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

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FORM 10-K

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

For the fiscal year ended December 29, 2005

Commission file number: 033-49598

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UNITED ARTISTS THEATRE CIRCUIT, INC.(Exact name of registrant as Specified in its Charter)

|Maryland(State or Other Jurisdiction of
Incorporation or Organization) |  | 13-1424080(Internal Revenue Service Employer
Identification Number)
|---------------------------------------------------------------------- |  | -------------------------------------------------------------------
|7132 Regal Lane
Knoxville, TN(Address of Principal
Executive Offices)  |  | 37918(Zip Code)                                                    

Registrant's
Telephone Number, Including Area Code:865/922-1123

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

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

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K.    ý

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

Large
accelerated filer o                Accelerated filer o                Non-accelerated
filer ý

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

The registrant is a wholly owned subsidiary of Regal Entertainment Group. As of June 30, 2005, there were no shares of voting or non-voting
common stock held by non-affiliates of the registrant.

Indicate
by checkmark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934
subsequent to the distribution of securities under a plan confirmed by a
court.    Yes ý No o

The number of shares outstanding of $1.00 par value common stock at March 29, 2006 was 100 shares.



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TABLE OF CONTENTS



|PART I   |  |         
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|         |  | Item 1A.
|         |  | Item 1B.
|         |  | Item 2. 
|         |  | Item 3. 
|         |  | Item 4. 
|PART II  |  |         
|         |  | Item 5. 
|         |  | Item 6. 
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|         |  | Item 7A.
|         |  | Item 8. 
|         |  | Item 9. 
|         |  | Item 9A.
|         |  | Item 9B.
|PART III |  |         
|         |  | Item 10.
|         |  | Item 11.
|         |  | Item 12.
|         |  | Item 13.
|         |  | Item 14.
|PART IV  |  |         
|         |  | Item 15.

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UNITED ARTISTS THEATRE CIRCUIT, INC.  PART I

Some of the information in this Form 10-K includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts
included in this Form 10-K, including, without limitation, certain statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations" and
"Business" may constitute forward-looking statements. In some cases you can identify these "forward-looking statements" by words like "may," "will," "should," "expects," "plans," "anticipates,"
"believes," "estimates," "predicts," "potential" or "continue" or the negative of those words and other comparable words. These forward-looking statements involve risks and uncertainties. Our actual
results could differ materially from those indicated in these statements. The discussion and analysis of our financial condition and results of operations found within "Management's Discussion and
Analysis of Financial Condition and Results of Operation" should be read in conjunction with the Audited Consolidated Financial Statements and Notes thereto included in Part II, Item 8 of this
Form 10-K. The Company's actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such a difference include those
discussed in Item 1 and Item 1A as well as those discussed elsewhere in this Form 10-K.

Item 1. BUSINESS

THE COMPANY

United Artists Theatre Company (the "Parent" or "United Artists"), a Delaware corporation organized in February 2002, is the parent company of United
Artists Theatre Circuit, Inc. ("we," "us," "our," the "Company" or "UATC"), a Maryland corporation organized in May 1926, and United Artists Realty Company ("UAR"), which is the parent
company of United Artists Properties I Corp. ("Prop I"). UATC leases certain theatres from Prop I. The terms UATC and the Company shall be deemed to include the respective subsidiaries of such entity
when used in discussions included herein regarding the current operations or assets of such entity.

United
Artists became a wholly owned subsidiary of Regal Entertainment Holdings, Inc. ("REH") through a series of transactions in April and August 2002. REH is a
wholly owned subsidiary of Regal Entertainment Group ("REG" or "Regal") who acquired Regal Cinemas Corporation ("Regal Cinemas"), United Artists, Edwards Theatres, Inc. ("Edwards") and Regal
CineMedia Corporation ("Regal CineMedia") through a series of transactions on April 12, 2002. For a detailed discussion of the transactions resulting in Regal's acquisition of its subsidiaries,
see Note 2 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K. UATC, United Artists and certain of its subsidiaries emerged from
bankruptcy reorganization under Chapter 11 of Title 11 of the United States Bankruptcy Code on March 2, 2001.

As
described in Note 1 to the consolidated financial statements, on March 28, 2003, as part of an acquisition by REG of Hoyts Cinemas Corporation ("Hoyts"), two theatre
locations and 20 screens were contributed to UATC and recorded as a capital contribution totaling approximately $12.4 million.

On
June 6, 2003, UATC completed the sale of certain leased theatres consisting of 46 theatres and 438 screens in 11 states and certain other assets under construction to United
Artists Theatre Group, LLC ("UATG"), a wholly owned subsidiary of REH. For a detailed discussion of the transactions resulting from the sale to UATG, see Note 1 to the consolidated financial
statements.

On
August 17, 2005, REH transferred the stock of United Artists to Regal Cinemas, Inc. ("RCI"). As a result, United Artists and its subsidiaries became subsidiaries of RCI.

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As
described in Note 1 to the consolidated financial statements, on November 4, 2005 UATC completed the sale of 5 theatres and 37 screens in the Mississippi and Louisiana
markets to Boardwalk Ventures, LLC ("Boardwalk") for cash in the amount of approximately $5.5 million.

The
Company manages its business under one reportable segmenttheatre exhibition operations.

Our
Internet address is www.uatc.com. Our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K, and any amendments to these reports, are available free of charge on our Internet website under the heading "Investor Relations" as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the Securities and Exchange Commission.

DESCRIPTION OF BUSINESS

As of December 29, 2005, UATC operates 715 screens in 85 theatres in 19 states with over 25 million annual attendees. The UATC theatres are managed
by RCI, a wholly owned subsidiary of Regal, pursuant to a management arrangement described below. The Company primarily operates multi-screen theatres and has an average of 8.4 screens per location.
Theatre operations in seven states (California, New York, Florida, Maryland, Texas, Mississippi and Pennsylvania) accounted for approximately 68.2% and 66.9% of UATC's total theatres and screens,
respectively, as of December 29, 2005 and 73.7% of UATC's theatrical revenue for the fiscal year ended December 29, 2005.

The
Company has historically upgraded its theatre circuit by adding new screens and retrofitting existing theatres and strategically closing and disposing of under-performing theatres.
Approximately 59.3% of the Company's screens are in theatres with 10 or more screens. As of December 29, 2005, UATC operates 24 theatres (274 screens) which offer stadium seating, representing
38.3% of UATC's screens. Virtually all of the theatres UATC has built or renovated since 1997 have been state-of-the-art, 9 to 16 screen multiplex theatres with
stadium seating, high-backed rocking seats, digital sound, expanded concession areas and other state-of-the-art design features and amenities. These
state-of-the-art amenities will be included in UATC's renovations to existing theatres. As compared to the prior generation of non-stadium theatres,
UATC believes that these theatres provide a higher quality entertainment experience for patrons and significant operating efficiencies and improved economics for UATC.

In
connection with Regal's acquisition of its subsidiaries, as more fully described in Note 2 to the consolidated financial statements included in Part II, Item 8 of this
Form 10-K, a management agreement was executed between RCI and UATC under which RCI manages all aspects of the theatre operations of UATC and its subsidiaries and makes all business
decisions on behalf of UATC.

INDUSTRY OVERVIEW AND TRENDS

The domestic motion picture exhibition industry is a mature business that has historically maintained steady long-term growth in revenues and
attendance. Since 1965, total box office revenues have grown at a compound annual growth rate of approximately 6% with annual attendance of approximately 1.4 billion attendees in 2005. Against
this background of steady long-term growth in revenues and attendance, the exhibition industry has experienced periodic short-term increases and decreases in attendance and,
consequently, box office revenues. For example, between 1976 and 1978 attendance increased by 17.9%, only to decrease by 9.5% between 1978 and 1980. The industry has experienced similar increases in
attendance followed by attendance declines from 1980 through 1986, from 1986 through 1991 and from 1991 through 2000. Recently, attendance increased from 1.42 billion in 2000 to
1.64 billion in 2002, or 15.5%. Since 2002, attendance has declined to 1.40 billion patrons in 2005. We expect the cyclical nature of the domestic motion picture exhibition industry to
continue for the foreseeable future.

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Over
the past decade, the domestic motion picture exhibition industry experienced a period of extraordinary new theatre construction. From 1996 to 1999, the number of screens increased
at a compound annual growth rate of approximately 8%, which was more than double the industry's screen growth rate of approximately 3.5% from 1965 to 1995. This industry expansion was primarily driven
by major exhibitors upgrading their asset bases to an attractive megaplex format, which typically includes 10 or more screens per theatre and enhanced features such as stadium seating, improved
projection quality and superior sound systems. Generally, a modern megaplex is preferred by patrons over a sloped-floor multiplex theatre, the predominant theatre-type built prior to 1996.

We
believe that due to the financial difficulties experienced by many exhibitors in the late 1990's and because many major exhibitors have updated their theatre portfolios to the current
megaplex format, most major exhibitors have reduced their capital spending as compared to the late 1990's. As a result, we believe that the rate of new screen growth has returned to historical growth
patterns existing prior to the late 1990's expansion. We also believe that another evolution of theatre formats beyond the current megaplex is unlikely to occur in the foreseeable future. We believe
theatres larger than the current 10 to 18 screen megaplex are not able to generate attractive returns in most locations because of the substantial market suitability requirements to generate a level
of profitability similar to the current megaplex format.

More
recently, the domestic motion picture exhibition industry has experienced increased competition from other methods of delivering films to consumers, including cable television,
in-home video and DVD, satellite and pay-per-view services and downloads via the Internet. Traditionally, when motion picture distributors licensed their films to
the domestic motion
picture exhibition industry, they refrained from licensing their products to other delivery channels for a period of time, commonly called the theatrical release window. Over the past
several years, the average period between a film's theatrical release and its in-home video or DVD release has shortened. We believe that the contraction in the average theatrical
release window reflects the shorter period of time in which the average motion picture is able to generate meaningful revenue in its theatrical exhibition license period. As a consequence, we believe
that the shrinking of the theatrical release window over the past five to six years has not represented a material change in the studio/exhibition distribution model. Fundamentally, we believe
that movie-going is a convenient, affordable and attractively priced form of out-of-home entertainment, which, on an average price per patron basis, continues to compare
favorably to other out-of-home entertainment alternatives, such as concerts and sporting events. Since 1994, average movie ticket prices have increased at a compound annual
growth rate of only 4%.

However,
we believe that a material contraction of the theatrical release window could significantly dilute the consumer appeal of the out-of-home motion picture
offering. As a result, we continue to monitor the status of the theatrical release window and have increased our focus on the theatrical release window during our film exhibition decisions. Our
discussions with several film studios lead us to believe that these studios continue to realize the value of maintaining meaningful theatrical release windows for both distribution and exhibition
companies. Consequently, we believe a further material contraction in the theatrical release window is unlikely, but should such a contraction occur we believe that it could significantly impact our
business, financial condition and results of operations.

THEATRE OPERATIONS

UATC operates 715 screens in 85 theatres in 19 states as of December 29, 2005. We primarily operate multi-screen theatres. Our multi-screen theatre
complexes typically feature auditoriums ranging from 100 to 500 seats each. As a result, our theatres appeal to a diverse group of patrons because we offer a wide selection of films and convenient
show times. In addition, many of our theatres feature modern amenities such as wall-to-wall screens, digital stereo surround-sound, multi-station concessions stands,
computerized ticketing systems, plush stadium seating with cup holders and retractable armrests, neon-enhanced interiors and exteriors, and video game areas adjacent to the theatre lobby.

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Our
multi-screen theatres are designed to increase profitability by optimizing revenues per square foot and reducing the cost per square foot of operation. We vary auditorium seating
capacities within the same theatre, allowing us to exhibit films on a more cost effective basis for a longer period of time by shifting films to smaller auditoriums to meet changing attendance levels.
In addition, we realize
significant operating efficiencies by having common box office, concessions, projection, lobby and restroom facilities, which enables us to spread some of our costs, such as payroll, advertising and
rent, over a higher revenue base. We stagger movie show times to reduce staffing requirements and lobby congestion and to provide more desirable parking and traffic flow patterns. In addition, we
believe that operating a theatre circuit consisting primarily of multi-screen theatres enhances our ability to attract patrons.

The
following table details the number of locations and theatre screens in our theatre circuit ranked by the number of screens in each state as of December 29, 2005:

State

Locations

Number of ScreensNew York

17

125California

11

82Texas

7

73Mississippi

7

56Florida

6

53Maryland

4

46Pennsylvania

6

43New Jersey

3

31Colorado

4

30North Carolina

4

29Louisiana

3

26Arizona

2

21Arkansas

2

20Indiana

2

19Virginia

2

19Nevada

2

18Michigan

1

14Massachusetts

1

6Georgia

1

4Total

85

715


We
have implemented best management practices across all of our theatres, including daily, weekly and monthly management reports generated for each individual theatre, as well as
maintaining active communication between the theatres, divisional management and corporate management. We use these management reports and communications to closely monitor admissions and concessions
revenues as well as accounting, payroll and workforce information necessary to manage our theatre operations effectively and efficiently.

We
seek experienced theatre managers and require new theatre managers to complete a comprehensive training program within the theatres and at the "Regal Entertainment University," which
is held at our corporate office. The program is designed to encompass all phases of theatre operations, including our operating philosophy, policies, procedures and standards. In addition, we have an
incentive compensation program for theatre-level management that rewards theatre managers for controlling operating expenses while complying with our operating standards.

In
addition, we have implemented quality assurance programs in all of our theatres to maintain clean, comfortable and modern facilities. To maintain quality and consistency within our
theatre circuit,

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district
and regional managers regularly inspect each theatre. We also operate a "mystery shopper" program, which involves unannounced visits by unidentified customers who report on the quality of
service, film presentation and cleanliness at individual theatres.

FILM DISTRIBUTION

Domestic movie theatres are the primary initial distribution channel for domestic film releases. The theatrical success of a film is often the most important
factor in establishing its value in other film distribution channels. Motion pictures are generally made available through several alternative distribution methods after the theatrical release date,
including home video and DVD, cable television, broadcast television and satellite and pay-per-view services. A strong opening run at the theatre can help establish a film's
success and substantiate the film's revenue potential. For example, the value of home video, DVD and pay cable distribution agreements frequently depends on the success of a film's theatrical release.
As the primary distribution mechanism for the public's evaluation of films, we believe that domestic theatrical distribution remains the cornerstone of a film's overall financial success.

The
development of additional distribution channels has given motion picture producers the ability to generate a greater portion of a film's revenues through channels other than its
theatrical release. Historically, this potential for increased revenue after a film's initial theatrical release has enabled major studios and some independent producers to increase the budgets for
film production and advertising.

FILM EXHIBITION

Evaluation of Film.We license films on a film-by-film and
theatre-by-theatre basis by negotiating directly with film distributors. Prior to negotiating for a film license, we evaluate the prospects for upcoming films. Criteria we
consider for each film may include cast, producer, director, genre, budget, comparative film
performances and various other market conditions. Successful licensing depends greatly upon the exhibitor's knowledge of trends and historical film preferences of the residents in markets served by
each theatre, as well as the availability of commercially successful motion pictures.

Access to Film Product.Films are licensed from film distributors owned by major film production
companies and from independent film distributors that distribute films for smaller production companies. Film distributors typically establish geographic film licensing zones and allocate each
available film to one theatre within that zone.

In
film licensing zones where we are the sole exhibitor, we obtain film licenses by selecting a film from among those films being offered and negotiating directly with the distributor.
In zones where there is competition, a distributor will allocate films among the exhibitors in the zone. When films are licensed under the allocation process, a distributor will select an exhibitor
who then negotiates film rental terms directly with the distributor.

Film Rental Fees.Film licenses typically specify rental fees or formulas by which rental fees may be
calculated. The primary formulas used are the "firm term" formula, a "review or settlement" formula and a "sliding scale" formula. Under the firm term formula, the exhibitor and distributor agree
prior to the exhibition of the film on a specified percentage of the box office receipts to be remitted to the distributor. Under the review or settlement formula, the exhibitor and distributor
negotiate a percentage of the box office receipts to be remitted to the distributor upon completion of the theatrical engagement. These negotiations typically involve the use of historical settlements
or past precedent. Lastly, under a sliding scale formula, the distributor receives a percentage of the box office receipts using a pre-determined and mutually agreed upon film rental
template. This formula establishes film rental predicated on box office performance.

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Duration of Film Licenses.The duration of our film licenses are negotiated with our distributors on
a case-by-case basis. The term of our license agreements depend on performance of each film. Marketable movies that are expected to have high box office admission revenues will
generally have longer license terms than movies with more uncertain performance and popularity.

Relationship with Distributors.Many distributors provide quality first-run movies to the
motion picture exhibition industry. No single distributor dominates the market for an annual period, however according to industry sources, ten major film distributors reportedly accounted for 87% of
the industry's admissions revenues and 48 of the top 50 grossing films during 2004. We license films from each of the major distributors and believe that our relationships with these distributors are
excellent. From year to year, the revenues attributable to individual distributors will vary widely depending upon the number and popularity of films that each one distributes.

CONCESSIONS

In addition to box office admissions revenues, we generated approximately 27.2% of our total revenues from concessions sales during fiscal 2005. We emphasize
prominent and appealing concession stations designed for rapid and efficient service. We continually seek to increase concessions sales by optimizing product mix, introducing special promotions from
time to time and offering employee training and incentive programs to up-sell and cross-sell products. We have favorable concession supply contracts and have developed an
efficient concession purchasing and distribution supply chain. Our management negotiates directly with manufacturers for many of our concession items to obtain competitive prices and to ensure
adequate supplies.

COMPETITION

The motion picture industry is highly competitive. Motion picture exhibitors generally compete on the basis of the following competitive factors:



Our
competitors vary substantially in size, from small independent exhibitors to large national chains. As a result, our theatres are subject to varying degrees of competition in the
regions in which they operate. Our competitors, including newly established motion picture exhibitors, may build new theatres or screens in areas in which we operate, which may result in increased
competition and excess capacity in those areas. If this occurs, it may have an adverse effect on our business and results of operations.

We
also compete with other motion picture distribution channels, including home video and DVD, cable television, broadcast television and satellite and
pay-per-view services. Other technologies such as video on demand could also have an adverse effect on our business and results of operations. Traditionally, when motion
picture distributors licensed their products to the domestic exhibition industry, they refrained from licensing their motion pictures to these other distribution channels for a period of time,
commonly called the theatrical release window. We believe that the shortening of the theatrical release window over the past five to six years does not represent a material change in the
studio/exhibition distribution model. However, we believe that a material contraction of the theatrical release window could significantly dilute the consumer appeal of the
out-of-home motion picture offering. As a result, we continue to monitor the status of the theatrical release window and have increased our focus on the theatrical release
window during our film exhibition decisions. In addition,

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we
compete for the public's leisure time and disposable income with other forms of entertainment, including sporting events, concerts, live theatre and restaurants.

MARKETING AND ADVERTISING

Currently, film distributors organize and finance multimedia advertising campaigns for major film releases.

To
market our theatres, we utilize advertisements, including radio advertising, and movie schedules published in newspapers and over the Internet informing our patrons of film selections
and show times. Newspaper advertisements are typically displayed in a single grouping for all of our theatres located in a newspaper's circulation area. In some of our markets we employ special
marketing programs for specific films and concessions items.

We
participate in a frequent moviegoer loyalty program sponsored by REG, named the Regal Crown Club, in all of our markets. Regal Crown Club members are eligible for specified awards,
such as concession items, based on purchases made at our participating theatres. In addition, we seek to develop patron loyalty through a number of marketing programs such as free summer children's
film
series and cross-promotional ticket redemptions and promotions within local communities. We currently offer these programs only in selected markets. We plan to use these programs in markets where we
believe patron loyalty can be further enhanced, and we will continue to evaluate our markets on a case-by-case basis to determine the suitability of these programs in
individual regions.

