   |   |                   |   | Chief Accounting  Officer |
|   |   | Date:                  |   | April 16,  2007 |

 

Pursuantto the requirements of the Securities Exchange Act of 1934, this report hasbeen signed below by the following persons on behalf of the registrant and inthe capacities and on the dates indicated.

| /s/   PETER C. BROWN    |   | Chairman of the Board,                |   | April 16, 2007 |
|-----------------------------------|--------|---------------------------------------|--------|---------------------|
| Peter C. Brown                    |   | Chief Executive Officer and President |   |                |
| /s/   MICHAEL R. HANNON |   |                                  |   | April 16, 2007 |
| Michael R. Hannon                 |   | Director                              |   |                |
| /s/   STEPHEN P. MURRAY |   |                                  |   | April 16, 2007 |
| Stephen P. Murray                 |   | Director                              |   |                |
| /s/   STAN PARKER       |   |                                  |   | April 16, 2007 |
| Stan Parker                       |   | Director                              |   |                |
| /s/   AARON J. STONE    |   |                                  |   | April 16, 2007 |
| Aaron J. Stone                    |   | Director                              |   |                |
| /s/   JOHN CONNAUGHTON  |   |                                  |   | April 16, 2007 |
| John Connaughton                  |   | Director                              |   |                |
| /s/   MICHAEL CONNELLY  |   |                                  |   | April 16, 2007 |
| Michael Connelly                  |   | Director                              |   |                |
| /s/   BENJAMIN COUGHLIN |   |                                  |   | April 16, 2007 |
| Benjamin Coughlin                 |   | Director                              |   |                |
| /s/   TRAVIS REID       |   |                                  |   | April 16, 2007 |
| Travis Reid                       |   | Director                              |   |                |
| /s/   CRAIG R. RAMSEY   |   | Executive Vice President  and         |   | April 16, 2007 |
| Craig R. Ramsey                   |   | Chief Financial Officer               |   |                |
| /s/   KEVIN M. CONNOR   |   | Senior Vice President,  General       |   | April 16, 2007 |
| Kevin M. Connor                   |   | Counsel and Secretary                 |   |                |
| /s/   CHRIS A. COX      |   | Vice President and                    |   | April 16, 2007 |
| Chris A. Cox                      |   | Chief Accounting Officer              |   |                |

 

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**EXHIBITINDEX**

| EXHIBIT NUMBER | ** ** | **DESCRIPTION**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|----------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *2.1(a)        |       | Modified First Amended Joint Plan of Reorganization  of Debtors and Official Committee of Unsecured Creditors for GC  Companies, Inc. and its Jointly Administered Subsidiaries filed on  March 1, 2002 with the United States Bankruptcy Court for the District  of Delaware (incorporated by reference from Exhibit 2.2 to Form 8-K  filed March 7, 2002).                                                                                                                                                                                                                                                        |
| *2.1(b)        |       | Agreement and Plan of Merger, dated June 20,  2005, by and among Marquee Holdings Inc. and LCE Holdings, Inc.  (incorporated by reference from Exhibit 2.1 to the Company’s Form 8-K  filed on June 24, 2005).                                                                                                                                                                                                                                                                                                                                                                                                 |
| *2.2           |       | Purchase and Sale Agreement, dated as of  March 9, 2002, by and among G.S. Theaters, L.L.C., a Louisiana limited  liability Company, Westbank Theatres, L.L.C., a Louisiana limited  liability company, Clearview Theatres, L.L.C., a Louisiana limited liability  company, Houma Theater, L.L.C., a Louisiana limited liability company,  Hammond Theatres, L.L.C., a Louisiana limited liability company, and  American Multi-Cinema, Inc. together with Form of Indemnification  Agreement (Appendix J) (incorporated by reference from Exhibit 2.1  to Form 8-K filed March 13, 2002). |
| *2.3           |       | Agreement and Plan of Merger, dated as of  July 22, 2004 by and among Marquee Holdings, Inc., Marquee Inc. and  AMC Entertainment Inc. (incorporated by reference from Exhibit 2.1 to  Form 8-K filed June 23, 2004).                                                                                                                                                                                                                                                                                                                                                                                               |
| *3.1(a)        |       | Restated and Amended Certificate of Incorporation of  AMC Entertainment Inc. (as amended on December 2, 1997 and  September 18, 2001 and December 23, 2004) (incorporated by  reference from Exhibit 3.1 to the Company’s Form 8-K (File  No. 1-8747) filed December 27, 2004).                                                                                                                                                                                                                                                                                                                      |
| *3.1(b)        |       | Certificate of Designations of Series A  Convertible Preferred Stock and Series B Exchangeable Preferred Stock of  AMC Entertainment Inc. (restated for filing purposes in accordance with  Rule 102(c) of Regulation S-T) (incorporated by reference  from Exhibit 3.1(b) to the Company’s Form 10-Q (File  No. 1-8747) for the quarter ended June 27, 2002).                                                                                                                                                                                                                             |
| *3.2           |       | Amended and Restated Bylaws of AMC Entertainment  Inc. (Incorporated by Reference from Exhibit 3.2 to the Company’s  Form 10-Q (File No. 1-8747) filed December 27,  2004).                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|           |       | Certificates of Incorporation or corresponding  instrument, with amendments, of the following additional registrants:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 3.3.1          |       | Loews Citywalk Theatre Corporation (incorporated by  reference from Exhibit 3.3.1 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 3.3.2          |       | S&J Theatres, Inc. (incorporated by reference  from Exhibit 3.3.2 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| 3.3.3          |       | Loews Bristol Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.3 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| 3.3.4          |       | Loews Connecticut Cinemas, Inc. (incorporated  by reference from Exhibit 3.3.4 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| 3.3.5          |       | Downtown Boston Cinemas, LLC (incorporated by  reference from Exhibit 3.3.5 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 3.3.6          |       | Farmers Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.6 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| 3.3.7          |       | Gateway Cinemas, LLC (incorporated by reference from  Exhibit 3.3.7 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |

