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

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FORM 10-Q

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

For the quarterly period ended July 1, 2004

Commission file number: 001-31315

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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

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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 ý    No o

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange
Act): Yes ý    No o

Class A Common Stock54,707,659 shares outstanding at August 6, 2004

Class B
Common Stock89,216,142 shares outstanding at August 6, 2004



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TABLE OF CONTENTS



|PART IFINANCIAL INFORMATION
|----------------------------
|Item 1.                     
|                            
|                            
|                            
|                            
|Item 2.                     
|Item 3.                     
|Item 4.                     
|PART IIOTHER INFORMATION   
|Item 1.                     
|Item 4.                     
|Item 6.                     
|SIGNATURES                  

2

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PART IFINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

REGAL ENTERTAINMENT GROUP  UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                 |                                                 | July 1, 2004 |         | January 1, 2004 |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ------------ | ------- | --------------- | -
|
|ASSETS                                                                                                                                                                           |                                                 |              |         |                 |  
|CURRENT ASSETS:                                                                                                                                                                  |                                                 |              |         |                 |  
|                                                                                                                                                                                 | Cash and cash equivalents                       |              | $       | 356.1           |  
|                                                                                                                                                                                 | Restricted cash                                 |              |         | 0.6             |  
|                                                                                                                                                                                 | Trade and other receivables, net                |              |         | 31.2            |  
|                                                                                                                                                                                 | Inventories                                     |              |         | 8.6             |  
|                                                                                                                                                                                 | Prepaid expenses and other current assets       |              |         | 22.5            |  
|                                                                                                                                                                                 | Assets held for sale                            |              |         | 6.4             |  
|                                                                                                                                                                                 | Deferred income tax asset                       |              |         | 5.8             |  
|                                                                                                                                                                                 |                                                 |              |         |                 |  
|TOTAL CURRENT ASSETS                                                                                                                                                             |                                                 |              | 431.2   |                 |  
|PROPERTY AND EQUIPMENT:                                                                                                                                                          |                                                 |              |         |                 |  
|                                                                                                                                                                                 | Land                                            |              |         | 121.8           |  
|                                                                                                                                                                                 | Buildings, leasehold improvements and equipment |              |         | 2,022.8         |  
|                                                                                                                                                                                 | Construction in progress                        |              |         | 17.5            |  
|                                                                                                                                                                                 |                                                 |              |         |                 |  
|Total property and equipment                                                                                                                                                     |                                                 |              | 2,162.1 |                 |  
|Accumulated depreciation and amortization                                                                                                                                        |                                                 |              | (384.9  | )               |  
|                                                                                                                                                                                 |                                                 |              |         |                 |  
|Total property and equipment, net                                                                                                                                                |                                                 |              | 1,777.2 |                 |  
|GOODWILL                                                                                                                                                                         |                                                 |              | 196.4   |                 |  
|DEFERRED TAX ASSET                                                                                                                                                               |                                                 |              | 35.9    |                 |  
|OTHER NON-CURRENT ASSETS                                                                                                                                                         |                                                 |              | 36.9    |                 |  
|                                                                                                                                                                                 |                                                 |              |         |                 |  
|TOTAL ASSETS                                                                                                                                                                     |                                                 | $            | 2,477.6 |                 | $
|                                                                                                                                                                                 |                                                 |              |         |                 |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                             |                                                 |              |         |                 |  
|CURRENT LIABILITIES:                                                                                                                                                             |                                                 |              |         |                 |  
|                                                                                                                                                                                 | Current portion of debt obligations             |              | $       | 260.9           |  
|                                                                                                                                                                                 | Accounts payable                                |              |         | 149.9           |  
|                                                                                                                                                                                 | Accrued expenses                                |              |         | 47.6            |  
|                                                                                                                                                                                 | Income taxes payable                            |              |         | 41.2            |  
|                                                                                                                                                                                 | Deferred revenue                                |              |         | 75.5            |  
|                                                                                                                                                                                 | Bankruptcy claims and liabilities               |              |         | 1.3             |  
|                                                                                                                                                                                 |                                                 |              |         |                 |  
|TOTAL CURRENT LIABILITIES                                                                                                                                                        |                                                 |              | 576.4   |                 |  
|DEBT OBLIGATIONS                                                                                                                                                                 |                                                 |              | 1,635.8 |                 |  
|LEASE FINANCING ARRANGEMENTS                                                                                                                                                     |                                                 |              | 92.5    |                 |  
|CAPITAL LEASE OBLIGATIONS                                                                                                                                                        |                                                 |              | 24.2    |                 |  
|OTHER NON-CURRENT LIABILITIES                                                                                                                                                    |                                                 |              | 67.1    |                 |  
|                                                                                                                                                                                 |                                                 |              |         |                 |  
|TOTAL LIABILITIES                                                                                                                                                                |                                                 |              | 2,396.0 |                 |  
|MINORITY INTEREST                                                                                                                                                                |                                                 |              | 2.1     |                 |  
|STOCKHOLDERS' EQUITY:                                                                                                                                                            |                                                 |              |         |                 |  
|Class A common stock, $0.001 par value; 500,000,000 shares authorized, 54,562,179 and 52,774,904 shares issued and outstanding at July 1, 2004 and January 1, 2004, respectively |                                                 |              |        |                 |  
|Class B common stock, $0.001 par value; 200,000,000 shares authorized, 89,216,142 shares issued and outstanding                                                                  |                                                 |              | 0.1     |                 |  
|Preferred stock, $0.001 par value; none issued and outstanding                                                                                                                   |                                                 |              |        |                 |  
|Additional paid-in capital                                                                                                                                                       |                                                 |              | 36.2    |                 |  
|Retained earnings                                                                                                                                                                |                                                 |              | 43.2    |                 |  
|                                                                                                                                                                                 |                                                 |              |         |                 |  
|TOTAL STOCKHOLDERS' EQUITY                                                                                                                                                       |                                                 |              | 79.5    |                 |  
|                                                                                                                                                                                 |                                                 |              |         |                 |  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                                                                       |                                                 | $            | 2,477.6 |                 | $
|                                                                                                                                                                                 |                                                 |              |         |                 |  

See accompanying notes to unaudited condensed consolidated financial statements.

3

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REGAL ENTERTAINMENT GROUP    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

|                                           |                                                                                   | Quarter Ended
July 1, 2004 |        | Quarter Ended
June 26, 2003 |   | Two Quarters
Ended
July 1, 2004 |         | Two Quarters
Ended
June 26, 2003 |        
|------------------------------------------ | --------------------------------------------------------------------------------- | -------------------------- | ------ | --------------------------- | - | ------------------------------- | ------- | -------------------------------- | -------
|
|REVENUES:                                  |                                                                                   |                            |        |                             |   |                                 |         |                                  |        
|                                           | Admissions                                                                        |                            | $      | 450.2                       |   | $                               | 439.9   |                                  |        
|                                           | Concessions                                                                       |                            |        | 179.3                       |   |                                 | 172.7   |                                  |        
|                                           | Other operating revenue                                                           |                            |        | 43.6                        |   |                                 | 35.5    |                                  |        
|                                           |                                                                                   |                            |        |                             |   |                                 |         |                                  |        
|TOTAL REVENUE                              |                                                                                   |                            | 673.1  |                             |   | 648.1                           |         |                                  | 1,213.6
|OPERATING EXPENSES:                        |                                                                                   |                            |        |                             |   |                                 |         |                                  |        
|                                           | Film rental and advertising costs                                                 |                            |        | 243.7                       |   |                                 | 249.4   |                                  |        
|                                           | Cost of concessions                                                               |                            |        | 26.4                        |   |                                 | 24.0    |                                  |        
|                                           | Rent expense                                                                      |                            |        | 70.3                        |   |                                 | 70.3    |                                  |        
|                                           | Other operating expenses                                                          |                            |        | 160.1                       |   |                                 | 152.5   |                                  |        
|                                           | General and administrative expenses                                               |                            |        | 16.7                        |   |                                 | 15.8    |                                  |        
|                                           | Depreciation and amortization                                                     |                            |        | 43.3                        |   |                                 | 39.3    |                                  |        
|                                           | Merger and restructuring expenses and amortization of deferred stock compensation |                            |        | 1.6                         |   |                                 | 2.6     |                                  |        
|                                           | Net loss (gain) on disposal and impairment of operating assets                    |                            |        | (2.9                        | ) |                                 | 0.9     |                                  |        
|                                           | Gain on lawsuit settlement                                                        |                            |        |                            |   |                                 |        |                                  |        
|                                           |                                                                                   |                            |        |                             |   |                                 |         |                                  |        
|TOTAL OPERATING EXPENSES                   |                                                                                   |                            | 559.2  |                             |   | 554.8                           |         |                                  | 1,038.1
|                                           |                                                                                   |                            |        |                             |   |                                 |         |                                  |        
|INCOME FROM OPERATIONS                     |                                                                                   |                            | 113.9  |                             |   | 93.3                            |         |                                  | 175.5  
|OTHER (EXPENSE) INCOME:                    |                                                                                   |                            |        |                             |   |                                 |         |                                  |        
|                                           | Interest expense, net                                                             |                            |        | (21.4                       | ) |                                 | (15.4   | )                                |        
|                                           | Minority interest in earnings of consolidated subsidiaries                        |                            |        | 0.2                         |   |                                 | (0.1    | )                                |        
|                                           | Loss on extinguishment of debt                                                    |                            |        | (76.0                       | ) |                                 |        |                                  |        
|                                           | Other, net                                                                        |                            |        | (3.2                        | ) |                                 |        |                                  |        
|                                           |                                                                                   |                            |        |                             |   |                                 |         |                                  |        
|TOTAL OTHER EXPENSE, NET                   |                                                                                   |                            | (100.4 | )                           |   | (15.5                           | )       |                                  | (124.1 
|                                           |                                                                                   |                            |        |                             |   |                                 |         |                                  |        
|INCOME BEFORE INCOME TAXES                 |                                                                                   |                            | 13.5   |                             |   | 77.8                            |         |                                  | 51.4   
|PROVISION FOR INCOME TAXES                 |                                                                                   |                            | 6.1    |                             |   | 30.7                            |         |                                  | 21.2   
|                                           |                                                                                   |                            |        |                             |   |                                 |         |                                  |        
|NET INCOME                                 |                                                                                   | $                          | 7.4    |                             | $ | 47.1                            |         | $                                | 30.2   
|                                           |                                                                                   |                            |        |                             |   |                                 |         |                                  |        
|EARNINGS PER SHARE:                        |                                                                                   |                            |        |                             |   |                                 |         |                                  |        
|                                           | Basic                                                                             |                            | $      | 0.05                        |   | $                               | 0.34    |                                  | $      
|                                           | Diluted                                                                           |                            | $      | 0.05                        |   | $                               | 0.33    |                                  | $      
|AVERAGE SHARES OUTSTANDING (in thousands): |                                                                                   |                            |        |                             |   |                                 |         |                                  |        
|                                           | Basic                                                                             |                            |        | 143,466                     |   |                                 | 138,473 |                                  |        
|                                           | Diluted                                                                           |                            |        | 147,500                     |   |                                 | 143,267 |                                  |        