MANAGEMENT INFORMATION SYSTEMS

We make extensive use of information technology (IT) for the management of our business, our theatres, and other revenue generating operations. The revenue
streams generated by attendance and concession sales are fully supported by information systems to monitor cash flow and to detect fraud and inventory shrinkage. We have recently implemented a new
point-of-service solution, which provides for enhanced capabilities and efficiency within our theatre operations. We continue to expand our ability to sell tickets remotely by
using Internet ticketing partners (fandango.com and movietickets.com) and by deploying self-service customer activated terminals (CATs) in appropriate theatres. The CATs can sell tickets
for current and future shows and provide the capability to retrieve tickets purchased through our Internet ticketing partners. We continue to investigate and invest in IT technologies to improve
services to our patrons and provide information to our management, allowing them to operate the theatres efficiently.

Our
scheduling systems support the coordination needed to properly allocate our auditoriums between film showings and meetings and events, while also ensuring that movie audiences view
the intended advertising and that revenue is allocated to the appropriate business function. The scheduling systems also provide information electronically and automatically to the newspapers, which
allows them to publish correct show starting times with approved advertising graphics. The sales and attendance information developed by the theatre systems is used directly for film booking and
settlement as well as being the primary source of data for our financial systems.

SEASONALITY

Our revenues are usually seasonal, coinciding with the timing of releases of motion pictures by the major distributors. Generally, studios release the most
marketable motion pictures during the summer and the holiday season. The unexpected emergence of a hit film during other periods can alter the traditional trend. The timing of movie releases can have
a significant effect on our results of operations, and the results of one quarter are not necessarily indicative of results for the next quarter or any other quarter. The seasonality of motion picture
exhibition, however, has become less pronounced as studios are releasing motion pictures somewhat more evenly throughout the year.

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EMPLOYEES

As of March 1, 2006, we employed approximately 2,645 persons. Film projectionists at certain of the Company's theatres in the New York market are covered
by two collective bargaining agreements. The Company considers its employee relations to be good.

REGULATION

The distribution of motion pictures is in large part regulated by federal and state antitrust laws and has been the subject of numerous antitrust cases. Consent
decrees effectively require major film distributors to offer and license films to exhibitors, including us, on a film-by-film and theatre-by-theatre
basis. Consequently, exhibitors cannot assure themselves of a supply of films by entering into long-term arrangements with major distributors, but must negotiate for licenses on a
film-by-film basis.

Our
theatres must comply with Title III of the Americans with Disabilities Act of 1990 (the "ADA") to the extent that such properties are "public accommodations" and/or
"commercial facilities" as defined by the ADA. Compliance with the ADA requires that public accommodations "reasonably accommodate" individuals with disabilities and that new construction or
alterations made to "commercial facilities" conform to accessibility guidelines unless "structurally impracticable" for new
construction or technically infeasible for alterations. Non-compliance with the ADA could result in the imposition of injunctive relief, fines, award of damages to private litigants and
additional capital expenditures to remedy such non-compliance.

We
believe that we are in substantial compliance with all current applicable regulations relating to accommodations for the disabled. We intend to comply with future regulations in that
regard and except as set forth in Note 9 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K, we do not currently anticipate that
compliance will require us to expend substantial funds. Our theatre operations are also subject to federal, state and local laws governing such matters as wages, working conditions, citizenship and
health and sanitation requirements. We believe that we are in substantial compliance with all of such laws.

Item 1A. RISK FACTORS



We have substantial lease obligations. For fiscal 2005, our total rent expense was approximately $44.5 million. As of December 29, 2005, we had
total contractual cash obligations of approximately $379.7 million. For a detailed discussion of our contractual cash obligations and other commercial commitments over the next
several years, refer to "Management's Discussion and Analysis of Financial Condition and Results of OperationsContractual Cash Obligations and Commitments" included elsewhere in
Part II, Item 8 of this Form 10-K below.

If
we are unable to meet our lease obligations, we could be forced to restructure our obligations and seek additional funding from our Parent, a wholly owned subsidiary of Regal, or sell
assets. We may be unable to restructure our obligations and obtain additional funding from our Parent or sell assets on satisfactory terms or at all. As a result, inability to meet our lease
obligations could cause us to default on those obligations. Many of our lease agreements contain restrictive covenants that limit our ability to take specific actions or require us not to allow
specific events to occur and prescribe minimum financial maintenance requirements that we must meet. If we violate those restrictive covenants or fail to meet the minimum financial requirements
contained in a lease, we would be in default under that instrument, which could, in turn, result in defaults under other leases. Any such defaults could materially impair our financial condition and
liquidity.

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The motion picture exhibition industry is fragmented and highly competitive with no significant barriers to entry. Theatres operated by national and regional
circuits and by small independent exhibitors compete with our theatres, particularly with respect to film licensing, attracting patrons and developing new theatre sites. Moviegoers are generally not
brand conscious and usually choose a theatre based on its location, the films showing there and its amenities.

In
recent years, motion picture exhibitors have been upgrading their asset bases to an attractive megaplex format which features stadium seating, improved projection quality and
superior sound systems. Generally, stadium seating found in modern megaplex theatres is preferred by patrons over slope-floored multiplex theatres, which were the predominant theatre-type
built prior to 1996. As of December 29, 2005, approximately 62% of our screens were located in theatres that are sloped-floored multiplex theatres. These theatres may be more vulnerable to
competition than our modern megaplex theatres, and should other theatre operators choose to build and operate modern megaplex theatres in these markets, the performance of our theatres in these
markets may be significantly and negatively impacted. In addition, should other theatre operators return to the aggressive building strategies undertaken in the late 1990's, our attendance, revenue
and income from operations per screen could decline substantially.



We also compete with other movie delivery vehicles, including cable television, downloads via the Internet, in-home video and DVD, satellite and
pay-per-view services. Traditionally, when motion picture distributors licensed their products to the domestic exhibition industry, they refrained from licensing their motion
pictures to these other delivery vehicles for a period of time, commonly called the theatrical release window. We believe that a material contraction of the current theatrical release window could
significantly dilute the consumer's appeal of the in-theatre motion picture offering, which could have a material adverse effect on our business and results of operations. We also compete
for the public's leisure time and disposable income with other forms of entertainment, including sporting events, concerts, live theatre and restaurants.



Our ability to operate successfully depends upon the availability, diversity and appeal of motion pictures, our ability to license motion pictures and the
performance of such motion pictures in our markets. We mostly license first-run motion pictures, the success of which have increasingly depended on the marketing efforts of the major
studios. Poor performance of, or any disruption in the production of (including by reason of a strike) these motion pictures, or a reduction in the marketing efforts of the major studios, could hurt
our business and results of operations. In addition, a change in the type and breadth of movies offered by studios may adversely affect the demographic base of moviegoers.



The film distribution business is highly concentrated, with ten major film distributors reportedly accounting for 87% of industry admissions revenues and 48 of
the top 50 grossing films during 2004. Our business depends on maintaining good relations with these distributors. In addition, we are dependent on our ability to negotiate commercially favorable
licensing terms for first-run films. A deterioration in our relationship with any of the ten major film distributors could affect our ability to negotiate film licenses on favorable terms
or our ability to obtain commercially successful films and, therefore, could hurt our business and results of operations.

11

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The distribution of motion pictures is in large part regulated by federal and state antitrust laws and has been the subject of numerous antitrust cases. Consent
decrees resulting from those cases effectively require major motion picture distributors to offer and license films to exhibitors, including us, on a film-by-film and
theatre-by-theatre basis. Consequently, we cannot assure ourselves of a supply of motion pictures by entering into long-term arrangements with major distributors,
but must compete for our licenses on a film-by-film and theatre-by-theatre basis.



The industry is in the early stages of conversion from film-based media to electronic based media. There are a variety of constituencies associated
with this anticipated change, which may significantly impact industry participants, including content providers, distributors, equipment providers and exhibitors. Should the conversion process rapidly
accelerate and the major studios not finance the conversion as expected, we may have to raise additional capital to finance the conversion costs associated with this potential change. The additional
capital necessary may not, however, be available to us on attractive terms, if at all. Furthermore, it is impossible to accurately predict how the roles and allocation of costs (including operating
costs) between various industry participants will change if the industry changes from physical media to electronic media.



Our success depends upon the retention of our senior management, including Michael Campbell, our President and Chairman of the Board. We cannot assure you that we
would be able to find qualified replacements for the individuals who make up our senior management if their services were no longer available. The loss of services of one or more members of our senior
management team could have a material adverse effect on our business, financial condition and results of operations. We do not currently maintain key-man life insurance for any of our
employees. The loss of any member of senior management could adversely affect our ability to effectively pursue our business strategy.



We depend on consumers voluntarily spending discretionary funds on leisure activities. Motion picture theatre attendance may be affected by prolonged negative
trends in the general economy that adversely affect consumer spending, including such trends resulting from terrorist attacks on, or wars or threatened wars involving, the United States. Any reduction
in consumer confidence or disposable income in general may affect the demand for motion pictures or severely impact the motion picture production industry, which, in turn, could adversely affect our
operations.

Item 1B. UNRESOLVED STAFF COMMENTS

Not applicable

Item 2. PROPERTIES

As of December 29, 2005, we operated 83 of our theatres pursuant to lease agreements and owned the land and buildings for 2 theatres. For a
December 29, 2005 list of the states in which we operated theatres and the number of theatres and screens operated in each such state, please see the chart under Part I, Item 1 of this
Form 10-K under the caption "BusinessTheatre Operations" which is incorporated herein by reference. The majority of our leased theatres are subject to lease agreements
with original terms of 20 years or more and, in most cases, renewal options for up to an additional 10 years. These leases provide for minimum annual rentals and the renewal options
generally provide

12

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for
rent increases. Some leases require, under specified conditions, further rental payments based on a percentage of revenues above specified amounts. A significant majority of the leases are net
leases, which require us to pay the cost of insurance, taxes and a portion of the lessor's operating costs.

Of
the 85 owned and leased theatres, 2 theatres and three screens are held through a corporation that is owned 80% by UATC and one theatre and nine screens is held by a corporation,
owned 51% by UATC. The remaining owned and leased theatres are held directly by UATC or its wholly owned subsidiaries. Certain of our leased theatres are subject to sale and leaseback transactions, as
further described in Note 7 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

UATC
also manages one theatre and one screen located in the United States and receives a monthly management fee based on a percentage of total revenues.

UATC
leases the land, building and equipment in the theatres owned by Prop I in accordance with a master affiliate lease. The Prop I master lease expired in 2003 and UATC exercised its
option to extend the lease for an additional ten years.

Item 3. LEGAL PROCEEDINGS

Pursuant to General Instruction G(2) to Form 10-K and Rule 12b-23 under the Securities Exchange Act of 1934, as
amended, the information required to be furnished by us under
this Part I, Item 3 (Legal Proceedings) is incorporated by reference to the information contained under the caption "Other" in Note 9 to the consolidated financial statements included in
Part II, Item 8 of this Form 10-K.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of UATC's sole shareholder, the Parent, during the fourth quarter ended December 29, 2005.

PART II

Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

As of March 29, 2006, UATC's common stock is held entirely by the Parent. There is no established public trading market for the Company's common stock.
During 2003, UATC effected two cash dividends totaling approximately $109.2 million to the Parent. During 2004, UATC effected one cash dividend totaling approximately $21.7 million to
the Parent. During 2005, UATC effected two cash dividends totaling approximately $32.3 million to the Parent. UATC's ability to pay dividends is restricted by the terms of the Participation
Agreement entered into in connection with the 1995 sale and leaseback transaction described in Note 7 to the consolidated financial statements included in Part II, Item 8 of this
Form 10-K.

Item 6. SELECTED FINANCIAL DATA

The following table presents selected historical financial data of UATC for the past five fiscal years. Effective March 2, 2001, UATC emerged from
protection under Chapter 11 of the U.S. Bankruptcy Code pursuant to a reorganization plan that provided for the discharge of significant financial obligations. In accordance with AICPA Statement of
Position 90-7, UATC adopted fresh start reporting whereby UATC's assets, liabilities and new capital structure were adjusted to reflect estimated fair values as of March 1, 2001.
For the periods prior to March 2, 2001, the assets and liabilities of UATC and the related consolidated results of operations are referred to below as "Predecessor Company," and for periods
subsequent to March 1, 2001, the assets and liabilities of UATC and the

13

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related
consolidated results of operations are referred to as the "Reorganized Company." As a result of the above, the financial data of the Predecessor Company is not comparable to the financial data
of the Reorganized Company. The following selected historical consolidated financial data set forth below should be read in conjunction with, and are qualified in their entirety by, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and UATC's consolidated financial statements and notes thereto included elsewhere in this Form 10-K
(in millions, except operating data).

|                                                     |  | Reorganized Company(2) |       | Predecessor
Company(1) |  
|---------------------------------------------------- |  | ---------------------- | ----- | ---------------------- | -
|
|
|Summary of operations data:                          |  |                        |       |                        |  
|Total operating revenue                              |  | $                      | 252.5 |                        | $
|Income from operations                               |  |                        | 5.5   |                        |  
|Net income (loss)                                    |  |                        | 3.3   |                        |  
|Balance sheet data at period end:                    |  |                        |       |                        |  
|Cash and cash equivalents                            |  | $                      | 31.5  |                        | $
|Total assets                                         |  |                        | 152.2 |                        |  
|Total debt(3)                                        |  |                        | 2.3   |                        |  
|Stockholder's equity (deficit)                       |  |                        | 71.7  |                        |  
|Other financial data:                                |  |                        |       |                        |  
|Cash flow provided by (used in) operating activities |  | $                      | 19.5  |                        | $
|Cash flow provided by (used in) investing activities |  |                        | 9.5   |                        |  
|Cash flow provided by (used in) financing activities |  |                        | (33.0 | )                      |  
|Operating data(4):                                   |  |                        |       |                        |  
|Theatre locations                                    |  |                        | 85    |                        |  
|Screens                                              |  |                        | 715   |                        |  
|Average screens per location                         |  |                        | 8.4   |                        |  
|Attendance (in millions)                             |  |                        | 25.4  |                        |  
|Average ticket price                                 |  | $                      | 6.88  |                        | $
|Average concessions per patron                       |  |                        | 2.70  |                        |  

---

14

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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion summarizes the significant factors affecting the consolidated operating results, financial condition, liquidity and cash
flows of UATC for the fiscal years December 29, 2005, December 30, 2004 and January 1, 2004. The following discussion and analysis should be read in conjunction with the
consolidated financial statements of UATC and the notes thereto included elsewhere in this Form 10-K.

Overview and Basis of Presentation

As
of December 29, 2005, UATC operates 715 screens in 85 theatres in 19 states with over 25 million annual attendees. The UATC operated theatres are managed by RCI, a
wholly owned subsidiary of Regal, pursuant to a management arrangement described below. The Company primarily operates multi-screen theatres and has an average of 8.4 screens per location. Theatre
operations in seven states (California, New York, Florida, Maryland, Texas, Mississippi and Pennsylvania) accounted for approximately 68.2% and 66.9% of UATC's total theatres and screens,
respectively, as of December 29, 2005 and 73.7% of UATC's theatrical revenue for the fiscal year ended December 29, 2005.

United
Artists became a wholly owned subsidiary of REH through a series of transactions in April and August 2002. REH is a wholly owned subsidiary of Regal who acquired
Regal Cinemas, United Artists, Edwards and Regal CineMedia through a series of transactions on April 12, 2002. For a detailed discussion of the transactions resulting in Regal's acquisition of
its subsidiaries, see Note 2 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K. On August 17, 2005, REH transferred the
stock of United Artists to RCI. As a result, United Artists and its subsidiaries became subsidiaries of RCI.

The
Company generates revenues primarily from admissions and concession sales. Additional revenues are generated by on-screen and lobby advertisements, rental of theatres for
business meetings, concerts and other events distributed on a live or pre-recorded basis provided by RCI pursuant to its management agreement with UATC (described in Note 5 to the
consolidated financial statements included in Part II, Item 8 of this Form 10-K), electronic video games located adjacent to the lobbies of certain of the Company's theatres
and vendor marketing programs.
Film rental costs depend on a variety of factors including the prospects of a film, the popularity of a film and the length of time since the film's release and generally decline as a percentage of
admission revenues the longer a film is in exhibition. Because the Company purchases certain concession items, such as fountain drinks and popcorn, in bulk and not pre-packaged for
individual servings, the Company is able to improve its margins by negotiating volume discounts. Other operating expenses consist primarily of theatre labor and occupancy costs.

In
order to provide a meaningful basis of comparing the fiscal years ended December 29, 2005, December 30, 2004 and January 1, 2004 for purposes of the
following tables and discussion, the operating results for the fifty-two weeks ended December 29, 2005 ("Fiscal 2005 Period") are compared to the fifty-two weeks ended
December 30, 2004 ("Fiscal 2004 Period") and the fifty-three weeks ended January 1, 2004 ("Fiscal 2003 Period").

For
a summary of industry trends as well as other risks and uncertainties relevant to the Company, see "Business-Industry Overview and Trends", "Risk Factors" and "Management Discussion
and Analysis of Financial Condition and Results of Operations."

Results of Operations

The 2005 fiscal year was a challenging year for the industry and the Company. Based on our review of industry sources, national box office revenues were estimated
to have declined five to six

15

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percent
for the calendar year of 2005 in comparison to the calendar year of 2004. While we believe that the 2005 national box office revenues benefited from increased average ticket prices per patron
and the solid performance of a few select films, which largely contributed to an increase in average concession revenues per patron, these factors could not offset the overall decline in the 2005
national attendance and box office revenues. We believe the lack of commercially appealing films in general resulted in the 2005 decline in attendance and lackluster box office results.

Our
total revenues for the Fiscal 2005 Period were $252.5 million, a 13.9% decrease compared to total revenues of $293.3 million for the Fiscal 2004 Period. The decline in
the Company's operating results was attributable to a 19.1% decrease in attendance resulting primarily from the closure of 100 underperforming screens during the Fiscal 2005 Period and weaker film
product exhibited during the Fiscal 2005 Period. Also, to a lesser extent the Fiscal 2005 Period results were negatively impacted by the sale of 37 screens to another theatre operator in
November 2005. The decline in box office revenues was partially offset by a 5.8% increase in the Fiscal 2005 Period average ticket prices per patron. During the Fiscal 2005 Period, we
experienced growth of 6.7% in average concession revenues per patron. The growth in average concession revenues per patron was attributable to changes in our
product mix (including certain pricing and size changes) and the increased breadth of family-oriented and concession-friendly film product exhibited during the Fiscal 2005 Period. Income from
operations for the Fiscal 2005 Period was $5.5 million, a 42.7% decrease compared to income from operations of $9.6 million for the Fiscal 2004 Period. The decline in income from
operations was primarily attributable to the decline in attendance during the Fiscal 2005 Period, partially offset by a decrease in operating expenses and the net gain on the disposal of operating
assets during the Fiscal 2005 Period, as described more fully below. Net income increased to $3.3 million in the Fiscal 2005 Period as compared to a net loss of ($0.7) million in the
Fiscal 2004 Period. The increase in net income was primarily attributable to the decrease in interest expense and in minority interest expense during the Fiscal 2005 Period and the Fiscal 2004 Period
expense related to the purchase of the remaining partnership interest of the two partners in one of our subsidiaries, as described more fully below.

We
are optimistic regarding the 2006 film slate and share the view of a number of film studio executives and analysts who believe the industry is poised to benefit from a year of solid
box office performance. Evidenced by the film studios' continued efforts to promote and market upcoming film releases, 2006 appears to be another year of high-profile releases such as Ice Age 2, X-Men 3, Over the Hedge, The
Poseidon Adventure, Mission Impossible 3, The Da Vinci Code, Cars, Pirates of the Caribbean 2, Superman
ReturnsandCharlotte's Web.

With
respect to capital expenditures, due in part to the timing of certain construction projects, we expect theatre capital expenditures to be in the range of $5.0 million to
$10.0 million for fiscal 2006, primarily consisting of expansion of existing theatre facilities, upgrades and replacements.

