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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 28, 2002

Commission file number: 001-31315

Regal Entertainment Group(Exact name of Registrant as Specified in its Charter)

Delaware(State or Other Jurisdiction of
Incorporation or Organization)

02-0556934(Internal Revenue Service Employer
Identification Number)9110 East Nichols Avenue, Suite 200
Centennial, CO(Address of Principal Executive Offices)

80112(Zip code)


Registrant's Telephone Number, Including Area Code:303/792-3600

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 and 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 o    No ý

Class A
Common Stock45,532,620 shares outstanding at June 21, 2002
Class B Common Stock84,590,337 shares outstanding at June 21, 2002

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TABLE OF CONTENTS

|                                                                                              |                                                                | Page No.
|--------------------------------------------------------------------------------------------- | -------------------------------------------------------------- | --------
|PART IFINANCIAL INFORMATION                                                                  |                                                                |         
|Item 1. FINANCIAL STATEMENTS                                                                  |                                                                |         
|                                                                                              | UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS                |         
|                                                                                              | UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS      |         
|                                                                                              | UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS      |         
|                                                                                              | NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |         
|Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |                                                                |         
|Item 3. QUANTITATIVE & QUALITATIVE DISCLOSURES ABOUT MARKET RISK                              |                                                                |         
|PART IIOTHER INFORMATION                                                                     |                                                                |         
|Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS                                             |                                                                |         
|Item 6. EXHIBITS AND REPORTS ON FORM 8-K                                                      |                                                                |         
|                                                                                              | SIGNATURES                                                     |         

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PART IFINANCIAL INFORMATION    Item 1. FINANCIAL STATEMENTS    REGAL ENTERTAINMENT GROUP (NOTE 1)    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

|                                          |                                           | March 28,
2002 |           | January 3,
2002
|----------------------------------------- | ----------------------------------------- | -------------- | --------- | ---------------
|
|ASSETS                                   
|CURRENT ASSETS                            |                                           |                |           |                
|                                          | Cash and cash equivalents                 |                | $         | 216,566        
|                                          | Restricted cash                           |                |           | 23,628         
|                                          | Trade and other receivables, net          |                |           | 15,677         
|                                          | Inventories                               |                |           | 7,028          
|                                          | Prepaid expenses and other current assets |                |           | 42,857         
|                                          | Assets held for sale                      |                |           | 7,184          
|                                          | Deferred income tax asset                 |                |           | 980            
|                                          |                                           |                |           |                
|TOTAL CURRENT ASSETS                      |                                           |                | 313,920   |                
|PROPERTY AND EQUIPMENT, NET               |                                           |                | 1,737,269 |                
|INVESTMENT IN REGAL CINEMAS, INC.         |                                           |                |          |                
|INTANGIBLE ASSETS, NET                    |                                           |                | 157,936   |                
|OTHER NONCURRENT ASSETS                   |                                           |                | 30,738    |                
|                                          |                                           |                |           |                
|TOTAL ASSETS                              |                                           | $              | 2,239,863 |                
|                                          |                                           |                |           |                
|LIABILITIES AND PARENT'S INVESTMENT      
|CURRENT LIABILITIES                       |                                           |                |           |                
|                                          | Current maturities of long-term debt      |                | $         | 33,413         
|                                          | Accounts payable                          |                |           | 120,492        
|                                          | Accrued expenses                          |                |           | 115,118        
|                                          | Deferred tax liability                    |                |           | 571            
|                                          | Bankruptcy claims and liabilities         |                |           | 78,817         
|                                          |                                           |                |           |                
|TOTAL CURRENT LIABILITIES                 |                                           |                | 348,411   |                
|LONG-TERM DEBT                            |                                           |                | 876,554   |                
|LEASE FINANCING ARRANGEMENTS              |                                           |                | 97,399    |                
|CAPITAL LEASE OBLIGATIONS                 |                                           |                | 4,050     |                
|DEFERRED TAX LIABILITY                    |                                           |                | 46,660    |                
|OTHER NONCURRENT LIABILITIES              |                                           |                | 40,605    |                
|                                          |                                           |                |           |                
|TOTAL LIABILITIES                         |                                           |                | 1,413,679 |                
|                                          |                                           |                |           |                
|MINORITY INTEREST OF SUBSIDIARIES         |                                           |                | 346,944   |                
|MANDATORY REDEEMABLE PREFERRED STOCK      |                                           |                | 47,134    |                
|PARENT'S INVESTMENT                       |                                           |                |           |                
|                                          | Contributed capital                       |                |           | 416,646        
|                                          | Retained earnings                         |                |           | 15,460         
|                                          |                                           |                |           |                
|TOTAL PARENT'S INVESTMENT                 |                                           |                | 432,106   |                
|                                          |                                           |                |           |                
|TOTAL LIABILITIES AND PARENT'S INVESTMENT |                                           | $              | 2,239,863 |                
|                                          |                                           |                |           |                

See accompanying notes to unaudited condensed consolidated financial statements

2

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REGAL ENTERTAINMENT GROUP (NOTE 1)    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                         |                                                            | Quarter
ended
March 28, 2002 |         | Quarter
ended
March 29, 2001 |  
|-------------------------------------------------------- | ---------------------------------------------------------- | ---------------------------- | ------- | ---------------------------- | -
|
|REVENUES                                                 |                                                            |                              |         |                              |  
|                                                         | Admissions                                                 |                              | $       | 286,170                      |  
|                                                         | Concessions                                                |                              |         | 113,818                      |  
|                                                         | Other operating revenue                                    |                              |         | 14,140                       |  
|                                                         |                                                            |                              |         |                              |  
|TOTAL OPERATING REVENUE                                  |                                                            |                              | 414,128 |                              |  
|OPERATING EXPENSES                                       |                                                            |                              |         |                              |  
|                                                         | Film rental and advertising costs                          |                              |         | 146,833                      |  
|                                                         | Cost of concessions                                        |                              |         | 15,833                       |  
|                                                         | Other theatre operating expenses                           |                              |         | 154,885                      |  
|                                                         | General and administrative expenses                        |                              |         | 15,878                       |  
|                                                         | Merger and restructuring expenses                          |                              |         | 7,921                        |  
|                                                         | Depreciation and amortization                              |                              |         | 27,732                       |  
|                                                         | Gain on disposal and impairment of operating assets        |                              |         | (165                         | )
|                                                         |                                                            |                              |         |                              |  
|TOTAL OPERATING EXPENSES                                 |                                                            |                              | 368,917 |                              |  
|                                                         |                                                            |                              |         |                              |  
|INCOME (LOSS) FROM OPERATIONS                            |                                                            |                              | 45,211  |                              |  
|OTHER INCOME (EXPENSE)                                   |                                                            |                              |         |                              |  
|                                                         | Interest expense                                           |                              |         | (14,604                      | )
|                                                         | Interest income                                            |                              |         | 178                          |  
|                                                         | Minority interest in earnings of consolidated subsidiaries |                              |         | (8,711                       | )
|                                                         | Other, net                                                 |                              |         | (411                         | )
|                                                         |                                                            |                              |         |                              |  
|TOTAL OTHER EXPENSE, NET                                 |                                                            |                              | (23,548 | )                            |  
|INCOME (LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEM |                                                            |                              | 21,663  |                              |  
|PROVISION FOR INCOME TAXES                               |                                                            |                              | 12,301  |                              |  
|                                                         |                                                            |                              |         |                              |  
|INCOME (LOSS) BEFORE EXTRAORDINARY ITEM                  |                                                            |                              | 9,362   |                              |  
|EXTRAORDINARY ITEM                                       |                                                            |                              |         |                              |  
|                                                         | Gain on extinguishment of debt                             |                              |         | 1,174                        |  
|                                                         |                                                            |                              |         |                              |  
|NET INCOME (LOSS)                                        |                                                            | $                            | 10,536  |                              | $
|                                                         |                                                            |                              |         |                              |  

See accompanying notes to unaudited condensed consolidated financial statements

3

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REGAL ENTERTAINMENT GROUP (NOTE 1)    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                              |                                                             | Quarter
ended
March 28, 2002              |         | Quarter
ended
March 29, 2001 |       
|----------------------------------------------------------------------------- | ----------------------------------------------------------- | ----------------------------------------- | ------- | ---------------------------- | ------
|
|CASH FLOWS FROM OPERATING ACTIVITIES                                          |                                                             |                                           |         |                              |       
|Net income (loss)                                                             |                                                             | $                                         | 10,536  |                              | $     
|Adjustments to reconcile net income to cash provided by operating activities: |                                                             |                                           |         |                              |       
|                                                                              | Depreciation and amortization                               |                                           |         | 27,732                       |       
|                                                                              | Extraordinary gain on debt extinguishment                   |                                           |         | (1,174                       | )     
|                                                                              | Reorganization items                                        |                                           |         |                             |       
|                                                                              | Minority interests in earnings of consolidated subsidiaries |                                           |         | 8,711                        |       
|                                                                              | Deferred income taxes                                       |                                           |         | 8,147                        |       
|                                                                              | Gain on disposal and impairment of operating assets         |                                           |         | (165                         | )     
|                                                                              | Changes in operating assets and liabilities:                |                                           |         |                              |       
|                                                                              |                                                             | Trade and other receivables               |         |                              | (3,055
|                                                                              |                                                             | Inventories                               |         |                              | 496   
|                                                                              |                                                             | Prepaid expenses and other current assets |         |                              | (7,072
|                                                                              |                                                             | Accounts payable                          |         |                              | (7,983
|                                                                              |                                                             | Accrued expenses and other liabilities    |         |                              | (8,431
|                                                                              |                                                             |                                           |         |                              |       
|NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                           |                                                             |                                           | 27,742  |                              |       
|CASH FLOWS FROM INVESTING ACTIVITIES                                          |                                                             |                                           |         |                              |       
|                                                                              | Capital expenditures                                        |                                           |         | (15,148                      | )     
|                                                                              | Proceeds from disposition of assets                         |                                           |         | 1,567                        |       
|                                                                              | Decrease in other long term assets                          |                                           |         | 5,175                        |       
|                                                                              | Decrease in reimbursable construction advances              |                                           |         | 162                          |       
|                                                                              | Decrease in assets held for sale                            |                                           |         | 840                          |       
|                                                                              | Decrease in restricted cash                                 |                                           |         | 4,523                        |       
|                                                                              |                                                             |                                           |         |                              |       
|NET CASH USED BY INVESTING ACTIVITIES                                         |                                                             |                                           | (2,881  | )                            |       
|CASH FLOWS FROM FINANCING ACTIVITIES                                          |                                                             |                                           |         |                              |       
|                                                                              | Borrowings on long term obligations                         |                                           |         |                             |       
|                                                                              | Payments on long term obligations                           |                                           |         | (903                         | )     
|                                                                              | Decrease in cash overdraft                                  |                                           |         |                             |       
|                                                                              | Payment of bankruptcy claims and liabilities                |                                           |         | (42,546                      | )     
|                                                                              | Cash of Regal Cinemas at acquisition date                   |                                           |         | 166,705                      |       
|                                                                              | Cash of Regal CineMedia at acquisition date                 |                                           |         | 364                          |       
|                                                                              |                                                             |                                           |         |                              |       
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                     |                                                             |                                           | 123,620 |                              |       
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                     |                                                             |                                           | 148,481 |                              |       
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                              |                                                             |                                           | 68,085  |                              |       
|                                                                              |                                                             |                                           |         |                              |       
|CASH AND CASH EQUIVALENTS AT END OF PERIOD                                    |                                                             | $                                         | 216,566 |                              | $     
|                                                                              |                                                             |                                           |         |                              |       
|SUPPLEMENTAL CASH FLOW INFORMATION:                                           |                                                             |                                           |         |                              |       
|                                                                              | Cash paid for income taxes                                  |                                           | $       | 8,021                        |       
|                                                                              |                                                             |                                           |         |                              |       
|                                                                              | Cash paid for interest                                      |                                           | $       | 9,647                        |       
|                                                                              |                                                             |                                           |         |                              |       