See accompanying notes to unaudited condensed consolidated financial statements.

4

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REGAL ENTERTAINMENT GROUP    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                    |                                                                               | Two Quarters
Ended
July 1, 2004                                                                    |                                           | Two Quarters
Ended
June 26, 2003 |     
|--------------------------------------------------- | ----------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ----------------------------------------- | -------------------------------- | ----
|
|CASH FLOWS FROM OPERATING ACTIVITIES:               |                                                                               |                                                                                                    |                                           |                                  |     
|                                                    | Net income                                                                    |                                                                                                    | $                                         | 30.2                             |     
|                                                    | Adjustments to reconcile net income to cash provided by operating activities: |                                                                                                    |                                           |                                  |     
|                                                    |                                                                               | Depreciation and amortization                                                                      |                                           |                                  | 86.5
|                                                    |                                                                               | Amortization of deferred stock compensation                                                        |                                           |                                  | 2.8 
|                                                    |                                                                               | Minority interest in earnings of consolidated subsidiaries                                         |                                           |                                  | 0.9 
|                                                    |                                                                               | Deferred income tax expense                                                                        |                                           |                                  | 0.8 
|                                                    |                                                                               | Net gain on disposal and impairment of operating assets                                            |                                           |                                  | (4.0
|                                                    |                                                                               | Loss on extinguishment of debt                                                                     |                                           |                                  | 76.0
|                                                    |                                                                               | Changes in operating assets and liabilities (excluding effects of acquisition and reorganization): |                                           |                                  |     
|                                                    |                                                                               |                                                                                                    | Trade and other receivables               |                                  |     
|                                                    |                                                                               |                                                                                                    | Inventories                               |                                  |     
|                                                    |                                                                               |                                                                                                    | Prepaid expenses and other current assets |                                  |     
|                                                    |                                                                               |                                                                                                    | Accounts payable                          |                                  |     
|                                                    |                                                                               |                                                                                                    | Income taxes payable                      |                                  |     
|                                                    |                                                                               |                                                                                                    | Accrued expenses and other liabilities    |                                  |     
|                                                    |                                                                               |                                                                                                    |                                           |                                  |     
|NET CASH PROVIDED BY OPERATING ACTIVITIES           |                                                                               |                                                                                                    | 163.9                                     |                                  |     
|CASH FLOWS FROM INVESTING ACTIVITIES:               |                                                                               |                                                                                                    |                                           |                                  |     
|                                                    | Capital expenditures                                                          |                                                                                                    |                                           | (46.0                            | )   
|                                                    | Proceeds from disposition of fixed assets                                     |                                                                                                    |                                           | 22.6                             |     
|                                                    | Proceeds from sale-leaseback transaction                                      |                                                                                                    |                                           | 11.5                             |     
|                                                    | Proceeds from disposition of partnership interest                             |                                                                                                    |                                           | 2.8                              |     
|                                                    | Cash used to acquire Hoyts, net of cash acquired                              |                                                                                                    |                                           |                                 |     
|                                                    | Cash used for acquisitions, net of cash acquired                              |                                                                                                    |                                           | (26.9                            | )   
|                                                    | Decrease in other assets                                                      |                                                                                                    |                                           | (2.5                             | )   
|                                                    | Cash used to purchase partnership interest                                    |                                                                                                    |                                           | (9.9                             | )   
|                                                    | Decrease in reimbursable construction advances                                |                                                                                                    |                                           |                                 |     
|                                                    | Decrease in restricted cash                                                   |                                                                                                    |                                           |                                 |     
|                                                    |                                                                               |                                                                                                    |                                           |                                  |     
|NET CASH USED IN INVESTING ACTIVITIES               |                                                                               |                                                                                                    | (48.4                                     | )                                |     
|CASH FLOWS FROM FINANCING ACTIVITIES:               |                                                                               |                                                                                                    |                                           |                                  |     
|                                                    | Cash used to pay dividends                                                    |                                                                                                    |                                           | (769.8                           | )   
|                                                    | Proceeds from stock option exercises                                          |                                                                                                    |                                           | 12.6                             |     
|                                                    | Net payments on debt obligations                                              |                                                                                                    |                                           | (565.6                           | )   
|                                                    | Cash used to redeem senior subordinated notes                                 |                                                                                                    |                                           | (354.4                           | )   
|                                                    | Payment of bankruptcy claims and liabilities                                  |                                                                                                    |                                           | (2.2                             | )   
|                                                    | Payment of debt acquisition costs and other                                   |                                                                                                    |                                           | (18.8                            | )   
|                                                    | Proceeds from exercise of stock purchase warrants                             |                                                                                                    |                                           |                                 |     
|                                                    | Proceeds from Regal Cinemas senior credit facility                            |                                                                                                    |                                           | 1,650.0                          |     
|                                                    | Proceeds from convertible notes offering                                      |                                                                                                    |                                           |                                 |     
|                                                    | Net payment on convertible notes hedge and warrants                           |                                                                                                    |                                           |                                 |     
|                                                    |                                                                               |                                                                                                    |                                           |                                  |     
|NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES |                                                                               |                                                                                                    | (48.2                                     | )                                |     
|                                                    |                                                                               |                                                                                                    |                                           |                                  |     
|NET INCREASE IN CASH AND CASH EQUIVALENTS           |                                                                               |                                                                                                    | 67.3                                      |                                  |     
|CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD    |                                                                               |                                                                                                    | 288.8                                     |                                  |     
|                                                    |                                                                               |                                                                                                    |                                           |                                  |     
|CASH AND CASH EQUIVALENTS AT END OF PERIOD          |                                                                               | $                                                                                                  | 356.1                                     |                                  | $   
|                                                    |                                                                               |                                                                                                    |                                           |                                  |     
|SUPPLEMENTAL CASH FLOW INFORMATION:                 |                                                                               |                                                                                                    |                                           |                                  |     
|                                                    | Cash paid for income taxes, net of refunds received                           |                                                                                                    | $                                         | 15.3                             |     
|                                                    |                                                                               |                                                                                                    |                                           |                                  |     
|                                                    | Cash paid for interest                                                        |                                                                                                    | $                                         | 42.7                             |     
|                                                    | Declaration of extraordinary dividend                                         |                                                                                                    | $                                         |                                 |     
|                                                    |                                                                               |                                                                                                    |                                           |                                  |     

See accompanying notes to unaudited condensed consolidated financial statements.

5

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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") is the parent company of Regal Entertainment Holdings, Inc. ("REH"), which is the parent company of
Regal Cinemas Corporation ("Regal Cinemas") and its subsidiaries and United Artists Theatre Company ("United Artists") and its subsidiaries. Regal Cinemas' subsidiaries include Regal
Cinemas, Inc. and its subsidiaries, which include Edwards Theatres, Inc. ("Edwards"), Regal CineMedia Corporation ("Regal CineMedia"), Hoyts Cinemas Corporation ("Hoyts") and United
Artists Theatre Group ("UATG"). The terms Regal or the Company, REH, Regal Cinemas, United Artists, Edwards, Regal CineMedia, Hoyts and UATG shall be deemed to include the respective subsidiaries of
such entities when used in discussions included herein regarding the current operations or assets of such entities.