Overall
for the fiscal 2006 year, we are expecting a modest rebound in attendance as a result of the upcoming high-profile film releases described above and increases
in ticket prices and average concessions per patron. In addition, we expect fiscal 2006 admission and concessions revenues to be supported by our continued focus on efficient theatre operations. For
an understanding of the significant factors that influenced our performance during the past three fiscal years, the preceding and following discussion should be read in conjunction with the
consolidated financial statements and the notes thereto presented in this Form 10-K.

16

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The
following table sets forth the percentage of total revenues represented by certain items reflected in UATC's consolidated statements of income for the Fiscal 2005 Period, Fiscal 2004
Period and the Fiscal 2003 Period:

|                    |                                                                   | Fiscal 2005 Period       |      | Fiscal 2004 Period |      | Fiscal 2003 Period |     
|------------------- | ----------------------------------------------------------------- | ------------------------ | ---- | ------------------ | ---- | ------------------ | ----
|Revenues:           |                                                                   |                          |      |                    |      |                    |     
|                    | Admissions                                                        |                          | 69.2 | %                  | 69.6 | %                  | 68.6
|                    | Concessions                                                       |                          | 27.2 |                    | 27.1 |                    | 26.8
|                    | Other operating revenues                                          |                          | 3.6  |                    | 3.3  |                    | 4.6 
|                    |                                                                   |                          |      |                    |      |                    |     
|                    |                                                                   | Total revenues           |      | 100.0              |      | 100.0              |     
|Operating expenses: |                                                                   |                          |      |                    |      |                    |     
|                    | Film rental and advertising costs                                 |                          | 35.8 |                    | 36.0 |                    | 35.9
|                    | Cost of concessions                                               |                          | 3.9  |                    | 4.0  |                    | 3.9 
|                    | Other theatre operating expenses                                  |                          | 43.5 |                    | 41.5 |                    | 38.8
|                    | Sale and leaseback rentals                                        |                          | 6.0  |                    | 5.3  |                    | 3.9 
|                    | General and administrative expenses                               |                          | 3.0  |                    | 3.0  |                    | 3.0 
|                    | Depreciation and amortization                                     |                          | 5.3  |                    | 4.7  |                    | 4.4 
|                    | Loss (gain) on disposal and impairments of operating assets       |                          | (0.7 | )                  | 0.6  |                    | 0.2 
|                    | Restructure costs and amortization of deferred stock compensation |                          | 1.0  |                    | 1.0  |                    | 0.8 
|                    | Loss on lawsuit settlement                                        |                          |     |                    | 0.6  |                    |    
|                    |                                                                   |                          |      |                    |      |                    |     
|                    |                                                                   | Total operating expenses |      | 97.8               |      | 96.7               |     
|                    |                                                                   |                          |      |                    |      |                    |     
|                    | Income from operations                                            |                          | 2.2  | %                  | 3.3  | %                  | 9.1 
|                    |                                                                   |                          |      |                    |      |                    |     

Total Revenues

The following table summarizes revenues and revenue-related data for the Fiscal 2005 Period, Fiscal 2004 Period and the Fiscal 2003 Period (in millions,
except averages):

|                                  |                | Fiscal 2005 Period |       | Fiscal 2004 Period |   | Fiscal 2003 Period
|--------------------------------- | -------------- | ------------------ | ----- | ------------------ | - | ------------------
|Admissions                        |                | $                  | 174.7 |                    | $ | 204.2             
|Concessions                       |                |                    | 68.7  |                    |   | 79.5              
|Other operating revenues          |                |                    | 9.1   |                    |   | 9.6               
|                                  |                |                    |       |                    |   |                   
|                                  | Total revenues |                    | $     | 252.5              |   | $                 
|                                  |                |                    |       |                    |   |                   
|Attendance                        |                |                    | 25.4  |                    |   | 31.4              
|Average ticket price(1)           |                | $                  | 6.88  |                    | $ | 6.50              
|Average concessions per patron(2) |                | $                  | 2.70  |                    | $ | 2.53              

---

Admissions

Total admissions revenues decreased $29.5 million, or 14.4%, to $174.7 million for the Fiscal 2005 Period, from $204.2 million for the Fiscal
2004 Period. The Fiscal 2005 Period total admissions revenues were unfavorably impacted by a decrease in attendance of approximately 19.1%. The decrease in attendance was primarily due to the closure
of 100 underperforming screens during the Fiscal 2005 Period and weaker film product exhibited during the Fiscal 2005 Period. Also, to a lesser extent, the

17

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Fiscal
2005 Period admissions revenues were negatively impacted by the sale of 37 screens to another theatre operator in November 2005. The decline in total admissions revenues for the Fiscal
2005 Period was partially offset by a 5.8% increase in the Fiscal 2005 Period average ticket prices per patron. The increase in the Fiscal 2005 Period average ticket price was primarily attributable
to periodic pricing reviews conducted by the Company, which includes analysis of various factors, including general inflationary trends and local market conditions.

Total
admission revenues decreased $91.3 million, or 30.9% to $204.2 million for the Fiscal 2004 Period, from $295.5 million for the Fiscal 2003 Period. The Fiscal
2003 Period results include the benefit of the results of operations of the 46 theatres sold to UATG for five months of the year until the theatres were sold on June 6, 2003. In
addition, the results for the Fiscal 2003 Period were positively impacted by the timing of our fiscal 2003 calendar which consisted of fifty-three weeks compared to fifty-two weeks in the
Fiscal 2004 Period. During the Fiscal 2004 Period the Company closed 83 underperforming screens. Partially offsetting the sale of the 46 theatres to UATG and the closing of underperforming screens,
the Fiscal 2004 Period results benefited from the results of operations of the two contributed Hoyts theatres, whereas the results of operations of the two Hoyts theatres were excluded from the first
three months of the Fiscal 2003 Period because the two Hoyts theatres were not contributed until March 28, 2003. As a net result of the above factors, the Fiscal 2004 Period box office
results were negatively impacted by a net decline in attendance of approximately 31.9%, partially offset by a 1.4% increase in average ticket prices per patron due to increases in retail ticket prices
and sales of a greater proportion of full-price tickets from R-rated films during the first quarter of the Fiscal 2004 Period.

Concessions

Total concessions revenues decreased $10.8 million, or 13.6%, to $68.7 million for the Fiscal 2005 Period, from $79.5 million for the Fiscal
2004 Period. The decrease in concessions revenues in the Fiscal 2005 Period compared to the Fiscal 2004 Period was due to a 19.1% decrease in attendance, partially offset by a 6.7% increase in average
concessions per patron. The net increase in the Fiscal 2005 Period average concessions per patron was primarily attributable to changes in our concessions product mix
(including certain pricing and size changes) and the increased breadth of family-oriented and concession-friendly film product exhibited during the Fiscal 2005 Period.

Total
concessions revenues decreased $35.7 million, or 31.0%, to $79.5 million for the Fiscal 2004 Period, from $115.2 million for the Fiscal 2003 Period. The
decrease in concessions revenues in the Fiscal 2004 Period compared to the Fiscal 2003 Period was due to a 31.9% decrease in attendance, partially offset by a 1.2% increase in average concession
revenues per patron. The net increase in Fiscal 2004 Period concession revenues per patron was primarily attributable to price increases and a favorable film product mix in the second and third
quarters of the Fiscal 2004 Period.

Other Operating Revenues

Total other operating revenues decreased $0.5 million, or 5.2%, to $9.1 million for the Fiscal 2005 Period, from $9.6 million for the Fiscal
2004 Period. Included in other operating revenues are on-screen and lobby advertising revenues, business meetings and concert event revenues, marketing revenues from certain of the
Company's vendor marketing programs and game revenues. The decrease in other operating revenues in the Fiscal 2005 Period compared to the Fiscal 2004 Period was primarily due to the 19.1% decline in
attendance during the Fiscal 2005 Period, partially offset by increases in revenues from our vendor marketing programs.

Total
other operating revenues decreased $10.3 million, or 51.8%, to $9.6 million for the Fiscal 2004 Period, from $19.9 million for the Fiscal 2003 Period. The
decrease in other operating revenues in the Fiscal 2004 Period compared to the Fiscal 2003 Period was primarily the result of a decrease in

18

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certain
vendor marketing programs, the closure of 83 underperforming screens during the Fiscal 2004 Period and the sale of the 46 theatres to UATG on June 6, 2003. The decrease in other
operating revenues was partially offset by the inclusion of the two Hoyts theatres for a full Fiscal 2004 Period.

Operating Expenses

The following table summarizes certain operating expenses for the Fiscal 2005 Period, Fiscal 2004 Period and the Fiscal 2003 Period (dollars in millions):

|                                       |  | Fiscal 2005 Period |  | Fiscal 2004 Period |  | Fiscal 2003 Period
|-------------------------------------- |  | ------------------ |  | ------------------ |  | ------------------
|
|Film rental and advertising costs(1)   |  | 90.4               |  | 51.7               |  | 105.7             
|Cost of concessions(2)                 |  | 10.0               |  | 14.6               |  | 11.8              
|Other theatre operating expenses(3)    |  | 109.8              |  | 43.5               |  | 121.7             
|Sale and leaseback rentals(3)          |  | 15.1               |  | 6.0                |  | 15.4              
|General and Administrative expenses(3) |  | 7.6                |  | 3.0                |  | 8.8               

---

Film Rental and Advertising Costs

Film rental and advertising costs decreased $15.3 million, or 14.5%, to $90.4 million in the Fiscal 2005 Period, from $105.7 million in the
Fiscal 2004 Period. During the Fiscal 2005 Period, film rental and advertising costs as a percentage of admissions revenues decreased to 51.7% as compared to 51.8% in the Fiscal 2004 Period. The
decreases in film rental and advertising costs during the Fiscal 2005 Period was a result of lower film rental cost associated with the lackluster performance of certain Fiscal 2005 Period films,
partially offset by higher film rental cost associated with certain Fiscal 2005 films such asStar Wars: Episode IIIRevenge of the Sith.

Film
rental and advertising costs decreased $48.9 million, or 31.6%, to $105.7 million in the Fiscal 2004 Period, from $154.6 million in the Fiscal 2003 Period. Film
rental and advertising costs as a percentage of admissions revenues decreased to 51.8% in the Fiscal 2004 Period as compared to 52.3% in the Fiscal 2003 Period. The decrease in film rental and
advertising costs as a percentage of box office revenues during the Fiscal 2004 Period was a result of a favorable film product mix and a continued focus on managing advertising costs.

Cost of Concessions

Cost of concessions decreased $1.8 million, or 15.3%, to $10.0 million in the Fiscal 2005 Period, from $11.8 million in the Fiscal 2004
Period. Cost of concessions as a percentage of concessions revenues decreased to 14.6% in the Fiscal 2005 Period as compared to 14.8% in the Fiscal 2004 Period. The decrease in the cost of concessions
as a percentage of concession revenues during the Fiscal 2005 Period was primarily attributable to the mix of concession product.

Cost
of concessions decreased $4.8 million, or 28.9%, to $11.8 million in the Fiscal 2004 Period, from $16.6 million in the Fiscal 2003 Period due primarily to the
result of the sale of the 46 theatres to UATG on June 6, 2003, and the net closure of 83 screens during the Fiscal 2004 Period. Cost of concessions as a percentage of concession revenues
increased to 14.8% in the Fiscal 2004 Period as compared to 14.4% in the Fiscal 2003 Period. The increase in the cost of concessions as a percentage

19

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of
concession revenues in the Fiscal 2004 Period was primarily attributable to the mix of concession product coupled with increases in promotional costs.

Other Theatre Operating Expenses

Other theatre operating expenses decreased $11.9 million, or 9.8%, to $109.8 million in the Fiscal 2005 Period, from $121.7 million in the
Fiscal 2004 Period. Other theatre operating expenses as a percentage of total revenues increased to 43.5% in the Fiscal 2005 Period as compared to 41.5% in the Fiscal 2004 Period. The decrease in
total other theatre operating expenses in the Fiscal 2005 Period was primarily attributable to the 19.1% decline in attendance during the Fiscal 2005 Period and decrease in certain
non-rent occupancy costs and certain other operating costs. The increase in other theatre operating expenses as a percentage of total revenues in the Fiscal 2005 Period was primarily
attributable to decreasing revenues coupled with the fixed nature of various theatre operating expenses.

Other
theatre operating expenses decreased $45.5 million, or 27.2%, to $121.7 million in the Fiscal 2004 Period, from $167.2 million in the Fiscal 2003 Period. The
decrease in total other theatre operating expenses in the Fiscal 2004 Period was primarily due to the result of the sale of the 46 theatres to UATG on June 6, 2003, the impact of one additional
week of operating results during the Fiscal 2003 Period and the net closure of 83 screens during the Fiscal 2004 Period. Other theatre operating expenses as a percentage of total revenues increased to
41.5% in the Fiscal 2004 Period as compared to 38.8% in the Fiscal 2003 Period. The increase in other theatre operating expenses as a percentage of total revenues in the Fiscal 2004 Period was
primarily due to the fixed cost nature of certain operating expenses, coupled with a decline in total revenues during the Fiscal 2004 Period.

Sale and Leaseback Rentals

Sale and leaseback expenses decreased $0.3 million, or 1.9%, to $15.1 million during the Fiscal 2005 Period, from $15.4 million in the Fiscal
2004 Period. The decrease in sale and leaseback expenses in the Fiscal 2005 Period was due to a decrease in rent expense related to the sale of certain underperforming
properties during the Fiscal 2005 Period as further described in Note 7 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

Sale
and leaseback expenses decreased $1.3 million, or 7.8%, to $15.4 million during the Fiscal 2004 Period, from $16.7 million in the Fiscal 2003 Period. The
decrease in sale and leaseback expenses in the Fiscal 2004 Period was due to a decrease in rent expense related to the sale of certain underperforming properties during the Fiscal 2004 Period as
further described in Note 7 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K.

General and Administrative Expenses

General and administrative expenses decreased $1.2 million, or 13.6%, to $7.6 million during the Fiscal 2005 Period, from $8.8 million in the
Fiscal 2004 Period. As a percentage of total revenues, general and administrative expenses were approximately 3.0% for both the Fiscal 2005 and Fiscal 2004 Periods. Included in general and
administrative expenses are management fees associated with the management agreement between RCI and UATC under which RCI manages the theatre operations of UATC. The decrease in general and
administrative expenses during the Fiscal 2005 Period was primarily due to the reduction in management fee costs incurred during the Fiscal 2005 Period resulting from the decrease in total revenues
during the Fiscal 2005 Period compared to the Fiscal 2004 Period.

General
and administrative expenses decreased $4.1 million, or 31.8%, to $8.8 million during the Fiscal 2004 Period, from $12.9 million in the Fiscal 2003 Period. As
a percentage of total revenues, general and administrative expenses were approximately 3.0% for both the Fiscal 2004 and Fiscal 2003 Periods. Included in general and administrative expenses are
management fees associated with the management agreement between RCI and UATC. The decrease in general and administrative expenses

20

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during
the Fiscal 2004 Period was primarily due to the reduction in management fee costs incurred during the Fiscal 2004 Period resulting from the decrease in total revenues during the Fiscal 2004
Period compared to the Fiscal 2003 Period.

Depreciation and Amortization

Depreciation and amortization decreased $0.4 million, or 2.9%, to $13.3 million in the Fiscal 2005 Period, from $13.7 million in the Fiscal
2004 Period. The decrease in depreciation and amortization during the Fiscal 2005 Period was primarily due to the closure of 100 screens during the Fiscal 2005 Period.

Depreciation
and amortization decreased $5.3 million, or 27.9%, to $13.7 million in the Fiscal 2004 Period, from $19.0 million in the Fiscal 2003 Period. The
decrease in depreciation and amortization during the Fiscal 2004 Period was primarily due to the sale of the 46 theatres to UATG discussed above and the net closure of 83 screens during the Fiscal
2004 Period.

Income from Operations

Income from operations totaled approximately $5.5 million for the Fiscal 2005 Period, which represents a decrease of $4.1 million, or 42.7%, from
$9.6 million for the Fiscal 2004 Period. The decrease in income from operations during the Fiscal 2005 Period was primarily attributable to the reduction in total revenues discussed above,
partially offset by a decrease in total operating expenses, including a net gain on the disposal and impairment of operating assets for the Fiscal 2005 Period.

Income
from operations totaled approximately $9.6 million for the Fiscal 2004 Period, which represents a decrease of $29.8 million, or 75.6%, from $39.4 million for
the Fiscal 2003 Period. The decrease in income from operations during the Fiscal 2004 Period was primarily attributable to the sale of the 46 theatres to UATG during the Fiscal 2003 Period, the net
closure of 83 screens during the Fiscal 2004 Period, the timing of our Fiscal 2004 Period calendar in comparison to the Fiscal 2003 Period calendar and the loss on a lawsuit settlement arising from
the exhibition of a film, partially offset by a reduction of restructuring expenses and the inclusion of the two Hoyts theatres for a full Fiscal 2004 Period.

Interest Expense, Net

Net interest expense decreased $0.7 million to ($0.1) million for the Fiscal 2005 Period, from $0.6 million for the Fiscal 2004 Period. The
decrease in net interest expense during the Fiscal 2005 Period was primarily due to the repayment of the mortgage associated with the sale of the land and building related to one location and the
increase in interest income during the Fiscal 2005 Period.

Net
interest expense decreased $9.0 million, or 93.8%, to $0.6 million for the Fiscal 2004 Period, from $9.6 million for the Fiscal 2003 Period. The decrease in net
interest expense during the Fiscal 2004 Period was primarily due to the Company's repayment of the note payable to the Parent in June 2003 using funds obtained from the sale of 46 theatres to
UATG.

Income Taxes

The provision for income taxes increased $0.2 million, or 8.7%, to $2.5 million for the Fiscal 2005 Period, from $2.3 million for the Fiscal
2004 Period. Accordingly, the effective tax rate was 43.1% and 143.8% for the Fiscal 2005 and Fiscal 2004 Periods, respectively. The decrease in the effective tax rate was primarily attributable to a
nondeductible loss recorded as a result of the purchase by UATC of a partnership interest in one of its subsidiaries on March 29, 2004 as described in Note 1 to the consolidated
financial statements included in Part II, Item 8 of this Form 10-K, as well as certain other nondeductible expenses, including minority interest.

21

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The
provision for income taxes decreased $9.2 million, or 80.0%, to $2.3 million for the Fiscal 2004 Period, from $11.5 million for the Fiscal 2003 Period.
Accordingly, the effective tax rate was 143.8% and 39.2% for the Fiscal 2004 and Fiscal 2003 Periods, respectively. The increase in the effective tax rate was primarily attributable to the
aforementioned nondeductible loss associated with the purchase by UATC of a partnership interest in one of its subsidiaries on March 29, 2004, and certain other nondeductible expenses,
including minority interest.

As
discussed in Note 8 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K, during 2005, REG, the parent company of the
consolidated tax group which includes activity of the Company, was notified that the Internal Revenue Service ("IRS") would examine its 2002 and 2003 federal income tax returns. In
October 2005, the examination of REG's federal tax returns for such years was completed, and REG and the IRS agreed to certain adjustments to the years under audit. Such
adjustments did not have a material impact on the Company's provision for income taxes.

Net Income (Loss)

Net income totaled $3.3 million for the Fiscal 2005 Period, which represents an increase of $4.0 million from a net loss of ($0.7) million
for the Fiscal 2004 Period. The increase in net income for the Fiscal 2005 Period was primarily attributable to the decreases in interest expense, minority interest expense and the Fiscal 2004 Period
expense related to the purchase of the partnership interests in one of our subsidiaries included as a component of "Other net," partially offset by an increase in income taxes and the decrease in
income from operations, as discussed above.

Net
income decreased $18.5 million to a net loss of ($0.7) million for the Fiscal 2004 Period, from $17.8 million for the Fiscal 2003 Period. The decrease in net
income for the Fiscal 2004 Period was
attributable to the decrease in income from operations, increase in minority interest expense and the expense related to the purchase of the partnership interests in one of the Company's subsidiaries,
partially offset by the decrease in interest expense and decrease in the provision for income taxes, as discussed above.