See accompanying notes to unaudited condensed consolidated financial statements

4

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REGAL ENTERTAINMENT GROUP  NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1    THE COMPANY AND BASIS OF PRESENTATION

Regal Entertainment Group (the "Company" or "Regal") consists of the controlling equity interests in United Artists Theatre Company and its subsidiaries ("United
Artists"), Edwards Theatres, Inc. and its subsidiaries ("Edwards") and Regal Cinemas Corporation and its subsidiaries ("Regal Cinemas") owned by The Anschutz Corporation and its subsidiaries
("Anschutz"). Regal operates the largest theatre circuit in the United States, consisting of 5,829 screens in 553 theatres in 36 states as of March 28, 2002. In February 2002, the
Company formed Regal CineMedia Corporation ("Regal CineMedia") to focus on the development of ancillary revenues.    The Company formally operates on a 52 week fiscal year with each
quarter consisting of 13 weeks, unless otherwise noted.

During
2000 and 2001, United Artists, Edwards and Regal Cinemas, Inc. filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code in the United
States Bankruptcy Courts identified below (the "Applicable Bankruptcy Court"), as well as joint plans of reorganization. The joint plans of reorganization, as amended, for United Artists and Edwards
were approved by the Applicable Bankruptcy Court, and were declared effective on March 2, 2001 ("UA Effective Date") for United Artists and September 29, 2001 ("Edwards Effective Date")
for Edwards. The Applicable Bankruptcy Court approved Regal Cinemas, Inc.'s joint plan of reorganization in December 2001 and declared it effective on January 29, 2002. Also on that
date, Anschutz and the other shareholders of Regal Cinemas, Inc. exchanged their equity interests in Regal Cinemas, Inc. for equity interests in Regal Cinemas and as a result, Regal
Cinemas, Inc. became a wholly owned subsidiary of Regal Cinemas. Regal Cinemas was formed for the primary purpose of acquiring and holding the shares of common stock of Regal
Cinemas, Inc.

Anschutz
acquired controlling equity interests in United Artists, Edwards and Regal Cinemas, Inc. upon each of the entities' emergence from bankruptcy reorganization. Anschutz's
contributions of these equity interests to the Company were recorded in the consolidated financial statements of the Company at the combined historical cost basis of Anschutz, which represents
Anschutz's net cost to acquire certain debt of United Artists, Edwards and Regal Cinemas, Inc. prior to their filing voluntary petitions for relief under Chapter 11. Anschutz exchanged such
debt holdings for controlling equity interests
following the emergence from bankruptcy of United Artists, Edwards and Regal Cinemas, Inc. As a result of the acquisition by Anschutz, Regal's fiscal 2001 consolidated results of operations
include only the results of operations of United Artists from the UA Effective Date to January 3, 2002, and of Edwards, from the Edwards Effective Date to December 27, 2001 (the
Company's fiscal 2001 periods in which Anschutz controlled United Artists and Edwards are referred to as the "Periods Under Common Control"). Accordingly, Regal's consolidated results of operations
for the quarter ended March 29, 2001 do not include the results of operations of Edwards or Regal Cinemas, Inc. and only include the results of operations of United Artists for the four
weeks ended March 29, 2001.

While
the actual date that Regal Cinemas, Inc. emerged from bankruptcy and Anschutz acquired its controlling equity interest in Regal Cinemas was January 29, 2002, for financial
reporting purposes the date is deemed to have occurred on January 24, 2002. As such, the Company's results of operations for the quarter ended March 28, 2002 include the results of
operations of United Artists (from January 4, 2002), Edwards (from December 28, 2001), and Regal Cinemas (from January 24, 2002). At January 3, 2002, the Company's
investment in Regal Cinemas, Inc. was accounted for as a cost investment in the accompanying unaudited condensed consolidated balance sheet. As of March 28, 2002, Regal CineMedia had not
generated significant revenues, incurred significant operating expenses or made significant capital expenditures.

Commencing
in 2002, the Company elected to base its quarterly reporting periods on the last Thursday of each calendar quarter and adopted the fiscal year end of Regal
Cinemas, Inc. Regal

5

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Cinemas Inc.'s 2001 fiscal year ended on December 27, 2001. As a result of the election to conform the reporting periods, United Artists' results of operations reflected in the
accompanying financial statements for the quarter ended March 28, 2002 reflect the twelve weeks of operating results from January 4, 2002 through March 28, 2002. For the period from
December 28, 2001 through January 3, 2002 (the date of United Artists' fiscal 2001 year end), United Artists recorded revenue of approximately $17.8 million and net income
of approximately $2.5 million.

On
March 5, 2002, Anschutz acquired a controlling equity interest in an insolvent digital video advertising company, Next Generation Network, Inc. ("NGN"), for
approximately $2.8 million in an out-of-court restructuring of NGN's indebtedness. Anschutz has funded approximately $7.2 million to NGN through bridge loans and
other consideration. As described in Note 4"Subsequent Events", on April 12, 2002, Anschutz contributed all of its capital stock of NGN, representing approximately 95% of
the outstanding capital stock of NGN, and the outstanding principal balances of such bridge loans and other consideration to Regal CineMedia in exchange for 100,000 shares of capital stock of Regal
CineMedia.

On
March 8, 2002, the holders of 100% of the capital stock of Regal Cinemas, Edwards and Regal CineMedia entered into an agreement to exchange their stock for shares of stock in
Regal. Regal also agreed to exchange its stock for stock representing approximately 90% of United Artists. As described in Note 4"Subsequent Events", the exchange transaction was
consummated on April 12, 2002.

The
Company, without audit, has prepared the condensed consolidated balance sheet as of March 28, 2002, the condensed consolidated statements of operations and the condensed
consolidated statements of cash flows for the quarter ended March 28, 2002 and the quarter ended March 29, 2001. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly in all material respects the financial position, results of operations and cash flows for all periods presented have been made. The January 3,
2002 information is derived from the audited January 3, 2002 consolidated financial statements of the Company included in the Company's prospectus, dated May 8, 2002, filed with the
Securities and Exchange Commission in connection with Regal's initial public offering (File No. 333-84096). These unaudited condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto included in the audited financial statements. The results of operations for the quarter ended March 28, 2002 are not
necessarily indicative of the operating results for the full year.

Certain
reclassifications have been made to the 2001 financial statements to conform to the 2002 presentation.

2    CHAPTER 11 PROCEEDINGS

Prior to and during the reorganization proceedings of United Artists, Edwards and Regal Cinemas, Inc., Anschutz acquired claims of creditors of United
Artists, and Anschutz and OCM Principal Opportunities Fund II, L.P. and its subsidiaries ("Oaktree's Principal Activities Group") acquired claims of creditors of Edwards and Regal Cinemas, Inc.
that allowed Anschutz to actively negotiate the terms upon which each company would emerge from reorganization.

The
reorganization proceedings of United Artists, Edwards and Regal Cinemas, Inc. had significant effects on the operations and financial condition of each company. United Artists
and Regal Cinemas adjusted their assets, liabilities and capital structure to reflect estimated fair values at the time of their emergence from their reorganization proceedings and the acquisition of
a controlling equity interest by Anschutz. In addition, in connection with their reorganizations, each of United Artists, Edwards and Regal Cinemas, Inc. were able to selectively close
under-performing theatres and negotiate rent reductions and lease termination rights, which improved the financial performance of their asset bases.

6

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On August 23, 2000, Edwards Theatre Circuit, Inc. and affiliates filed voluntary petitions for relief under Chapter 11 of Title 11 of the United
States Code in the United States Bankruptcy Court for the
Central District of California (the "California Bankruptcy Court"). On May 24, 2001, Edwards filed a plan of reorganization and related disclosure statement, as subsequently amended on
July 23, 2001 (the "Edwards Plan"). On September 24, 2001, the California Bankruptcy Court confirmed the Edwards Plan. On September 29, 2001, all conditions required for the
effectiveness of the Edwards Plan were met, and the Edwards Plan became effective. Pursuant to the Edwards Plan, Anschutz and Oaktree's Principal Activities Group agreed to exchange approximately
$14.6 million of their pre-petition secured claims and cash of $41.4 million for $56.0 million in Edwards' Series A preferred stock and 51% of Edwards'
newly-issued common stock and $10.0 million of senior secured debt for $10.0 million of senior unsecured subordinated notes (the "Edwards Subordinated Notes"). For a discussion of
Edwards related bankruptcy claims and other related party transactions, see Note 11"Related Party Transactions".