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| 3.3.8  |   | Kips Bay Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.8 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                        |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.3.9  |   | LCE Mexican Holdings, Inc. (incorporated by  reference from Exhibit 3.3.9 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                    |
| 3.3.10 |   | Lewisville Cinemas, LLC (incorporated by reference  from Exhibit 3.3.10 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                           |
| 3.3.11 |   | Loeks Acquisition Corp. (incorporated by reference  from Exhibit 3.3.11 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                           |
| 3.3.12 |   | Loews Akron Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.12 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                    |
| 3.3.13 |   | Loews Arlington Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.13 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                |
| 3.3.14 |   | Loews Berea Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.14 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                    |
| 3.3.15 |   | Loews Cineplex International Holdings, Inc.  (incorporated by reference from Exhibit 3.3.15 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006). |
| 3.3.16 |   | Loews Cineplex Theatres Holdco, Inc.  (incorporated by reference from Exhibit 3.3.16 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006).        |
| 3.3.17 |   | Loews Cineplex U.S. Callco, LLC (incorporated by  reference from Exhibit 3.3.17 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                   |
| 3.3.18 |   | Loews Garden State Cinemas, LLC (incorporated by  reference from Exhibit 3.3.18 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                   |
| 3.3.19 |   | Loews Greenwood Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.19 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                |
| 3.3.20 |   | Loews North Versailles Cinemas, LLC (incorporated by  reference from Exhibit 3.3.20 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).               |
| 3.3.21 |   | Loews Plainville Cinemas, LLC (incorporated by  reference from Exhibit 3.3.21 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                     |
| 3.3.22 |   | Loews Theatre Management Corp. (incorporated by  reference from Exhibit 3.3.22 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                    |
| 3.3.23 |   | Loews Theatres Clearing Corp. (incorporated by  reference from Exhibit 3.3.23 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                     |
| 3.3.24 |   | Loews USA Cinemas Inc. (incorporated by  reference from Exhibit 3.3.24 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                       |
| 3.3.25 |   | Loews Vestal Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.25 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                   |
| 3.3.26 |   | Loews Washington Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.26 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).               |
| 3.3.27 |   | LTM Turkish Holdings, Inc. (incorporated by  reference from Exhibit 3.3.27 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                   |
| 3.3.28 |   | Methuen Cinemas, LLC (incorporated by reference from  Exhibit 3.3.28 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).                              |
| 3.3.29 |   | Ohio Cinemas, LLC (incorporated by reference from  Exhibit 3.3.29 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).                                 |
| 3.3.30 |   | Plitt Southern Theatres, Inc. (incorporated by  reference from Exhibit 3.3.30 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                |
| 3.3.31 |   | Plitt Theatres, Inc. (incorporated by reference  from Exhibit 3.3.31 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                         |
| 3.3.32 |   | Richmond Mall Cinemas, LLC (incorporated by  reference from Exhibit 3.3.32 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                        |

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| 3.3.33 |   | RKO Century Warner Theatres, Inc. (incorporated  by reference from Exhibit 3.3.33 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).     |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.3.34 |   | Springfield Cinemas, LLC (incorporated by reference  from Exhibit 3.3.34 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                   |
| 3.3.35 |   | Star Theatres of Michigan, Inc. (incorporated  by reference from Exhibit 3.3.35 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).       |
| 3.3.36 |   | Star Theatres, Inc. (incorporated by reference  from Exhibit 3.3.36 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                   |
| 3.3.37 |   | The Walter Reade Organization, Inc.  (incorporated by reference from Exhibit 3.3.37 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006).  |
| 3.3.38 |   | Theater Holdings, Inc. (incorporated by  reference from Exhibit 3.3.38 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                |
| 3.3.39 |   | U.S.A. Cinemas, Inc. (incorporated by reference  from Exhibit 3.3.39 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                  |
| 3.3.40 |   | Waterfront Cinemas, LLC (incorporated by reference  from Exhibit 3.3.40 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                    |
| 3.3.41 |   | Loews Chicago Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.41 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).           |
| 3.3.42 |   | Loews Merrillville Cinemas, Inc. (incorporated  by reference from Exhibit 3.3.42 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).      |
| 3.3.43 |   | South Holland Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.43 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).           |
| 3.3.44 |   | Webster Chicago Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.44 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).         |
| 3.3.45 |   | Loews Century Mall Cinemas, Inc. (incorporated  by reference from Exhibit 3.3.45 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).      |
| 3.3.46 |   | Loews Cherry Tree Mall Cinemas, Inc.  (incorporated by reference from Exhibit 3.3.46 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006). |
| 3.3.47 |   | Loews Lafayette Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.47 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).         |
| 3.3.48 |   | Fall River Cinema, Inc. (incorporated by  reference from Exhibit 3.3.48 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).               |
| 3.3.49 |   | Liberty Tree Cinema Corp. (incorporated by reference  from Exhibit 3.3.49 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                  |
| 3.3.50 |   | Loews Cheri Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.50 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).             |
| 3.3.51 |   | Loews Fresh Pond Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.51 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).        |
| 3.3.52 |   | Nickelodeon Boston, Inc. (incorporated by  reference from Exhibit 3.3.52 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).              |
| 3.3.53 |   | Sack Theatres, Inc. (incorporated by reference  from Exhibit 3.3.53 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                   |
| 3.3.54 |   | Loews Baltimore Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.54 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).         |
| 3.3.55 |   | Loews Centerpark Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.55 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).        |
| 3.3.56 |   | Brick Plaza Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.56 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).             |
| 3.3.57 |   | Jersey Garden Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.57 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).           |

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| 3.3.58 |   | Loews East Hanover Cinemas, Inc. (incorporated  by reference from Exhibit 3.3.58 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).         |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.3.59 |   | Loews Freehold Mall Cinemas, Inc. (incorporated  by reference from Exhibit 3.3.59 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).        |
| 3.3.60 |   | Loews Meadowland Cinemas 8, Inc. (incorporated  by reference from Exhibit 3.3.60 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).         |
| 3.3.61 |   | Loews Meadowland Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.61 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).           |
| 3.3.62 |   | Loews Mountainside Cinemas, Inc. (incorporated  by reference from Exhibit 3.3.62 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).         |
| 3.3.63 |   | Loews New Jersey Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.63 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).           |
| 3.3.64 |   | Loews Newark Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.64 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).               |
| 3.3.65 |   | Loews Ridgefield Park Cinemas, Inc.  (incorporated by reference from Exhibit 3.3.65 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006).     |
| 3.3.66 |   | Loews Toms River Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.66 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).           |
| 3.3.67 |   | Loews West Long Branch Cinemas, Inc.  (incorporated by reference from Exhibit 3.3.67 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006).    |
| 3.3.68 |   | Loews-Hartz Music Makers Theatres, Inc.  (incorporated by reference from Exhibit 3.3.68 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006). |
| 3.3.69 |   | Music Makers Theatres, Inc. (incorporated by  reference from Exhibit 3.3.69 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).              |
| 3.3.70 |   | New Brunswick Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.70 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).              |
| 3.3.71 |   | Parsippany Theatre Corp. (incorporated by reference  from Exhibit 3.3.71 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                      |
| 3.3.72 |   | Red Bank Theatre Corporation (incorporated by  reference from Exhibit 3.3.72 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                  |
| 3.3.73 |   | White Marsh Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.73 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                |
| 3.3.74 |   | Crescent Advertising Corporation (incorporated by  reference from Exhibit 3.3.74) to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).             |
| 3.3.75 |   | Eton Amusement Corporation (incorporated by  reference from Exhibit 3.3.75 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                    |
| 3.3.76 |   | Forty-Second Street Cinemas, Inc.  (incorporated by reference from Exhibit 3.3.76 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006).       |
| 3.3.77 |   | Lance Theatre Corporation (incorporated by reference  from Exhibit 3.3.77 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                     |
| 3.3.78 |   | Leow’s California Theatres, Inc. (incorporated  by reference from Exhibit 3.3.78 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).    |
| 3.3.79 |   | Parkchester Amusement Corporation (incorporated by  reference from Exhibit 3.3.79 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).             |
| 3.3.80 |   | Talent Booking Agency, Inc. (incorporated by  reference from Exhibit 3.3.80 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).              |
| 3.3.81 |   | Loews Richmond Mall Cinemas, Inc. (incorporated  by reference from Exhibit 3.3.81 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).        |
| 3.3.82 |   | Mid-States Theatres, Inc. (incorporated by  reference from Exhibit 3.3.82 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                |