Cash Flows

The following table summarizes certain cash flow data for the Fiscal 2005 Period, Fiscal 2004 Period and Fiscal 2003 Period (dollars in millions):

|                                                     |  | Fiscal 2005 Period |       | Fiscal 2004 Period |   | Fiscal 2003 Period |  
|---------------------------------------------------- |  | ------------------ | ----- | ------------------ | - | ------------------ | -
|Net cash provided by operating activities            |  | $                  | 19.5  |                    | $ | 32.8               |  
|Net cash provided by (used in) investing activities  |  |                    | 9.5   |                    |   | (5.8               | )
|Net cash used in financing activities                |  |                    | (33.0 | )                  |   | (13.3              | )
|                                                     |  |                    |       |                    |   |                    |  
|Net increase (decrease) in cash and cash equivalents |  |                    | (4.0  | )                  |   | 13.7               |  
|                                                     |  |                    |       |                    |   |                    |  



Cash flows generated from operating activities were approximately $19.5 million for the Fiscal 2005 Period compared to approximately $32.8 million
for the Fiscal 2004 Period. Fiscal 2005 Period cash flows generated from operating activities were impacted by several factors including a decrease in income from operations during the Fiscal 2005
Period related to a reduction in total revenues, partially offset by decreases in operating expenses including a net gain on the disposal and impairment of operating assets for the Fiscal 2005 Period.
The $13.3 million net decrease in net cash provided by operating activities was attributable to a net decrease of $9.9 million in adjustments to reconcile net income to cash provided by
operating activities and a net decrease of $7.4 million in changes in

22

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operating
assets and liabilities, partially offset a $4.0 million increase in net income. Such adjustments included a decrease in depreciation and amortization of $0.4 million, a
decrease in minority interest expense of $1.1 million, an increase in the net gain on the disposal and impairment of operating assets of $3.5 million and a loss of $7.4 million
related to the purchase of the partnership interests in one of the Company's subsidiaries during the Fiscal 2004 Period, partially offset by an increase of $1.9 million in deferred income tax
expense. The net decrease in the changes in operating assets and liabilities was primarily related to the timing of certain vendor payments and income tax payments and decreases in prepaid expenses
and other current assets.

Cash
flows provided by investing activities were approximately $9.5 million for the Fiscal 2005 Period compared to cash flows used in investing activities of approximately
$5.8 million for the Fiscal 2004 Period. The $15.3 million net increase in cash flows provided by investing activities was attributable to a $3.5 million decrease in capital
expenditures and a $4.7 million increase in proceeds from the disposition of assets during the Fiscal 2005 Period and $9.9 million used to purchase the partnership interests in one of
the Company's subsidiaries during the Fiscal 2004 Period, partially offset by $2.8 million in proceeds received from the sale of the Company's interest in a limited liability company during the
Fiscal 2004 Period.

Cash
flows used in financing activities were approximately $33.0 million for the Fiscal 2005 Period compared to cash flows used in financing activities of approximately
$13.3 million for the Fiscal 2004 Period. The $19.7 million net increase in cash flows used in financing activities was primarily attributable to the increase in cash dividends to the
Parent of $10.6 million and the $2.7 million mortgage repayment during the Fiscal 2005 Period and the net decrease in the change in the related party receivable of $6.8 million
during the Fiscal 2005 Period as compared to the Fiscal 2004 Period, described in Note 4 to the consolidated financial statements included in Part II, Item 8 of this
Form 10-K.



Cash flows generated from operating activities were approximately $32.8 million for the Fiscal 2004 Period compared to approximately $37.0 million
for the Fiscal 2003 Period. The $4.2 million net decrease was attributable to a $18.5 million decrease in net income along with a net decrease of $12.0 million in adjustments to
reconcile net income to cash provided by operating activities. Such adjustments included a decrease in depreciation and amortization of $5.3 million, which was primarily attributable to the
sale of the 46 theatres to UATG during the Fiscal 2003 Period, a decrease in deferred income tax expense of $13.5 million and a $7.4 million loss related to the purchase of the
partnership interests in one of the Company's subsidiaries during the Fiscal 2004 Period. A net increase of $26.3 million in changes in operating assets and liabilities partially offset the
decrease in net cash provided by operating activities during the Fiscal 2004 Period. The net increase in operating assets and liabilities was primarily related to the timing of certain vendor payments
and income tax payments.

Cash
flows used in investing activities were approximately $5.8 million for the Fiscal 2004 Period compared to cash flows provided by investing activities of approximately
$307.2 million for the Fiscal 2003 Period. The $313.0 million net decrease was attributable to $9.9 million used to purchase the partnership interests in one of the Company's
subsidiaries during the Fiscal 2004 Period as compared to $311.4 million in proceeds received for the sale of the 46 theatres to UATG and $7.3 million in construction advances received
in the Fiscal 2003 Period. A net decrease of $7.5 million in capital expenditures and a net increase of $5.6 million in proceeds from asset sales partially offset the decrease in net
cash provided by investing activities during the Fiscal 2004 Period.

Cash
flows used in financing activities were approximately $13.3 million for the Fiscal 2004 Period compared to cash flows used in financing activities of approximately
$379.4 million for the Fiscal 2003 Period. The $366.1 million net increase was primarily attributable to the net decrease in the note

23

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payable
to the Parent resulting from the repayment of the note in the Fiscal 2003 Period, the net decrease in the related party receivable of $24.2 million and the $87.5 million decrease
in the cash dividends to the Parent during the Fiscal 2004 Period.

Liquidity and Capital Resources

The
Company's revenues are generally collected in cash through admissions and concessions revenues. The Company's operating expenses are primarily related to film and advertising costs,
rent and occupancy, and payroll. Film costs are ordinarily paid to distributors within 30 days following receipt of
admissions revenues and the cost of the Company's concessions are generally paid to vendors approximately 30 days from purchase. The Company's current liabilities, however, generally include
items that will become due within twelve months and, as a result, at any given time, the Company's balance sheet is likely to reflect a working capital deficit.

The
Company funds the cost of its capital expenditures through internally generated cash flow and cash on hand. The Company's capital requirements have historically arisen principally in
connection with adding new screens and retrofitting existing theatres, upgrading the Company's theatre facilities and replacing equipment. The Company currently expects capital expenditures for
theatre expansion, upgrading and replacements to be in the range of $5.0 million to $10.0 million in Fiscal 2006. During the Fiscal 2005 Period, the Company invested an aggregate of
approximately $5.5 million in capital expenditures.

As
part of the Company's bankruptcy restructuring, debt was reduced from approximately $439.7 million under the Company's bank credit facility, as it existed before the petition
date, to approximately $252.1 million under the Company's restructured term bank credit facility (the "Term Facility"). During the Fiscal 2002 Period, a portion of the proceeds from the public
offering of Regal were loaned to the Parent by Regal to repay the Company's Term Facility. This debt was replaced by a note payable to the Parent, which was obligated under a substantially similar
note payable to REH. On June 6, 2003, UATC used the proceeds from the sale of the theatre assets to UATG to repay the principal and all unpaid and accrued interest on the note payable of
approximately $263.8 million.

On
October 11, 2005, UATC entered into a purchase and sale agreement with Boardwalk Ventures, LLC ("Boardwalk") to sell a total of 5 theatres and 37 screens in Mississippi and
Louisiana for cash in the amount of approximately $5.5 million. The disposition was completed on November 4, 2005. Pursuant to the agreement, Boardwalk was also granted the right to
purchase 5 additional theatres with 28 screens in Mississippi and Louisiana for $4.9 million in cash.

Contractual Cash Obligations and Commitments

The Company primarily leases its theatres pursuant to long-term non-cancelable operating leases, including leases that are subject to sale
and leaseback transactions, as further described in Note 7 to the consolidated financial statements included in Part II, Item 8 of this Form 10-K. Other than operating
leases which are detailed below, the Company does not utilize variable interest entities or any

24

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other
form of off-balance sheet financing. As of December 29, 2005, the Company's estimated contractual cash obligations over the next several periods are as follows (dollars
in millions):

|                                                 |  | Payments Due By Period
|------------------------------------------------ |  | ----------------------
|
|Capital lease obligations, including interest(1) |  | $                     
|Operating leases(2)                              |  |                       
|                                                 |  |                       
|Total contractual cash obligations               |  | $                     
|                                                 |  |                       

---

We
believe that the amount of cash and cash equivalents on hand and cash flow expected from operations will be adequate for the Company to execute its business strategy and meet
anticipated requirements for lease obligations, capital expenditures, working capital and debt service for the next 12 months.

Sale-Leaseback Transactions

For information regarding our various sale and leaseback transactions, refer to Note 7 to the consolidated financial statements included in Part II,
Item 8 of this Form 10-K.

Critical Accounting Estimates

Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which require
management to make estimates and assumptions that affect the reported amounts of the assets and liabilities and disclosures of contingent assets and liabilities as of the date of the balance sheet as
well as the reported amounts of revenues and expenses during the reporting period. We routinely make estimates and judgments about the carrying value of our assets and liabilities that are not readily
apparent from other sources. We evaluate and modify on an ongoing basis such estimates and assumptions, which include, but are not limited to, those related to film costs, property and equipment,
goodwill and income taxes. Estimates and assumptions are based on historical and other factors believed to be reasonable under the circumstances. The results of these estimates may form the basis of
the carrying value of certain assets and liabilities. Actual results, under conditions and circumstances different from those assumed, may differ materially from estimates. The impact and any
associated risks related to estimates, assumptions, and accounting policies are discussed within "Management's Discussion and Analysis of Financial Condition and Results of Operations", as well as in
the notes to the consolidated financial statements, if applicable, where such estimates, assumptions, and accounting policies affect our reported and expected results. Management has discussed the
development and selection of its critical accounting estimates with the audit committee of our Board of Directors and the audit committee has reviewed our related disclosures herein.

25

---





We believe the following accounting policies are critical to our business operations and the understanding of our results of operations and affect the more significant judgments and
estimates used in the preparation of our consolidated financial statements:



26

---





Quarterly Results

The following tables set forth selected unaudited quarterly results for the eight quarters ended December 29, 2005. The quarterly financial data as of each
period presented below have been derived from UATC's unaudited consolidated financial statements for those periods. Results for these periods are not necessarily indicative of results for the full
year. The quarterly financial data should be read in

27

---



conjunction
with the consolidated financial statements of UATC and notes thereto included elsewhere in this Form 10-K.

|(In millions)                 |  | Dec. 29,
2005 |      | Sept. 29,
2005 |   | June 30,
2005 |  | March 31,
2005 |      | Dec. 30,
2004 |   | Sept. 30,
2004 |  | July 1,
2004 |      | April 1,
2004 |  
|----------------------------- |  | ------------- | ---- | -------------- | - | ------------- |  | -------------- | ---- | ------------- | - | -------------- |  | ------------ | ---- | ------------- | -
|Total revenues                |  | $             | 62.0 |                | $ | 63.1          |  | $              | 64.9 |               | $ | 62.5           |  | $            | 68.8 |               | $
|Income (loss) from operations |  |               | 3.2  |                |   | 1.5           |  |                |     |               |   | 0.8            |  |              | (0.8 | )             |  
|Net income (loss)             |  |               | 2.1  |                |   | 0.7           |  |                |     |               |   | 0.5            |  |              | (1.7 | )             |  

Inflation

The Company does not believe that inflation has had a material impact on its financial position or results of operations.

Seasonality

The Company's revenues are usually seasonal, coinciding with the timing of releases of motion pictures by the major distributors. Generally, studios release the
most marketable motion pictures during the summer and the holiday seasons. The unexpected emergence of a "hit" film during other periods can alter the traditional pattern. The timing of movie releases
can have a significant effect on the Company's results of operations, and the results of one quarter are not necessarily indicative of the results for the next or any other quarter. The seasonality of
motion picture exhibition, however, has become less pronounced as studios are releasing motion pictures somewhat more evenly throughout the year.

Recent Accounting Pronouncements

For a discussion of the recent accounting pronouncements relevant to our operations, refer to the information provided under Note 3 to the consolidated
financial statements included in Part II, Item 8 of this Form 10-K, which information is incorporated herein by reference.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

UATC's market risk is confined to interest rate exposure of its debt obligations that bear interest based on floating rates. As of December 29, 2005, the
Company maintained no debt obligations bearing floating interest rates.

28

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The
Board of Directors
United Artists Theatre Circuit, Inc:

We
have audited the accompanying consolidated balance sheets of United Artists theatre Circuit, Inc. and subsidiaries as of December 29, 2005 and December 30, 2004,
and the related consolidated statements of operations, stockholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended
December 29, 2005. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We
conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of United Artists Theatre Circuit, Inc.
and subsidiaries as of December 29, 2005 and December 30, 2004, and the results of their operations and their cash flows for each of the years in the three-year period
ended December 29, 2005, in conformity with U.S. generally accepted accounting principles.

/s/
KPMG LLP

Nashville,
Tennessee
March 13, 2006

29

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UNITED ARTISTS THEATRE CIRCUIT, INC.        AND SUBSIDIARIES        Consolidated Balance Sheets        (Amounts in millions, except share data)

|                                           |                                                                                                                                                          | December 29, 2005                               |       | December 30, 2004 |      
|------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ----- | ----------------- | -----
|Assets                                     |                                                                                                                                                          |                                                 |       |                   |      
|Current assets:                            |                                                                                                                                                          |                                                 |       |                   |      
|                                           | Cash and cash equivalents                                                                                                                                |                                                 | $     | 31.5              |      
|                                           | Receivables, net                                                                                                                                         |                                                 |       | 1.0               |      
|                                           | Prepaid expenses, concession inventory and other current assets                                                                                          |                                                 |       | 0.9               |      
|                                           | Deferred income tax asset                                                                                                                                |                                                 |       | 0.1               |      
|                                           |                                                                                                                                                          |                                                 |       |                   |      
|Total current assets                       |                                                                                                                                                          |                                                 | 33.5  |                   |      
|Investments and related receivables        |                                                                                                                                                          |                                                 | 0.2   |                   |      
|Assets held for sale                       |                                                                                                                                                          |                                                 |      |                   |      
|Property and equipment:                    |                                                                                                                                                          |                                                 |       |                   |      
|                                           |                                                                                                                                                          | Land                                            |       |                   | 3.3  
|                                           |                                                                                                                                                          | Buildings, leasehold improvements and equipment |       |                   | 134.5
|                                           |                                                                                                                                                          |                                                 |       |                   |      
|Total property and equipment               |                                                                                                                                                          |                                                 | 137.8 |                   |      
|Accumulated depreciation and amortization  |                                                                                                                                                          |                                                 | (56.2 | )                 |      
|                                           |                                                                                                                                                          |                                                 |       |                   |      
|Total property and equipment, net          |                                                                                                                                                          |                                                 | 81.6  |                   |      
|Goodwill                                   |                                                                                                                                                          |                                                 | 36.4  |                   |      
|Other non-current assets                   |                                                                                                                                                          |                                                 | 0.5   |                   |      
|                                           |                                                                                                                                                          |                                                 |       |                   |      
|Total assets                               |                                                                                                                                                          | $                                               | 152.2 |                   | $    
|                                           |                                                                                                                                                          |                                                 |       |                   |      
|Liabilities and Stockholder's Equity       |                                                                                                                                                          |                                                 |       |                   |      
|Current liabilities:                       |                                                                                                                                                          |                                                 |       |                   |      
|                                           | Accounts payable                                                                                                                                         |                                                 | $     | 15.6              |      
|                                           | Accrued expenses                                                                                                                                         |                                                 |       | 7.1               |      
|                                           | Current portion of debt obligations                                                                                                                      |                                                 |       | 0.1               |      
|                                           |                                                                                                                                                          |                                                 |       |                   |      
|Total current liabilities                  |                                                                                                                                                          |                                                 | 22.8  |                   |      
|Other non-current liabilities              |                                                                                                                                                          |                                                 | 3.4   |                   |      
|Long-term debt                             |                                                                                                                                                          |                                                 | 2.2   |                   |      
|Deferred income tax liability              |                                                                                                                                                          |                                                 | 50.3  |                   |      
|                                           |                                                                                                                                                          |                                                 |       |                   |      
|Total liabilities                          |                                                                                                                                                          |                                                 | 78.7  |                   |      
|Minority interest                          |                                                                                                                                                          |                                                 | 1.8   |                   |      
|Stockholder's equity                       |                                                                                                                                                          |                                                 |       |                   |      
|                                           | Preferred stock, $1.00 par value; 5,000,000 shares authorized, no shares issued and outstanding at December 29, 2005 and December 30, 2004, respectively |                                                 |       |                  |      
|                                           | Common stock, $1.00 par value; 1,000 shares authorized, 100 shares issued and outstanding at December 29, 2005 and December 30, 2004, respectively       |                                                 |       |                  |      
|                                           | Additional paid-in capital                                                                                                                               |                                                 |       | 92.0              |      
|                                           | Unamortized deferred stock compensation                                                                                                                  |                                                 |       | (0.8              | )    
|                                           | Retained earnings (deficit)                                                                                                                              |                                                 |       | 0.7               |      
|                                           | Related party receivables                                                                                                                                |                                                 |       | (20.2             | )    
|                                           |                                                                                                                                                          |                                                 |       |                   |      
|Total stockholder's equity                 |                                                                                                                                                          |                                                 | 71.7  |                   |      
|                                           |                                                                                                                                                          |                                                 |       |                   |      
|Total liabilities and stockholder's equity |                                                                                                                                                          | $                                               | 152.2 |                   | $    
|                                           |                                                                                                                                                          |                                                 |       |                   |      

See accompanying notes to consolidated financial statements.

30

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UNITED ARTISTS THEATRE CIRCUIT, INC.        AND SUBSIDIARIES        Consolidated Statements of Operations        (Amounts in Millions)

|                                  |                                                                      | Year Ended
December 29, 2005 |       | Year Ended
December 30, 2004 |   | Year Ended
January 1, 2004 |      
|--------------------------------- | -------------------------------------------------------------------- | ---------------------------- | ----- | ---------------------------- | - | -------------------------- | -----
|Revenues:                         |                                                                      |                              |       |                              |   |                            |      
|                                  | Admissions                                                           |                              | $     | 174.7                        |   | $                          | 204.2
|                                  | Concessions                                                          |                              |       | 68.7                         |   |                            | 79.5 
|                                  | Other operating revenue                                              |                              |       | 9.1                          |   |                            | 9.6  
|                                  |                                                                      |                              |       |                              |   |                            |      
|Total revenue                     |                                                                      |                              | 252.5 |                              |   | 293.3                      |      
|Operating expenses:               |                                                                      |                              |       |                              |   |                            |      
|                                  | Film rental and advertising costs                                    |                              |       | 90.4                         |   |                            | 105.7
|                                  | Cost of concessions                                                  |                              |       | 10.0                         |   |                            | 11.8 
|                                  | Other operating expenses                                             |                              |       | 109.8                        |   |                            | 121.7
|                                  | Sale and leaseback rentals                                           |                              |       | 15.1                         |   |                            | 15.4 
|                                  | General and administrative expenses                                  |                              |       | 7.6                          |   |                            | 8.8  
|                                  | Depreciation and amortization                                        |                              |       | 13.3                         |   |                            | 13.7 
|                                  | Net loss (gain) on disposal and impairment of operating assets       |                              |       | (1.7                         | ) |                            | 1.8  
|                                  | Restructure expenses and amortization of deferred stock compensation |                              |       | 2.5                          |   |                            | 3.0  
|                                  | Net loss on lawsuit settlement                                       |                              |       |                             |   |                            | 1.8  
|                                  |                                                                      |                              |       |                              |   |                            |      
|Total operating expenses          |                                                                      |                              | 247.0 |                              |   | 283.7                      |      
|                                  |                                                                      |                              |       |                              |   |                            |      
|Income from operations            |                                                                      |                              | 5.5   |                              |   | 9.6                        |      
|Other (income) expense:           |                                                                      |                              |       |                              |   |                            |      
|                                  | Interest expense, net                                                |                              |       | (0.1                         | ) |                            | 0.6  
|                                  | Minority interest in earnings of consolidated subsidiaries           |                              |       | (0.2                         | ) |                            | 0.9  
|                                  | Other, net                                                           |                              |       |                             |   |                            | 6.5  
|                                  |                                                                      |                              |       |                              |   |                            |      
|Total other (income) expense, net |                                                                      |                              | (0.3  | )                            |   | 8.0                        |      
|                                  |                                                                      |                              |       |                              |   |                            |      
|Income before income taxes        |                                                                      |                              | 5.8   |                              |   | 1.6                        |      
|Provision for income taxes        |                                                                      |                              | (2.5  | )                            |   | (2.3                       | )    
|                                  |                                                                      |                              |       |                              |   |                            |      
|Net income (loss)                 |                                                                      | $                            | 3.3   |                              | $ | (0.7                       | )    
|                                  |                                                                      |                              |       |                              |   |                            |      

See accompanying notes to consolidated financial statements.