The
Edwards Plan also provided that Edwards' senior secured lenders receive a pay-down of $9.5 million of principal and all pre-petition and post-petition
accrued and unpaid interest at the applicable non-default rate. In connection with the Edwards Plan, the Edwards Subordinated Notes were issued and the existing secured lenders established
a $180.0 million restructured term loan. General unsecured creditors were entitled to receive, at their option, either a cash distribution equal to 90% of the holder's allowed claim or an
unsecured seven year note equal to 100% of the allowed claim. The seven year notes provide for semi-annual interest payments, in arrears, beginning on the six-month anniversary
of the effective date at a rate of 9% per annum, compounded annually. The notes also require semi-annual principal reduction payments beginning on the six-month anniversary of
the Edwards Effective Date.



On September 5, 2000, United Artists and the majority of United Artists' subsidiaries, including United Artists Theatre Circuit, Inc. and the
majority of its subsidiaries, all as debtors, filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of
Delaware (the "Delaware Bankruptcy Court"), as well as a joint plan of reorganization. On January 22, 2001, the joint plan of reorganization, as amended (the "UA Plan"), was approved by the
Delaware Bankruptcy Court and declared effective by the debtors on March 2, 2001. As a consequence of the UA Plan, on March 2, 2001, United Artists' reorganized capital structure
consisted of approximately $252.1 million of debt under a restructured bank credit facility (the "United Artists Term Credit Facility"), $57 million of convertible preferred stock and
$39.1 million in common equity. Anschutz converted 100% of its senior debt of United Artists into a combination of convertible preferred stock, common stock and warrants to purchase common
stock (at an exercise price of $10.00 per share) which, in aggregate, represented approximately 54% of the fully diluted common equity of United Artists. Other senior lenders under United Artists'
pre-petition credit facility received common stock in United Artists representing approximately 29% of the fully diluted common equity and subordinated lenders received warrants to
purchase common stock at an exercise price of $10.00 per share, which, in the aggregate, represented approximately 7% of the fully diluted common equity, with the remaining 10% of the fully diluted
common equity reserved for management stock options.

In
addition, a pool of $5.0 million in cash and $1.1 million in payment-in-kind notes was established for distribution on a pro rata basis to
unsecured creditors. The payment-in-kind notes earn "in-kind" interest
at 8% with one-third of the principal payable during March 2005, one-third payable during March 2006 and the remaining one-third, along with all accrued interest, payable
during March 2007.

7

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On
the UA Effective Date, United Artists adopted fresh-start reporting in accordance with AICPA Statement of Position 90-7,Financial Reporting by
Entities in Reorganization Under the Bankruptcy Code("SOP 90-7"). For accounting purposes, the inception date of the reorganized company was deemed to be
March 2, 2001. Under fresh-start reporting, the reorganization value of United Artists, which represents the fair value of all of the assets (net of liabilities), was determined through
negotiations between the United Artists' management and its pre-petition creditors and was allocated to United Artists' assets based on their relative fair values. Liabilities, other than
deferred income taxes, were also stated at their fair values. Deferred income taxes are determined in accordance with SFAS No. 109,Accounting for Income
Taxes.



On October 11, 2001, Regal Cinemas, Inc. and its subsidiaries filed voluntary petitions for relief under Chapter 11 of Title 11 of the United States
Code in the United States Bankruptcy Court for the Middle District of Tennessee (the "Tennessee Bankruptcy Court") under case numbers 301-11305 through 301-11320, seeking court
supervision of the Company's restructuring efforts. Pursuant to the plan of reorganization (the "Regal Plan"), certain holders of its then existing senior credit facilities (including Anschutz and
Oaktree's Principal Activities Group) agreed to exchange approximately $725 million of their pre-petition claims for 100% of Regal Cinemas, Inc.'s newly-issued common stock.
Other principal terms of the Regal Plan included:



On
December 7, 2001, the Tennessee Bankruptcy Court confirmed the Regal Plan and as a result, Regal Cinemas, Inc. commenced appropriate actions to consummate the Regal Plan
and emerged from bankruptcy on January 29, 2002. Also on January 29, 2002, Regal Cinemas, Inc. became a wholly owned subsidiary of Regal Cinemas. The transaction was accomplished
by the issuance of 7,500,000 shares of Regal Cinemas common stock in exchange for 100% of the outstanding common stock of Regal Cinemas, Inc. As a result of this exchange, Anschutz and
Oaktree's Principal Activities Group, acquired approximately 75% of the Regal Cinemas' common stock issued upon emergence.

Approximately
$1.8 billion of Regal Cinemas, Inc. long-term debt plus approximately $196 million of accrued and unpaid interest was discharged under the
terms of the Regal Plan in exchange for total payments of approximately $575.3 million. Regal Cinemas funded these payments through 1) cash on hand, 2) a term loan
($270.0 million) borrowed under new senior credit facilities, and 3) the issuance of new senior subordinated notes ($200.0 million).

In
connection with Regal Cinemas, Inc.'s emergence from bankruptcy and acquisition of a controlling interest by Anschutz, Regal Cinemas, Inc. made certain adjustments in accordance with
SOP 90-7 to reflect its emergence from bankruptcy and simultaneously allocated Anschutz's predecessor cost basis to Regal Cinemas, Inc.'s assets and liabilities. The impact of these adjustments
resulted in a $511.1 million write-down of Regal Cinemas, Inc.'s assets.

8

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3    INTEGRATIONS

During the first quarter of 2002, the Company commenced a plan to restructure certain of its operations to facilitate the integration of Regal Cinemas, United
Artists and Edwards. The restructuring principally involved the closing of certain Edwards and United Artists corporate facilities and relocation of the theatre management operations of United Artists
and Edwards to Regal Cinemas' offices in Knoxville, Tennessee. The restructuring plan was communicated by Company management to Edwards and United Artists corporate employees during January and
March 2002. Such restructuring is not expected to result in any theatre closings.

With
respect to the Edwards restructuring plan, the Company terminated 78 corporate employees located in its Edwards Newport Beach, California corporate offices. Of the total Edwards
restructuring charge of $3.1 million, approximately $1.1 million related to employee termination benefits and approximately $2.0 million related to other direct exit costs
(principally lease termination fees) associated with the closing of Edwards' corporate offices. The United Artists restructuring plan provided for the termination of 102 administrative employees
located in the Centennial, Colorado corporate offices along with closure of a film office located in New York City. Total United Artists restructuring charges were $2.1 million, of which
approximately $2.0 million related to employee
termination benefits and approximately $0.1 million related to direct exit costs for the closure of the New York City film office.

Such
costs have been accrued and are included in "merger and restructuring expenses" in the accompanying unaudited condensed consolidated statement of operations for the quarter ended
March 28, 2002. The Company expects to substantially complete the Edwards and United Artists integration during the second quarter of 2002.

4    SUBSEQUENT EVENTS



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 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, the holders of outstanding options of United Artists and Regal Cinemas received replacement options to purchase 8,832,147 shares of Class A
common stock at prices ranging from $4.44 to $12.87 per share. Regal also granted to 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 Class B common stock at $8.88 per share and warrants to purchase 296,129 shares of Class A
common stock at $8.88 per share. The terms of the exchange transaction were set forth in an exchange agreement entered into on March 8, 2002 among Anschutz and several of the minority
stockholders of United Artists, Edwards and Regal Cinemas.

Following
the exchange transaction, Anschutz transferred beneficial ownership of 1,455,183 shares of Class B common stock to Oaktree's Principal Activities Group. Consequently,
Anschutz owns 81.7% of the Company's outstanding Class B common stock, representing 77.5% of the combined voting power of the Company's outstanding common stock and has the ability to direct
the election of members of the Company's board of directors and to determine the outcome of other matters submitted to the vote of the Company's stockholders.

9

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On
April 12, 2002, Anschutz contributed all of its capital stock of NGN, representing approximately 95% of the outstanding capital stock of NGN, and the outstanding principal
balances of bridge loans and other consideration to Regal CineMedia in exchange for 100,000 shares of capital stock of Regal CineMedia, which was then exchanged for the Company's Class B Common
Stock in the exchange transaction described above.



On April 17, 2002, Regal Cinemas sold $150 million principal amount of 93/8% senior subordinated notes due 2012, which were issued
under the indenture pursuant to which Regal Cinemas sold in January 2002 $200 million principal amount of 93/8% senior subordinated notes due 2012. The proceeds of the
notes issued on April 17, 2002, together with cash on hand at Regal Cinemas, Inc., were used to repay approximately $180.7 million of senior bank debt including accrued interest
of Edwards, to redeem approximately $12.0 million of Edwards Subordinated Notes including accrued interest primarily held by Anschutz and Oaktree's Principal Activities Group (see
Note 6"Long-Term Obligations"), and to redeem approximately $75.4 million of preferred stock of Edwards held by Anschutz, Oaktree's Principal Activities Group
and members of the Edwards family. In connection with the repayment of the indebtedness and the redemption of the Edwards Subordinated Notes and preferred stock of Edwards, Edwards became a wholly
owned subsidiary of Regal Cinemas, Inc.



In May 2002, the Company issued 18.0 million shares of its Class A common stock in an initial public offering. The initial public offering
was effected through a Registration Statement on Form S-1 (File No. 333-84096) that was declared effective by the Securities and Exchange Commission on
May 8, 2002. All 18.0 million shares were sold at an initial public offering price of $19.00 per share, for an aggregate offering price of $342 million, through a syndicate of
underwriters managed by Credit Suisse First Boston Corporation, Lehman Brothers Inc., Bear, Stearns & Co. Inc. and Salomon Smith Barney Inc.

The
Company paid underwriting discounts and commissions totaling approximately $23.1 million in connection with the offering. In addition, the Company estimates additional
expenses of approximately $3.1 million in connection with the offering. The net offering proceeds, after deducting underwriting discounts, commissions and other offering expenses, were
approximately $315.8 million. No offering expenses were paid directly or indirectly to any of the Company's directors or officers (or their
associates) or persons owning ten percent or more of any class of the Company's equity securities or to any other affiliates of the Company.

The
Company used a portion of the net proceeds to repay approximately $240.7 million of principal and accrued interest owed by United Artists under the United Artists Term Credit
Agreement (see Note 6"Long-Term Obligations") and intends to use the remaining portion to fund operating costs and capital expenditures of Regal CineMedia and for
general corporate purposes. Pending these uses, since the time of receipt of the net proceeds, the Company has invested the remaining net proceeds of this offering in short-term money
market and money market equivalent securities.