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| 3.3.83  |   | Loews Montgomery Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.83 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                 |
|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.3.84  |   | Stroud Mall Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.84 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                      |
| 3.3.85  |   | Fountain Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.85 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                         |
| 3.3.86  |   | Loews Arlington West Cinemas, Inc.  (incorporated by reference from Exhibit 3.3.86 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006).            |
| 3.3.87  |   | Loews Deauville North Cinemas, Inc.  (incorporated by reference from Exhibit 3.3.87 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006).           |
| 3.3.88  |   | Loews Fort Worth Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.88 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                 |
| 3.3.89  |   | Loews Houston Cinemas, Inc. (incorporated by  reference from Exhibit 3.3.89 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                    |
| 3.3.90  |   | Loews Lincoln Plaza Cinemas, Inc. (incorporated  by reference from Exhibit 3.3.90 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).              |
| 3.3.91  |   | Loews Cineplex Entertainment Gift Card Corporation  (incorporated by reference from Exhibit 3.3.91 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006). |
| 3.3.92  |   | Loews Pentagon City Cinemas, Inc. (incorporated  by reference from Exhibit 3.3.92 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).              |
| 3.3.93  |   | AMC Card Processing Services, Inc.  (incorporated by reference from Exhibit 3.3.93 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006).            |
| 3.3.94  |   | AMC Entertainment Interational, Inc.  (incorporated by reference from Exhibit 3.3.94 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006).          |
| 3.3.95  |   | American Multi-Cinema, Inc. (incorporated  by reference from Exhibit 3.3.95 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).                    |
| 3.3.96  |   | Centertainment, Inc. (incorporated by reference  from Exhibit 3.3.96 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                           |
| 3.3.97  |   | Club Cinema of Mazza, Inc. (incorporated by  reference from Exhibit 3.3.97 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                     |
| 3.3.98  |   | National Cinema Network, Inc. (incorporated by  reference from Exhibit 3.3.98 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                  |
| 3.3.99  |   | Premium Cinema of Yorktown, Inc. (incorporated  by reference from Exhibit 3.3.99 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).               |
| 3.3.100 |   | Premium Theater of Framingham, Inc.  (incorporated by reference from Exhibit 3.3.100 to the Company’s  Form S-4 (File No. 333-133574) filed April 27,  2006).          |
| 3.3.101 |   | Premium Theatre of Mayfair, Inc. (incorporated  by reference from Exhibit 3.3.101 to the Company’s Form S-4  (File No. 333-133574) filed April 27, 2006).              |
| *3.4    |   | By-laws of the following Additional  Registrants: (incorporated by reference from Exhibit 3.4 to the  Company’s Form S-4 (File No. 333-133574) filed  April 27, 2006):      |
|    |   | Brick Plaza Cinemas, Inc.                                                                                                                                                                       |
|    |   | Crescent Advertising Corporation                                                                                                                                                                     |
|    |   | Eton Amusement Corporation                                                                                                                                                                           |
|    |   | Fall River Cinema, Inc.                                                                                                                                                                         |
|    |   | Farmers Cinemas, Inc.                                                                                                                                                                           |
|    |   | Forty-Second Street Cinemas, Inc.                                                                                                                                                               |
|    |   | Fountain Cinemas, Inc.                                                                                                                                                                          |
|    |   | Jersey Garden Cinemas, Inc.                                                                                                                                                                     |

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|        |   | Kips Bay Cinemas, Inc.                        |
|--------|--------|----------------------------------------------------|
|   |   | Lance Theatre Corporation                          |
|   |   | Liberty Tree Cinema Corp.                          |
|   |   | Loeks Acquisition Corp.                            |
|   |   | Loews Akron Cinemas, Inc.                     |
|   |   | Loews Arlington Cinemas, Inc.                 |
|   |   | Loews Arlington West Cinemas, Inc.            |
|   |   | Loews Baltimore Cinemas, Inc.                 |
|   |   | Loews Berea Cinemas, Inc.                     |
|   |   | Loews Bristol Cinemas, Inc.                   |
|   |   | Loew’s California Theatres, Inc.         |
|   |   | Loews Centerpark Cinemas, Inc.                |
|   |   | Loews Century Mall Cinemas, Inc.              |
|   |   | Loews Cheri Cinemas, Inc.                     |
|   |   | Loews Cherry Tree Mall Cinemas, Inc.          |
|   |   | Loews Chicago Cinemas, Inc.                   |
|   |   | Loews Cineplex Entertainment Gift Card Corporation |
|   |   | Loews Cineplex International Holdings, Inc.   |
|   |   | Loews Cineplex Theatres Holdco, Inc.          |
|   |   | Loews Citywalk Theatre Corporation                 |
|   |   | Loews Connecticut Cinemas, Inc.               |
|   |   | Loews Deauville North Cinemas, Inc.           |
|   |   | Loews East Hanover Cinemas, Inc.              |
|   |   | Loews Fort Worth Cinemas, Inc.                |
|   |   | Loews Freehold Mall Cinemas, Inc.             |
|   |   | Loews Fresh Pond Cinemas, Inc.                |
|   |   | Loews Greenwood Cinemas, Inc.                 |
|   |   | Loews Houston Cinemas, Inc.                   |
|   |   | Loews Lafayette Cinemas, Inc.                 |
|   |   | Loews Lincoln Plaza Cinemas, Inc.             |
|   |   | Loews Meadowland Cinemas 8, Inc.              |
|   |   | Loews Meadowland Cinemas, Inc.                |
|   |   | Loews Merrillville Cinemas, Inc.              |
|   |   | Loews Montgomery Cinemas, Inc.                |
|   |   | Loews Mountainside Cinemas, Inc.              |
|   |   | Loews New Jersey Cinemas, Inc.                |
|   |   | Loews Newark Cinemas, Inc.                    |
|   |   | Loews Pentagon City Cinemas, Inc.             |
|   |   | Loews Richmond Mall Cinemas, Inc.             |
|   |   | Loews Ridgefield Park Cinemas, Inc.           |
|   |   | Loews Theatre Management Corp.                     |
|   |   | Loews Theatres Clearing Corp.                      |
|   |   | Loews Toms River Cinemas, Inc.                |
|   |   | Loews USA Cinemas Inc.                             |
|   |   | Loews Vestal Cinemas, Inc.                    |
|   |   | Loews Washington Cinemas, Inc.                |
|   |   | Loews West Long Branch Cinemas, Inc.          |
|   |   | Loews-Hartz Music Makers Theatres, Inc.       |
|   |   | LTM Turkish Holdings, Inc.                    |
|   |   | Mid-States Theatres, Inc.                     |