31

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UNITED ARTISTS THEATRE CIRCUIT, INC.        AND SUBSIDIARIES        Consolidated Statements of Stockholder's Equity and Comprehensive Income (Loss)        (Amounts in Millions)

|                                                  |  | Preferred
stock |   | Common
stock |   | Additional
paid-in
capital |  | Deferred
stock
compensation |       | Retained
earnings/
(accumulated
deficit) |   | Intercompany
and
Related
party
receivable |   | Total
stockholder's
equity |      
|------------------------------------------------- |  | --------------- | - | ------------ | - | -------------------------- |  | --------------------------- | ----- | ---------------------------------------- | - | ----------------------------------------- | - | -------------------------- | -----
|Balances at December 26, 2002                     |  | $               |  |              | $ |                           |  | $                           | 112.3 |                                          | $ | (8.5                                      | ) | $                          | 18.3 
|Net income and comprehensive income               |  |                 |  |              |   |                           |  |                             |      |                                          |   |                                          |   |                            | 17.8 
|Dividends to Parent                               |  |                 |  |              |   |                           |  |                             | (82.4 | )                                        |   |                                          |   |                            | (26.8
|Amortization of deferred stock compensation       |  |                 |  |              |   |                           |  |                             |      |                                          |   | 2.6                                       |   |                            |     
|Tax benefit from exercise of stock options        |  |                 |  |              |   |                           |  |                             | 0.7   |                                          |   |                                          |   |                            |     
|Change in related party receivable                |  |                 |  |              |   |                           |  |                             |      |                                          |   |                                          |   |                            |     
|Sale of certain theatre assets to UATG            |  |                 |  |              |   |                           |  |                             | 87.3  |                                          |   |                                          |   |                            |     
|Contribution from Parent of two Hoyts locations   |  |                 |  |              |   |                           |  |                             | 12.4  |                                          |   |                                          |   |                            |     
|                                                  |  |                 |   |              |   |                            |  |                             |       |                                          |   |                                           |   |                            |      
|Balances at January 1, 2004                       |  |                 |  |              |   |                           |  |                             | 130.3 |                                          |   | (5.9                                      | ) |                            | 9.3  
|Net income (loss) and comprehensive income (loss) |  |                 |  |              |   |                           |  |                             |      |                                          |   |                                          |   |                            | (0.7 
|Dividend to Parent                                |  |                 |  |              |   |                           |  |                             | (10.5 | )                                        |   |                                          |   |                            | (11.2
|Amortization of deferred stock compensation       |  |                 |  |              |   |                           |  |                             |      |                                          |   | 2.8                                       |   |                            |     
|Tax benefit from exercise of stock options        |  |                 |  |              |   |                           |  |                             | 3.3   |                                          |   |                                          |   |                            |     
|Change in related party receivable                |  |                 |  |              |   |                           |  |                             |      |                                          |   |                                          |   |                            |     
|Sale of certain theatre assets to UATG            |  |                 |  |              |   |                           |  |                             | (2.3  | )                                        |   |                                          |   |                            |     
|                                                  |  |                 |   |              |   |                            |  |                             |       |                                          |   |                                           |   |                            |      
|Balances at December 30, 2004                     |  |                 |  |              |   |                           |  |                             | 120.8 |                                          |   | (3.1                                      | ) |                            | (2.6 
|Net income and comprehensive income               |  |                 |  |              |   |                           |  |                             |      |                                          |   |                                          |   |                            | 3.3  
|Dividends to Parent                               |  |                 |  |              |   |                           |  |                             | (32.3 | )                                        |   |                                          |   |                            |     
|Amortization of deferred stock compensation       |  |                 |  |              |   |                           |  |                             |      |                                          |   | 2.3                                       |   |                            |     
|Tax benefit from exercise of stock options        |  |                 |  |              |   |                           |  |                             | 3.5   |                                          |   |                                          |   |                            |     
|Change in related party receivable                |  |                 |  |              |   |                           |  |                             |      |                                          |   |                                          |   |                            |     
|                                                  |  |                 |   |              |   |                            |  |                             |       |                                          |   |                                           |   |                            |      
|Balances at December 29, 2005                     |  | $               |  |              | $ |                           |  | $                           | 92.0  |                                          | $ | (0.8                                      | ) | $                          | 0.7  
|                                                  |  |                 |   |              |   |                            |  |                             |       |                                          |   |                                           |   |                            |      

See accompanying notes to consolidated financial statements.

32

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UNITED ARTISTS THEATRE CIRCUIT, INC.        AND SUBSIDIARIES        Consolidated Statements of Cash Flows        (Amounts in Millions)

|                                                                                     |                                                                                                 | Year ended
December 29, 2005              |       | Year ended
December 30, 2004 |      | Year ended
January 1, 2004 |      
|------------------------------------------------------------------------------------ | ----------------------------------------------------------------------------------------------- | ----------------------------------------- | ----- | ---------------------------- | ---- | -------------------------- | -----
|Cash flow from operating activities:                                                 |                                                                                                 |                                           |       |                              |      |                            |      
|Net income (loss)                                                                    |                                                                                                 | $                                         | 3.3   |                              | $    | (0.7                       | )    
|Adjustments to reconcile net income (loss) to cash provided by operating activities: |                                                                                                 |                                           |       |                              |      |                            |      
|                                                                                     | Effect of leases with escalating minimum annual rentals                                         |                                           |       | 0.2                          |      |                            |     
|                                                                                     | Depreciation and amortization                                                                   |                                           |       | 13.3                         |      |                            | 13.7 
|                                                                                     | Amortization of deferred stock compensation                                                     |                                           |       | 2.3                          |      |                            | 2.8  
|                                                                                     | Net loss (gain) on disposal and impairment of operating assets                                  |                                           |       | (1.7                         | )    |                            | 1.8  
|                                                                                     | Gain on sale of LLC interest                                                                    |                                           |       |                             |      |                            | (0.9 
|                                                                                     | Loss on purchase of partnership interests                                                       |                                           |       |                             |      |                            | 7.4  
|                                                                                     | Minority interest in earnings of consolidated subsidiaries                                      |                                           |       | (0.2                         | )    |                            | 0.9  
|                                                                                     | Deferred income tax expense                                                                     |                                           |       | 4.8                          |      |                            | 2.9  
|                                                                                     | Change in operating assets and liabilities (excluding effects of acquisition and dispositions): |                                           |       |                              |      |                            |      
|                                                                                     |                                                                                                 | Receivables                               |       |                              | (0.2 | )                          |      
|                                                                                     |                                                                                                 | Prepaid expenses and concession inventory |       |                              | 4.4  |                            |      
|                                                                                     |                                                                                                 | Other assets                              |       |                              | 0.4  |                            |      
|                                                                                     |                                                                                                 | Accounts payable                          |       |                              | (0.5 | )                          |      
|                                                                                     |                                                                                                 | Accrued expenses and other liabilities    |       |                              | (6.6 | )                          |      
|                                                                                     |                                                                                                 |                                           |       |                              |      |                            |      
|Net cash provided by operating activities                                            |                                                                                                 |                                           | 19.5  |                              |      | 32.8                       |      
|                                                                                     |                                                                                                 |                                           |       |                              |      |                            |      
|Cash flow from investing activities:                                                 |                                                                                                 |                                           |       |                              |      |                            |      
|                                                                                     | Capital expenditures                                                                            |                                           |       | (5.5                         | )    |                            | (9.0 
|                                                                                     | Proceeds from disposition of fixed assets, net                                                  |                                           |       | 15.0                         |      |                            | 10.3 
|                                                                                     | Cash used to purchase partnership interests                                                     |                                           |       |                             |      |                            | (9.9 
|                                                                                     | Proceeds from the disposition of partnership interest                                           |                                           |       |                             |      |                            | 2.8  
|                                                                                     | Proceeds from the sale of certain theatre assets to UATG                                        |                                           |       |                             |      |                            |     
|                                                                                     | Decrease in reimbursable construction advances                                                  |                                           |       |                             |      |                            |     
|                                                                                     | Other, net                                                                                      |                                           |       |                             |      |                            |     
|                                                                                     |                                                                                                 |                                           |       |                              |      |                            |      
|Net cash used in investing activities                                                |                                                                                                 |                                           | 9.5   |                              |      | (5.8                       | )    
|                                                                                     |                                                                                                 |                                           |       |                              |      |                            |      
|Cash flow from financing activities:                                                 |                                                                                                 |                                           |       |                              |      |                            |      
|                                                                                     | Debt payments                                                                                   |                                           |       | (0.4                         | )    |                            | (0.5 
|                                                                                     | Decrease (increase) in related party receivables                                                |                                           |       | 2.4                          |      |                            | 9.2  
|                                                                                     | Payment of mortgage                                                                             |                                           |       | (2.7                         | )    |                            |     
|                                                                                     | Dividend to Parent                                                                              |                                           |       | (32.3                        | )    |                            | (21.7
|                                                                                     | Other, net                                                                                      |                                           |       |                             |      |                            | (0.3 
|                                                                                     | Payment of affiliate note payable to Parent                                                     |                                           |       |                             |      |                            |     
|                                                                                     |                                                                                                 |                                           |       |                              |      |                            |      
|Net cash used in financing activities                                                |                                                                                                 |                                           | (33.0 | )                            |      | (13.3                      | )    
|                                                                                     |                                                                                                 |                                           |       |                              |      |                            |      
|Net increase (decrease) in cash and cash equivalents                                 |                                                                                                 |                                           | (4.0  | )                            |      | 13.7                       |      
|Cash and cash equivalents:                                                           |                                                                                                 |                                           |       |                              |      |                            |      
|                                                                                     | Beginning of period                                                                             |                                           |       | 35.5                         |      |                            | 21.8 
|                                                                                     |                                                                                                 |                                           |       |                              |      |                            |      
|                                                                                     | End of period                                                                                   |                                           | $     | 31.5                         |      | $                          | 35.5 
|                                                                                     |                                                                                                 |                                           |       |                              |      |                            |      
|Supplemental cash flow information:                                                  |                                                                                                 |                                           |       |                              |      |                            |      
|                                                                                     | Cash paid for interest                                                                          |                                           | $     | 0.2                          |      | $                          | 0.4  
|                                                                                     |                                                                                                 |                                           |       |                              |      |                            |      
|                                                                                     | Cash paid for income taxes                                                                      |                                           | $     | 0.3                          |      | $                          | 3.6  
|                                                                                     |                                                                                                 |                                           |       |                              |      |                            |      

See accompanying notes to consolidated financial statements.

33

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UNITED ARTISTS THEATRE CIRCUIT, INC.        AND SUBSIDIARIES        Notes to Consolidated Financial Statements        December 29, 2005

(1) The Company and Basis of Presentation

United Artists Theatre Company (the "Parent" or "United Artists"), a Delaware corporation, is the parent company of United Artists Theatre Circuit, Inc.
("we," "us," "our," the "Company" or "UATC") and United Artists Realty Company ("UAR"), which is the parent company of United Artists Properties I Corp. ("Prop I"). UATC leases certain theatres from
Prop I. The terms UATC and the Company shall be deemed to include the respective subsidiaries of such entity when used in discussions included herein regarding the current operations or assets of such
entity.

The
accompanying consolidated financial statements include the accounts of the Company and those of all majority owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

UATC
operates 715 screens in 85 theatres in 19 states as of December 29, 2005. The Company formally operates on a 52-week fiscal year with each quarter generally
consisting of 13 weeks, unless otherwise noted. The Company's fiscal year ends on the first Thursday after December 25, which in certain years (such as fiscal 2003) results in a
53-week fiscal year.

The
Company became a subsidiary of Regal Entertainment Group ("REG" or "Regal") on April 12, 2002, in conjunction with an exchange transaction in which REG, through its wholly
owned subsidiary Regal Entertainment Holdings, Inc. ("REH"), also acquired Edwards Theatres, Inc. ("Edwards"), Regal Cinemas Corporation ("Regal Cinemas") and Regal CineMedia Corporation
("Regal CineMedia"). REG is controlled by Anschutz Company ("Anschutz"), which indirectly controlled each of us, Edwards, Regal Cinemas, United Artists and Regal CineMedia prior to REG's acquisition
of us and them in the exchange transaction. For a detailed discussion of the transactions resulting in Regal's acquisition of its subsidiaries, see Note 2 to the consolidated financial
statements. On August 17, 2005, REH transferred the stock of United Artists to RCI. As a result, United Artists and its subsidiaries became subsidiaries of RCI.

In
connection with Regal's acquisition of its subsidiaries, Regal Cinemas, Inc. ("RCI"), an indirect subsidiary of Regal, agreed to manage the theatre operations of UATC and its
subsidiaries pursuant to a management agreement.

On
March 28, 2003, as part of an acquisition by REG of Hoyts Cinemas Corporation ("Hoyts"), two theatre locations and 20 screens were contributed to UATC and recorded as a capital
contribution totaling approximately $12.4 million. The results of operations of the two Hoyts theatres are reflected in the accompanying consolidated statements of operations from
March 28, 2003.

On
June 6, 2003, UATC completed the sale of certain leased theatres consisting of 46 theatres and 438 screens in 11 states and certain other assets under construction to United
Artists Theatre Group, LLC ("UATG"), a wholly owned subsidiary of REH, for a total cash consideration of approximately $291.4 million, pursuant to an asset purchase agreement between UATG and
UATC. Also on June 6, 2003, UATG and Prop I entered into a purchase and sale agreement under which Prop I sold its right, title and interest in certain owned theatre properties to UATG for
total cash consideration of approximately $20.0 million. With the proceeds of the sale of such properties, Prop I effected a payment of $20.0 million on its outstanding indebtedness to
UATC. The purchase price for the leased

34

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theatres
was based on a valuation of the operations of the leased theatres on an ongoing basis and the purchase price for the owned theatre properties was based on the appraised value for such
properties.

In
connection with the series of transactions described above, UATC used the proceeds from the sale of the theatre assets of approximately $291.4 million and the
$20.0 million repayment from Prop I along with cash on hand of approximately $57.4 million to (1) repay its outstanding indebtedness of approximately $263.8 million under a
note payable to United Artists and (2) effect a cash dividend of approximately $105.0 million to United Artists.

On
March 29, 2004 and June 30, 2004, UATC acquired the remaining partnership interest of two of the partners in one of its subsidiaries for an aggregate purchase price of
$9.9 million, which resulted in a
loss of $7.4 million. The loss was recorded in the accompanying consolidated statement of operations as a component of "Other net." In addition, on June 30, 2004, UATC sold its interest
in a limited liability company for $2.8 million, which resulted in a gain of $0.9 million. The gain was recorded in the accompanying consolidated statement of operations as a component
of "Other net."

In
November 2004, UATC effected a cash dividend of approximately $21.7 million to the Parent. The dividend was recorded as an $11.2 million reduction of retained
earnings and a $10.5 million reduction of additional paid-in capital upon declaration.

In
March 2005 and October 2005, UATC effected cash dividends of approximately $21.8 million and $10.5 million, respectively to the Parent. The dividends were
recorded as a reduction of additional paid-in capital upon declaration.

On
October 11, 2005, UATC entered into a purchase and sale agreement with Boardwalk Ventures, LLC ("Boardwalk") to sell a total of 5 theatres and 37 screens in Mississippi and
Louisiana for cash in the amount of approximately $5.5 million. The disposition was completed on November 4, 2005. Pursuant to the purchase and sale agreement, Boardwalk was also granted
the right to purchase 5 theatres and 28 screens in Mississippi and Louisiana. The purchase option price for such theatres is $4.9 million in cash.

(2) Formation of Regal Entertainment Group

Exchange Transaction

On March 8, 2002, Anschutz entered into an agreement to exchange its controlling interest in United Artists for common stock of Regal, resulting in Regal
being the majority shareholder of United Artists. Anschutz also exchanged its ownership interests in two other theatre companies for common stock of Regal. The management of these three theatre
companies was combined, with management of the theatre operations based in Knoxville, Tennessee, while management of certain ancillary businesses was based in Centennial, Colorado. As described below,
the exchange transaction was consummated on April 12, 2002.

On
April 12, 2002, through a series of transactions, Regal issued (1) 70,538,017 shares of Class B common stock to Anschutz in exchange for its controlling equity
interests in Regal Cinemas, United Artists, Edwards and Regal CineMedia, (2) 14,052,320 shares of Class B common stock to OCM

35

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Principal
Opportunities Fund II, L.P. and its subsidiaries ("Oaktree's Principal Activities Group") in exchange for its contribution of capital stock of Regal Cinemas and Edwards and
(3) 27,493,575 shares of Class A common stock to the other stockholders of Regal Cinemas, United Artists, Edwards and Regal CineMedia party to an exchange agreement in exchange for their
capital stock of Regal Cinemas, United Artists, Edwards and Regal CineMedia.

Upon
the closing of the exchange transaction, the holders of outstanding options of United Artists received replacement options to purchase 2,287,552 shares of Regal Class A
common stock at prices ranging from $4.44 to $12.87 per share. Regal also granted to certain holders of United Artists warrants in exchange for their contribution to Regal of outstanding warrants to
purchase 3,750,000 shares of United Artists' common stock, warrants to purchase 3,928,185 shares of Regal Class B common stock at $8.88 per share and warrants to purchase 296,129 shares of
Regal Class A common stock at $8.88 per share. Following the exchange transaction, Anschutz transferred beneficial ownership of 1,455,183 shares of Class B common stock to Oaktree's
Principal Activities Group. In addition, Anschutz acquired an additional 697,620 shares of Class B common stock in May 2002.

Anschutz
controls approximately 82.0% of the combined voting power of Regal's outstanding common stock and, therefore, has the ability to direct the election of members of Regal's board
of directors and to determine the outcome of other matters submitted to the vote of Regal's stockholders. Because Anschutz controls Regal, the Company's Parent and sole stockholder, it has the ability
to control the Company.

Initial Public Offering of Regal Entertainment Group

In May 2002, REG issued 18.0 million shares of its Class A common stock in an initial public offering at a price of $19.00 per share,
receiving aggregate net offering proceeds, net of underwriting discounts, commissions and other offering expenses, of $314.8 million. A portion of the proceeds from this offering were used to
repay UATC's term bank credit facility, which was replaced by a note payable to the Parent, which was obligated under a substantially similar note payable to Regal.

On
August 16, 2002, REH a wholly owned subsidiary of Regal acquired the remaining outstanding shares of common stock of United Artists held by the United Artists' minority
stockholders and warrants to acquire shares of common stock of United Artists held by various institutional holders for approximately $34.0 million. Immediately prior to the acquisition, the
common stock of United Artists was the only outstanding class of voting stock, of which the minority stockholders owned approximately
9.9%, and REH owned the remaining 90.1%. As a result of this transaction, United Artists became a wholly owned subsidiary of REH.

(3) Summary of Significant Accounting Policies



The consolidated financial statements include the accounts of UATC. All significant intercompany accounts and transactions have been eliminated in consolidation.