On a pro forma basis, assuming (i) a full thirteen weeks of post bankruptcy operating results for Regal Cinemas, United Artists and Edwards,
(ii) the contribution by Anschutz and the exchange by several minority shareholders of their equity interests in United Artists, Regal Cinemas, Edwards and Regal CineMedia for shares of the
Company, (iii) the issuance of $150 million of 93/8% senior subordinated notes, (iv) the repayment of Edwards indebtedness and the effects of the Company's initial
public offering, revenues and net income would have been $540.3 million and $34.7 million for

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the quarter ended March 28, 2002 and $470.9 million and $1.1 million for the quarter ended March 29, 2001.

5    BANKRUPTCY RELATED CLAIMS

Regal Cinemas and Edwards have bankruptcy claims that remain unsettled and are subject to ongoing negotiation and possible litigation. At March 28, 2002,
approximately $78.8 million of remaining claims related to Regal Cinemas' and Edwards' bankruptcy proceedings are recorded in the Company's Unaudited Condensed consolidated balance sheet as
Bankruptcy Claims and Liabilities. In the opinion of management, based on its examination of these matters, its experience to date and discussions with legal counsel, the outcome of these legal
matters, after taking into consideration the amounts already accrued, is not expected to have a material effect on liquidity. The timing of the payment of these claims will depend upon the resolution
of these claims.

6    LONG-TERM OBLIGATIONS

Long-term obligations at March 28, 2002 and January 3, 2002, consist of the following:

March 28,
2002

January 3,
2002(In thousands)Regal Cinemas Senior Credit Facility

$
270,000

$
Regal Cinemas 93/8% Senior Subordinated Notes


200,000


United Artists Term Credit Facility


240,042


240,649Edwards Senior Secured Term Loan


180,000


180,000Edwards Subordinated Notes to Shareholders


10,390


10,325Lease financing arrangements, 11.5%, maturing in various installments through 2021


99,059


Capital lease obligations


4,200


2,666Other


7,725


5,300United Artists Revolving Credit Facility





Total long-term obligations


1,011,416


438,940Less current maturities


(33,413
)

(15,589
)Total long-term obligations, net

$
978,003

$
423,351


Regal Cinemas Senior Credit FacilityRegal Cinemas entered into a senior credit agreement with several financial institutions
including Lehman Brothers Inc., Credit Suisse First Boston Corporation, General Electric Capital Corporation and Lehman Commercial Paper Inc. on January 29, 2002. Under the credit
agreement, the lenders advanced Regal Cinemas $270.0 million through a senior secured term loan and have made available, subject to the satisfaction of conditions customary for extensions of
credit of this
type, an additional $100.0 million through a senior secured revolving credit facility. The term loan will amortize at a rate of 5% per annum for the first five years, with the remaining 75% due
on January 29, 2008. The revolving credit facility became available on January 29, 2002 and will be available until January 29, 2007. At March 28, 2002, there were no
amounts outstanding on the revolving credit facility.

Borrowings
bear interest, at Regal Cinemas' option, at either the base rate or Eurodollar rate plus, in each case, an applicable margin. The applicable margin for loans under the
revolving credit facility is subject to adjustment based upon the consolidated total leverage ratio of Regal Cinemas. The base rate is a fluctuating interest rate equal to the higher of (a) the
British Banking Association's prime rate or (b) the Federal Funds Effective Rate plus 0.5%. At March 28, 2002, interest on the senior credit facility was 5.375%.

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Regal
Cinemas may prepay borrowings under the credit agreement in whole or in part, in minimum amounts and subject to other conditions set forth in the credit agreement. Regal Cinemas is
required to make mandatory prepayments to the lenders from the net cash proceeds from asset sales in particular circumstances specified in the credit agreement; up to 50% of excess cash flow; and the
net cash proceeds from new debt or equity issuances in particular circumstances specified in the credit agreement.

Regal
Cinemas' obligations are secured by, among other things, the capital stock of most of its subsidiaries, mortgages on most of its properties and a security interest in substantially
all of its assets.

The
credit agreement includes various financial covenants such as consolidated debt to EBITDA ratios and capital expenditure limitations. The credit agreement also contains customary
covenants, including limitations on Regal Cinemas' ability to incur debt, and events of default, including a change of control, as defined in the credit agreement. The credit agreement also limits
Regal Cinemas' ability to pay dividends, to make advances and otherwise to engage in intercompany transactions.

Regal Cinemas Senior Subordinated NotesOn January 29, 2002, Regal Cinemas issued $200.0 million aggregate
principal amount of 93/8% senior subordinated notes due 2012. Interest on the notes is payable semi-annually on February 1 and August 1 of each year, and the
notes mature on February 1, 2012. The notes are guaranteed by most of Regal Cinemas existing subsidiaries and are unsecured, ranking behind Regal Cinemas' obligations under its senior credit
facility and any future senior indebtedness.

Regal
Cinemas has the option to redeem the notes, in whole or in part, at any time on or after February 1, 2007 at redemption prices declining from 104.688% of their principal
amount on February 1, 2007 to 100% of their principal amount on or after February 1, 2010, plus accrued interest. At any time on or prior to February 1, 2005, Regal Cinemas may
also redeem up to 35% of the aggregate principal
amount of the notes at a redemption price of 109.375% of their principal amount, plus accrued interest, within 90 days of an underwritten public offering of common stock of Regal Cinemas or of
a future underwritten public offering of the Company's common stock, the proceeds of which are used as a contribution to the equity of Regal Cinemas. Upon a change of control, as defined in the
indenture pursuant to which the notes were issued, Regal Cinemas is required to offer to purchase the notes at a purchase price equal to 101% of their principal amount, plus accrued interest. In
addition, the indenture limits Regal Cinemas' and its subsidiaries' ability to, among other things, incur additional indebtedness and pay dividends on or repurchase capital stock.

As
described in Note 4"Subsequent Events", on April 17, 2002, Regal Cinemas sold $150 million principal amount of 93/8% senior
subordinated notes due 2012, which were issued under the indenture pursuant to which Regal Cinemas sold in January 2002 the $200 million principal amount of 93/8% senior
subordinated notes due 2012.

United Artists Term Credit FacilityThe United Artists Term Credit Facility represents a 72.5% reinstatement of the amounts
owed to lenders, other than Anschutz, under the pre-petition credit facility. Borrowers under the term facility include certain United Artists entities and certain of their subsidiaries.
The term facility provides for interest to be accrued at varying rates, with interest payable monthly. Principal payments under the term facility are $0.6 million quarterly from June 30,
2001 through December 31, 2003 and $6.3 million payable each quarter during 2004, with the remaining principal balance due on February 2, 2005. Additional principal repayments may
also be required as a result of asset sales or the issuance of certain debt or equity securities. The term facility is secured by, among other things, the capital stock of United Artists Theatre
Circuit and certain of its subsidiaries. Any such security interests held by the lenders under the term facility are subordinate to the security interests held by the lenders under the
$35.0 million United Artists revolving credit facility as described below. The term facility contains certain provisions that require United Artists to maintain certain financial ratios and
places limitations on, among other things, capital expenditures and additional

12

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indebtedness. The interest rate at March 28, 2002 was 5.85%. As described in Note 4"Subsequent Events", the United Artists Term Credit Facility was repaid in connection
with Regal's initial public offering.

United Artists Revolving Credit FacilityThe $35.0 million United Artists Revolving Credit Facility (the "UA Revolver")
is a $35.0 million revolving credit facility (with a sublimit of $10.0 million related to the issuance of letters of credit, of which there were $1.6 million outstanding at
March 28, 2002) repayable in full on August 2, 2004. The commitment may be reduced as the result of issuance of certain debt or equity securities. Borrowers under the UA Revolver include
certain United Artists entities and certain of their subsidiaries. The UA Revolver provides for interest to be accrued at varying rates, with interest payable monthly. The UA Revolver is secured by
the same collateral as is the term facility described above. The UA Revolver contains certain provisions that require United Artists to maintain certain financial ratios and places limitations on,
among other things, capital expenditures and additional indebtedness. Such provisions are substantially the same as those within the term facility described above. The interest rate at
March 28, 2002 was 4.68%. The UA Revolver was terminated in May 2002.

Edwards Senior Term Loan and Subordinated NotesThe Edwards senior secured term loan is secured by substantially all assets of
Edwards and bears interest at Libor plus a margin, as defined (6.75% at March 28, 2002). Interest is payable monthly and principal payments are due in various amounts ranging from
$2.1 million to $9.1 million beginning June 27, 2002 and continuing quarterly through March 31, 2005, with a final principal payment of $126.7 million due on the
maturity date of June 30, 2005. Mandatory prepayments are required based on certain events such as receipt of cash proceeds related to dispositions of assets, refinancing of indebtedness or
when allowed claims under the Edwards Plan elect or receive the unsecured note option. The senior secured term loan agreement contains various affirmative, restrictive and financial covenants,
including various financial ratios and relationships.

The
Edwards Subordinated Notes are payable to Anschutz ($8 million) and Oaktree's Principal Activities Group. The notes bear interest at between 11% and 13% per year, as defined,
with principal and interest due on September 29, 2005.

As
described in Note 4"Subsequent Events," on April 17, 2002, Regal Cinemas sold $150 million principal amount of 93/8% senior
subordinated notes due 2012, which were issued under the indenture pursuant to which Regal Cinemas sold in January 2002 the $200 million principal amount of 93/8% senior
subordinated notes due 2012. The proceeds of the notes together with cash on hand at Regal Cinemas, Inc., were used to repay the Edwards term loan the Edwards Subordinated Notes.

Lease Financing ArrangementsThese obligations primarily represent capitalized lease obligations resulting from the
requirements of Emerging Issues Task Force No. 97-10,The Effect of Lessee Involvement in Asset Construction,released in fiscal
1998.

8    INCOME TAXES

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. 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.

No
benefit for income taxes was recorded for the quarter ended March 29, 2001 because the Company recorded an offsetting valuation allowance against the resulting deferred tax
asset, as it was

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more likely than not that such deferred tax assets would not be realized. Accordingly, the effective tax rate for 2001 is 0%. The provision for income taxes of $12.3 million for the quarter
ended March 28, 2002 reflects an effective tax rate of approximately 56.8%. Excluding the effects of minority interest in
earnings of consolidated subsidiaries recorded in the accompanying statement of operations for the quarter ended March 28, 2002, the Company's effective tax rate is approximately 40.5%.