128

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|        |   | Music Makers Theatres, Inc.                                                                                                                                                                                            |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | New Brunswick Cinemas, Inc.                                                                                                                                                                                            |
|   |   | Nickelodeon Boston, Inc.                                                                                                                                                                                               |
|   |   | Parkchester Amusement Corporation                                                                                                                                                                                           |
|   |   | Parsippany Theatre Corp.                                                                                                                                                                                                    |
|   |   | Plitt Southern Theatres, Inc.                                                                                                                                                                                          |
|   |   | Plitt Theatres, Inc.                                                                                                                                                                                                   |
|   |   | Red Bank Theatre Corporation                                                                                                                                                                                                |
|   |   | RKO Century Warner Theatres, Inc.                                                                                                                                                                                      |
|   |   | S&J Theatres Inc.                                                                                                                                                                                                       |
|   |   | Sack Theatres, Inc.                                                                                                                                                                                                    |
|   |   | South Holland Cinemas, Inc.                                                                                                                                                                                            |
|   |   | Star Theatres of Michigan, Inc.                                                                                                                                                                                        |
|   |   | Star Theatres, Inc.                                                                                                                                                                                                    |
|   |   | Stroud Mall Cinemas, Inc.                                                                                                                                                                                              |
|   |   | Talent Booking Agency, Inc.                                                                                                                                                                                            |
|   |   | The Walter Reade Organization, Inc.                                                                                                                                                                                    |
|   |   | Theater Holdings, Inc.                                                                                                                                                                                                 |
|   |   | U.S.A. Cinemas, Inc.                                                                                                                                                                                                   |
|   |   | Webster Chicago Cinemas, Inc.                                                                                                                                                                                          |
|   |   | White Marsh Cinemas, Inc.                                                                                                                                                                                              |
| *3.5   |   | By-laws of LCE Mexican  Holdings, Inc. (incorporated by reference from Exhibit 3.5 to the  Company’s Form S-4 (File No. 333-133574) filed  April 27, 2006).                                   |
| *3.6   |   | By-laws of Loews  Cineplex Theatres, Inc. (incorporated by reference from Exhibit 3.6  to the Company’s Form S-4 (File No. 333-133574) filed  April 27, 2006).                                |
| *3.7   |   | Limited Liability  Company Agreement of Loews Cineplex U.S. Callco, LLC. (incorporated by  reference from Exhibit 3.7 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006). |
| *3.8   |   | Limited Liability  Company Agreement of Downtown Boston Cinemas, LLC (incorporated by  reference from Exhibit 3.8 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).     |
| *3.9   |   | Limited Liability  Company Agreement of Gateway Cinemas, LLC. (incorporated by reference  from Exhibit 3.9 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).            |
| *3.10  |   | Limited Liability  Company Agreement of Loews North Versailles Cinemas, LLC. (incorporated by  reference from Exhibit 3.10 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006). |
| *3.11  |   | Limited Liability  Company Agreement of Loews Plainville Cinemas, LLC. (incorporated by  reference from Exhibit 3.11 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).       |
| *3.12  |   | Limited Liability  Company Agreement of Methuen Cinemas, LLC. (incorporated by reference from  Exhibit 3.12 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).                |

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| *3.13   |   | Limited Liability  Company Agreement of Ohio Cinemas, LLC. (incorporated by reference from  Exhibit 3.13 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).                                                                                                                                                                                                                                                           |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *3.14   |   | Limited Liability  Company Agreement of Richmond Mall Cinemas, LLC. (incorporated by reference  from Exhibit 3.14 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                                                                                                                                                                                                  |
| *3.15   |   | Limited Liability  Company Agreement of Springfield Cinemas, LLC. (incorporated by reference  from Exhibit 3.15 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                                                                                                                                                                                                    |
| *3.16   |   | Limited Liability  Company Agreement of Waterfront Cinemas, LLC. (incorporated by reference from  Exhibit 3.16 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).                                                                                                                                                                                                                                                     |
| *3.17   |   | Limited Liability  Company Agreement of Lewisville Cinemas, LLC. (incorporated by reference from  Exhibit 3.17 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).                                                                                                                                                                                                                                                     |
| *3.18   |   | Limited Liability  Company Agreement of Loews Garden State Cinemas, LLC. (incorporated by  reference from Exhibit 3.18 to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                                                                                                                                                                                             |
| *3.19   |   | Partnership Agreement of  Loeks-Star Partners. (incorporated by reference from Exhibit 3.19 to the  Company’s Form S-4 (File No. 333-133574) filed  April 27, 2006).                                                                                                                                                                                                                                                                       |
| *3.20   |   | By-laws of AMC  Card Processing Services, Inc. (incorporated by reference from  Exhibit 3.20 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).                                                                                                                                                                                                                                                                  |
| *3.21   |   | By-laws of AMC  Entertainment Interational, Inc. (incorporated by reference from  Exhibit 3.21 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).                                                                                                                                                                                                                                                                |
| *3.22   |   | By-laws of  American Multi-Cinema, Inc. (incorporated by reference from  Exhibit 3.22 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).                                                                                                                                                                                                                                                                         |
| *3.23   |   | By-laws of  Centertainment, Inc. (incorporated by reference from Exhibit 3.23  to the Company’s Form S-4 (File No. 333-133574) filed  April 27, 2006).                                                                                                                                                                                                                                                                                |
| *3.24   |   | By-laws of Club  Cinema of Mazza, Inc. (incorporated by reference from Exhibit 3.24  to the Company’s Form S-4 (File No. 333-133574) filed  April 27, 2006).                                                                                                                                                                                                                                                                          |
| *3.25   |   | By-laws of  National Cinema Network, Inc. (incorporated by reference from  Exhibit 3.25 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).                                                                                                                                                                                                                                                                       |
| *3.26   |   | By-laws of Premium  Theater of Framingham, Inc. (incorporated by reference from  Exhibit 3.26 to the Company’s Form S-4 (File No. 333-133574)  filed April 27, 2006).                                                                                                                                                                                                                                                                 |
| *4.1(a) |   | Credit Agreement, dated  January 16, 2006 among AMC Entertainment Inc., Grupo Cinemex, S.A. de  C.V., Cadena Mexicana de Exhibicion, S.A. de C.V., the Lenders and the  Issuers named therein, Citicorp U.S. and Canada, Inc. and Banco Nacional  de Mexico, S.A., Integrante del Groupo Financiero Banamex. (incorporated by  reference from Exhibit 10.7 to the Company’s Form 8-K (File  No. 1-8747) filed January 31, 2006). |