36

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Revenues are generated principally through admissions and concessions sales with proceeds received in cash at the point of sale. Other operating revenues consist
primarily of product advertising (including vendor marketing programs) and other ancillary revenues which are recognized as income in the period earned. The Company recognizes payments received
attributable to the marketing and advertising services provided by the Company under certain vendor programs as revenue in the period in which the related impressions are delivered. Such impressions
are measured by the concession product sales volume, which is a mutually agreed upon proxy of attendance and reflects the Company's marketing and advertising services delivered to its vendors.
Proceeds received from advance ticket sales and gift certificates are recorded as deferred revenue. The Company recognizes revenue associated with gift certificates and advanced ticket sales at such
time as the items are redeemed, they expire or redemption becomes unlikely. The determination of the likelihood of redemption is based on an analysis of the Company's historical redemption trends.



The Company considers all unrestricted highly liquid debt instruments and investments purchased with an original maturity of three months or less to be
cash equivalents. At December 29, 2005, the Company held substantially all of its cash in temporary cash investments in the form of certificates of deposit and variable rate investment accounts
with major financial institutions.



Inventories consist of concession products and theatre supplies. The Company states inventories on the basis of first-in, first-out (FIFO)
cost, which is not in excess of net realizable value.



The Company states property and equipment at cost. Major renewals and improvements are capitalized, while maintenance and repairs which do not improve or extend
the lives of the respective assets, are expensed currently. Gains and losses from disposition of property and equipment are included in income and expense when realized. The Company records
depreciation and amortization using the straight-line method over the following estimated useful lives:

Buildings

20-30 yearsEquipment

5-15 yearsLeasehold improvements

Lesser of term of lease or asset life


Included
in property and equipment is $2.3 million, $2.4 million and $2.5 million of assets accounted for under capital leases as of December 29, 2005,
December 30, 2004 and January 1, 2004, respectively. The Company records amortization using the straight-line method over the shorter of the lease terms or the estimated
useful lives noted above.

37

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The changes in the carrying amount of goodwill for the years ended December 29, 2005 and December 30, 2004 are as follows (in millions):

Year Ended
December 29, 2005

Year Ended
December 30, 2004Balance at beginning of year

$
29.5

$
29.5Adjustments related to certain deferred taxes of UATC


6.9


Balance at end of year

$
36.4

$
29.5


Statement
of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," became effective for the Company in the first quarter of fiscal 2002. This
standard revised the financial accounting and reporting for goodwill and certain intangible assets. Among the revisions were the discontinuation of the amortization of goodwill and certain intangible
assets and the periodic testing (at
least annually) for the impairment of goodwill at a reporting unit level and additional financial statement disclosures. The Company has identified its reporting units under SFAS No. 142 to be
the designated market areas in which the Company conducts its theatre operations. The fair value of the Company's identified reporting units were estimated using the expected present value of
associated future cash flows and market values of the underlying theatres within each reporting unit. The Company's annual goodwill impairment assessments for the years ended
December 29, 2005 and December 30, 2004 indicated that the fair value of its reporting units exceeded their carrying value and therefore, goodwill was not deemed to be impaired.



The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of the assets may
not be fully recoverable. The Company generally evaluates assets for impairment on an individual theatre basis, which management believes is the lowest level for which there are identifiable cash
flows. If the sum of the expected future cash flows, undiscounted and without interest charges, is less than the carrying amount of the assets, the Company recognizes an impairment charge in the
amount by which the carrying value of the assets exceeds their fair market value. The fair value of assets is determined using the present value of the estimated future cash flows or the expected
selling price less selling costs for assets of which the Company expects to dispose. This analysis resulted in the recording of impairment charges of $0.8 million, $0.2 million and
$0.1 million for the years ended December 29, 2005, December 30, 2004 and January 1, 2004, respectively.



Other non-current assets include long-term receivables and debt acquisition costs, which are deferred and amortized over the terms of the
related agreements using a method that approximates the effective interest method. Other assets as of December 29, 2005, December 30, 2004 and January 1,

38

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2004
were $0.5 million, $0.9 million and $0.8 million, respectively, net of accumulated amortization of $0.0 million, $0.1 million and $0.1 million,
respectively.



Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. In
addition, income tax rules and regulations are subject to interpretation and require judgment by the Company and may be challenged by the taxation authorities. The Company establishes accruals
relative to tax uncertainties that we deem to be probable of loss and that can be reasonably estimated. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. The Company records a valuation allowance if it is deemed more likely than not that its deferred income tax assets will not be
realized.

The
Company expects that certain deferred income tax assets are not more likely than not to be recovered and therefore, has established a valuation allowance. The Company reassesses its
need for the valuation allowance for its deferred income taxes on an ongoing basis. Should the Company realize certain tax assets with a valuation allowance that relate to pre-acquisition
periods, goodwill would be reduced.



Deferred revenue relates primarily to vendor programs, gift certificates and advance ticket sales, and is recognized as revenue as described above in this
Note 3 under "Revenue Recognition."



The Company recognizes rent on a straight-line basis after considering the effect of rent escalation provisions resulting in a level monthly rent
expense for each lease over its term. The deferred rent liability is included in other non-current liabilities.



The Company estimates its film cost expense and related film cost payable based on management's best estimate of the ultimate settlement of the film costs with
the distributors. Generally, less than one-third of our quarterly film expense is estimated at period-end. The length of time until these costs are known with certainty depends
on the ultimate duration of the film play, but is typically "settled" within two to three months of a particular film's opening release. Upon settlement with our film distributors, film cost
expense and the related film cost payable are adjusted to the final film settlement.

39

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The Company expenses advertising costs as incurred. Start-up costs associated with a new theatre are also expensed as incurred.



In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based CompensationTransition and Disclosure." SFAS No.148
amends SFAS No. 123, "Accounting for Stock-Based Compensation," to provide alternative methods of transition for a voluntary change to SFAS No. 123's fair value based method of
accounting for stock-based employee compensation. In addition, SFAS No. 148 amends the disclosure requirements of SFAS No.123 and Accounting Principles Board (APB) Opinion No. 28,
"Interim Financial Reporting," to require disclosure in the summary of significant accounting policies of the effects of an entity's accounting policy with respect to stock-based employee compensation
on reported net income and earnings per share in annual and interim financial statements. Under SFAS No. 123, entities are permitted to recognize as expense the fair value of all stock-based
awards on the date of grant over the vesting period and alternatively allows entities to continue to apply the provisions of APB Opinion No. 25, "Accounting for Stock Issued to Employees" and
related interpretations and provide pro forma net income or loss and earnings or loss per share disclosures as if the fair-value-based method defined in SFAS No. 123 had been
applied.

Upon
the closing of the exchange transaction described in Note 2, the holders of outstanding options of United Artists received replacement options to purchase 2,287,552 shares of
Regal Class A common stock at prices ranging from $4.44 to $12.87 per share. Regal has elected to continue accounting for its stock option plan using the intrinsic value method in accordance
with the provisions of APB Opinion No. 25 and related interpretations, which requires compensation costs to be recognized for the excess of the fair value of options on the date of grant over
the option exercise price.



The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Significant estimates include those related to film costs, property and equipment, goodwill and income taxes. Actual results could differ
from those estimates.



UATC manages its business under one reportable segmenttheatre exhibition operations.



Net income and comprehensive income were the same for all years presented.

40

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Certain reclassifications have been made to the 2003 and 2004 consolidated financial statements to conform to the 2005 presentation.



In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS 123R") that addresses the accounting for
share-based payment transactions in which an enterprise receives employee services in exchange for either equity instruments of the enterprise or liabilities that are based on the fair value of the
enterprise's equity instruments or that may be settled by the issuance of such equity instruments. SFAS 123R eliminates the ability to account for share-based compensation transactions, as the
Company does currently, using the intrinsic value method prescribed by APB Opinion No. 25, and generally requires that such transactions be accounted for using a fair-value-based
method and recognized as expenses in the Company's consolidated statement of income rather than disclose the impact on the Company's consolidated net income within the Company's footnotes.
SFAS 123R requires companies to assess the most appropriate model to calculate the value of the options. The Company currently utilizes the Black-Scholes valuation model to value its stock
options. In addition, there are a number of other requirements under the new standard that would result in different accounting treatment than currently required. These differences include, but are
not limited to, the accounting for the tax benefit on employee stock options and restricted stock awards issued under Regal's 2002 Stock Incentive Plan, and the presentation of such tax benefits
within the consolidated statement of cash flows. In addition to the appropriate fair value model to be used for valuing share-based payments, the Company will also be required to determine the
transition method to be used at date of adoption. The allowed transition methods are the modified prospective and modified retroactive adoption alternatives. The modified prospective method requires
that compensation expense be recorded for all unvested stock options and restricted stock at the beginning of the first quarter of adoption of SFAS 123R, while the retroactive method requires
companies to record compensation expense for all unvested stock options and restricted stock beginning with the first disclosed period restated. The effective date of SFAS 123R for the
Company's consolidated financial statements is December 30, 2005.

The
Company adopted SFAS 123R effective December 30, 2005 and expects to apply the modified prospective approach. The Company is currently evaluating the impact
SFAS 123R will have on its consolidated financial position, cash flows and results of operations.

In
May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections a replacement of APB Opinion No. 20 and FASB Statement
No. 3", which requires retrospective application to prior periods' financial statements of changes in accounting principle, unless it is impracticable to determine
either the period-specific effects or the cumulative effect of the change. It also requires that a change in depreciation, amortization, or depletion method for long-lived, nonfinancial
assets be accounted for as a change in accounting estimate affected by a change in accounting principle. The Company is not currently contemplating an accounting change which would be impacted by SFAS
No. 154.

41

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(4) Debt Obligations

Debt obligations are summarized as follows (amounts in millions):

December 29,
2005

December 30,
2004Debt obligations(a)

$
2.3

$
5.4Less current portion


(0.1
)

(0.5
)Long-term debt

$
2.2

$
4.9


---

In
September 2005, UATC repaid the $2.7 million mortgage collateralized by land and building resulting from the sale of a theatre property located in Staten Island, NY.

The
aggregate annual maturities of debt obligations are as follows (amounts in millions):

2006

$
0.12007


0.12008


0.22009


0.22010


0.2Thereafter


1.5Totals

$
2.3


(5) Related Party Transactions

UATC leases certain of its theatres from Prop I in accordance with a master lease (the "Master Lease"). The Master Lease provides for basic monthly or quarterly
rentals and may require additional rentals, based on the revenue of the underlying theatre. In order to fund the cost of additions and/or renovations to the theatres leased by UATC from Prop I, UATC
has periodically made advances to Prop I. As part of the application of fresh-start reporting the receivable was reclassified from other assets to stockholder's equity and interest no longer accrues
on this account. The receivable will be reduced upon any sale of properties by Prop I, with UATC receiving the net proceeds of the sale. As
described in Note 1, Prop I used the proceeds from the sale of its interest in certain owned theatre properties to UATG to repay $20.0 million on its outstanding indebtedness to UATC.

RCI
manages all aspects of the theatre operations of UATC and its subsidiaries pursuant to the terms of a management agreement, which includes all of its cash collections, cash
disbursements and other cash management functions. During the years ended December 29, 2005, December 30, 2004 and January 1, 2004, UATC recorded management fee expenses of
approximately $7.6 million, $8.6 million and $10.7 million, respectively, related to this arrangement. Such fees have been recorded in the

42

---



accompanying
consolidated statements of operations as a component of "General and Administrative" expenses.

Pursuant
to the Company's management agreement with RCI, RCI provides all on-screen and lobby advertising and event services to UATC. UATC receives a net fee for the use of
its theatres for such advertising and event services that is recorded in other revenue and totaled $1.5 million, $1.7 million and $2.2 million in the years ended
December 29, 2005, December 30, 2004 and January 1, 2004, respectively.

As
of December 29, 2005, the Company's related party receivables totaled approximately $20.2 million, which represents a decrease of $2.4 million from
$22.6 million as of December 30, 2004. The decrease in these receivables is primarily attributable to the timing of the intercompany cash collections and disbursements, as described
above.

In
November 2004, UATC effected a cash dividend of approximately $21.7 million to the Parent. The dividend was recorded as an $11.2 million reduction of retained
earnings and a $10.5 million reduction of additional paid-in capital upon declaration.

In
March 2005 and October 2005, UATC effected cash dividends of approximately $21.8 million and $10.5 million, respectively to the Parent. The dividends were
recorded as a reduction of additional paid-in capital upon declaration.

On
August 17, 2005 REH, transferred the stock of United Artists to RCI. As a result, United Artists and its subsidiaries became subsidiaries of RCI.

(6) Restructure Costs

Restructure costs are included in "Restructure costs and amortization of deferred stock compensation" in the accompanying consolidated statements of operations.
As of December 29, 2005, December 30, 2004 and January 1, 2004 the Company has paid approximately $0.2 million, $0.2 million and $0.7 million of restructuring
expenses, respectively.

(7) SaleLeaseback Transaction

In December 1995, UATC entered into a sale and leaseback transaction whereby the land and buildings underlying 27 of its operating theatres and four
theatres and a screen addition under development were sold to and leased back from an unaffiliated third party. The transaction requires UATC to lease the underlying theatres for a period of
21 years and one month, with the option to extend for up to an additional 10 years. In conjunction with the transaction, the buyer of the properties issued publicly traded
pass-through certificates. UATC amended the lease on March 7, 2001 to allow UATC to terminate the master lease with respect to the obsolete properties, to allow the owner trustee to
sell those properties and pay down the underlying debt (at a discount to par through September 2002 and par thereafter) and to reduce the amount of rent paid by UATC on the lease. Included in
the 2001 amendment is a $35.0 million cap on the ability to sell properties. Through December 29, 2005 approximately $29.3 million of this cap has been utilized through theatre
sales. Several of UATC's properties included in the sale and leaseback transaction have been determined by

43

---



UATC
to be economically obsolete for theatre use. As of December 29, 2005, 16 theatres were subject to the sale leaseback transaction. One property is no longer operational. An evaluation of
the remaining theatres is performed on an ongoing basis. Approximately $58.7 million in principal amount of pass-through certificates were outstanding as of December 29,
2005. On October 11, 2005, UATC entered into a purchase and sale agreement with Boardwalk to sell a total of 5 theatres and 37 screens in Mississippi and Louisiana for cash in the amount of
approximately $5.5 million. One of these theatres is subject to the sale leaseback transaction. The disposition was completed on November 4, 2005.

In
connection with the 1995 sale and leaseback transaction, UATC entered into a Participation Agreement that requires UATC to comply with various covenants, including limitations on
indebtedness, restricted payments, transactions with affiliates, guarantees, issuance of preferred stock of subsidiaries and subsidiary distributions, transfer of assets and pay dividends.

On
November 8, 1996, UATC entered into a sale and leaseback transaction, pursuant to which UATC sold three of its operating theatres and two theatres under development to an
unaffiliated third party for approximately $21.5 million and leased back those theatres pursuant to a lease that terminates in 2017. The lease provides UATC with an option to extend the term of
the lease for an additional 10 years. Two of the theatres have been determined by UATC to be economically obsolete and are no longer in operation.

The
UATC 1995 and 1996 sale and leaseback transactions resulted in UATC having two separate master lease agreements, each covering multiple properties. Each agreement provides for a
single lease payment to be made to the landlord with respect to all the properties subject to the respective master lease without regards to any lease rate that might otherwise be attributable to a
specific lease property.

In
connection with UATC's adoption of fresh-start reporting upon its emergence from bankruptcy, the Company assessed the lease payment obligations under the two master lease agreements
and concluded that such aggregate obligations provided economically consistent returns on the underlying lease properties as compared with similar leased facilities. As such, the amount of rent
currently being paid under the master lease agreement is substantially attributable to the value of the key theatres. Accordingly, the Company has accounted for the total rent paid under these
agreements as expense and have included the future annual rental due under the master lease agreement in rent commitments (see Note 9 "Commitments and Contingencies").

In
December 1997, UATC entered into a sale and leaseback transaction, pursuant to which UATC sold two theatres under development and leased them back from an unaffiliated third
party for approximately $18.1 million. Approximately $9.2 million of the sales proceeds were paid to UATC during 1999 for reimbursement of some construction costs associated with the two
theatres. The lease has a term of 22 years with options to extend the term of the lease for an additional 10 years.

During
1999, UATC entered into a sale and leaseback transaction on one existing theatre. Proceeds were received in the amount of $5.4 million by UATC during 1999. The lease has a
term of 20 years, with an option to extend the term of the lease for up to 20 additional years.

44

---



(8) Income Taxes

The components of the provision for income taxes for income from continuing operations for each of the fiscal years were as follows (in millions):

|                           |          | Year Ended
December 29,
2005 |     | Year Ended
December 30,
2004 |   | Year Ended
January 1,
2004 |     
|-------------------------- | -------- | ---------------------------- | --- | ---------------------------- | - | -------------------------- | ----
|Federal                    |          |                              |     |                              |   |                            |     
|                           | Current  |                              | $   | (1.9                         | ) | $                          | (0.5
|                           | Deferred |                              |     | 4.0                          |   |                            | 2.4 
|State                      |          |                              |     |                              |   |                            |     
|                           | Current  |                              |     | (0.4                         | ) |                            | (0.1
|                           | Deferred |                              |     | 0.8                          |   |                            | 0.5 
|                           |          |                              |     |                              |   |                            |     
|Total income tax provision |          | $                            | 2.5 |                              | $ | 2.3                        |     
|                           |          |                              |     |                              |   |                            |     

During
the years ended December 29, 2005, December 30, 2004 and January 1, 2004 a current tax benefit of $3.5 million, $3.3 million and
$0.7 million, respectively, was allocated directly to shareholders equity for the exercise of stock options.

The
reconciliation of the provision for income taxes as reported and the amount computed by multiplying the income before taxes and extraordinary item by the U.S. federal statutory rate
of 35% was as follows (in millions):

|                                                          |  | Year Ended
December 29,
2005 |      | Year Ended
December 30,
2004 |   | Year Ended
January 1,
2004
|--------------------------------------------------------- |  | ---------------------------- | ---- | ---------------------------- | - | --------------------------
|Provision calculated at federal statutory income tax rate |  | $                            | 2.0  |                              | $ | 0.6                       
|State and local income taxes, net of federal benefit      |  |                              | 0.3  |                              |   | 0.3                       
|Disallowed loss                                           |  |                              | 0.3  |                              |   | 1.2                       
|Minority interest                                         |  |                              | (0.1 | )                            |   | 0.3                       
|Other                                                     |  |                              |     |                              |   | (0.1                      
|                                                          |  |                              |      |                              |   |                           
|Total income tax provision                                |  | $                            | 2.5  |                              | $ | 2.3                       
|                                                          |  |                              |      |                              |   |                           

45

---



Significant
components of the Company's net deferred tax liability consisted of the following (in millions):

Year Ended
December 29, 2005

Year Ended
December 30, 2004Deferred tax assetsNet operating loss carryforward

$
28.1

$
28.1Excess of tax basis over book basis of fixed assets


17.4


14.0Accrued expenses


1.2


1.7Other





3.2Total deferred tax assets before valuation allowance


46.7


47.0Valuation allowance


(28.1
)

(28.2
)Total deferred tax assets after valuation allowance


18.6


18.8Deferred tax liabilitiesDeferred gain on sale of theatres


(53.0
)

(59.5
)Excess of book basis over tax basis of intangible assets


(15.8
)

(1.6
)Total deferred tax liabilities


(68.8
)

(61.1
)Net deferred tax liability

$
(50.2
)
$
(42.3
)


At
December 29, 2005, the Company has net operating loss carryforwards for federal income tax purposes of approximately $67.9 million with expiration commencing during
2007. The Company's net operating loss carryforwards were generated by the predecessor entities of UATC. The Tax Reform Act
of 1986 imposed substantial restrictions on the utilization of net operating losses in the event of an "ownership change" of a corporation. Accordingly, the Company's ability to utilize the net
operating losses may be impaired as a result of the "ownership change" limitations.

In
assessing the valuation of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible. The Company has
recorded a valuation allowance against deferred tax assets at December 29, 2005 and December 30, 2004 totaling $28.1 million and $28.2 million, respectively, as management
believes it more likely than not that such deferred tax asset amounts would not be realized in future tax periods. The valuation allowance relates to pre-acquisition deferred tax assets of
UATC. Accordingly, future reductions in the valuation allowance will reduce goodwill related to the acquisition of UATC.