Regal
operates the largest theatre circuit in the United States, consisting of 6,053 screens in 544 theatres in 39 states as of July 1, 2004. Regal CineMedia focuses on the
development of ancillary revenues. The Company formally operates on a 52-week fiscal year with each quarter generally consisting of 13 weeks, unless otherwise noted. The Company's fiscal
year ends on the first Thursday after December 25, which in certain years (such as fiscal 2003) results in a 53-week fiscal year.

During
2000 and 2001, United Artists and a majority of its subsidiaries at that time (the "United Artists Bankrupt Entities"), Edwards Theatre Circuit Affiliated Group and its
subsidiaries at that time (the "Edwards Bankrupt Entities"), and Regal Cinemas, Inc. and its subsidiaries at that time (the "Regal Cinemas, Inc. Bankrupt Entities") filed voluntary
petitions for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Courts identified below, as well as joint plans of reorganization. The joint plans of
reorganization, as amended, for the United Artists Bankrupt Entities and the Edwards Bankrupt Entities were approved by the United States Bankruptcy Courts for the District of Delaware and the Central
District of California, respectively. Such joint plans of reorganization became effective on March 2, 2001 ("UA Effective Date") for the United Artists
Bankrupt Entities and September 29, 2001 ("Edwards Effective Date") for the Edwards Bankrupt Entities. The United States Bankruptcy Court for the Middle District of Tennessee approved the Regal
Cinemas, Inc. Bankrupt Entities' joint plan of reorganization on December 7, 2001, and it became effective on January 29, 2002. Also on that date, the Anschutz Corporation and its
subsidiaries ("Anschutz") and the other stockholders 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. Edwards was formed in connection with the reorganization of the Edwards Bankrupt Entities to, among other things, effect the substantive consolidation of the Edwards Bankrupt
Entities through their merger into Edwards. As a result of the merger transaction, Edwards succeeded to all of the assets and liabilities of the Edwards Bankrupt Entities.

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 financial statements of the Company at the combined historical cost basis of Anschutz, which represents Anschutz's net cost
to acquire certain debt of the United Artists, Edwards and Regal Cinemas, Inc. Bankrupt Entities 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 the United Artists, Edwards and Regal Cinemas, Inc. Bankrupt Entities.

6

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For
further discussion of the series of events leading to the formation of the Company and other significant transactions which have occurred through January 1, 2004, please refer
to Note 1 to the consolidated financial statements included in Part II, Item 8 of our annual report on Form 10-K filed on March 16, 2004 with the Securities and
Exchange Commission (File No. 001-31315) for the fiscal year ended January 1, 2004.

Regal
acquired certain theatre operations of Hoyts on March 28, 2003. The results of operations of the acquired theatre locations have been included in the accompanying unaudited
condensed consolidated financial statements for the periods subsequent to the acquisition date of March 28, 2003. See Note 2"Acquisitions" for further discussion of this
transaction.

On
April 26, 2004, the Company signed an agreement with Signature Theatres to acquire 30 theatres comprising 309 screens in California and Hawaii. Consummation of this acquisition
is subject to customary closing conditions, including antitrust clearance. On April 29, 2004, Regal acquired five theatres representing 49 screens in the Northeastern United States. On
May 5, 2004, Regal acquired an additional two theatres with 26 screens in the Northeastern United States. The total aggregate cash purchase price for the combined acquisitions is estimated to
be approximately $226.9 million, including approximately $200.0 million for the Signature Theatres acquisition, which is expected to close during the second half of fiscal 2004. The
results of operations of the seven theatres acquired during the
quarter ended July 1, 2004 have been included in the Company's unaudited condensed consolidated financial statements for periods subsequent to the respective acquisition dates. See
Note 2"Acquisitions" for further discussion of these transactions.

On
May 12, 2004, Regal, along with a newly created subsidiary of Regal Cinemas, Regal Cinemas Bonds Corporation ("RCBC"), completed a cash tender offer and consent solicitation
for the $350.0 million aggregate principal amount of the Regal Cinemas 93/8% Senior Subordinated Notes due 2012 (the "Notes"). Approximately $298.1 million aggregate
principal amount of the Notes were purchased, with total additional consideration for the tender offer and consent solicitation of approximately $56.3 million being paid to the tendering
holders. Regal and RCBC financed the tender offer and consent solicitation with a portion of the proceeds from a refinancing of Regal Cinemas' then existing indebtedness. The new indebtedness consists
of a $1,750.0 million senior secured credit facility of Regal Cinemas, including a senior secured term loan facility of approximately $1,650.0 million and a senior secured revolving
credit facility of $100.0 million. Upon consummation of the refinancing, Regal recognized a loss on debt extinguishment of approximately $76.0 million. See
Note 3"Debt Obligations" for further discussion of these transactions.

On
May 13, 2004, Regal declared an extraordinary cash dividend of $5.00 per share on each outstanding share of its Class A and Class B common stock. Stockholders of
record at the close of business on May 21, 2004 were paid this dividend on June 2, 2004. The dividend was recorded as a reduction of additional paid-in capital upon
declaration. A portion of the net proceeds from Regal Cinemas' new $1,750.0 million senior secured credit facility was used to fund the approximate $718.3 million extraordinary dividend.
See Note 3"Debt Obligations" for further description of the new Regal Cinemas senior secured credit facility.

On
June 30, 2004, Regal made a $50.0 million voluntary prepayment of the outstanding senior secured term loan.

During
the two quarters ended July 1, 2004, Regal paid two cash dividends of $0.18 per share on each share of the Company's Class A and Class B common stock, or
$51.5 million in the aggregate.

The
Company has prepared the unaudited condensed consolidated balance sheet as of July 1, 2004 and the unaudited condensed consolidated statements of operations and cash flows in
accordance with accounting principles generally accepted in the United States of America for interim financial information and the rules and regulations of the Securities and Exchange Commission.
Accordingly,

7

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certain
information and footnote disclosures typically included in an annual report have been condensed or omitted for this quarterly report. 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 1, 2004 unaudited condensed consolidated balance sheet information is derived from the audited consolidated financial statements of the Company included in its annual report on
Form 10-K for the fiscal year ended January 1, 2004. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated
financial statements and notes thereto. The results of operations for the quarter and two quarters ended July 1, 2004 are not necessarily indicative of the operating results that may be
achieved for the full 2004 fiscal year.

Net
income and total comprehensive income are the same for all periods presented.

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

2.     ACQUISITIONS

On March 28, 2003, Regal acquired 52 Hoyts theatres representing 554 screens located in 10 states in the Northeastern United States, pursuant to a stock
purchase agreement dated February 3, 2003, among Regal, HUSH Holdings U.S. Inc. ("HUSH") and Hoyts. The purchase price of approximately $213.1 million includes cash of
approximately $100.0 million, the issuance of 4,761,904 shares of Regal's Class A common stock to HUSH with an aggregate fair value of $88.1 million as of the date of issuance,
and the assumption of certain capital lease and other obligations with an aggregate fair value of approximately $25.0 million. The value of the 4,761,904 Class A common shares issued was
determined based on the closing market price of Regal's common shares on February 4, 2003, the date on which the terms of the acquisition were agreed to and announced. The transaction was
accounted for using the purchase method of accounting and, accordingly, the purchase price was allocated to the assets acquired and liabilities assumed for each of the respective theatre locations
based on their estimated fair values at the date of acquisition, with the remaining balance allocated to goodwill. The results of operations of the acquired theatre operations have been included in
the accompanying financial statements for the periods subsequent to the acquisition date of March 28, 2003.

The
following is a summary of the allocation of the purchase price to the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition (in millions):

Current assets

$
1.1Buildings, leasehold improvements and equipment, net


200.2Goodwill


0.9Deferred income tax asset


33.0Other assets


0.2Current liabilities


(22.0
)Other liabilities


(0.3
)Total purchase price

$
213.1


The
following unaudited pro forma results of operations for the two quarters ended June 26, 2003 assume the acquisition of Hoyts occurred as of the beginning of the period. The
pro forma results have been prepared for comparative purposes only and do not purport to indicate the results of operations which would actually have occurred had the combination been in effect on the
date indicated, or which

8

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may
occur in the future. Pro forma results for the quarter ended June 26, 2003 are not presented below because the Hoyts results are included in the statement of operations for the entire
quarterly period.

(in millions except per share amounts)

Two Quarters
Ended
June 26, 2003Revenues

$
1,222.1Operating income


172.2Net income


85.8Net income available to common stockholders


85.8Earnings per shareBasic:


0.62Diluted:


0.60


On
April 26, 2004, the Company signed an agreement with Signature Theatres to acquire 30 theatres comprising 309 screens in California and Hawaii. Consummation of this acquisition
is subject to customary closing conditions, including antitrust clearance. On April 29, 2004, Regal acquired five theatres representing 49 screens in the Northeastern United States. On
May 5, 2004, Regal acquired an additional two theatres with 26 screens in the Northeastern United States. The total aggregate cash purchase price for the combined acquisitions is estimated to
be approximately $226.9 million, including approximately $200.0 million for the Signature Theatres acquisition, which is expected to close during the second half of fiscal 2004. The
results of operations of the seven theatres acquired during the quarter ended July 1, 2004 have been included in the Company's unaudited condensed consolidated financial statements for periods
subsequent to the respective acquisition dates.