130

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| *4.1(b) |   | Guaranty, dated  January 26, 2006 by AMC Entertainment Inc. and each of the other  Guarantors party thereto, in favor of the Guaranteed Parties named therein  (incorporated by reference from Exhibit 10.8 to the Company’s  Form 8-K (File No. 1-8747) filed January 31,  2006).                                                                                              |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *4.1(c) |   | Pledge and Security  Agreement, dated January 26, 2006, by AMC Entertainment Inc. and  each of the other Grantors party thereto in favor of Citicorp U.S. and  Canada, Inc., as agent for the Secured Parties (incorporated by  reference from Exhibit 10.9 to the Company’s Form 8-K (File  No. 1-8747) filed January 31, 2006).                                     |
| *4.1(d) |   | Consent and Release,  dated as of April 17, 2006, by and between AMC Entertainment Inc. and  Citicorp U.S. and Canada, Inc. (incorporated by reference from  Exhibit 4.1(d) to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                                                                   |
| *4.2(a) |   | Indenture, dated  January 27, 1999, respecting AMC Entertainment Inc.’s 91¤2%  Senior Subordinated Notes due 2011 (incorporated by reference from  Exhibit 4.3 to the Company’s Form 10-Q (File No. 1-8747)  for the quarter ended December 31, 1998).                                                                                                                |
| *4.2(b) |   | Agreement of  Resignation, Appointment and Acceptance, dated August 30, 2000, among  the Company, The Bank of New York and HSBC Bank USA respecting AMC  Entertainment Inc.’s 91¤2%  Senior Subordinated Notes due 2011 (incorporated by reference from  Exhibit 4.3(a) to the Company’s Form 10-Q (File  No. 1-8747) for the quarter ended September 28, 2000). |
| *4.2(c) |   | First Supplemental  Indenture dated March 29, 2002, respecting AMC Entertainment Inc.’s 91¤2%  Senior Subordinated Notes due 2011 (incorporated by reference from  Exhibit 4 to the Company’s Form 8-K (File No. 1-8747)  dated April 10, 2002).                                                                                                                      |
| *4.2(d) |   | Second Supplemental  Indenture dated December 23, 2004, respecting AMC Entertainment Inc.’s 91¤2%  Senior Subordinated Notes due 2011 (incorporated by reference from  Exhibit 4.1 to the Company’s 8-K (File No. 1-8747)  filed January 12, 2005).                                                                                                                        |
| *4.2(e) |   | Third Supplemental  Indenture dated January 26, 2006, respecting AMC Entertainment Inc.’s 91¤2%  Senior Subordinated Notes due 2011 (incorporated by reference from  Exhibit 4.2(e) to the Company’s Form 10- Q filed on  February 13, 2006).                                                                                                                         |
| *4.2(f) |   | Fourth Supplemental  Indenture dated April 20, 2006, respecting AMC Entertainment Inc.’s 91¤2%  Senior Subordinated Notes due 2011 (incorporated by reference from  Exhibit 4.2(f) to the Company’s Form S-4 (File  No. 333-133574) filed on April 27, 2006).                                                                                                    |
| *4.3    |   | Registration Rights  Agreement, dated January 27, 1999, respecting AMC Entertainment Inc.’s 91¤2%  Senior Subordinated Notes due 2011 (incorporated by reference from Exhibit 4.4  to the Company’s Form 10-Q (File No. 1-8747) for the  quarter ended December 31, 1998).                                                                                            |
| *4.4(a) |   | Indenture, dated  January 16, 2002, respecting AMC Entertainment Inc.’s 97¤8%  Senior Subordinated Notes due 2012 (incorporated by reference from Exhibit 4.5  to Amendment No. 1 to the Company’s Registration Statement on  Form S-3 (File No. 333-75208) filed on January 25,  2002).                                                                         |

131

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| *4.4(b) |   | First Supplemental  Indenture, dated December 23, 2004, respecting AMC Entertainment Inc.’s  97¤8%  Senior Subordinated Notes due 2012 (incorporated by reference from  Exhibit 4.5(b) to the Company’s Registration Statement on  Form S-4 (File No. 333-122376) filed on  January 28, 2005).                                    |
|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *4.4(c) |   | Second Supplemental  Indenture, dated January 26, 2006, respecting AMC Entertainment Inc.’s 97¤8%  Senior Subordinated Notes due 2012 (incorporated by reference from  Exhibit 4.4(c) to the Company’s Form 10- Q filed on  February 13, 2006).                                                                                        |
| *4.4(d) |   | Third Supplemental  Indenture dated April 20, 2006, respecting AMC Entertainment Inc.’s 97¤8%  Senior Subordinated Notes due 2012 (incorporated by reference from  Exhibit 4.4(d) to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                         |
| *4.5    |   | Registration Rights  Agreement, dated January 16, 2002, respecting AMC Entertainment Inc.’s 97¤8%  Senior Subordinated Notes due 2012 (incorporated by reference from  Exhibit 4.6 to Amendment No. 1 to the Company’s Registration  Statement on Form S-3 (File No. 333-75208) filed on  January 25, 2002).                      |
| *4.6(a) |   | Indenture, dated  February 24, 2004, respecting AMC Entertainment Inc.’s 8% Senior  Subordinated Notes due 2014. (Incorporated by reference from Exhibit 4.7  to the Company’s Registration Statement on Form S-4 (File  No. 333-113911) filed on March 24, 2004).                                                                          |
| *4.6(b) |   | First Supplemental  Indenture, dated December 23, 2004, respecting AMC Entertainment Inc.’s  8% Senior Subordinated Notes due 2014 (incorporated by reference from  Exhibit 4.7(b) to the Company’s Registration Statement on  Form S-4 (File No. 333-122376) filed on  January 28, 2005).                                             |
| *4.6(c) |   | Second Supplemental  Indenture, dated January 26, 2006, respecting AMC Entertainment Inc.’s  8% Senior Subordinated Notes due 2014 (incorporated by reference from  Exhibit 4.6(c) to the Company’s Form 10-Q filed on  February 13, 2006).                                                                                                 |
| *4.6(d) |   | Third Supplemental Indenture  dated April 20, 2006, respecting AMC Entertainment Inc.’s 8% Senior  Subordinated Notes due 2014 (incorporated by reference from  Exhibit 4.6(d) to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                                 |
| *4.7    |   | Registration Rights  Agreement, dated February 24, 2004, respecting AMC Entertainment Inc.’s  8% senior subordinated notes due 2014. (Incorporated by reference from  Exhibit 4.8 to the Company’s Registration Statement on Form S-4  (File No. 333-113911) filed on March 24, 2004).                                                      |
| *4.8(a) |   | Indenture, dated  August 18, 2004, respecting AMC Entertainment Inc.’s, as successor by  merger to Marquee Inc.’s, 85¤8% Senior  Notes due 2012 (incorporated by reference from Exhibit 4.9(a) to  the Company’s Registration Statement on Form S-4 (File  No. 333-122376) filed on January 28, 2005).                       |
| *4.8(b) |   | First Supplemental  Indenture, dated December 23, 2004, respecting AMC Entertainment Inc.’s,  as successor by merger to Marquee Inc.’s, 85¤8%  Senior Notes due 2012 (incorporated by reference from  Exhibit 4.9(b) to the Company’s Registration Statement on  Form S-4 (File No. 333-122376) filed on  January 28, 2005). |