9    MANDATORY REDEEMABLE PREFERRED STOCK

As of March 28, 2002, Edwards had authorized and issued 56,000 shares (44,000 shares to Anschutz and 12,000 shares to Oaktree's Principal Activities Group)
of $0.001 par value, mandatory redeemable Series A preferred stock and 15,000 shares of Edwards' mandatory redeemable Series B preferred stock, $0.001 par value, to three other
shareholders.

As
described in Note 4"Subsequent Events" and Note 11"Related Party Transactions," on April 17, 2002, the Company redeemed approximately
$75.4 million of mandatory redeemable Series A and Series B preferred stock of Edwards that was held by Anschutz, Oaktree's Principal Activities Group and members of the Edwards family.

10    CONTINGENCIES

Regal Cinemas, Inc., Edwards and United Artists are defendants in a number of claims arising from their decision to file voluntary petitions for relief
under Chapter 11 and to close theatre locations or to cease construction of theatres on sites for which such entities had contractual obligations to lease such property. The Company believes it has
adequately provided for the settlement of such claims. Regal Cinemas, Inc., Edwards and United Artists are also presently involved in various legal proceedings arising in the ordinary course of
their business operations, including personal injury claims, employment matters and contractual disputes. Upon the filing of the petitions, the Applicable Bankruptcy Court imposed a stay applicable to
all entities, of, among other things, the commencement or continuation of judicial, administrative, or other actions or proceedings against Regal Cinemas, Inc., Edwards and United Artists that
were or could have been commenced before the bankruptcy petitions. 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.

11    RELATED PARTY TRANSACTIONS

Edwards Bankruptcy Claims

Under the Edwards Plan, Anschutz and Oaktree's Principal Activities Group have agreed to contribute to Edwards $0.90 for each $1.00 of allowed general unsecured
claims in excess of $55.0 million, up to $13.5 million. For each $900 contributed, Anschutz and Oaktree's Principal Activities Group will receive $1,044, up to a maximum of $15,663,333,
from Ms. Carole Ann Ruoff and Ms. Joan Edwards Randolph, both former stockholders of Edwards; and from Edwards Affiliated Holdings, LLC, a company controlled by Mr. W. James
Edwards, another former stockholder of Edwards. Regal will also acquire up to 331,451 shares of its Class A common stock from Edwards Affiliated Holdings, LLC, based on the dollar amount
contributed by Anschutz and Oaktree's Principal Activities Group. Anschutz and Oaktree's Principal Activities Group will, in turn, receive the same number of shares from Regal, and will also receive
from Ms. Ruoff and Ms. Randolph an aggregate of up to $7,384,469 in cash, in each instance based on the amount contributed and allocated between Anschutz and Oaktree's Principal
Activities Group in relation to their respective contributions.

In
addition, Anschutz and Oaktree's Principal Activities Group will contribute to Edwards $0.90 for each $1.00 of allowed general unsecured claims in excess of $70.0 million. In
exchange for these contributions, Regal will acquire up to 1,383,461 shares of its Class A common stock from Edwards Affiliated Holdings, LLC based on the amount contributed by Anschutz and
Oaktree's Principal

14

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Activities Group. Anschutz and Oaktree's Principal Activities Group will, in turn, receive the same number of shares from Regal, and will also receive from Ms. Ruoff and Ms. Randolph up
to an aggregate of $5,935,531 in cash, in each instance based on the amount contributed and allocated between Anschutz and Oaktree's Principal Activities Group in relation to their respective
contributions.

Redemption of Edwards' Series A Preferred Stock and Series B Preferred Stock

In connection with the formation of Regal, Edwards issued 135,000 shares of its Class A common stock to the holders of Edwards' Series A preferred
stock and 115,000 shares of its Class B common stock to the holders of Edwards' Series B preferred stock in consideration for the elimination of voting rights on such preferred stock.

On
April 17, 2002, Regal Cinemas used a portion of the proceeds from the 93/8% senior subordinated notes issued on April 17, 2002 to cause Edwards to redeem
its Series A and Series B preferred stock. Anschutz received $47.8 million and Oaktree's Principal Activities Group received $11.9 million in the redemption of Edwards'
Series A preferred stock held by them. Edwards Affiliated Holdings, LLC, an entity controlled by Edwards' former stockholder and director, W. James Edwards, III, and Mr. Edwards' sisters
received an aggregate of $15.7 million in the redemption of the Edwards' Series B preferred stock held by them.

Payment of Edwards' Subordinated Notes

On April 17, 2002, Regal Cinemas used a portion of the proceeds from the 93/8% senior subordinated notes issued on April 17, 2002 to
cause Edwards to redeem from Anschutz approximately $9.6 million and from Oaktree's Principal Activities Group approximately $2.4 million owed on the Edwards Subordinated Notes issued by
Edwards to Anschutz and Oaktree's Principal Activities Group.

15

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Guaranties of Certain Edwards' Lease Obligations

On March 8, 2002, Anschutz entered into a Guaranty for the benefit of Starwood Wasserman Fresno LLC pursuant to which Anschutz unconditionally and
irrevocably agreed to guaranty the full and timely payment and performance of all of the duties, obligations and covenants of Edwards under Edwards' December 27, 1999 lease with Starwood
Wasserman Fresno LLC. The lease relates to property located in Fresno, California on which Edwards operates a theatre. Pursuant to the Guaranty, if Edwards defaults under the lease, whether by failing
to pay rent when due, failing to use the premises as a motion picture theatre facility, failing to maintain the premises or otherwise, Starwood Wasserman Fresno LLC may proceed immediately against
Anschutz or Edwards, or both, or may enforce against Anschutz or Edwards, or both, any rights it has under the lease or pursuant to applicable laws. Anschutz and Regal intend to have the Guaranty
terminated and replaced by a new guaranty from Regal, substantially in the form of the Guaranty, for the benefit of Starwood Wasserman Fresno LLC.

On
March 8, 2002, Anschutz entered into a Guaranty for the benefit of Starwood Wasserman Ontario LLC pursuant to which Anschutz unconditionally and irrevocably agreed to guaranty
the full and timely payment and performance of all of the duties, obligations and covenants of Edwards under Edwards' July 16, 1999 lease with Starwood Wasserman Ontario LLC. The lease relates
to property located in Ontario, California on which Edwards operates a theatre. Pursuant to the Guaranty, if Edwards defaults under the lease, whether by failing to pay rent when due, failing to use
the premises as a motion picture theatre facility, failing to maintain the premises or otherwise, Starwood Wasserman Ontario LLC may proceed immediately against Anschutz or Edwards, or both, or may
enforce against Anschutz or Edwards, or both, any rights it has under the lease or pursuant to applicable laws. Anschutz and Regal intend to have the Guaranty terminated and replaced by a new guaranty
from Regal, substantially in the form of the Guaranty, for the benefit of Starwood Wasserman Ontario LLC.

Bridge Facility

During December 2001, Regal Cinemas, Inc. entered into a bridge facility with Anschutz and an affiliate of Oaktree's Principal Activities Group.
Under the terms of the bridge facility, Regal Cinemas, Inc. paid commitment fees during January 2002 of $1.6 million to Anschutz and $400,000 to an affiliate of Oaktree's
Principal Activities Group, which in the aggregate was 1% of the total amount of available commitments under the bridge facility. This bridge facility was not drawn and terminated upon Regal
Cinemas, Inc.'s emergence from bankruptcy.

Other Transactions

During the first quarter of 2002, as members of the class of holders of Regal Cinemas, Inc.'s former senior credit facilities, Anschutz, Oaktree's
Principal Activities Group and Greenwich Street Capital Partners ("GSCP"), received $33.6 million, $5.6 million and $6.0 million, respectively, in respect of accrued but unpaid
interest. As members of the class of holders of Regal Cinemas Inc.'s subordinated debt, Anschutz received cash payments of approximately $129.5 million, Oaktree's Principal Activities
Group received cash payments of approximately $29.7 million and GSCP received cash payments of approximately $5.5 million in satisfaction of these claims, which payments equaled
approximately 20% of the principal amount of subordinated debt held by them. Anschutz received cash payments of approximately $3.2 million, Oaktree's Principal Activities Group received cash
payments of approximately $800,000 from Regal and GSCP received cash payments from Regal Cinemas, Inc. of approximately $50,000 in respect of certain documented expenses incurred in connection
with Regal Cinemas' restructuring. In addition, Regal paid GSCP $1.0 million for restructuring services.

16

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12    RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 supersedes Accounting Principles Board Opinion No. 16 (APB 16), "Business Combinations," and
primarily addresses the accounting for the cost of an acquired business (i.e., the purchase price allocation), including any subsequent adjustment to its cost. SFAS No. 142 primarily addresses
the accounting for goodwill and intangible asset subsequent to their acquisition (i.e., the post-acquisition accounting) and supersedes APB 17, "Intangible Assets." The most significant
changes made by SFAS No. 141 involve the requirement to use the purchase method of accounting for all business combinations, thereby eliminating use of the
pooling-of-interests method along with the establishment of new criteria for determining whether the Company should recognize intangible assets acquired in a business
combination separately from goodwill. SFAS No. 141 is effective for all business combinations initiated after June 30, 2001. The adoption of SFAS No. 141 did not have a material
impact on the Company's financial position or results of operations.

Under
SFAS No. 142, the Company can no longer amortize goodwill, reorganizational value in excess of amounts allocated to identifiable assets or indefinite lived intangible
assets, and will test for impairment at least annually at a reporting unit level. Additionally, the amortization period of intangible assets with finite lives is no longer limited to 40 years.
Other long-lived assets will continue to be amortized over their useful lives and reviewed for impairment in accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets to be Disposed Of," and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," issued in August 2001. SFAS
No. 142 is effective for fiscal years beginning after December 15, 2001 for all goodwill and other intangible assets including excess reorganization value recognized in an entity's
statement of financial position at that date, regardless of when those assets were initially recognized. The adoption of SFAS No. 142 did not have a material impact on the Company's financial
position and results of operations.

In
June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 establishes accounting standards for recognition and
measurement of the fair value of obligations associated with the retirement of long-lived assets when there is a legal obligation to incur such costs. Under SFAS No. 143, the costs
of retiring an asset will be recorded as a liability when the retirement obligation arises and will be amortized to expense over the life of the asset. SFAS No. 143 is effective for fiscal
years beginning after June 15, 2002. The Company is evaluating the impact of the
adoption of this standard and has not yet determined the effect of adoption on its financial position and results of operations.