3.     DEBT OBLIGATIONS

Debt obligations at July 1, 2004 and January 1, 2004 consist of the following (in millions):

July 1, 2004

January 1, 2004Regal 33/4% Convertible Senior Notes

$
240.0

$
240.0Regal Cinemas 93/8% Senior Subordinated Notes


51.9


350.0Regal Cinemas Senior Credit Facility


1,595.9


509.6Lease financing arrangements, 11.5%, maturing in various installments through 2021


95.0


96.0Capital lease obligations


25.1


25.4Other


5.5


6.2Total debt obligations


2,013.4


1,227.2Less current portion


(260.9
)

(31.1
)Total debt obligations, net of current maturities

$
1,752.5

$
1,196.1


Regal 33/4% Convertible Senior NotesOn May 28, 2003, Regal issued $240.0 million aggregate
principal amount of 33/4% Convertible Senior Notes due May 15, 2008. Interest on the notes is payable semi-annually in arrears on May 15 and November 15
of each year, beginning November 15, 2003. The notes are senior unsecured obligations of Regal and rank on parity with all of our existing and future senior unsecured indebtedness and prior to
all of our subordinated indebtedness. The notes are effectively subordinated to all of our future secured indebtedness to the extent of the assets securing that indebtedness and to any indebtedness
and other liabilities of our subsidiaries. None of our subsidiaries have guaranteed any of our obligations with respect to the notes. On or after May 15, 2007, our note holders will have the
option to convert their notes, in whole or in part, into shares of our Class A common stock at any time prior to maturity, subject to certain limitations, unless previously purchased by us at
the note holder's option upon a change in control, at the current

9

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conversion
price of $16.0176 per share (which conversion price has been adjusted for the extraordinary dividends paid on July 1, 2003 and June 2, 2004 and the payment of our quarterly
dividends on March 12, 2004 and June 15, 2004). Prior to May 15, 2007, our note holders will have the right, at their option, to convert their notes, in whole or in part, into
shares of our Class A common stock, subject to certain limitations, unless previously purchased by us at the note holder's option upon a change in control, at the current conversion price of
$16.0176 per share, subject to further adjustments described below, if:



At
the current conversion price of $16.0176 per share, each $1,000 of aggregate principal amount of notes would be convertible into approximately 62.4313 shares of our Class A
common stock. Upon conversion, we may elect to deliver cash in lieu of shares of Class A common stock or a combination of cash and shares of Class A common stock. As explained above,
with respect to the par amount of the conversion obligation, we intend to deliver cash to note holders upon conversion. The conversion price and the number of shares delivered on conversion are
subject to adjustment upon certain events.

In
connection with the issuance of the notes, we used approximately $18.8 million of the net proceeds of the offering to enter into convertible note hedge and warrant transactions
with respect to our Class A common stock to reduce the potential dilution from conversion of the notes. Under the terms of the convertible note hedge arrangement (the "Convertible Note Hedge")
with Credit Suisse First Boston ("CSFB"), we paid $36.2 million for a forward purchase option contract under which we are entitled to purchase from CSFB a fixed number of shares of our
Class A common shares (at a current price per share of $16.0176). In the event of the conversion of the notes, this forward purchase option contract allows us to purchase, at a fixed price
equal to the implicit conversion price of shares issued under the convertible notes, a number of shares equal to the shares that we issue to a note holder upon conversion. Settlement terms of this
forward purchase option allow the Company to elect

10

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cash
or share settlement based on the settlement option it chooses in settling the conversion feature of the notes. We accounted for the Convertible Note Hedge pursuant to the guidance in EITF
00-19, "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in a Company's Own Stock." Accordingly, the $36.2 million purchase price of the forward
stock purchase option contract was recorded as a debit to consolidated stockholders' equity.

We
also sold to CSFB a warrant (the "Warrant") to purchase shares of our Class A common stock. The Warrant is currently exercisable for 14,983,518 shares of our Class A
common stock (after giving effect to the extraordinary dividends paid on July 1, 2003 and June 2, 2004 and the quarterly dividends paid on March 12, 2004 and June 15, 2004)
at a current exercise price of $18.4818 per share. We received $17.4 million cash from CSFB in return for the sale of this forward share purchase option contract. CSFB cannot exercise the
Warrant unless and until a conversion event occurs. We have the option of
settling the Warrant in cash or shares of our Class A common stock. We accounted for the sale of the Warrant as the sale of a permanent equity instrument pursuant to the guidance in EITF
00-19. Accordingly, the $17.4 million sales price of the forward stock purchase option contract was recorded as a credit to consolidated stockholders' equity.

The
Convertible Note Hedge and the Warrant allow us to acquire sufficient Class A common shares from CSFB to meet our obligation to deliver Class A common shares upon
conversion by the note holder, unless the Class A common share price exceeds $18.4818. When the fair value of our Class A common shares exceeds such price, the equity contracts have an
offsetting economic impact, and accordingly will no longer be effective as a hedge of the dilutive impact of possible conversion.

The
Regal 33/4% Convertible Senior Notes allow us to settle any conversion, and we have the intent to settle any conversion, by remitting to the note holder the accreted
value of the note in cash, while settling the conversion spread (the excess conversion value over the accreted value) in the shares of our Class A common stock. The accounting for convertible
debt with such settlement features is addressed in the consensus reached by the EITF with respect to the accounting for Instrument C as set forth in EITF 90-19, "Convertible Bonds with
Issuer Option to Settle for Cash Upon Conversion." It is our intent to settle the notes' conversion obligations consistent with Instrument C. Because the accreted value of the notes will be settled
for cash upon the conversion, only the conversion spread (the excess conversion value over the accreted value), which will be settled in stock, will result in potential dilution in our
earnings-per-share computations.

On
July 1, 2004, the closing sale price of our Class A common stock was $18.03, which exceeded 110% of the then current conversion price of $16.0176. Accordingly, as of
July 1, 2004, our note holders held the right, at their option, to convert their notes, in whole or in part, into shares of our Class A common stock, subject to certain limitations, at
the conversion price of $16.0176. This conversion option, coupled with the Company's stated policy to settle any conversion by remitting to the note holder the accreted value of the note in cash,
resulted in a reclassification of the $240.0 million principal amount of the Regal 33/4% Convertible Senior Notes as a current liability on the accompanying unaudited condensed
consolidated balance sheet as of July 1, 2004. The future balance sheet classification of this liability (i.e., current versus non-current presentation) will be monitored at each
quarterly reporting date, and will be determined based on an analysis of the various conversion rights described above.

Regal Cinemas93/8%Senior Subordinated NotesOn April 15, 2004, Regal
and its subsidiary, RCBC, commenced a cash tender offer and consent solicitation for the $350.0 million aggregate principal amount of the Regal Cinemas 93/8% Senior Subordinated
Notes due 2012. On April 27, 2004, the Company completed its consent solicitation with respect to the Notes amending the indenture governing the Notes to eliminate substantially all of the
restrictive covenants and certain default provisions. Consideration for each $1,000 principal amount of Notes tendered was $1,169.05, plus a consent payment of $20.00 per $1,000 principal amount of
Notes for those holders who properly

11

---



tendered
their Notes with a consent on or before April 27, 2004. Such consideration was determined as of April 28, 2004 by reference to a fixed spread above the yield to maturity of the
2.25% U.S. Treasury Note due February 15, 2004. The tender offer was completed on May 12, 2004 and approximately $298.1 million aggregate principal amount of the Notes were
purchased. Total additional consideration paid for the tender offer and consent solicitation was approximately $56.3 million. The tender offer and consent solicitation were financed with a
portion of the proceeds from the new Senior Credit Facility described below. Approximately $918.3 million of the proceeds from the new Senior Credit Facility, together with a portion of Regal
Cinemas' available cash, was distributed by Regal Cinemas to Regal, which used approximately $718.3 million of the proceeds to pay an extraordinary dividend of $5.00 per share to its holders of
Class A and Class B common stock on June 2, 2004, as described in Note 1"The Company and Basis of Presentation." The remaining balance was retained for the
fiscal 2004 acquisitions disclosed in Note 2"Acquisitions" and for general corporate purposes. Upon consummation of the refinancing of Regal Cinemas' senior indebtedness, Regal
recognized a loss on debt extinguishment of approximately $76.0 million.

Regal Cinemas Fourth Amended and Restated Credit AgreementOn May 10, 2004, Regal Cinemas entered into the Fourth Amended and
Restated Credit Agreement (the "Senior Credit Facility") with Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative Agent, and the other lenders and agents party
thereto, which is filed herewith as exhibit 4.1. The Senior Credit Facility consists of a term loan facility (the "Term Facility") in an aggregate principal amount of up to
$1,650.0 million and a revolving credit facility in an aggregate principal amount of up to $100.0 million (the "Revolving Facility"). The Revolving Facility has a sublimit of
$10.0 million for short term loans and a sublimit of $30.0 million for letters of credit.