132

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| *4.8(c)  |   | Second Supplemental  Indenture, dated January 26, 2006, respecting AMC Entertainment Inc.’s,  as successor by merger to Marquee Inc.’s, 85¤8%  Senior Notes due 2012 (incorporated by reference from  Exhibit 4.8(c) to the Company’s Form 10-Q filed on  February 13, 2006).                                                                              |
|----------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *4.8(d)  |   | Third Supplemental  Indenture dated April 20, 2006, respecting AMC Entertainment Inc.’s 85¤8%  Senior Notes due 2012 (incorporated by reference from  Exhibit 4.8(d) to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                                                               |
| *4.9(a)  |   | Registration Rights  Agreement dated August 18, 2004, respecting AMC Entertainment Inc.’s, as  successor by merger to Marquee Inc.’s, 85¤8%  Senior Notes due 2012 (incorporated by reference from  Exhibit 4.10(a) to the Company’s Registration Statement on  Form S-4 (File No. 333-122376) filed on  January 28, 2005).                           |
| *4.9(b)  |   | Joinder Agreement to  Registration Rights Agreement dated December 23, 2004, respecting AMC  Entertainment Inc.’s, as successor by merger to Marquee Inc.’s, 85¤8%  Senior Notes due 2012 (incorporated by reference from  Exhibit 4.10(b) to the Company’s Registration Statement on  Form S-4 (File No. 333-122376) filed on  January 28, 2005).    |
| *4.10(a) |   | Indenture, dated  August 18, 2004, respecting AMC Entertainment Inc.’s, as successor by  merger to Marquee Inc.’s, Senior Floating Rate Notes due 2010 (incorporated  by reference from Exhibit 4.11(a) to the Company’s Registration  Statement on Form S-4 (File No. 333-122376) filed on  January 28, 2005).                                            |
| *4.10(b) |   | First Supplemental  Indenture, dated December 23, 2004, respecting AMC Entertainment Inc.’s,  as successor by merger to Marquee Inc.’s, Senior Floating Rate Notes due 2010  (incorporated by reference from Exhibit 4.11(b) to the Company’s  Registration Statement on Form S-4 (File No. 333-122376)  filed on January 28, 2005).                       |
| *4.10(c) |   | Second Supplemental  Indenture, dated January 26, 2006, respecting AMC Entertainment Inc.’s,  as successor by merger to Marquee Inc.’s, Senior Floating Rate Notes due 2010  (incorporated by reference from Exhibit 4.10(c) to the Company’s  Form 10-Q filed on February 13, 2006).                                                                           |
| *4.10(d) |   | Third Supplemental  Indenture dated April 20, 2006, respecting AMC Entertainment Inc.’s  Senior Floating Rate Notes due 2010 (incorporated by reference from  Exhibit 4.10(d) to the Company’s Form S-4 (File  No. 333-133574) filed on April 27, 2006).                                                                                                        |
| *4.11(a) |   | Registration Rights  Agreement dated August 18, 2004, respecting AMC Entertainment Inc.’s, as  successor by merger to Marquee Inc.’s, Senior Floating Rate Notes due 2010  (incorporated by reference from Exhibit 4.12(a) to the Company’s  Registration Statement on Form S-4 (File No. 333-122376)  filed on January 28, 2005).                         |
| *4.11(b) |   | Joinder Agreement to  Registration Rights Agreement dated December 23, 2004, respecting AMC  Entertainment Inc.’s, as successor by merger to Marquee Inc.’s, Senior  Floating Rate Notes due 2010 (incorporated by reference from  Exhibit 4.12(b) to the Company’s Registration Statement on  Form S-4 (File No. 333-122376) filed on  January 28, 2005). |

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| *4.12(a) |   | Indenture, dated  January 26, 2006, respecting AMC Entertainment Inc.’s 11% senior  subordinated notes due 2016, between AMC Entertainment Inc. and HSBC Bank  USA, National Association (incorporated by reference from Exhibit 4.1 to  the Company’s Form 8-K (File No. 1-8747) filed on  January 31, 2006).                                                                                                                       |
|----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *4.12(b) |   | First Supplemental  Indenture dated April 20, 2006, respecting AMC Entertainment Inc.’s 11%  Senior Subordinated Notes due 2016 (incorporated by reference from  Exhibit 4.12(b) to the Company’s Form S-4 (File  No. 333-133574) filed April 27, 2006).                                                                                                                                                                        |
| *4.13    |   | Registration Rights  Agreement dated January 26, 2006, respecting AMC Entertainment Inc.’s  11% senior subordinated notes due 2016, among AMC Entertainment Inc., the  guarantors party thereto, Credit Suisse Securities (USA) LLC, Citigroup  Global Markets Inc., and J.P. Morgan Securities Inc. (incorporated by  reference from Exhibit 4.2 to the company’s Form 8-K (File  No. 1-8747) filed on January 31, 2006). |
| *10.1    |   | Consent Decree, dated  December 21, 2005, by and among Marquee Holdings Inc., LCE  Holdings, Inc. and the State of Washington (incorporated by reference  from Exhibit 10.1 to the Company’s Form 8-K (File No. 1-  8747) filed on December 27, 2005).                                                                                                                                                                               |
| *10.2    |   | Hold Separate  Stipulation and Order, dated December 21, 2005, by and among Marquee  Holdings Inc., LCE Holdings, Inc. and the State of Washington  (incorporated by reference from Exhibit 10.2 to the Company’s  Form 8-K (File No. 1-8747) filed on December 27,  2005).                                                                                                                                                          |
| *10.3    |   | Final Judgment, dated  December 20, 2005, by and among Marquee Holdings Inc., LCE  Holdings, Inc. and the Antitrust Division of the United States  Department of Justice (incorporated by reference from Exhibit 10.3 to  the Company’s Form 8-K (File No. 1-8747) filed on  December 27, 2005).                                                                                                                                     |
| *10.4    |   | Hold Separate  Stipulation and Order, dated December 20, 2005, by and among Marquee  Holdings Inc., LCE Holdings and the Antitrust Division of the United States  Department of Justice (incorporated by reference from Exhibit 10.4 to  the Company’s Form 8-K (File No. 1-8747) filed on  December 27, 2005).                                                                                                                           |
| *10.5    |   | District of Columbia  Final Judgment, dated December 21, 2005, by and among Marquee Holdings  Inc., LCE Holdings, Inc. and the District of Columbia (incorporated by  reference from Exhibit 10.5 to the Company’s Form 8-K (File  No. 1-8747) filed on December 27, 2005).                                                                                                                                                          |
| *10.6    |   | Stipulation for Entry  into Final Judgment, dated December 20, 2005, by and among Marquee  Holdings Inc., LCE Holdings, Inc. and the State of California  (incorporated by reference from Exhibit 10.6 to the Company’s  Form 8-K (File No. 1-8747) filed on December 27,  2005).                                                                                                                                                    |
| *10.7    |   | Stipulated Final  Judgment, dated December 20, 2005, by and among Marquee Holdings Inc., LCE  Holdings, Inc. and the State of California (incorporated by reference  from Exhibit 10.7 to the Company’s Form 8-K (File No. 1-8747)  filed on December 27, 2005).                                                                                                                                                                     |