In
August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which provides clarifications of certain
implementation issues with SFAS No. 121 along with additional guidance on the accounting for the impairment or disposal of long-lived assets. SFAS No. 144 supersedes SFAS
No. 121 and applies to all long-lived assets (including discontinued operations) and consequently amends APB 30, "Reporting the Effects of Disposal of a Segment of a Business." SFAS
No. 144 develops one accounting model (based on the model in SFAS No. 121) for long-lived assets that are to be disposed of by sale, as well as addresses the principal
implementation issues. SFAS No. 144 requires that entities measure long-lived assets that are to be disposed of by sale at the lower of book value or fair value less cost to sell.
That requirement eliminates APB 30's requirement that discontinued operations be measured at net realizable value or that entities include under "discontinued operations" in the financial statements
amounts for operating losses that have not yet occurred. Additionally, SFAS No. 144 expands the scope of discontinued operations to include all components of an entity with operations that
(1) the entity can distinguish from the rest of the entity and (2) the entity will eliminate from the ongoing operations of the entity in a disposal transaction.

17

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SFAS
No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001, and early application is encouraged. The adoption of SFAS
No. 144 did not have a material impact on the Company's financial position and results of operations.

In
July 2001, the American Institute of Certified Public Accountants issued Emerging Issues Task Force Topic No. D-98, which requires that equity securities,
with redemption features that are not solely within the control of the issuer, be classified outside permanent equity. This guidance was effective for the Company's fourth quarter and is to be applied
retroactively. The adoption of this guidance did not have a material impact on the Company's financial position or results of operations.

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL  CONDITION AND RESULTS OF OPERATIONS

The information in this Form 10-Q 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-Q,
including, without limitation, certain statements under "Management's Discussion and Analysis of Financial Condition and Results of Operations" may constitute forward-looking statements. These
forward-looking statements involve risks and uncertainties. Our actual results could differ materially from those indicated in these statements as a result of certain risk factors as more fully
discussed below and under the heading "Risk Factors" contained in our final prospectus dated May 8, 2002 related to
our initial public offering. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove
to be correct. The following analysis of the financial condition and results of operations of Regal Entertainment Group ("Regal" or the "Company") should be read in conjunction with the Unaudited
Condensed Consolidated Financial Statements and Notes thereto included herein.



We are the largest domestic motion picture exhibitor with 5,829 screens in 553 theatres in 36 states as of March 28, 2002. We primarily conduct our operations
through our wholly owned subsidiaries, Regal Cinemas, Edwards and Regal CineMedia, and our approximately 90% owned subsidiary United Artists.

Regal
was created through a series of transactions during 2001 and 2002. Anschutz acquired controlling equity interests in United Artists and Edwards upon United Artists' emergence from
bankruptcy reorganization on March 2, 2001 and Edwards' emergence from bankruptcy reorganization on September 29, 2001. On January 29, 2002, Anschutz acquired a controlling equity
interest in Regal Cinemas, Inc. when Regal Cinemas, Inc. and its subsidiaries emerged from bankruptcy reorganization. Anschutz exchanged its controlling equity interest in Regal
Cinemas, Inc. for a controlling equity interest in Regal Cinemas immediately thereafter. Regal Cinemas, Inc. is a wholly owned subsidiary of Regal Cinemas. In addition, Regal CineMedia
was formed in February 2002 to focus on the development of ancillary revenues.

The
Company's financial statements reflect the results of operations from the dates Anschutz acquired its controlling equity interests in United Artists, Edwards and Regal Cinemas. These
controlling equity interests have been recorded in the Company's financial statements at Anschutz's combined historical cost basis. Accordingly, the Company's financial statements for the quarter
ended March 29, 2001 reflect only the results of United Artists from March 2, 2001. The Company's results of operations for the period ended March 28, 2002 include the results of
operations of United Artists (from January 4, 2002), Edwards (from December 28, 2001), and Regal Cinemas (from January 24,

18

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2002). As of March 28, 2002, Regal CineMedia had not generated significant revenue, incurred significant operating expenses or made significant capital expenditures.

The
Company believes its historical results are not indicative of its current operations, and, as a result, has not provided an in-depth comparison of the quarter ended March 28,
2002 results versus those for the quarter ended March 29, 2001 because (i) its historical results do not include a full thirteen weeks of operating results for Regal Cinemas or United
Artists for the quarter ended March 28, 2002, (ii) its historical results do not reflect the results of operations for Regal Cinemas or Edwards for the quarter ended March 29,
2001 and these results are significant to the Company, and (iii) our capital structure has changed significantly subsequent to the Company's quarter ended March 29, 2001. Therefore, the
Company does not believe an in-depth period-to-period comparison of these results would be useful in understanding its current operations.



Our financial statements are prepared in conformity with accounting principles generally accepted in the United States, 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.
Such estimates and judgments are evaluated and modified as necessary on an ongoing basis. We believe that the following significant accounting policies may involve a higher degree of judgment and
complexity:



The Company generates revenues primarily from admissions and concession sales. Additional revenues are generated by electronic video games located adjacent to the
lobbies of certain of the Company's theatres and by on-screen advertisements, and rebates from concession vendors. Direct theatre costs consist of film rental and advertising costs, costs
of concessions and theatre operating expenses. Film rental costs depend on 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. Theatre operating expenses consist primarily of theatre labor and
occupancy costs.

19

---



The following table sets forth the percentage of total revenues represented by certain items included in the Company's unaudited condensed consolidated statements
of operations for the quarters ended March 28, 2002 and March 29, 2001.

Quarter Ended
March 28, 2002

Quarter Ended
March 29, 2001Revenues:Admissions

69.1
%
68.3
%Concessions

27.5

27.8Other operating revenues

3.4

3.9Total operating revenues

100.0

100.0Direct theatre costs:Film rental and advertising costs(1)

51.3

51.4Cost of concessions(2)

13.9

11.3Other theatre operating expenses(3)

37.4

57.6General and administrative expenses(3)

3.8

5.3Sub-total(3)

80.5

101.2Depreciation and amortization(3)

6.7

11.8Merger and restructuring expenses(3)

1.9

Gain on disposal and impairment of operating assets(3)



Total operating expenses

89.1

113.0Operating income (loss)

10.9
%
(12.5
)%


---

Total
revenues, operating income (loss) and net income (loss) for the quarter ended March 28, 2002 were $414.1 million, $45.2 million and $10.5 million compared to $29.4 million, ($3.7
million), and ($6.8 million) for the quarter ended March 29, 2001. As described in"Overview"above, the Company's historical results of operations for
March 29, 2001 do not reflect the results of operations for Regal Cinemas and Edwards whereas the historical results of operations for March 28, 2002 reflect a full thirteen weeks of operations for
Edwards, twelve weeks of operations for United Artists and nine weeks of operations for Regal Cinemas. As such, the Company does not believe an in-depth comparison of these results would be useful in
understanding its current operations.

EBITDA

EBITDA (earnings before depreciation and amortization expense, merger and restructuring expenses, and gain on disposal and impairment of operating assets) was
approximately $80.7 million, or 19.5% of
total revenues, for the quarter ended March 28, 2002 and was $(0.3) million, or (1.2%) of total revenues, for the quarter ended March 29, 2001.



Cash flows generated from operating activities were approximately $27.7 million compared to a use of approximately $7.5 million in 2001. The primary difference
was attributable to differences in net

20

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income (loss), non cash items and changes in working capital items. Capital expenditures were $15.1 million in 2002 compared to $0.5 million in 2001. This difference is primarily due to the inclusion
of Edwards, Regal Cinemas and twelve weeks of United Artists in 2002. In addition, Regal Cinemas, Inc. had $166.7 million of cash on the date Anschutz acquired a controlling equity interest therein.



The Company primarily conducts its operations through its subsidiaries: Regal Cinemas, United Artists, Edwards and Regal CineMedia. The Company was formed in the
first quarter of 2002 and expects its primary uses of cash to be for operating expenses and general corporate purposes related to corporate operations. The Company's principal sources of liquidity
will be cash from its operating subsidiaries and proceeds from the Company's May 2002 initial public offering. In the Company's operating subsidiaries, principal uses of cash will be for
operating expenses, capital expenditures, capital and debt service. The principal sources of liquidity for the Company's theatre subsidiaries will be cash generated from their operations, cash on hand
and the revolving credit facilities provided for under the Regal Cinemas senior credit facilities.

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 revenues are primarily cash transactions from admissions and concessions. 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 operating subsidiaries' capital expenditures through internally generated cash flow, cash on hand and financing activities. The Company's capital
requirements have historically arisen principally in connection with acquisitions of theatres, new theatre openings, adding new screens to existing theatres and upgrading the Company's theatre
facilities. The Company intends
to continue to grow its theatre circuit through selective expansion and acquisition opportunities. The Company anticipates that capital expenditures related to its theatre circuit will be
approximately $80.0 million in 2002. The Company has commitments to build two new theatres in 2002 and one new theatre in 2003 representing an aggregate of 44 screens, and, in 2002, expects to
add 15 screens to existing theatres. In addition to capital expenditures associated with its theatre operations, the Company expects to have capital expenditures of approximately $35.0 million
in connection with Regal CineMedia during 2002, almost entirely in the second half of the year. The Company anticipates a significant portion of these capital expenditures to be made in connection
with the purchase of digital equipment to provide advertising and promotional services. During the quarter ended March 28, 2002, the Company invested $15.1 million in capital
expenditures.

As
the Company builds its digital network and attempts to grow its ancillary revenues, the Company expects Regal CineMedia to generate an operating loss in 2002. The Company's primary
sources of liquidity to fund these losses and capital expenditures will be cash on hand, cash from United Artists and cash from the May 2002 initial public offering.