The
Term Facility will mature on November 10, 2010 and the Revolving Facility will mature on May 10, 2009. Interest is payable (a) in the case of base rate loans,
quarterly in arrears, and (b) in the case of Eurodollar rate loans, at the end of each interest period, but in no event less often than every 3 months. The Term Facility amortizes in
equal quarterly installments in an aggregate annual amount equal to 1.0% of the original principal amount of the Term Facility during the first six years thereof, with the balance payable in two equal
installments, the first on June 30, 2010 and the second on November 10, 2010. On June 30, 2004, Regal made a $50.0 million voluntary prepayment of the outstanding Term
Facility.

The
obligations of Regal Cinemas are secured by, among other things, a lien on substantially all of its tangible and intangible personal property (including but not limited to accounts
receivable, inventory, equipment, general intangibles, investment property, deposit and securities accounts, and intellectual
property) and certain real property. The obligations under the Senior Credit Facility are also guarantied by certain subsidiaries of Regal Cinemas and secured by a lien on all or substantially all of
such subsidiaries' personal property and certain real property. The obligations are further guarantied by Regal Entertainment Holdings, Inc., on a limited recourse basis, with such guaranty
being secured by a lien on the capital stock of Regal Cinemas.

As
of July 1, 2004, Regal Cinemas had approximately $83.6 million available for drawing under the Revolving Facility, including approximately $13.6 million available
for the issuance of letters of credit under the letter of credit subfacility.

Borrowings
under the Senior Credit Facility bear interest, at Regal Cinemas' option, at either a base rate or an adjusted Eurodollar rate plus, in each case, an applicable margin. The
base rate is the higher of Prime Rate, as determined by Credit Suisse First Boston, and the Federal Funds Effective Rate plus 0.5%. Regal Cinemas may elect interest periods of 1, 2, 3, 6 or (if
available to all lenders) 12 months for the adjusted Eurodollar rate. The applicable margin is determined according to the consolidated leverage ratio of Regal Cinemas and its subsidiaries. As
of July 1, 2004, the interest rate on the Term Facility was approximately 4.2%. See Note 10"Subsequent Events" for further discussion

12

---



of
an amendment to the Senior Credit Facility to reduce the interest rate applicable to the Term Facility by 50 basis points.

Regal
Cinemas may prepay borrowings under the Senior Credit Facility, in whole or in part, in minimum amounts and subject to other conditions set forth in the Senior Credit Facility.
Regal Cinemas is required to make mandatory prepayments with:



The
above-described mandatory prepayments are required to be applied pro rata to the remaining amortization payments under the Term Facility. When there are no longer outstanding loans
under the Term Facility, mandatory prepayments are be applied to prepay outstanding loans under the Revolving Facility with no corresponding permanent reduction of commitments under the Revolving
Facility.

The
Senior Credit Facility includes several financial covenants including:



The
Senior Credit Facility contains customary affirmative covenants including, among other things, maintenance of corporate existence and rights; performance of obligations; delivery of
financial statements and other financial information; delivery of notices of default, litigation, ERISA events and material adverse change; maintenance of properties; maintenance of insurance;
maintenance of a rating of the Senior Credit Facility by each of Standard & Poor's Ratings Services and Moody's Investors Service, Inc; compliance with laws; inspection of books and properties;
further assurances; and payment of taxes.

The
Senior Credit Facility also contains customary negative covenants (subject to exceptions, limitations and baskets) which limit the ability of Regal Cinemas and its subsidiaries to,
among other things, incur indebtedness, grant liens, make investments or acquisitions, engage in affiliate transactions, or pay dividends. These limitations will restrict the ability of Regal Cinemas
ability to fund the operations the Company or any subsidiary of the Company that is not a subsidiary of Regal Cinemas.

The
Senior Credit Facility specifies customary events of default including, among other things, nonpayment of principal, interest or other amounts; violation of covenants; incorrectness
of representations and warranties in any material respect; cross default and cross acceleration with respect to indebtedness in an aggregate principal amount of $25.0 million or more;
bankruptcy; judgments

13

---



involving
liability of $25.0 million or more; ERISA events; actual or asserted invalidity of guarantees or security documents; and change of control.

Other Long-Term ObligationsAll other long-term obligations not explicitly discussed herein are described in
Note 7 to the consolidated financial statements included in our annual report on Form 10-K for the fiscal year ended January 1, 2004.

4.     INCOME TAXES

The provision for income taxes of $6.1 million and $30.7 million for the quarters ended July 1, 2004 and June 26, 2003 reflect
effective tax rates of approximately 45.2% and 39.5%, respectively. The provision for income taxes of $21.2 million and $54.1 million for the two quarters ended July 1, 2004 and
June 26, 2003 reflect effective tax rates of approximately 41.2% and 39.6%, respectively. The effective tax rates for the quarter and two quarters ended July 1, 2004 reflect the impact
of certain non-deductible expenses.

For
federal income tax purposes, the Company has carryover tax basis in certain assets acquired in the Hoyts acquisition described in Note 2"Acquisitions." Such
acquired entities had net operating loss carryforwards totaling approximately $155.4 million as of the date of acquisition. Pursuant to certain IRS limitations, the Company's allowable annual
deduction with respect to the Hoyts net operating loss carryforwards is limited to approximately $8.6 million. As of July 1, 2004, the Company has recorded deferred tax assets in the
amount of approximately $33.9 million, net of a valuation allowance of approximately $13.9 million, in connection with the Hoyts acquisition.

In
assessing the realizable value of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which these temporary differences become deductible. The
Company has recorded a valuation allowance against deferred tax assets at July 1, 2004 and January 1, 2004, totaling $48.0 million and $48.9 million, respectively, as
management believes it is more likely than not that the deferred tax assets would not be realized in future tax periods. The valuation allowance relates to pre-acquisition deferred tax
assets of Edwards, United Artists and Hoyts. Accordingly, future reductions in the valuation allowance will reduce goodwill related to these respective acquisitions.

5.     CAPITAL STOCK AND STOCK BASED COMPENSATION



As of July 1, 2004, the Company's authorized capital stock consisted of:



Of
the authorized shares of Class A common stock, 18,000,000 shares were sold in connection with the Company's initial public offering in May 2002. The Company's
Class A common stock is listed on the New York Stock Exchange ("NYSE") under the trading symbol "RGC." As of July 1, 2004, 54,562,179 shares of Class A common stock were
outstanding. Of the authorized shares of Class B common stock, 89,216,142 shares were outstanding as of July 1, 2004, all of which are held by The Anschutz Company and OCM Principal
Opportunities Fund II, L.P. and its subsidiaries. Each share of Class B common stock converts into one share of Class A Common stock at the option of the holder or upon certain transfers
of a holder's Class B common stock. Each holder of Class B common stock is entitled to ten votes for each outstanding share of Class B common stock owned by that stockholder on
every matter properly submitted to the Stockholders for their vote. Of the authorized shares of the

14

---



preferred
stock, no shares were issued and outstanding as of July 1, 2004. The Class A common stock is entitled to one vote for each outstanding share of Class A common stock on
every matter properly submitted to the stockholders for a vote. The Class A and Class B common stock vote together as a single class on all matters submitted to the stockholders for a
vote. The material terms and provisions of the Company's certificate of incorporation affecting the relative rights of the Class A common stock and the Class B common stock are described
in Note 12 to the financial statements included in our annual report on Form 10-K for the fiscal year ended January 1, 2004.



Other than disclosed in Note 3, no warrants to acquire the Company's common stock were outstanding as of July 1, 2004.



In connection with the June 2, 2004 extraordinary cash dividend and pursuant to the antidilution adjustment terms of the 2002 Stock Incentive Plan, the
exercise price and the number of shares of Class A common stock subject to options held by the Company's option holders were adjusted to prevent dilution and restore their economic position to
that existing immediately before the extraordinary dividend. The antidilution adjustments made with respect to such options resulted in a decrease in the range of exercise prices, which is currently
from $2.6901 to $17.83 per share, an increase in the aggregate number of shares issuable upon exercise of such options by 2,617,820 and an increase in the total number of authorized shares under the
Plan to 16,110,241. As of July 1, 2004 and after giving effect to the antidilution adjustments, the Company had outstanding options to purchase a total of 11,574,960 shares of Class A
common stock under the Plan. There were no accounting consequences for changes made to reduce the exercise prices and increase the number of shares
underlying options as a result of the extraordinary dividend because (1) the aggregate intrinsic value of the awards immediately after the extraordinary dividend was not greater than the
aggregate intrinsic value of the awards immediately before the extraordinary dividend and (2) the ratio of the exercise price per share to the market value per share was not reduced.