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| *10.8     |   | Second Amended and  Restated Certificate of Incorporation of Marquee Holdings Inc. (incorporated  by reference from Exhibit 10.1 to the Company’s Form 8-K  (File No. 1-8747) filed on January 31, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|-----------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *10.9     |   | Second Amended and  Restated Stockholders Agreement of Marquee Holdings Inc., dated  January 26, 2006, among Marquee Holdings Inc. and the stockholders of  Marquee Holdings Inc. party thereto (incorporated by reference from  Exhibit 10.2 to the Company’s Form 8-K (File No. 1-8747)  filed on January 31, 2006).                                                                                                                                                                                                                                                                                                                                      |
| *10.10    |   | Amended and Restated  Management Stockholders Agreement of Marquee Holdings Inc., dated  January 26, 2006, among Marquee Holdings Inc. and the stockholders of  Marquee Holdings Inc. party thereto (incorporated by reference from  Exhibit 10.3 to the Company’s Form 8-K (File No. 1-8747)  filed on January 31, 2006).                                                                                                                                                                                                                                                                                                                                  |
| *10.11    |   | Continuing Service  Agreement, dated January 26, 2006, among AMC Entertainment Inc. (as  successor to Loews Cineplex Entertainment Corporation) and Travis Reid, and,  solely for the purposes of its repurchase obligations under Section 7  thereto, Marquee Holding Inc. (incorporated by reference from  Exhibit 10.4 to the Company’s Form 8-K (File No. 1-8747)  filed on January 31, 2006).                                                                                                                                                                                                                                                     |
| *10.12    |   | Non-Qualified  Stock Option Agreement, dated January 26, 2006, between Marquee Holdings  Inc. and Travis Reid (incorporated by reference from Exhibit 10.5 to the  Company’s Form 8-K (File No. 1-8747) filed on  January 31, 2006).                                                                                                                                                                                                                                                                                                                                                                                                                        |
| *10.13    |   | Amended and Restated Fee  Agreement, dated as of January 26, 2006, by and among Marquee Holdings  Inc., AMC Entertainment Inc., J.P. Morgan Partners, L.P., Apollo Management  V, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P.,  Apollo Netherlands Partners V A), L.P., Apollo Netherlands partners  V(B), L.P., Apollo German Partners V GmbH & Co KG Bain Capital  Partners, LLC, TC Group, L.L.C., a Delaware limited liability company  and Applegate and Collatos, Inc. (incorporated by reference from  Exhibit 10.6 to the Company’s Form 8-K (File No. 1-8747)  filed on January 31, 2006). |
| *10.14    |   | American Multi-Cinema, Inc.  Savings Plan, a defined contribution 401(k) plan, restated  January 1, 1989, as amended (Incorporated by reference from  Exhibit 10.6 to AMCE’s Form S-1 (File No. 33-48586)  filed June 12, 1992, as amended).                                                                                                                                                                                                                                                                                                                                                                                                 |
| *10.15(a) |   | Defined Benefit  Retirement Income Plan for Certain Employees of American Multi-Cinema, Inc.  dated January 1, 1989, as amended (Incorporated by reference from  Exhibit 10.7 to AMCE’s Form S-1 (File No. 33-48586)  filed June 12, 1992, as amended).                                                                                                                                                                                                                                                                                                                                                                                           |
| *10.15(b) |   | AMC Supplemental  Executive Retirement Plan dated January 1, 1994 (Incorporated by  reference from Exhibit 10.7(b) to AMCE’s Form 10-K  (File No. 0-12429) for the fiscal year ended March 30,  1995).                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| *10.16    |   | Employment Agreement  between Marquee Holdings, Inc., AMC Entertainment Inc. and Peter C.  Brown dated December 23, 2004 (incorporated by reference from  Exhibit 10.3 to AMCE’s Registration Statement on Form S-4  (File No. 333-122376) filed on January 28, 2005).                                                                                                                                                                                                                                                                                                                                                                       |

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| *10.17 |   | Employment agreement  between Marquee Holdings, Inc., AMC Entertainment Inc., American Multi-Cinema, Inc.  and Philip M. Singleton dated December 23, 2004 (incorporated by  reference from Exhibit 10.4 to AMCE’s Registration Statement on  Form S-4 (File No. 333-122376) filed on  January 28, 2005). |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *10.18 |   | Executive Medical  Expense Reimbursement and Supplemental Accidental Death or Dismemberment  Insurance Plan, as restated effective as of February 1, 1991  (Incorporated by reference from Exhibit 10.13 to AMCE’s Form S-1  (File No. 33-48586) filed June 12, 1992, as amended).                                       |
| *10.19 |   | Division Operations  Incentive Program (Incorporated by reference from Exhibit 10.15 to  AMCE’s Form S-1 (File No. 33-48586) filed  June 12, 1992, as amended).                                                                                                                                                               |
| *10.20 |   | Summary of American  Multi-Cinema, Inc. Executive Incentive Program (Incorporated by  reference from Exhibit 10.36 to AMCE’s Registration Statement on  Form S-2 (File No. 33-51693) filed December 23,  1993).                                                                                                               |
| *10.21 |   | First Amended and  Restated American Multi-Cinema, Inc. Retirement Enhancement Plan  effective July 31, 2003 (incorporated by reference from  Exhibit 10.1 to the Company’s Form 10-Q (File No. 1-8747)  for the quarter ended October 2, 2003).                                                                    |
| *10.22 |   | Employment agreement  between AMC Entertainment Inc., American Multi-Cinema, Inc. and  Richard M. Fay which commenced on July 1, 2001. (Incorporated by  Reference from Exhibit 10.15 to Amendment No. 1 to the  Company’s Form 10-K (File No. 1-8747) for the year  ended March 29, 2001).               |
| *10.23 |   | AMC Non-Qualified  Deferred Compensation Plans (Incorporated by reference from  Exhibit 10.37 to Amendment No. 2 to AMCE’s Registration Statement  on Form S-2 (File No. 33-51693) filed February 18,  1994.                                                                                                                  |
| *10.24 |   | American Multi-Cinema, Inc.  Executive Savings Plan (Incorporated by reference from Exhibit 10.28 to  AMCE’s Registration Statement on Form S-4 (File No. 333-25755)  filed April 24, 1997).                                                                                                                                  |
| *10.25 |   | Agreement of Sale and  Purchase dated November 21, 1997 among American Multi-Cinema, Inc.  and AMC Realty, Inc., as Seller, and Entertainment Properties Trust, as  Purchaser (Incorporated by reference from Exhibit 10.1 of the Company’s  Current Report on Form 8-K (File No. 1-8747) filed  December 9, 1997). |
| *10.26 |   | Option Agreement dated  November 21, 1997 among American Multi-Cinema, Inc. and AMC  Realty, Inc., as Seller, and Entertainment Properties Trust, as  Purchaser (Incorporated by reference from Exhibit 10.2 of the Company’s  Current Report on Form 8-K (File No. 1-8747) filed  December 9, 1997).               |
| *10.27 |   | Right to Purchase  Agreement dated November 21, 1997, between AMC Entertainment Inc., as  Grantor, and Entertainment Properties Trust as Offeree (Incorporated by reference  from Exhibit 10.3 of the Company’s Current Report on Form 8-K  (File No. 1-8747) filed December 9, 1997.)                                        |