As
of March 28, 2002, Regal Cinemas had $100 million available under its undrawn senior revolving credit facility, $270 million outstanding under its senior secured
term loan and $200 million of 93/8% senior subordinated notes due 2012. In April 2002, Regal Cinemas issued a letter of credit for $15 million thereby reducing the
availability under its senior revolving credit facility. On April 17, 2002, Regal Cinemas sold $150 million principal amount of 93/8% senior subordinated notes due 2012,
which were issued under the indenture pursuant to which Regal Cinemas sold in January 2002 $200 million principal amount of 93/8% senior subordinated notes due 2012. The proceeds
from the notes issued on

21

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April 17, 2002, together with cash on hand at Regal Cinemas, Inc., was used to repay approximately $180.7 million of senior bank debt including accrual interest of Edwards, to redeem
approximately $12.0 million of Edwards Subordinated Notes including accrual interest primarily held by Anschutz and Oaktree's Principal Activities Group, and to redeem approximately
$75.4 million of preferred stock of Edwards held by Anschutz, Oaktree's Principal Activities Group and members of the Edwards family.

In
May 2002, the Company issued 18.0 million shares of its Class A common stock in an initial public offering. The initial public offering was effected through a
Registration Statement on Form S-1 (File No. 333-84096) that was declared effective by the Securities and Exchange Commission on May 8, 2002. All
18.0 million shares were sold at an initial public offering price of $19.00 per share, for an aggregate offering price of $342 million, through a syndicate of underwriters managed by
Credit Suisse First Boston Corporation, Lehman Brothers Inc., Bear, Stearns & Co. Inc. and Salomon Smith Barney Inc.

The
Company paid to the underwriters underwriting discounts and commissions totaling approximately $23.1 million in connection with the offering. In addition, the Company
estimates additional expenses of approximately $3.1 million in connection with the offering. The net offering proceeds, after deducting underwriting discounts, commissions and other offering
expenses, were approximately $315.9 million. No offering expenses were paid directly or indirectly to any of the Company's directors or officers (or their associates) or persons owning ten
percent or more of any class of equity securities or to any other affiliates.

The
Company used a portion of the net proceeds to repay approximately $240.7 million of principal and accrued interest owed by United Artists under its term credit agreement (see
Note 6"Long-Term Obligations") and intends to use the remaining portion to fund operating costs and capital expenditures of Regal CineMedia and for general corporate
purposes. Pending these uses, since the time of receipt of the net proceeds, the Company has invested the remaining net proceeds of this offering in short-term money market and money
market equivalent securities.

The
amounts that the Company will actually expend for capital expenditures, working capital and other general corporate purposes will vary significantly depending on a number of factors,
including future revenue growth, if any, and the amount of cash that the Company generates from operations. As a result, the Company will retain broad discretion over the allocation of net proceeds of
the offering. The Company may also use a portion of the net proceeds for the acquisition of businesses, products and technologies.



The Company primarily leases its theatres pursuant to long-term non-cancelable operating leases. As of March 28, 2002, after giving
pro forma effect the April 17, 2002 notes offering, May 2002 initial public offering and the related use of proceeds therefrom (see Note 4"Subsequent Events"), the

22

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Company's estimated contractual cash obligations and commercial commitments over the next several years are as follows (in thousands):

|                                   |  | Payments Due by Period
|---------------------------------- |  | ----------------------
|
|Contractual Cash Obligations       |  |                       
|Long-term debt                     |  | $                     
|Capital lease obligations          |  |                       
|Lease financing arrangements       |  |                       
|Operating leases                   |  |                       
|General unsecured creditors        |  |                       
|Other long term obligations        |  |                       
|                                   |  |                       
|Total contractual cash obligations |  | $                     
|                                   |  |                       

|                             |  | Amount of Commitment Expiration per Period
|---------------------------- |  | ------------------------------------------
|
|Other Commercial Commitments |  |                                           
|Lines of credit              |  | $                                         
|                             |  |                                           
|Total commercial commitments |  | $                                         
|                             |  |                                           

The
Company believes that the amount of cash and cash equivalents on hand, cash flow expected from operations, availability under its revolving credit facilities and proceeds from the
May 2002 initial public offering 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 at least 12 months.

The
following is a description of material indebtedness of the Company as of March 28, 2002 after giving effect to the events which occurred in April and May 2002,
described above and in Note 4"Subsequent Events":



Regal Cinemas entered into a senior credit agreement with several financial institutions including Lehman Brothers Inc., Credit Suisse First Boston
Corporation, General Electric Capital Corporation and Lehman Commercial Paper Inc. on January 29, 2002. Under the credit agreement, the lenders advanced Regal Cinemas
$270.0 million through a senior secured term loan and have made available, subject to the satisfaction of conditions customary for extensions of credit of this type, an additional
$100.0 million through a senior secured revolving credit facility. The term loan will amortize at a rate of 5% per annum for the first five years, with the remaining 75% due on
January 29, 2008. The revolving credit facility became available on January 29, 2002 and will be available until January 29, 2007.

Borrowings
bear interest, at Regal Cinemas' option, at either the base rate or Eurodollar rate plus, in each case, an applicable margin. The applicable margin for loans under the
revolving credit facility is subject to adjustment based upon the consolidated total leverage ratio of Regal Cinemas. The base rate is a fluctuating interest rate equal to the higher of (a) the
British Banking Association's prime rate or (b) the Federal Funds Effective Rate plus 0.5%. Regal Cinemas must also pay customary administration fees, expenses and commitment fees on the unused
portion of the revolving credit facility and provide indemnities for liabilities arising in particular circumstances.

23

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Regal
Cinemas may prepay borrowings under the credit agreement in whole or in part, in minimum amounts and subject to other conditions set forth in the credit agreement. Regal Cinemas is
required to make mandatory prepayments to the lenders from:



The
mandatory prepayment of the obligations under the credit agreement is subject to specified exceptions. The lenders under the term loan facility may elect to decline any mandatory
prepayment.

Regal
Cinemas' obligations are secured by, among other things, the capital stock of most of its subsidiaries, mortgages on most of its properties and a security interest in substantially
all of its assets.

The
credit agreement includes several financial covenants. Regal Cinemas cannot permit, at the end of each applicable fiscal quarter:



The
credit agreement also contains customary covenants, including limitations on Regal Cinemas' ability to incur debt, and events of default, including a change of control, as defined in
the credit agreement. The credit agreement also limits Regal Cinemas' ability to pay dividends, to make advances to the Company or its other subsidiaries and otherwise to engage in intercompany
transactions. These limitations will restrict its ability to fund operations outside of Regal Cinemas with funds generated at Regal Cinemas.



On January 29, 2002, Regal Cinemas issued $200.0 million aggregate principal amount of 93/8% senior subordinated notes due 2012.
Subsequently, on April 17, 2002, Regal Cinemas issued an additional $150.0 million aggregate principal amount of 93/8% senior subordinated notes due 2012 with

24

---

identical terms. The January notes were initially purchased by Credit Suisse First Boston Corporation and Lehman Brothers Inc., and the April notes were initially purchased by Credit Suisse
First Boston Corporation. In each instance, the notes were resold to various qualified institutional buyers and non-U.S. persons pursuant to Rule 144A and Rule 903 or
Rule 904, respectively, under the Securities Act of 1933. Interest on the notes is payable semi-annually on February 1 and August 1 of each year, and the notes mature
on February 1, 2012. The notes are guaranteed by most of Regal Cinemas' existing subsidiaries, and, under the circumstances specified in the indenture, future subsidiaries will also be required
to guarantee the notes. The notes are unsecured and rank behind Regal Cinemas' obligations under its senior credit facility and any future senior indebtedness.

Regal
Cinemas has the option to redeem the notes, in whole or in part, at any time on or after February 1, 2007 at redemption prices declining from 104.688% of their principal
amount on February 1, 2007 to 100% of their principal amount on or after February 1, 2010, plus accrued interest. At any time on or prior to February 1, 2005, Regal Cinemas may
also redeem up to 35% of the aggregate principal amount of the notes at a redemption price of 109.375% of their principal amount, plus accrued interest, within 90 days of an underwritten public
offering of common stock of Regal Cinemas or of a future underwritten public offering of the Company's common stock, the proceeds of which are used as a contribution to the equity of Regal Cinemas.
Upon a change of control, as defined in the indenture
pursuant to which the notes were issued, Regal Cinemas is required to offer to purchase the notes at a purchase price equal to 101% of their principal amount, plus accrued interest. In addition, the
indenture limits Regal Cinemas' and its subsidiaries' ability to, among other things, incur additional indebtedness and pay dividends on or repurchase capital stock.

In
May 2002, Regal Cinemas filed a registration statement under the Securities Act of 1933 pursuant to a registration rights agreement entered into in connection with the
93/8% senior subordinated notes offerings. The registration statement will allow the eligible holders of the notes to exchange their notes for notes registered under the Securities Act
of 1933. Regal Cinemas will not receive any proceeds from the transaction.



During 2000, Regal Cinemas, Inc. entered into a sale and leaseback transaction with an unaffiliated third party, involving 15 of its owned theatres. Under
the terms of this transaction, Regal Cinemas, Inc. sold the land and related improvements of the theatres for $45.2 million and leased them back for an initial lease term of
20 years, with an option to extend it for up to 20 additional years. Regal Cinemas accounts for these leases as operating leases.



For some of the Company's new theatre sites built in fiscal years 1999, 2000 and 2001, the Company was considered the owner (for accounting purposes) of the
theatre during the construction period. In accordance with Emerging Issues Task Force No. 97-10, the Company was required to record the balance sheet obligations when the
construction of the theatre was completed resulting in payments being recorded as interest expense and principal reduction rather than rent expense. These leases typically run for a period of
20 years.



In December 1995, United Artists Theatre Circuit ("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,

25

---

the buyer of the properties issued publicly traded pass-through certificates. Several of its properties included in the sale and leaseback transaction have been determined by UATC to be
economically obsolete for theatre use. UATC amended the lease on March 7, 2001 to allow UATC to terminate the master lease with respect to the obsolete properties, allow the owner trustee to
sell those properties and pay down the underlying debt and reduce the amount of rent paid by UATC on the lease. Approximately $97.4 million in principal amount of pass-through
certificates are outstanding as of March 28, 2002.

In
connection with the 1995 sale and leaseback transaction, UATC entered into a Participation Agreement that requires United Artists 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 dividends.

On
November 8, 1996, United Artists entered into a sale and leaseback transaction, pursuant to which United Artists 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 United Artists an
option to extend the term of the lease for an additional 10 years. Two of the theatres have been determined by United Artists to be economically obsolete and are no longer in operation.