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

The
Company has elected to continue accounting for its stock option grants under its 2002 Stock Incentive Plan using the intrinsic value method in accordance with the provisions of APB
No. 25, which requires compensation costs to be recognized for the excess of the fair value of options on the date of grant over the option exercise price. Had the fair value of options granted
under the Company's 2002 Stock Incentive Plan been recognized in accordance with SFAS No. 123, as compensation expense on a straight-line basis over the vesting period of the
grants, the Company's reported net income and diluted

15

---



earnings
per share would have been recorded in the amounts indicated below (in millions, except per share data):

|                                                                                                                                               |  | Quarter Ended
July 1, 2004 |      | Quarter Ended
June 26, 2003 |   | Two Quarters
Ended
July 1, 2004 |   | Two Quarters
Ended
2003
June 26, |     
|---------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------- | ---- | --------------------------- | - | ------------------------------- | - | -------------------------------- | ----
|Net income:                                                                                                                                    |  | $                          | 7.4  |                             | $ | 47.1                            |   | $                                | 30.2
|Less: additional stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects |  | $                          | (0.7 | )                           | $ | (0.7                            | ) | $                                | (1.4
|                                                                                                                                               |  |                            |      |                             |   |                                 |   |                                  |     
|Pro forma net income                                                                                                                           |  | $                          | 6.7  |                             | $ | 46.4                            |   | $                                | 28.8
|                                                                                                                                               |  |                            |      |                             |   |                                 |   |                                  |     
|Basic earnings per share:                                                                                                                      |  |                            |      |                             |   |                                 |   |                                  |     
|As reported                                                                                                                                    |  | $                          | 0.05 |                             | $ | 0.34                            |   | $                                | 0.21
|Pro forma                                                                                                                                      |  | $                          | 0.05 |                             | $ | 0.34                            |   | $                                | 0.20
|Diluted earnings per share:                                                                                                                    |  |                            |      |                             |   |                                 |   |                                  |     
|As reported                                                                                                                                    |  | $                          | 0.05 |                             | $ | 0.33                            |   | $                                | 0.21
|Pro forma                                                                                                                                      |  | $                          | 0.05 |                             | $ | 0.32                            |   | $                                | 0.20

16

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6.     COMMITMENTS AND CONTINGENCIES



During the quarter ended April 1, 2004, Regal Cinemas entered into a sale and leaseback transaction involving one of its owned theatres. Under the terms of
this transaction, Regal Cinemas sold the land and related improvements of the theatre for approximately $11.5 million and leased it back for an initial lease term of approximately
14 years. We account for this lease as an operating lease. The gain on the transaction of $2.0 million was deferred and is being amortized over the term of the lease agreement.



Regal Cinemas, Inc. and Edwards have bankruptcy claims that remain unsettled and are subject to ongoing negotiation and possible litigation. At
July 1, 2004, Regal Cinemas had accrued approximately $1.3 million for the estimated costs to resolve such 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 the Company's liquidity or results of operations. To the extent claims are allowed by the bankruptcy court, they will be funded with cash on hand or cash flow from operations.



Regal Cinemas, Inc., Edwards and United Artists are defendants in a number of claims arising from their decision to file voluntary petitions for bankruptcy
relief and to close theatre locations or to cease construction of theatres on sites for which such entities had contractual obligations to lease such property. We are also presently involved in
various legal proceedings arising in the ordinary course of our business operations, including personal injury claims, employment and contractual matters and other disputes. We believe we have
adequately provided for the settlement of such matters. Management believes any additional liability with respect to the above proceedings will not be material in the aggregate to our consolidated
financial position, results of operations or cash flows.

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

Our
theatres must comply with Title III of the Americans with Disabilities Act of 1990 (the "ADA") to the extent that such properties are "public accommodations" and/or "commercial
facilities"

17

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as
defined by the ADA. Compliance with the ADA requires that public accommodations "reasonably accommodate" individuals with disabilities and that new construction or alterations made to "commercial
facilities" conform to accessibility guidelines unless "structurally impracticable" for new construction or technically infeasible for alterations. Non-compliance with the ADA could result
in the imposition of injunctive relief, fines, an award of damages to private litigants and additional capital expenditures to remedy such non-compliance. United Artists and several of its
subsidiaries and UATG are subject to a consent decree arising from a lawsuit captioned Connie Arnold et. al. v. United Artists Theatre Circuit, Inc. et. al. The plaintiffs alleged nationwide
violations with the ADA for failure to remove barriers to access at existing theatres in a timely manner. In 1996, the parties involved in the case entered into a settlement agreement in which United
Artists agreed to remove physical barriers to access at its theatres prior to July 2001. In January 2001, the settlement agreement was amended to, among other things, extend the
completion date for barrier removal to July 2006 and require minimum expenditures of $250,000 a year for barrier removal.

On
August 13, 2003, the United States Court of Appeals for the Ninth Circuit reversed the United States District Court for the District of Oregon's award of summary judgment in
favor of our subsidiaries identified below with respect to an ADA claim on appeal before it, and remanded the case to the district court with instructions to enter summary judgment in favor of the
plaintiffs (other than Oregon Paralyzed Veterans of America, which did not join in the appeal). The lawsuit was originally filed in the district court on April 11, 2000 by the Oregon Paralyzed
Veterans of America, Kathy Stewmon, Tina Smith and Kathy Braddy against Regal Cinemas, Inc. and Eastgate Theatre Inc. dba Act III Theatre, Inc. The plaintiffs alleged, among other
things, that the "stadium seating" plans in six of the defendants' movie theatres violate the ADA and the related regulations of the Department of Justice. The appellate court did not address specific
changes, if any, that might be required to bring the stadium-style theatres into compliance with its interpretation of the ADA, and its decision conflicts with a recent decision, based upon
substantially similar facts, of the United States Court of Appeals for the Fifth Circuit captionedLara v. Cinemark USA, Inc. We believe we are in
compliance with the ADA regulation with respect to the subject theatres and as such appealed the Ninth Circuit's decision to the Supreme Court of the United States. After seeking an opinion from the
United States Department of Justice, which had previously filed an amicus brief opposing our legal position before the Ninth Circuit, the Supreme Court denied our request for review. The matter is
currently pending and will revert back to the District court for a determination of what, if anything, the Company will be required to do with respect to the claimed need to make the facilities more
accessible.

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

7.     RELATED PARTY TRANSACTIONS

During the quarter ended July 1, 2004, we incurred approximately $0.7 million of expenses payable to an Anschutz affiliate for telecommunication
services and approximately $0.1 million of expenses payable to an Anschutz affiliate for reimbursement of travel related expenses, primarily the use of an airplane, and approximately
$0.4 million of expenses payable to Anschutz affiliates for certain marketing and business services.

During
the quarter ended July 1, 2004, an Anschutz affiliate paid us for rent and other expenses related to a theatre facility, which totaled approximately $0.1 million for
the quarter ended July 1, 2004. Under this agreement, the Anschutz affiliate pays Regal Cinemas approximately $0.3 million annually for rent and other expenses related to this facility.

18

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8.     EARNINGS PER SHARE

Basic earnings per share is computed on the basis of the weighted average number of the common shares outstanding. Diluted earnings per share is computed on the
basis of the weighted average number of common shares outstanding plus the effect of potentially dilutive common stock options and warrants, using the treasury stock method. The components of basic
and diluted earnings per share are as follows (in millions, except share data):

Quarter Ended
July 1, 2004

Quarter Ended
June 26, 2003

Two Quarters
Ended
July 1, 2004

Two Quarters
Ended
June 26, 2003Net income

$
7.4

$
47.1

$
30.2

$
82.4Weighted average shares outstanding (in thousands):Basic:


143,466


138,473


142,852


135,139Add common stock equivalents


4,034


4,794


3,728


5,001Diluted:


147,500


143,267


146,580


140,140Earnings per shareBasic:

$
0.05

$
0.34

$
0.21

$
0.61Diluted

$
0.05

$
0.33

$
0.21

$
0.59


Common
stock equivalents consist principally of stock options and warrants. Stock options and warrants to purchase 15.2 million shares and 12.5 million shares of common
stock were outstanding at July 1, 2004 and June 26, 2003, respectively, but were not included in the computation of diluted earnings per share because their inclusion would have been
antidilutive.

The
$240.0 million convertible notes discussed in Note 7 to our financial statements included in our annual report on Form 10-K for the fiscal year ended
January 1, 2004 allow us to settle any conversion, and we have the intent to settle any conversion, by remitting to the note holder the accreted value of the note in cash, while settling the
conversion spread (the excess conversion value over the accreted value) in the shares of our Class A common stock. The accounting for convertible debt with such settlement features is addressed
in the consensus reached by the EITF with respect to the accounting for Instrument C as set forth in EITF 90-19, "Convertible Bonds with Issuer Option to Settle for Cash Upon Conversion."
It is our intent to settle the notes' conversion obligations consistent with Instrument C. Because the accreted value of the notes will be settled for cash upon the conversion, only the conversion
spread (the excess conversion value over the accreted
value), which will be settled in stock, will result in potential dilution in our earnings-per-share computations.