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| *10.28 |   | Lease dated  November 21, 1997 between Entertainment Properties Trust, as Landlord,  and American Multi-Cinema, Inc., as Tenant (Incorporated by  reference from Exhibit 10.4 of the Company’s Current Report on  Form 8-K (File No. 1-8747) filed December 9,  1997). (Similar leases have been entered into with respect to the following  theatres: Mission Valley 20, Promenade 16, Ontario Mills 30, Lennox 24,  West Olive 16, Studio 30 (Houston), Huebner Oaks 24,  First Colony 24, Oak View 24, Leawood Town Center 20, South  Barrington 30, Gulf Pointe 30, Cantera 30, Mesquite 30,  Hampton Town Center 24, Palm Promenade 24, Westminster  Promenade 24, Hoffman Center 22, Elmwood Palace 20, Westbank  Palace 16, Clearview Palace 12, Hammond Palace 10, Houma  Palace 10, Livonia 20, Forum 30, Studio 29 (Olathe),  Hamilton 24, Deer Valley 30, Mesa Grand 24 and  Burbank 16.      |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *10.29 |   | Guaranty of Lease dated  November 21, 1997 between AMC Entertainment, Inc., as Guarantor,  and Entertainment Properties Trust, as Owner (Incorporated by reference from  Exhibit 10.5 of the Company’s Current Report on Form 8-K  (File No. 1-8747) filed December 9, 1997, (Similar guaranties  have been entered into with respect to the following theatres: Mission  Valley 20, Promenade 16, Ontario Mills 30, Lennox 24,  West Olive 16, Studio 30 (Houston), Huebner Oaks 24, First  Colony 24, Oak View 24, Leawood Town Center 20, South  Barrington 30, Gulf Pointe 30, Cantera 30, Mesquite 30,  Hampton Town Center 24, Palm Promenade 24, Westminster  Promenade 24, Hoffman Center 22, Elmwood Palace 20, Westbank  Palace 16, Clearview Palace 12, Hammond Palace 10, Houma Palace 10,  Livonia 20, Forum 30, Studio 29 (Olathe), Hamilton 24,  Deer Valley 30, Mesa Grand 24 and Burbank 16. |
| *10.30 |   | Employment agreement  between AMC Entertainment Inc., American Multi-Cinema, Inc. and  Richard T. Walsh which commenced July 1, 2001. (Incorporated by  Reference from Exhibit 10.25 to the Company’s Form 10-K (File  No. 1-8747) for the year ended March 29, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| *10.31 |   | Form of Non-Qualified  Stock Option Agreement used in December 22, 2004 option grants to  Mr. Peter C. Brown and Mr. Philip M. Singleton (incorporated by  reference from Exhibit 10.18 to AMCE’s Registration Statement on  Form S-4 (File No. 333-122376) filed on  January 28, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
| *10.32 |   | Form of Incentive  Stock Option Agreement used in December 22, 2004 option grants to  Mr. Peter C. Brown and Mr. Philip M. Singleton (incorporated by reference  from Exhibit 10.19 to AMCE’s Registration Statement on Form S-4  (File No. 333-122376) filed on January 28, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| *10.33 |   | Retainer agreement with  Raymond F. Beagle, Jr. dated October 1, 2002. (Incorporated by  Reference from Exhibit 10.27 to the Company’s Form 10-Q (File  No. 1-8747) for the quarter ended September 26, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| *10.34 |   | Employment agreement  between AMC Entertainment Inc., American Multi-Cinema, Inc. and  John D. McDonald which commenced July 1, 2001. (Incorporated by  Reference from Exhibit 10.29 to Amendment No. 1 to the Company’s  Form 10-K (File No. 1-8747) for the year ended  March 29, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| *10.35 |   | Employment agreement  between AMC Entertainment Inc., American Multi-Cinema, Inc. and  Craig R. Ramsey which commenced on July 1, 2001. (Incorporated by  Reference from Exhibit 10.36 to the Company’s Form 10-Q (File  No. 1-8747) for the quarter ended June 27, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |

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| *10.36    |   | Investment Agreement  entered into April 19, 2001 by and among AMC Entertainment Inc. and  Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P.,  Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P.,  Apollo Management IV, L.P. and Apollo Management V, L.P. (Incorporated  by reference from Exhibit 4.7 to the Company’s Form 8-K (File  No. 1-8747) filed on April 20, 2001).                                                                                                                                                    |
|-----------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *10.37    |   | Standstill Agreement by  and among AMC Entertainment Inc., and Apollo Investment Fund IV, L.P.,  Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P.,  Apollo Overseas Partners V, L.P., Apollo Management IV, L.P. and Apollo  Management V, L.P., dated as of April 19, 2001. (Incorporated by  reference from Exhibit 4.8 to the Company’s Form 8-K (File  No. 1-8747) filed on April 20, 2001).                                                                                                                                             |
| *10.38    |   | Registration Rights  Agreement dated April 19, 2001 by and among AMC Entertainment Inc. and  Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P.,  Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P.  (Incorporated by reference from Exhibit 4.9 to the Company’s Form 8-K  (File No. 1-8747) filed on April 20, 2001).                                                                                                                                                                                                                  |
| *10.39    |   | Securities Purchase  Agreement dated June 29, 2001 by and among Apollo Investment  Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment  Fund V, L.P., Apollo Overseas Partners V, L.P., Apollo  Management IV, L.P., Apollo Management V, L.P., AMC Entertainment  Inc., Sandler Capital Partners V, L.P., Sandler Capital Partners V  FTE, L.P. and Sandler Capital Partners V Germany, L.P. (Incorporated by  reference from Exhibit 4.6 to the Company’s Form 10-Q (File  No. 1-8747) for the quarter ended June 28, 2001). |
| *10.40    |   | Form of  Indemnification Agreement dated September 18, 2003 between the Company  and Peter C. Brown, Charles S. Sosland, Charles J.  Egan, Jr., Michael N. Garin, Marc J. Rowan, Paul E.  Vardeman, Leon D. Black and Laurence M. Berg (incorporated by  reference from Exhibit 10.1 to the Company’s Form 10-Q (File  No. 1-8747) for the quarter ended January 1, 2004).                                                                                                                                                                |
| *10.41    |   | 2003 AMC Entertainment  Inc. Long-Term Incentive Plan (incorporated by reference from  Exhibit 10.2 to the Company’s Form 10-Q (File No. 1-8747)  for the quarter ended October 2, 2003).                                                                                                                                                                                                                                                                                                                                                                                                        |
| *10.42    |   | Description of 2004  Grant under the 2003 AMC Entertainment Inc. Long-Term Incentive Plan  (incorporated by reference from Exhibit 10.3 to the Company’s  Form 10-Q (File No. 1-8747) for the quarter ended  October 2, 2003).                                                                                                                                                                                                                                                                                                                                                                   |
| *10.43(a) |   | Marquee Holdings Inc.  2004 Stock Option Plan (incorporated by reference from  Exhibit 10.32(a) to AMCE’s Registration Statement on Form S-4  (File No. 333-122376) filed on January 28, 2005).                                                                                                                                                                                                                                                                                                                                                                                             |
| *10.43(b) |   | Form of Non-Qualified  Stock Option Agreement (incorporated by reference from  Exhibit 10.32(b) to AMCE’s Registration Statement on Form S-4  (File No. 333-122376) filed on January 28, 2005).                                                                                                                                                                                                                                                                                                                                                                                        |
| *10.43(c) |   | Form of Incentive  Stock Option Agreement (incorporated by reference from  Exhibit 10.32(c) to AMCE’s Registration Statement on Form S-4  (File No. 333-122376) filed on January 28, 2005).                                                                                                                                                                                                                                                                                                                                                                                            |

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| *10.44 |   | Contribution and Unit  Holders Agreement, dated as of March 29, 2005, among National Cinema  Network, Inc., Regal CineMedia Corporation and National CineMedia, LLC  (incorporated by reference from Exhibit 10.1 to the Company’s  Form 8-K filed April 4, 2005). |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *14    |   | Code of Ethics  (incorporated by reference from Exhibit 14 to AMCE’s Form 10-K  filed on June 23, 2004)                                                                                                                                                                      |
| *21    |   | Subsidiaries of AMC  Entertainment Inc.                                                                                                                                                                                                                                                          |
| **31.1 |   | Certification of Chief  Executive Officer pursuant to Section 302 of the Sarbanes-Oxley  Acts of 2002.                                                                                                                                                                                      |
| **31.2 |   | Certification of Chief  Financial Officer pursuant to Section 302 of the Sarbanes-Oxley  Acts of 2002.                                                                                                                                                                                      |
| **32.1 |   | Section 906  Certifications of Peter C. Brown (Chief Executive Officer) and Craig R.  Ramsey (Chief Financial Officer) furnished in accordance with Securities Act  Release 33-8212.                                                                                                   |

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*             Previouslyfiled.

**      Filedherewith.

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