46

---





In June 2005, REG, the parent company of the consolidated tax group which includes activity of the Company, was notified that the IRS would examine its 2002 and 2003 federal
income tax returns. During October 2005, the IRS completed its examination of REG's federal tax returns for such years and REG and the IRS agreed to certain adjustments to the Company's
2002 and 2003 federal tax returns. Such adjustments did not have a material impact on the Company's provision for income taxes.

(9) Commitments and contingencies



The Company accounts for a majority of its leases as operating leases. The Company, at its option, can renew a substantial portion of the leases at defined or
then fair rental rates for various periods. Certain leases for Company theatres provide for contingent rentals based on the revenue results of the underlying theatre and require the payment of taxes,
insurance, and other costs applicable to the property. Also, certain leases contain escalating minimum rental provisions that have been accounted for on a straight-line basis over the
initial term of the leases. Minimum rentals payable under all non-cancelable operating leases with terms in excess of one year as of December 29, 2005, are summarized for the
following fiscal years:

(In Millions)2006

$
39.22007


38.32008


38.22009


38.42010


36.5Thereafter


186.8


Rent
expense including sale and leaseback rentals of $15.1 million, $15.4 million, and $16.7 million for the years ended December 29, 2005,
December 30, 2004 and January 1, 2004 under such operating leases amounted to $44.5 million, $46.8 million and $62.5 million for the years ended
December 29, 2005, December 30, 2004 and January 1, 2004, respectively. Contingent rent expense was $1.1 million, $1.5 million and $1.5 million for
the years ended December 29, 2005, December 30, 2004 and January 1, 2004, respectively.



The Company and its subsidiaries are also presently involved in various legal proceedings arising in the ordinary course of its business operations, including
personal injury claims, employment and contractual matters and other disputes. The Company believes it has adequately provided for the settlement of such matters. Management believes any additional
liability with respect to the above proceedings will not be material in the aggregate to the Company's consolidated financial position, results of operations or cash flows.

The
Americans with Disabilities Act of 1990 (the "ADA") and certain state statutes, among other things, require that places of public accommodation, including theatres (both existing and
newly constructed), be accessible to the disabled. With respect to access to theatres, the ADA may require modifications to be made to existing theatres, if readily achievable, to make them accessible
to certain theatre patrons and employees who are disabled.

The
ADA requires that theatres be constructed in such a manner to enable persons with disabilities full use of the theatre, and its facilities, and reasonable access to work stations.
The ADA provides for a private right of action and reimbursement of plaintiffs' attorneys' fees and expenses under certain circumstances. Non-compliance with the ADA could result in the
imposition of injunctive relief, fines, award of damages to private litigants and additional capital expenditures to remedy such

47

---



non-compliance.
The Parent and several of its subsidiaries and UATG are subject to a consent decree arising from a lawsuit captioned Connie Arnold et. al. v. United Artists Theatre
Circuit, Inc. The plaintiffs alleged nationwide violations of the ADA for failure to remove barriers to access at existing theatres in a timely manner. In 1996, the parties involved in the case
entered into a settlement agreement in which UATC agreed to remove physical barriers to access at its theatres prior to July 2001. In January 2001, the settlement agreement was amended
to, among other things, extend the completion date for the barrier removal to July 2006 and require minimum expenditures of $250,000 a year for barrier removal. UATC has established a program
to review and evaluate UATC theatres and to make any changes that may be required by the ADA. UATC estimates the costs to comply with these requirements will total approximately $1.0 million.

On
March 18, 2003, Reading International, Inc., Citadel Cinemas, Inc. and Sutton Hill Capital, LLC (each a "Plaintiff" and collectively the "Plaintiffs") filed a
complaint and demand for jury trial in the United States District Court for the Southern District of New York against Oaktree Capital Management LLC, Onex Corporation ("Loews"), Regal, United Artists,
UATC, Loews Cineplex Entertainment Corporation, Columbia Pictures Industries, Inc., The Walt Disney Company, Universal Studios, Inc., Paramount Pictures Corporation, Metro-Goldwyn-Mayer
Distribution Company, Fox Entertainment Group, Inc., Dreamworks LLC, Stephen Kaplan and Bruce Karsh (collectively, the "Defendants") alleging various violations by the Defendants of federal and
state antitrust laws and New York common law. The Plaintiffs allege, among other things, that the consolidation of the theatre industry and alleged agreements between and among Regal, movie
distributors, and Loews, have adversely impacted their ability to exhibit first-run industry-anticipated top-grossing commercial films at their Village East theatre in Lower Manhattan, and
are seeking, among other things, a declaration that the Defendants' conduct is in violation of antitrust laws, damages, and equitable relief enjoining Defendants from engaging in future
anticompetitive conduct. On December 10, 2003, the court granted Defendant's motion to dismiss in part, thereby dismissing several of Plaintiffs' claims and dismissing Sutton Hill as a
Plaintiff. On December 24, 2003, Plaintiffs amended their complaint to add Village East Limited Partnership as a Plaintiff. Management believes that the remaining allegations and claims are
without merit and intends to vigorously defend against the Plaintiffs' claims. On July 29, 2005, Regal filed a motion for summary judgment as to all counts asserted against it and its
subsidiaries. The motion will most likely be decided in the first half of 2006.

From
time to time, we receive letters from private and public attorneys, in states where we operate theatres, regarding investigation into the accessibility of our theatres to persons
with visual or hearing impairments. We believe we provide the members of the visually and hearing impaired communities with reasonable access to the movie-going experience.

We
believe that we are in substantial compliance with all current applicable regulations relating to accommodations for the disabled. We intend to comply with future regulations in that
regard, and except as set forth above, we do not currently anticipate that compliance will require us to expend substantial funds. Our theatre operations are also subject to federal, state and local
laws governing such matters as wages, working conditions, citizenship and health and sanitation requirements. We believe that we are in substantial compliance with all of such laws.

(10) Capital Stock and Stock Option Plan

Common and Preferred Stock

UATC is authorized to issue 1,000 shares of its $1.00 par value common stock, of which 100 shares are issued and outstanding at December 29, 2005, and are
all held by the Parent. At December 29, 2005, the Company has 5,000,000 shares of preferred stock authorized with none issued.

48

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Stock Option Plans

At December 29, 2005, Regal had a stock option plan. At December 29, 2005, Regal applied the provisions of APB Opinion No. 25 and related
interpretations in accounting for these plans. No compensation cost has been recognized by UATC for Regal's stock option plan except for the amortization of deferred stock compensation of
$2.3 million, $2.8 million and $2.6 million for the years ended December 29, 2005, December 30, 2004 and January 1, 2004, respectively. For a discussion of
the fiscal 2006 adoption of SFAS 123R, refer to the information provided under Note 3 to the consolidated financial statements.

(11) Employee Benefits Plan

In conjunction with the exchange transaction in April 2002 (see Note 2"Formation of Regal Entertainment Group"), Regal Cinemas', United
Artists' and Edwards' management and operations were combined. Accordingly, during May 2002, United Artists transferred all plan assets (approximately $19.9 million) under the United
Artists Theatre Circuit 401(k) Savings Plan to the Regal Entertainment Group 401(k) plan, as further described below.

REG
sponsors an employee benefit plan, the Regal Entertainment Group 401(k) Profit Sharing Plan (the "Plan"), under section 401(k) of the Internal Revenue Code of
1986, as amended, for the benefit of substantially all full-time employees of UATC. The Plan provides that participants may contribute up to 20% of their compensation, subject to Internal
Revenue Service limitations. The Plan currently matches an amount equal to 40% of the participant's contributions up to 6% of the participant's compensation. Employee contributions are invested in
various investment funds based upon elections made by the employee.

(12) Fair Value of Financial Instruments

The methods and assumptions used to estimate the fair value of each class of financial instrument are as follows:

Cash and cash equivalents, accounts receivable, inventory, accounts payable and accrued liabilities:

The carrying amounts approximate fair value because of the short maturity of these instruments.

Long term obligations, excluding capital lease obligation:

The fair value of the Company's debt obligations were based on recent financing transactions for similar debt issuances and the carrying amounts approximates the
fair value.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

None.

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit
to the Securities and Exchange Commission under the Securities Exchange Act of 1934 (the "Exchange Act"), as amended, is recorded, processed, summarized and reported within the time periods specified
by the Commission's

49

---



rules
and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officers (whom we refer to in this periodic report as
our Certifying Officers), as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our Certifying Officers, the effectiveness of our
disclosure controls and procedures as of December 29, 2005, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded
that, as of December 29, 2005, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our fiscal quarter ended December 29, 2005 that have materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Management is responsible for the preparation and fair presentation of the consolidated financial statements included in this annual report. The consolidated
financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and reflect management's judgments and estimates concerning effects
of events and transactions that are accounted for or disclosed. The Company's internal control over financial reporting includes those policies and procedures that pertain to the Company's ability to
record, process, summarize and report reliable financial data. Management recognizes that there are inherent limitations in the effectiveness of any internal control over financial reporting,
including the possibility of human error and the circumvention or overriding of internal control. Accordingly, even effective internal control over financial reporting can provide only reasonable
assurance with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

Item 9B. OTHER INFORMATION

None.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Shown below are the names, ages as of December 29, 2005, and current position of our directors and executive officers. There are no family relationships
between any of the persons listed below, or between any of such persons and any of the directors of the Company or any persons nominated or chosen by the Company to become a director or executive
officer of the Company. Each Director's term is for a period of one year.

Name

Age

PositionMichael L. Campbell

52

President and Chairman of the BoardGregory W. Dunn

46

Director and Vice PresidentAmy E. Miles

39

Director, Vice President and TreasurerPeter B. Brandow

45

Vice President and Secretary


50

---



Michael
L. Campbell has served as a member of our board of directors since March 24, 2003 and as our President and Chairman of the Board since August 8, 2002. He is also
Chairman and Chief Executive Office of Regal and is Chief Executive Officer and a member of the board of directors of Regal Cinemas, Inc. Mr. Campbell served as Co-Chairman
of the Board and Co-Chief Executive Officer of Regal from March 2002 to May 2005. Mr. Campbell became Regal's Chief Executive Officer and Chairman of the Board in
May 2005. Mr. Campbell founded Regal Cinemas, Inc. in November 1989, and has served as Chief Executive Officer of Regal Cinemas, Inc. since its inception. Prior
thereto, Mr. Campbell was the Chief Executive Officer of Premiere Cinemas Corporation, which he co-founded in 1982, and served in such capacity until Premiere was sold in
October 1989. Mr. Campbell is a director of Regal, Eon Streams, Inc., Fandango, Inc. and the National Association of Theatre Owners ("NATO") and serves on Regal's and
NATO's executive committee of the board of directors. Mr. Campbell served as a director and executive officer of Regal Cinemas, Inc. when it filed for bankruptcy under Chapter 11 of the
United States Bankruptcy Code and throughout the related bankruptcy proceedings.

Gregory
W. Dunn has served as a member of our board of directors and as our Vice President since March 24, 2003. He is the President and Chief Operating Officer of Regal.
Mr. Dunn has served as President and Chief Operating Officer of Regal since May 2005 and prior to that time he served as
Executive Vice President and Chief Operating Officer from March 2002. Mr. Dunn served as Executive Vice President and Chief Operating Officer of Regal Cinemas, Inc. from 1995 to
March 2002. Mr. Dunn served as Vice President of Marketing and Concessions of Regal Cinemas, Inc. from 1991 to 1995. Mr. Dunn served as an executive officer of Regal
Cinemas, Inc. when it filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code and throughout the related bankruptcy proceedings.

Amy
E. Miles has served as a member of our board of directors since March 24, 2003 and as our Vice President and Treasurer since August 8, 2002. She is the Executive Vice
President, Chief Financial Officer and Treasurer of Regal and has served as such since March 2002. Ms. Miles has served as the Executive Vice President, Chief Financial Officer and
Treasurer of Regal Cinemas, Inc. since January 2000. Prior thereto, Ms. Miles served as Senior Vice President of Finance from April 1999, when she joined Regal
Cinemas, Inc. Ms. Miles was a Senior Manager with Deloitte & Touche from 1998 to 1999. From 1989 to 1998 she was with PricewaterhouseCoopers, LLC. Ms. Miles served as an
executive officer of Regal Cinemas, Inc. when it filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code and throughout the related bankruptcy proceedings.

Peter
Brandow has served as our Vice President and Secretary since March 24, 2003. He is the Executive Vice President, General Counsel and Secretary of Regal and has served as
such since March 2002. Mr. Brandow has served as the Executive Vice President, General Counsel and Secretary of Regal Cinemas, Inc. since July 2001, and prior to that time
he served as Senior Vice President, General Counsel and Secretary of Regal Cinemas, Inc. from February 2000. Mr. Brandow served as Vice President, General Counsel and Secretary
from February 1999 when he joined Regal Cinemas, Inc. From September 1989 to January 1999, Mr. Brandow was an associate with the law firm Simpson Thatcher &
Bartlett. Mr. Brandow served as an executive officer of Regal Cinemas, Inc. when it filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code and throughout the related
bankruptcy proceedings.

None
of our directors, executives officers or any beneficial owner of more than 10% of our equity securities is required to file reports pursuant to Section 16(a) of the
Securities Exchange Act of 1934 with respect to the relationship with us because we do not have any equity securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.

51

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Our
entire board of directors acts as our audit committee, and it has determined that Ms. Miles, as our principal financial officer as well as Regal's, qualifies as an "audit
committee financial expert" within the meaning of the regulations of the SEC. Ms. Miles is not "independent" under the applicable rules of the SEC.

In
accordance with the Sarbanes-Oxley Act and the applicable SEC rules, our principal executive, financial and accounting officers are subject to the Regal Code of Business Conduct and
Ethics, which
is applicable to all directors, officers and employees of Regal and its subsidiaries, including the Company and its subsidiaries, and includes a requirement that we make prompt disclosure of any
waiver of the code for executive officers or directors made by our board. A copy of the Code of Business Conduct and Ethics is available in print without charge to any person who sends a request to
the office of the Secretary of United Artists Theatre Circuit, Inc. at 7132 Regal Lane, Knoxville, Tennessee 37918.

Item 11. EXECUTIVE COMPENSATION

The following table shows the fiscal 2005, 2004 and 2003 cash compensation and certain other compensation paid to or accrued by certain of our executive officers
for the fiscal year ended December 29, 2005, December 30, 2004 and January 1, 2004. These individuals are referred to as our Named Executive Officers. The compensation reported
for the Named Executive Officers for fiscal 2005 is the compensation that they received in their capacities as executive officers of Regal. The Named Executive Officers did not receive any additional
compensation from us or any other Regal subsidiary during the year.

|                                                        |  |                |  |     |                         |  |     | Long-Term
Compensation 
|------------------------------------------------------- |  | -------------- |  | --- | ----------------------- |  | --- | -----------------------
|
|
|
|
|Michael L. Campbell
President and Chairman of the Board |  | 2005
2004
2003 |  | $$$ | 589,100
589,100
589,100 |  | $$$ | 589,100
530,190
650,000
|Gregory W. Dunn
Director and Vice President             |  | 2005
2004
2003 |  | $$$ | 398,244
377,169
377,169 |  | $$$ | 300,000
254,589
282,877
|Amy E. Miles
Director, Vice President and Treasurer     |  | 2005
2004
2003 |  | $$$ | 350,000
350,000
325,000 |  | $$$ | 262,500
249,375
275,000
|Peter B. Brandow
Vice President and Secretary           |  | 2005
2004
2003 |  | $$$ | 311,100
311,100
305,000 |  | $$$ | 221,659
209,993
228,750

Option Grants in Last Fiscal Year

There were no stock option grants to our Named Executive Officers during fiscal 2005

52

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Aggregated Option Exercises In Last Fiscal Year and FY-End Option Values

Our Named Executive Officers did not exercise any stock options to purchase shares of our common stock during the fiscal year ended December 29, 2005 and,
because all of our post-bankruptcy grants were exchanged for option grants from Regal in the exchange transaction, none of our securities were underlying unexercised stock options at
fiscal year end. Accordingly, the aggregated option exercise table has been omitted. For information regarding the Regal options exercises of our Named Executive Officers during the fiscal year,
please refer to Regal's proxy statement for its annual stockholders meeting to be held on May 10, 2006 and to be filed with the Securities and Exchange Commission within 120 days after
December 29, 2005.

Director Compensation

We reimburse our directors for reasonable out-of-pocket expenses related to attending board of director meetings. We do not pay, and do
not currently anticipate paying, any other cash or equity compensation to our directors for serving on our board of directors.

Employment Contracts and Termination of Employment and Change-In-Control Arrangements

We do not have any employment agreements with our Named Executive Officers. Regal, however, has entered into employment agreements with Messrs. Campbell
and Dunn and Ms. Miles, which provide for their employment as executive officers of the Company and our subsidiaries, as well as for Regal. The terms of their employment agreements with Regal
are set forth below.

Regal
entered into an employment agreement with Mr. Campbell on May 3, 2002, pursuant to which Mr. Campbell serves as our President and as the Chief Executive
Officer of Regal and Regal Cinemas. The term of the agreement is three years, subject to an automatic one-year extension on each anniversary date of the agreement. The agreement
provides for a base annual salary of $589,100, subject to subsequent annual adjustment. Mr. Campbell is also eligible to receive a cash bonus each year based on performance and attainment of
earnings objectives set by Regal's board of directors. Mr. Campbell's target bonus will be at least 100% of his base annual salary and his stretch bonus will be at least 150% of his base annual
salary.

If
Mr. Campbell's employment is terminated without cause, he is entitled to severance payments equal to two times his base annual salary and health and life insurance benefits for
24 months from the date of the termination of his employment. Under those circumstances, he is also entitled to receive, pro-rated to the date of termination, any bonus he would
have received for that year. If he terminates his employment for good reason, he is entitled to receive, in addition to amounts payable if Regal were to have terminated his employment without cause,
one times his target bonus. Also, if Regal terminates his employment, or if he resigns for good reason, within three months prior to, or one year after, a change of control of Regal, he is
entitled to receive severance payments equal to: (i) the actual bonus, pro-rated to the date of termination, he would have received in respect of the fiscal year in which the
termination occurs; and (ii) two and one-half times his annual base salary plus two times his target bonus, and health and life insurance benefits for 30 months.
Mr. Campbell is also subject to a noncompete agreement under which he agrees not to compete with Regal or its theatre affiliates or solicit or hire certain of Regal's employees during the term
of his employment agreement and for one year thereafter.

Regal
entered into employment agreements with Ms. Miles and Mr. Dunn on May 3, 2002, pursuant to which Ms. Miles serves as our Vice President and Treasurer
and as Chief Financial Officer of Regal and Regal Cinemas, and Mr. Dunn serves as our Vice President, as Regal's President and Chief Operating Officer and as Executive Vice President and Chief
Operating Officer of Regal Cinemas. The term of each agreement is three years, subject to an automatic one-year extension on each anniversary date of the agreements. The agreements
provide for base annual salaries of $377,169

53

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for
Mr. Dunn and $310,500 for Ms. Miles, subject to subsequent annual adjustment. Each of them is also eligible to receive a cash bonus each year based on performance and attainment of
earnings objectives set by Regal's board of directors. Each of their target bonuses will be at least 75% of their respective base annual salary and each of their stretch bonuses shall be at least 100%
of their respective base annual salary.