The
FASB has issued an Exposure Draft entitled, "Earnings per Share, an amendment of FASB Statement No. 128." The Exposure Draft proposes that when an entity has issued a contract
that may be settled either in shares or in cash at the entity's option, the entity should presume that the contract will be settled in shares, if the effect to earnings per share is dilutive. That
presumption may not be overcome, regardless of past practice or stated policy to the contrary. As a result, shares that would be issued upon the assumed conversion of the Company's
$240.0 million convertible senior notes would be included in diluted earnings per share to the extent dilutive using the "if-converted" method. The comment period for the Exposure
Draft ended April 13, 2004, and the effective date for the proposed Statement is fiscal years ending after December 15, 2004. Upon adoption, all prior period earnings per share data
would be adjusted to conform with the provisions of the Statement. Had the provisions of the Exposure Draft been effective for the reporting periods included herein, diluted earnings per share for the
quarter and two quarters ended June 26, 2003 and the two quarters ended July 1, 2004 would each have been $0.01 lower than reported amounts. There would have been no impact to reported
diluted earnings per share for the quarter ended July 1, 2004. The Company is evaluating the Exposure

19

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Draft
and alternative courses of action it might pursue with respect to the convertible notes to address the impact of the proposed literature.

9.     RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued FASB Interpretation No. 46 (revised December 2003), "Consolidation of Variable Interest Entities," which
addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity.
FIN 46R replaces FASB Interpretation No. 46, "Consolidation of Variable Interest Entities," which was issued in January 2003. The Company will be required to apply FIN 46R to variable
interests in VIEs created after December 31, 2003. For variable interests in VIEs created before January 1, 2004, the Interpretation will be applied beginning on January 1, 2005.
For any VIEs that must be consolidated under FIN 46R that were created before January 1, 2004, the assets, liabilities and noncontrolling interests of the VIE initially would be measured at
their carrying amounts with any difference between the net amount added to the balance sheet and any previously recognized interest being recognized as the cumulative effect of an accounting change.
If determining the carrying amounts is not practicable, fair value at the date FIN 46R first applies may be used to measure the assets, liabilities and non-controlling interest of the VIE.
Certain new disclosure requirements apply to all financial statements issued after January 31, 2003. The adoption of this interpretation did not have a material impact on the Company's
consolidated financial position or results of operations. Interpretive guidance relating to FIN 46 is continuing to evolve and the Company's management will continue to assess various aspects of
consolidations and variable interest entity accounting as additional guidance becomes available.

In
May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." This Statement establishes
standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS No. 150 requires certain financial instruments that
embody obligations of the issuer and have characteristics of both liabilities and equity to be classified as liabilities. Many of these instruments previously were classified as equity or temporary
equity and as such, SFAS No. 150 represents a significant change in practice in the accounting for a number of mandatorily redeemable equity instruments and certain equity derivatives that
frequently are used in connection with share repurchase programs. SFAS No. 150 is effective for all financial instruments created or modified after May 31, 2003, and to other instruments
at the beginning of the first interim period beginning after June 15, 2003. The Company's adoption of SFAS No. 150 did not have a material impact on its consolidated financial position,
cash flows or results of operations.

In
March 2004, the FASB issued a proposed Statement, "Share-Based Payment," that addresses the accounting for share-based payment transactions in which an enterprise receives
employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise's equity instruments or that may be
settled by the issuance of such equity instruments. The proposed Statement would eliminate the ability to account for share-based compensation transactions using APB Opinion No. 25, "Accounting
for Stock Issued to Employees," and generally would require instead that such transactions be accounted for using a fair-value-based method. The proposed Statement would be effective for
awards granted, modified, or settled in fiscal years beginning after December 15, 2004, for public entities that used the fair-value based method of accounting under the original
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation" for recognition or pro forma disclosure purposes. The Company is currently evaluating the impact the proposed Statement may
have on its consolidated financial position, cash flows and results of operations.

20

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10.   SUBSEQUENT EVENTS

On July 13, 2004, Regal Cinemas entered into four interest rate swap agreements with final maturity terms ranging from three to five years each. These
swaps were assigned to hedge approximately $800.0 million of variable rate liabilities under the Senior Credit Facility. Under the terms of the interest rate swap agreements, Regal Cinemas pays
interest at a fixed weighted average rate of 3.87%, plus an applicable margin of 2.25% (as of July 27, 2004) and will receive interest at a variable rate based on the 3-month LIBOR.
The interest rate swaps prospectively qualified for hedge accounting treatment in accordance with SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities," and as such, the
Company has effectively mitigated its exposure to interest rate volatility as it relates to approximately $800.0 million of the aforementioned credit facility. The interest rate swaps settle
any accrued interest for cash on the last day of each calendar quarter, until expiration. At such dates, the differences to be paid or received on the swaps will be included in interest expense. The
change in the fair values of the swaps will be recorded on the Company's consolidated balance
sheet as an asset or liability with the effective portion of the swaps' gains or losses reported as a component of other comprehensive income (loss) and the ineffective portion reported in earnings.
The fair value of the Company's interest rate swaps will be based on dealer quotes. These values will represent the amounts Regal Cinemas would receive or pay to terminate the agreements taking into
consideration various factors, including current interest rates.

On
July 15, 2004, the Company purchased an additional $361,000 principal amount of the Notes from a holder which failed to timely tender its Notes in connection with the tender
offer and consent solicitation described in Note 1 to the accompanying unaudited condensed consolidated financial statements.

On
July 27, 2004, Regal Cinemas entered into an amendment to the Senior Credit Facility to reduce the interest rate applicable to the Term Facility by 50 basis points. Borrowings
under the Term Facility and Revolving Facility bear interest, at Regal Cinemas' option, at either an adjusted Eurodollar rate or a base rate plus, in each case, an applicable margin. Effective
July 27, 2004, the applicable margin was reduced from 2.75% to 2.25% on the Term Facility. The applicable margin will be further reduced to 2.0% if the consolidated leverage ratio of Regal
Cinemas is maintained at 3.0 or less.

On
July 27, 2004, the Company declared a cash dividend of $0.20 per share on each share of the Company's Class A and Class B common stock, payable on
September 15, 2004, to stockholders of record on September 1, 2004.

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

Some of the information in this Quarterly Report on 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. In some cases you can identify these "forward-looking statements" by words like "may," "will," "should," "expects," "plans," "anticipates," "believes,"
"estimates," "predicts," "potential" or "continue" or the negative of those words and other comparable words. These forward-looking statements involve risks and uncertainties. Our actual results could
differ materially from those indicated in these statements as a result of certain factors as more fully discussed under the heading "Risk Factors" contained in our annual report on
Form 10-K filed on March 16, 2004 with the Securities and Exchange Commission (File No. 001-31315) for the Company's fiscal year ended January 1,
2004. The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto included herein.

21

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Overview

We conduct our operations primarily through our wholly owned subsidiaries, Regal Cinemas, United Artists, Edwards, Hoyts and Regal CineMedia. We operate the
largest and most geographically diverse theatre circuit in the United States, consisting of 6,053 screens in 544 theatres in 39 states as of July 1, 2004. Regal CineMedia focuses exclusively on
the expansion of ancillary businesses, such as advertising, and the creation of new complementary business lines that leverage our existing asset and customer bases. We believe the size, reach and
quality of our theatre circuit provide an exceptional platform to realize economies of scale in our theatre operations and capitalize on Regal CineMedia's ancillary revenue opportunities.

We
generate revenues primarily from admissions and concession sales. Additional revenues are generated by on-screen advertisements, rental of theatres for business meetings,
concerts and other events distributed on a live or pre-recorded basis by Regal CineMedia over the Regal CineMedia Digital Content NetworkSM (the "DCN"), vendor marketing
programs and electronic video games located adjacent to the lobbies of certain of our theatres. 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 we purchase certain concession items, such as fountain drinks and popcorn, in bulk and not
pre-packaged for
individual servings, we are able to improve our margins by negotiating volume discounts. Other operating expenses consist primarily of theatre labor and occupancy costs.

Regal
was created through a series of transactions during 2001 and 2002. Anschutz acquired controlling equity interests in United Artists (our predecessor for accounting purposes) upon
the emergence from bankruptcy reorganization on March 2, 2001 of the United Artists Bankrupt Entities. In the same manner, on September 29, 2001, Anschutz acquired controlling equity
interests in the Edwards Bankrupt Entities. On January 29, 2002, Anschutz acquired a controlling equity interest in Regal Cinemas, Inc. when the Regal Cinemas, Inc. Bankrupt
Entities emerged from bankruptcy reorganization. Anschutz exchanged its controlling equity interest in Regal Cinemas, Inc. for a controlling equity interest in Regal Cinemas immediately
thereafter. In addition, Regal CineMedia was formed in February 2002 to focus on the development of ancillary revenues. Regal acquired the controlling equity interests of United Artists,
Edwards, Regal Cinemas and Regal CineMedia through a series of transactions described in further detail in Note 1 to the financial statements included in our annual report on
Form 10-K for the fiscal year ended January 1, 2004.

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. The results of operations of the acquired Hoyts theatre locations
have been included in the Company's financial statements for periods subsequent to the acquisition date of March 28, 2003. The results of operations of the seven theatres acquired during the
quarter ended July 1, 2004 (see Note 2"Acquisitions") have been included in the Company's financial statements for periods subsequent to the respective acquisition dates.

For
a summary of industry trends as well as other risks and uncertainties relevant to the Company, see "BusinessIndustry Trends" and "Management's Discussion and Analysis of
Financial Condition and Results of OperationsRisk Factors" contained in our annual report on Form 10-K for the fiscal year ended January 1, 2004 and "Results of
Operations" below.