In
December 1997, United Artists entered into a sale and leaseback transaction, pursuant to which United Artists 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 United Artists 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, United Artists entered into a sale and leaseback transaction on one existing theatre. Proceeds were received in the amount of $5.4 million by United Artists 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.



During 2000, Edwards entered into two sale leaseback transactions whereby Edwards sold two of its properties and leased them back from an unaffiliated third
party. The sale resulted in a $3.9 million gain that was deferred and is being amortized over the life of the leaseback. As part of these transactions, an additional location was sold with a
portion of the building being leased back for corporate use. The related leases are being accounted for as operating leases.

During
1999, Edwards entered into four sale and leaseback transactions whereby Edwards sold four theatres and leased them back from an unaffiliated third party. The sale of three of
these theatres resulted in a $1.2 million gain that was deferred and is being amortized over the life of the lease. The sale of the remaining theatre resulted in a $0.3 million loss
which was recognized in 1999. The related leases are being accounted for as operating leases.



Regal Cinemas, Inc. and Edwards have bankruptcy claims that remain unsettled and are subject to ongoing negotiation and possible litigation. At March 28,
2002, Regal Cinemas had accrued approximately $46.9 million and Edwards had accrued approximately $31.9 million for the estimated costs to resolve their respective bankruptcy claims. In
the opinion of management, based on its examination of these matters, its experience to date and discussions with legal counsel, the outcome of these legal matters, after taking into consideration the
amounts already accrued, is not expected to have a material effect on liquidity. To the extent the Regal Cinemas claims are allowed by the

26

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bankruptcy court, they will be funded with cash on hand, cash flow from operations or borrowings under Regal Cinemas revolving credit facility. To the extent the Edwards claims are allowed by the
bankruptcy court, they will be funded from restricted cash that has been set aside, cash on hand, cash from operations and, if the allowed claims exceed $55 million, from contributions by
Anschutz and Oaktree's Principal Activities Group. The timing of these claims will depend upon the resolution of these claims. See also Note 2"Chapter 11 Proceedings" and
Note 11"Related Party Transactions."



In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business
Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 supersedes Accounting Principles Board Opinion No. 16 (APB 16), "Business Combinations," and
primarily addresses the accounting for the cost of an acquired business (i.e., the purchase price allocation), including any subsequent adjustment to its cost. SFAS No. 142 primarily addresses
the accounting for goodwill and intangible asset subsequent to their acquisition (i.e., the post-acquisition accounting) and supersedes APB 17, "Intangible Assets." The most significant
changes made by SFAS No. 141 involve the requirement to use the purchase method of accounting for all business combinations, thereby eliminating use of the
pooling-of-interests method along with the establishment of new criteria for determining whether the Company should recognize intangible assets acquired in a business
combination separately from goodwill. SFAS No. 141 is effective for all business combinations initiated after June 30, 2001. The adoption of SFAS No. 141 did not have a material
impact on the Company's financial position or results of operations.

Under
SFAS No. 142, the Company can no longer amortize goodwill, reorganizational value in excess of amounts allocated to identifiable assets or indefinite lived intangible
assets, and will test for impairment at least annually at a reporting unit level. Additionally, the amortization period of intangible assets with finite lives is no longer limited to 40 years.
Other long-lived assets will continue to be amortized over their useful lives and reviewed for impairment in accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets to be Disposed Of," and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," issued in August 2001. SFAS
No. 142 is effective for fiscal years beginning after December 15, 2001 for all goodwill and other intangible assets including excess reorganization value recognized in an entity's
statement of financial position at that date, regardless of when those assets were initially recognized. The adoption of SFAS No. 142 did not have a material impact on the Company's financial
position and results of operations.

In
June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 establishes accounting standards for recognition and
measurement of the fair value of obligations associated with the retirement of long-lived assets when there is a legal obligation to incur such costs. Under SFAS No. 143, the costs
of retiring an asset will be recorded as a liability when the retirement obligation arises and will be amortized to expense over the life of the asset. SFAS No. 143 is effective for fiscal
years beginning after June 15, 2002. The Company is evaluating the impact of the adoption of this standard and has not yet determined the effect of adoption on its financial position and
results of operations.

In
August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," which provides clarifications of certain
implementation issues with SFAS No. 121 along with additional guidance on the accounting for the impairment or disposal of long-lived assets. SFAS No. 144 supersedes SFAS
No. 121 and applies to all long-lived assets (including discontinued operations) and consequently amends APB 30, "Reporting the Effects of Disposal of a Segment of a Business." SFAS
No. 144 develops one accounting model (based on the model in SFAS No. 121) for long-lived assets that are to be disposed of by sale, as well as addresses the principal
implementation issues. SFAS No. 144 requires that entities measure long-lived assets that are to be disposed of by sale at the lower of book value or fair value less cost to sell.
That requirement eliminates APB 30's

27

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requirement that discontinued operations be measured at net realizable value or that entities include under "discontinued operations" in the financial statements amounts for operating losses that
have not yet occurred. Additionally, SFAS No. 144 expands the scope of discontinued operations to include all components of an entity with operations that (1) the entity can distinguish
from the rest of the entity and (2) the entity will eliminate from the ongoing operations of the entity in a disposal transaction.

SFAS
No. 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001, and early application is encouraged. The adoption of SFAS
No. 144 did not have a material impact on the Company's financial position and results of operations.

In
July 2001, the American Institute of Certified Public Accountants issued Emerging Issues Task Force Topic No. D-98, which requires that equity securities,
with redemption features that are not solely within
the control of the issuer, be classified outside permanent equity. This guidance was effective for the Company's fourth quarter and is to be applied retroactively. The adoption of this guidance did
not have a material impact on the Company's financial position or results of operations.



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 season. 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 results for the next or any other quarter. The seasonality of
motion picture exhibition, however, has become less pronounced in recent years as studios have begun to release major motion pictures somewhat more evenly throughout the year.



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

Item 3.  QUANTITATIVE & QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's market risk is confined to interest rate exposure of its debt obligations that bear interest based on floating rates. Certain of the Company's
credit facilities provide for variable rate interest that could be adversely affected by an increase in interest rates. As of March 28, 2002, the Company had borrowings subject to variable
interest rates of $690.0 million under its credit facilities. A one-half percent rise in the interest rate on its variable rate indebtedness held at March 28, 2002 would have
increased reported interest expense by approximately $862,500 for the quarter ended March 28, 2002.

28

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PART IIOTHER INFORMATION    Item 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

On May 8, 2002, the Company's Registration Statement on Form S-1 (File No. 333-84096) under the Securities Act of 1933, relating to the Company's initial
public offering of shares of its Class A common stock, was declared effective, and the Company's Registration Statement on Form S-1 (File No. 333-87870)
filed under Rule 462(b) under the Securities Act of 1933 was declared effective. Under these registration statements, the Company registered and sold a total of 18.0 million
shares of Class A common stock. The offering commenced on May 9, 2002 and terminated after all 18.0 million shares were sold. All of the offered shares were sold at $19.00 per
share, for an aggregate offering price of $342.0 million, through a syndicate of underwriters managed by Credit Suisse First Boston Corporation, Lehman Brothers Inc., Bear,
Stearns & Co. Inc. and Salomon Smith Barney Inc.

Pursuant
to the terms of the underwriting agreement described in the registration statements, the underwriters were entitled to elect to sell up to 2.7 million additional shares
of the Company's Class A common stock, all of which were to be sold through the syndicate by the selling stockholders described in the registration statements. All 2.7 million shares
were sold at a price of $19.00 per share for an aggregate offering price of $51.3 million. Together with the 18.0 million shares of Class A common stock sold by the Company, a
total of 20.7 million shares were sold at $19.00 per share for an aggregate offering price of $393.3 million.

The
Company paid underwriting discounts and commissions totaling approximately $23.1 million in connection with the offering. In addition, the Company estimates additional
expenses of approximately $3.1 million in connection with the offering. The net offering proceeds, after deducting underwriting discounts, commissions and other offering expenses totaling
approximately $26.2 million, were approximately $367.1 million, of which the Company received approximately $315.8 million and the selling stockholders received approximately
$51.3 million. No offering expenses were paid directly or indirectly to any of the Company's directors or officers (or their associates) or persons owning ten percent or more of any class of
the Company's equity securities or to any other affiliates of the Company.

The
Company used a portion of its net proceeds to repay approximately $240.7 million of principal and accrued interest owed by United Artists under its term credit agreement (see
Note 6"Long-Term
Obligations") and intends to use the remaining portion to fund operating costs and capital expenditures of Regal CineMedia and for general corporate purposes. Pending these uses and since the time of
receipt of the net proceeds, the Company has invested the remaining net proceeds from the offering in short-term money market and money market equivalent securities.

The
amounts that the Company will actually expend for capital expenditures, working capital and other general corporate purposes will vary significantly depending on a number of factors,
including future revenue growth, if any, and the amount of cash that the Company generates from operations. As a result, the Company will retain broad discretion over the allocation of its net
proceeds of the offering. The Company may also use a portion of its net proceeds for the acquisition of businesses, products and technologies.

29

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Item 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits:

|Exhibit No. |  | Exhibit Description                                                                                                                                                                                                             
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         |  | Amended and Restated Certificate of Incorporation of Registrant                                                                                                                                                                 
|3.2         |  | Amended and Restated Bylaws of Registrant (filed as Exhibit 3.4 to Registrant's Amendment No. 2 to Registration Statement on Form S-1 (Commission File No. 333-84096) filed on May 6, 2002 and incorporated herein by reference)

(b)  Reports
on Form 8-K.

None

30

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SIGNATURES

Pursuant to the requirements 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.

|                    |  | REGAL ENTERTAINMENT GROUP                                                 
|------------------- |  | --------------------------------------------------------------------------
|Date: June 24, 2002 |  | By:                                                                       
|                    |  | /s/AMY MILESAmy Miles Executive Vice President and
Chief Financial Officer

31

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EXHIBIT INDEX

|Exhibit No. |  | Exhibit Description                                                                                                                                                                                                             
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         |  | Amended and Restated Certificate of Incorporation of Registrant                                                                                                                                                                 
|3.2         |  | Amended and Restated Bylaws of Registrant (filed as Exhibit 3.4 to Registrant's Amendment No. 2 to Registration Statement on Form S-1 (Commission File No. 333-84096) filed on May 6, 2002 and incorporated herein by reference)
|            |  |                                                                                                                                                                                                                                 

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