If
either Ms. Miles' or Mr. Dunn's employment is terminated without cause, the terminated officer is entitled to severance payments equal to two times his or her base
annual salary and health and life insurance benefits for 24 months from the date of the termination of his or her employment. Under those circumstances, he or she is also entitled to receive,
pro-rated to the date of termination, any bonus he or she would have received for that year. If either Mr. Dunn or Ms. Miles terminates his or her employment for good reason,
he or she is entitled to receive, in addition to amounts payable if we were to have terminated his or her employment without cause, one times their respective target bonus. Also, if Regal terminates
employment, or if either of them resigns for good reason within three months prior to, or one year after, a change of control of Regal, the resigning officer is entitled to receive severance
payments equal to: (i) the actual bonus, pro-rated to the date of termination, that the executive officer would have received in the fiscal year in which the termination occurs, and
(ii) two times the executive officer's annual salary plus one and one-half times the executive officer's target bonus, and health and life insurance benefits for 30 months.
Mr. Dunn and Ms. Miles are each also subject to a noncompete agreement under which he or she agrees not to compete with Regal or its theatre affiliates or solicit or hire certain of
Regal's employees during the term of his or her employment agreement and for one year thereafter.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

We are a wholly owned subsidiary of United Artists, which is an indirect wholly owned subsidiary of Regal. Anschutz, which beneficially owned as of
December 29, 2005, approximately 50.0% of Regal's Class A common stock, approximately 87.8% of Regal's Class B common stock and approximately 82.0% of the voting power of Regal's
outstanding voting capital stock, may be deemed to beneficially own our shares held directly by United Artists. Philip F. Anschutz, as the sole owner of Anschutz, may be deemed to beneficially own our
shares beneficially owned by Anschutz. The foregoing information is based upon a filing made by Anschutz and Mr. Anschutz with the Securities and Exchange Commission in respect of the shares of
Regal beneficially owned by it and him. None of our directors or named executive officers owns beneficially any of our shares of capital stock.

Equity Compensation Plan Information

We do not have any compensation plans outstanding under which our equity securities are authorized for issuance, and we have no present intention to adopt any
such plans.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

UATC leases certain of its theatres from Prop I in accordance with a master lease (the "Master Lease"). The Master Lease provides for basic monthly or quarterly
rentals and may require additional rentals, based on the revenue of the underlying theatre. In order to fund the cost of additions and/or renovations to the theatres leased by UATC from Prop I, UATC
has periodically made advances to Prop I. As part of the application of fresh-start reporting the receivable was reclassified from other assets to stockholder's equity and interest no longer accrues
on this account. The receivable will be reduced upon any sale of properties by Prop I, with UATC receiving the net proceeds of the sale. As described in Note 1 to the consolidated financial
statements included in Part II, Item 8 of this Form 10-K, Prop I used the proceeds from the sale of its interest in certain owned theatre properties to UATG to repay
$20.0 million on its outstanding indebtedness to UATC.

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RCI
manages all aspects of the theatre operations of UATC and its subsidiaries pursuant to the terms of a management agreement, which includes all of its cash collections, cash
disbursements and other cash management functions. During the years ended December 29, 2005, December 30, 2004 and January 1, 2004, UATC recorded management fee expenses of
approximately $7.6 million, $8.6 million and $10.7 million, respectively, related to this arrangement. Such fees have been recorded in the accompanying consolidated statements of
operations as a component of "General and Administrative" expenses.

Pursuant
to the Company's management agreement with RCI, RCI provides all on-screen and lobby advertising and event services to UATC. UATC receives a net fee for the use of
its theatres for such advertising and event services that is recorded in other revenue and totaled $1.5 million, $1.7 million and $2.2 million in the years ended
December 29, 2005, December 30, 2004 and January 1, 2004, respectively.

As
of December 29, 2005, the Company's related party receivables totaled approximately $20.2 million, which represents a decrease of $2.4 million from
$22.6 million as of December 30, 2004. The decrease in these receivables is primarily attributable to the timing of the intercompany cash collections and disbursements, as described
above.

In
November 2004, UATC effected a cash dividend of approximately $21.7 million to the Parent. The dividend was recorded as an $11.2 million reduction of retained
earnings and a $10.5 million reduction of additional paid-in capital upon declaration.

In
March 2005 and October 2005, UATC effected cash dividends of approximately $21.8 million and $10.5 million, respectively to the Parent. The dividends were
recorded as a reduction of additional paid-in capital upon declaration.

United
Artists became a wholly owned subsidiary of REH through a series of transactions in April and August 2002. On June 6, 2003 UATC completed the sale of certain
leased theatres consisting of 46 theatres and 438 screens in 11 states and certain other assets under construction to UATG, a wholly owned subsidiary of REH, for total cash consideration of
approximately $291.4 million, pursuant to an asset purchase agreement between UATG and UATC. Also, on June 6, 2003, Prop I effected a payment of $20.0 million on its outstanding
indebtedness to UATC. Concurrent with the sale, UATC used a portion of the proceeds from the sale of the theatre assets to repay its outstanding indebtedness and related accrued interest of
approximately $263.8 million under a note payable to United Artists.

On
August 17, 2005, REH transferred the stock of United Artists to RCI. As a result, United Artists and its subsidiaries, including UATC, became subsidiaries of RCI.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Independent Auditors

KPMG, LLP served as our independent auditors for the fiscal years ended December 29, 2005 and December 30, 2004. For such fiscal years
we paid fees for services from KPMG as discussed below.



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Board of Directors Pre-Approval Policy

Our Board of Directors pre-approves all audit and permissible non-audit services provided by the independent auditors on a
case-by-case basis. These services may include audit services, audit related services, tax services and other services. Our Vice President and Treasurer is responsible for
presenting the board with an overview of all proposed audit, audit related, tax or other non-audit services to be performed by the independent auditors. The presentation must be in
sufficient detail to define clearly the services to be performed. The board does not delegate the responsibilities to pre-approve services performed by the independent auditors to
management or to an individual member of the board.

PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(1)   Consolidated
financial statements of United Artists Theatre Circuit, Inc.:



(2)   Financial
Statement Schedules have been omitted because of the absence of conditions under which these are required, or because the information is shown elsewhere in
this Form 10-K.

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|Exhibit Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            |  | United Artists Second Amended Joint Plan of Reorganization (filed as exhibit 2 to United Artists Theatre Circuit, Inc.'s Current Report on Form 8-K filed on February 9, 2001 (Commission File
No. 033-49598), and incorporated herein by reference)                                                                                                                                                                                                                                                                         
|3.1            |  | Restated Articles of Incorporation of United Artists Theatre Circuit, Inc. (filed as exhibit 3.1 to United Artists Theatre Circuit, Inc.'s Form S-1 (Commission File No. 033-49598) filed on
October 5, 1992, and incorporated herein by reference)                                                                                                                                                                                                                                                                          
|3.2            |  | Bylaws of United Artists Theatre Circuit, Inc. (filed as exhibit 3.2 to United Artists Theatre Circuit, Inc.'s Form S-1 (Commission File No. 033-49598) filed on October 5, 1992, and incorporated
herein by reference)                                                                                                                                                                                                                                                                                                      
|4.1            |  | Amendment to Leveraged Lease Facility and Second Supplemental Indenture, dated as of March 7, 2001, among United Artists Theatre Circuit, Inc., Wilmington Trust Company, William J. Wade, Theatre Investors,
Northway Associates Limited Partnership, State Street Bank and Trust Company, Susan Keller and MacKay Shields LLC (filed as exhibit 10.2 to United Artists Theatre Circuit, Inc.'s Form 10-Q for the fiscal quarter ended March 29, 2001
(Commission File No. 033-49598), and incorporated herein by reference)
|4.2            |  | Trust Indenture and Security Agreement, dated as of December 13, 1995, between Wilmington Trust Company, William J. Wade and Fleet National Bank of Connecticut and Alan B. Coffey (filed as exhibit 4.2 to United
Artists Theatre Circuit, Inc.'s Form S-2 (Commission File No. 333-1024) filed on February 5, 1996, and incorporated herein by reference)                                                                                                                                                                  
|4.3            |  | Pass Through Certificates, Series 1995-A Registration Rights Agreement, dated as of December 13, 1995, among United Artists Theatre Circuit, Inc., Morgan Stanley & Co. Incorporated and Merrill
Lynch, Pierce, Fenner & Smith Incorporated (filed as exhibit 4.3 to United Artists Theatre Circuit, Inc.'s Form S-2 (Commission File No. 333-1024) filed on February 5, 1996, and incorporated herein by reference)                                                                                                         
|4.4            |  | Participation Agreement, dated as of December 13, 1995, among United Artists Theatre Circuit, Inc., Wilmington Trust Company, William J. Wade, Theatre Investors, Inc., Northway Mall Associates, LLC,
Wilmington Trust Company, William J. Wade, Fleet National Bank of Connecticut, Alan B. Coffey and Fleet National Bank of Connecticut (filed as exhibit 4.4 to United Artists Theatre Circuit, Inc.'s Form S-2 (Commission File No. 333-1024)
 filed on February 5, 1996, and incorporated herein by reference)        
|4.5            |  | Pass Through Trust Agreement, dated as of December 13, 1995, between United Artists Theatre Circuit, Inc. and Fleet National Bank of Connecticut (filed as exhibit 4.5 to United Artists Theatre Circuit,
 Inc.'s Form S-2 (Commission File No. 333-1024) filed on February 5, 1996, and incorporated herein by reference)                                                                                                                                                                                                   
|4.6            |  | Lease Agreement, dated as of December 13, 1995, between Wilmington Trust Company and William J. Wade and United Artists (filed as exhibit 4.6 to United Artists Theatre Circuit, Inc.'s Form S-2 (Commission
File No. 333-1024) filed on February 5, 1996, and incorporated herein by reference)                                                                                                                                                                                                                             
|4.7            |  | Lease Agreement, dated as of October 1, 1988, between United Artists Properties I Corporation and United Artists Theatre Circuit, Inc. (filed as exhibit 10.1 to United Artists Theatre Circuit, Inc.'s
Form S-1 (Commission File No. 033-49598) filed on October 5, 1992, and incorporated herein by reference)                                                                                                                                                                                                             
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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|10.1  |  | Trademark Agreement as of May 12, 1992 by United Artists Entertainment Company, United Artists Holdings, Inc., United Artists Cable Holdings, Inc., United Artists Theatre Holding Company, on the one hand
and United Artists Theatre Circuit, Inc., United Artists Realty Company, UAB, Inc., and UAB II, Inc., on the other hand (filed as exhibit 10.9 to United Artists Theatre Circuit, Inc.'s Form S-1 (Commission File
No. 033-49598) filed on October 5, 1992, and incorporated herein by reference)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2  |  | Tax Sharing Agreement, dated as of May 12, 1992, between United Artists Theatre Company and United Artists Theatre Circuit, Inc. (filed as exhibit 10.11 to United Artists Theatre Circuit, Inc.'s
Form S-1 (Commission File No. 033-49598) filed on October 5, 1992, and incorporated herein by reference)                                                                                                                                                                                                  
|10.3  |  | Management Agreement, dated as of May 27, 2003, between Regal Cinemas, Inc. and United Artists Theatre Circuit, Inc. filed as exhibit 10.3 to United Artists Theatre Circuit, Inc.'s Form 10-K
(Commission File No. 033-49598) filed on March 31, 2004, and incorporated herein by reference)                                                                                                                                                                                                                
|10.4* |  | Employment Agreement, dated May 3, 2002, between Regal Entertainment Group and Michael L. Campbell (filed as exhibit 10.4 to Amendment No. 2 to the Registration Statement of Regal Entertainment Group on
Form S-1 (Commission File No. 333-84096) on May 6, 2002, and incorporated herein by reference)                                                                                                                                                                                                    
|10.5* |  | Employment Agreement, dated May 3, 2002, between Regal Entertainment Group and Gregory W. Dunn (filed as exhibit 10.7 to Amendment No. 2 to the Registration Statement of Regal Entertainment Group on
Form S-1 (Commission File No. 333-84096) on May 6, 2002, and incorporated herein by reference)                                                                                                                                                                                                        
|10.6* |  | Employment Agreement, dated May 3, 2002, between Regal Entertainment Group and Amy E. Miles (filed as exhibit 10.6 to Amendment No. 2 to the Registration Statement of Regal Entertainment Group on Form S-1
(Commission File No. 333-84096) on May 6, 2002, and incorporated herein by reference)                                                                                                                                                                                                           
|10.7  |  | Purchase and Sale Agreement by and between United Artists Theatre Circuit, Inc., as seller, and Boardwalk Ventures, LLC, as purchaser, dated as of October 11, 2005.                                                                                                                                                                                                                                                                                                                                         
|21.1  |  | Subsidiaries of United Artists Theatre Circuit, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|31.1  |  | Rule 13(a)-14(a) Certification of Principal Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                
|31.2  |  | Rule 13(a)-14(a) Certification of Principal Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

| |  | UNITED ARTISTS THEATRE CIRCUIT, INC.
| |  | ------------------------------------
| |  | By:                                 

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

|Signature                                 |  | Title                                                                                                 |  | Date          
|----------------------------------------- |  | ----------------------------------------------------------------------------------------------------- |  | --------------
|                                          |  |                                                                                                       |  |               
|/s/MICHAEL L. CAMPBELLMichael L. Campbell |  | President and Chairman of the Board (Principal Executive Officer)                                     |  | March 29, 2006
|/s/AMY E. MILESAmy E. Miles               |  | Director, Vice President and Treasurer (Principal Financial Officer and Principal Accounting Officer) |  | March 29, 2006
|/s/GREGORY W. DUNNGregory W. Dunn         |  | Director                                                                                              |  | March 29, 2006

Supplemental Information to be Furnished with Reports Filed Pursuant to Section 15(d) of the Act by Registrants Which Have Not Registered Securities Pursuant to
Section 12 of the Act

The
registrant has not sent to its sole stockholder an annual report to security holders covering the registrant's last fiscal year or any proxy statement, form of proxy or other proxy
soliciting material with respect to any annual or other meeting of security holders.

59

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Exhibit Index

|Exhibit
Number |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.1            |  | United Artists Second Amended Joint Plan of Reorganization (filed as exhibit 2 to United Artists Theatre Circuit, Inc.'s Current Report on Form 8-K filed on February 9, 2001 (Commission File
No. 033-49598), and incorporated herein by reference)                                                                                                                                                                                                                                                                         
|3.1            |  | Restated Articles of Incorporation of United Artists Theatre Circuit, Inc. (filed as exhibit 3.1 to United Artists Theatre Circuit, Inc.'s Form S-1 (Commission File No. 033-49598) filed on
October 5, 1992, and incorporated herein by reference)                                                                                                                                                                                                                                                                          
|3.2            |  | Bylaws of United Artists Theatre Circuit, Inc. (filed as exhibit 3.2 to United Artists Theatre Circuit, Inc.'s Form S-1 (Commission File No. 033-49598) filed on October 5, 1992, and incorporated
herein by reference)                                                                                                                                                                                                                                                                                                      
|4.1            |  | Amendment to Leveraged Lease Facility and Second Supplemental Indenture, dated as of March 7, 2001, among United Artists Theatre Circuit, Inc., Wilmington Trust Company, William J. Wade, Theatre Investors,
Northway Associates Limited Partnership, State Street Bank and Trust Company, Susan Keller and MacKay Shields LLC (filed as exhibit 10.2 to United Artists Theatre Circuit, Inc.'s Form 10-Q for the fiscal quarter ended March 29, 2001
(Commission File No. 033-49598), and incorporated herein by reference)
|4.2            |  | Trust Indenture and Security Agreement, dated as of December 13, 1995, between Wilmington Trust Company, William J. Wade and Fleet National Bank of Connecticut and Alan B. Coffey (filed as exhibit 4.2 to United
Artists Theatre Circuit, Inc.'s Form S-2 (Commission File No. 333-1024) filed on February 5, 1996, and incorporated herein by reference)                                                                                                                                                                  
|4.3            |  | Pass Through Certificates, Series 1995-A Registration Rights Agreement, dated as of December 13, 1995, among United Artists Theatre Circuit, Inc., Morgan Stanley & Co. Incorporated and Merrill
Lynch, Pierce, Fenner & Smith Incorporated (filed as exhibit 4.3 to United Artists Theatre Circuit, Inc.'s Form S-2 (Commission File No. 333-1024) filed on February 5, 1996, and incorporated herein by reference)                                                                                                         
|4.4            |  | Participation Agreement, dated as of December 13, 1995, among United Artists Theatre Circuit, Inc., Wilmington Trust Company, William J. Wade, Theatre Investors, Inc., Northway Mall Associates, LLC,
Wilmington Trust Company, William J. Wade, Fleet National Bank of Connecticut, Alan B. Coffey and Fleet National Bank of Connecticut (filed as exhibit 4.4 to United Artists Theatre Circuit, Inc.'s Form S-2 (Commission File No. 333-1024)
 filed on February 5, 1996, and incorporated herein by reference)        
|4.5            |  | Pass Through Trust Agreement, dated as of December 13, 1995, between United Artists Theatre Circuit, Inc. and Fleet National Bank of Connecticut (filed as exhibit 4.5 to United Artists Theatre Circuit,
 Inc.'s Form S-2 (Commission File No. 333-1024) filed on February 5, 1996, and incorporated herein by reference)                                                                                                                                                                                                   
|4.6            |  | Lease Agreement, dated as of December 13, 1995, between Wilmington Trust Company and William J. Wade and United Artists (filed as exhibit 4.6 to United Artists Theatre Circuit, Inc.'s Form S-2 (Commission
File No. 333-1024) filed on February 5, 1996, and incorporated herein by reference)                                                                                                                                                                                                                             
|4.7            |  | Lease Agreement, dated as of October 1, 1988, between United Artists Properties I Corporation and United Artists Theatre Circuit, Inc. (filed as exhibit 10.1 to United Artists Theatre Circuit, Inc.'s
Form S-1 (Commission File No. 033-49598) filed on October 5, 1992, and incorporated herein by reference)                                                                                                                                                                                                             
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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|10.1  |  | Trademark Agreement as of May 12, 1992 by United Artists Entertainment Company, United Artists Holdings, Inc., United Artists Cable Holdings, Inc., United Artists Theatre Holding Company, on the one hand
and United Artists Theatre Circuit, Inc., United Artists Realty Company, UAB, Inc., and UAB II, Inc., on the other hand (filed as exhibit 10.9 to United Artists Theatre Circuit, Inc.'s Form S-1 (Commission File
No. 033-49598) filed on October 5, 1992, and incorporated herein by reference)
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.2  |  | Tax Sharing Agreement, dated as of May 12, 1992, between United Artists Theatre Company and United Artists Theatre Circuit, Inc. (filed as exhibit 10.11 to United Artists Theatre Circuit, Inc.'s
Form S-1 (Commission File No. 033-49598) filed on October 5, 1992, and incorporated herein by reference)                                                                                                                                                                                                  
|10.3  |  | Management Agreement, dated as of May 27, 2003, between Regal Cinemas, Inc. and United Artists Theatre Circuit, Inc. filed as exhibit 10.3 to United Artists Theatre Circuit, Inc.'s Form 10-K
(Commission File No. 033-49598) filed on March 31, 2004, and incorporated herein by reference)                                                                                                                                                                                                                
|10.4* |  | Employment Agreement, dated May 3, 2002, between Regal Entertainment Group and Michael L. Campbell (filed as exhibit 10.4 to Amendment No. 2 to the Registration Statement of Regal Entertainment Group on
Form S-1 (Commission File No. 333-84096) on May 6, 2002, and incorporated herein by reference)                                                                                                                                                                                                    
|10.5* |  | Employment Agreement, dated May 3, 2002, between Regal Entertainment Group and Gregory W. Dunn (filed as exhibit 10.7 to Amendment No. 2 to the Registration Statement of Regal Entertainment Group on
Form S-1 (Commission File No. 333-84096) on May 6, 2002, and incorporated herein by reference)                                                                                                                                                                                                        
|10.6* |  | Employment Agreement, dated May 3, 2002, between Regal Entertainment Group and Amy E. Miles (filed as exhibit 10.6 to Amendment No. 2 to the Registration Statement of Regal Entertainment Group on Form S-1
(Commission File No. 333-84096) on May 6, 2002, and incorporated herein by reference)                                                                                                                                                                                                           
|10.7  |  | Purchase and Sale Agreement by and between United Artists Theatre Circuit, Inc., as seller, and Boardwalk Ventures, LLC, as purchaser, dated as of October 11, 2005.                                                                                                                                                                                                                                                                                                                                         
|21.1  |  | Subsidiaries of United Artists Theatre Circuit, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|31.1  |  | Rule 13(a)-14(a) Certification of Chief Executive Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|31.2  |  | Rule 13(a)-14(a) Certification of Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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