22

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Results of Operations for the Quarters and Two Quarters Ended July 1, 2004 and June 26, 2003



The theatre exhibition industry continued to perform better than expected for the first half of calendar 2004 against a solid calendar 2003 box office comparison.
The industry benefited from a strong first calendar quarter 2004 in which box office revenues grew approximately 6% and from high-performing films released in the second calendar quarter
of 2004, such asShrek 2, Harry Potter and the Prisoner of AzkabanandThe Day After Tomorrow.Based on
our review of selected industry sources, we believe national box office revenues in the second calendar quarter of 2004 increased approximately 3% over that of the second calendar quarter of 2003.
According to the same industry sources, national box office revenues were estimated to have increased approximately 4% for the first calendar half of 2004. We believe that 2004 box office results have
benefited from increased average ticket prices per patron, coupled with a slight increase in national attendance. The increase in average ticket price per patron is primarily attributable to increases
in ticket prices and a favorable first quarter 2004 film mix consisting of a higher percentage of R-rated films, which resulted in sales of a greater proportion of full price tickets.
During the second quarter of 2004, the film mix shifted to a more family-oriented and concession-friendly product, which moderated average ticket prices, but favorably impacted concession revenues for
the second quarter and year-to-date 2004 period.

Total
revenue for the Company's fiscal quarter ended July 1, 2004 ("Q2 2004 Period") was $673.1 million, a 3.9% increase from total revenue of $648.1 million for the
quarter ended June 26, 2003 ("Q2 2003 Period"). Total revenue for the Q2 2004 Period was bolstered by a combination of (1) an increase in average ticket prices of 1.7% and an increase in
attendance of 0.7%, (2) a return to family-oriented and concession-friendly film product, which favorably impacted concession revenues on both a per screen and per attendee basis,
(3) increases in other revenues as a result of incremental Regal CineMedia revenues and (4) the strong attendance week leading up to the July 4 holiday, which was not included in
the comparative Q2 2003 Period results. Income from operations increased 22.1% to $113.9 million for the Q2 2004 Period compared to $93.3 million in the Q2 2003 Period. Net income
decreased 84.3% to $7.4 million in the Q2 2004 Period as compared to net income of $47.1 million in the Q2 2003 Period. Earnings per diluted share decreased to $0.05 for the Q2 2004
Period compared to $0.33 during the Q2 2003 Period. Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $78.2 million for the Q2 2004 Period, a decrease of 41.0% from
$132.5 million in the Q2 2003 Period and represented an EBITDA margin (EBITDA divided by total revenues) of approximately 11.6%. The decline in net income, diluted earnings per share, EBITDA
and EBITDA margin is primarily attributable to a loss on extinguishment of debt of $76.0 million recorded in the Q2 2004 Period as a result of the Q2 2004 Period refinancing transactions
described further in Notes 1 and 3 to the accompanying unaudited condensed consolidated financial statements. A tabular reconciliation of net cash provided by operating activities to EBITDA and
net income is provided below under "Results of OperationsEBITDA."

Total
revenue for the two quarters ended July 1, 2004 ("Fiscal 2004 Period") was $1,213.6 million, a 3.2% increase from total revenue of $1,176.2 million for the two
quarters ended June 26, 2003 ("Fiscal 2003 Period"). As a result of the timing of our fiscal 2004 calendar, we experienced a significant calendar shift for the Fiscal 2004 Period from the
Fiscal 2003 Period. As a result, the Fiscal 2004 Period results lacked the benefit of the traditionally high attendance week between Christmas and New Year's Day included in the Fiscal 2003 Period
results, but benefited from the strong attendance week leading up to the July 4 holiday, which was not included in the comparative Fiscal 2003 Period results. In addition to the calendar
shifts, the Fiscal 2004 Period results include the results of operations of the acquired Hoyts Cinemas theatres for all periods, whereas the results of operations of the acquired Hoyts Cinemas
theatres were excluded from the first three months of the Fiscal 2003 Period because the Hoyts Cinemas acquisition did not occur until March 28, 2003. Excluding the impact of the calendar
shifts and the growth in total revenues due to the acquired Hoyts Cinemas

23

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theatres,
the Company's calendar box office growth on a per screen basis approximates the industry box office growth for the comparative time period in the prior year. The Fiscal 2004 Period box
office results also benefited from a 2.7% increase in average ticket prices per patron due to increases in ticket prices and sales of a greater proportion of full-price tickets from
R-rated films during the first quarter of the Fiscal 2004 Period, partially offset by a slight decline in attendance of approximately 0.5%. In addition to the growth in box office
revenues, we achieved growth in concession revenues and other revenues, on a per screen basis. The growth in concession revenues was benefited by a return to family-oriented and concession friendly
film in the second quarter of the Fiscal 2004 Period. In addition, the continued increases in Regal CineMedia revenues contributed to the increase in other revenues for the Fiscal 2004 Period. Income
from operations increased 5.8% to $175.5 million for the Fiscal 2004 Period compared to $165.9 million in the Fiscal 2003 Period. Net income decreased 63.3% to $30.2 million in
the Fiscal 2004 Period as compared to net income of $82.4 million in the Fiscal 2003 Period. Earnings per diluted share decreased to $0.21 for the Fiscal 2004 Period compared to $0.59 during
the Fiscal 2003 Period. The decline in net income and diluted earnings per share is primarily attributable to a loss on extinguishment of debt of $76.0 million recorded in the Fiscal 2004
Period as a result of the Q2 2004 Period refinancing transactions described further in Notes 1 and 3 to the accompanying unaudited condensed consolidated financial statements.

During
the Q2 2004 Period, the Company made significant progress with its strategic initiatives:



24

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The
following table sets forth the percentage of total revenues represented by certain items included in our consolidated statements of operations for the Q2 2004 Period, the Q2 2003
Period, the Fiscal 2004 Period and the Fiscal 2003 Period (dollars and attendance in millions, except average ticket prices and average concession per patron):

|                    |                                                                                      | Q2 2004 Period              |       | Q2 2003 Period |       | Fiscal 2004 Period |      | Fiscal 2003 Period |      
|------------------- | ------------------------------------------------------------------------------------ | --------------------------- | ----- | -------------- | ----- | ------------------ | ---- | ------------------ | -----
|
|Revenues:           |                                                                                      |                             |       |                |       |                    |      |                    |      
|                    | Admissions                                                                           |                             | $     | 450.2          |       | 66.9               | %    | $                  | 439.9
|                    | Concessions                                                                          |                             |       | 179.3          |       | 26.6               |      |                    | 172.7
|                    | Other operating revenues                                                             |                             |       | 43.6           |       | 6.5                |      |                    | 35.5 
|                    |                                                                                      |                             |       |                |       |                    |      |                    |      
|Total Revenue       |                                                                                      |                             | 673.1 |                | 100.0 |                    |      | 648.1              |      
|Operating Expenses: |                                                                                      |                             |       |                |       |                    |      |                    |      
|                    | Film rental and advertising costs(1)                                                 |                             |       | 243.7          |       | 54.1               |      |                    | 249.4
|                    | Cost of concessions(2)                                                               |                             |       | 26.4           |       | 14.7               |      |                    | 24.0 
|                    | Rent expense(3)                                                                      |                             |       | 70.3           |       | 10.4               |      |                    | 70.3 
|                    | Other operating expense(3)                                                           |                             |       | 160.1          |       | 23.8               |      |                    | 152.5
|                    | General and administrative expense(3)                                                |                             |       | 16.7           |       | 2.5                |      |                    | 15.8 
|                    | Depreciation and amortization(3)                                                     |                             |       | 43.3           |       | 6.4                |      |                    | 39.3 
|                    | Merger and restructuring expenses and amortization of deferred stock compensation(3) |                             |       | 1.6            |       | 0.2                |      |                    | 2.6  
|                    | Net loss (gain) on disposal and impairment of operating assets(3)                    |                             |       | (2.9           | )     | (0.4               | )    |                    | 0.9  
|                    | Gain on lawsuit settlement(3)                                                        |                             |       |               |       |                   |      |                    |     
|                    |                                                                                      |                             |       |                |       |                    |      |                    |      
|                    |                                                                                      | Total operating expenses(3) |       |                | 559.2 |                    | 83.1 |                    |      
|                    |                                                                                      |                             |       |                |       |                    |      |                    |      
|                    | Income from operations(3)                                                            |                             |       | 113.9          |       | 16.9               |      |                    | 93.3 
|                    | Interest expense, net(3)                                                             |                             |       | 21.4           |       | 3.2                |      |                    | 15.4 
|                    | Provision for income taxes(3)                                                        |                             |       | 6.1            |       | 0.9                |      |                    | 30.7 
|                    | Net income(3)                                                                        |                             |       | 7.4            |       | 1.1                |      |                    | 47.1 
|                    | EBITDA(3)(6)                                                                         |                             | $     | 78.2           |       | 11.6               |      | $                  | 132.5
|                    | Attendance                                                                           |                             |       | 69.1           |       | *                  |      |                    | 68.6 
|                    | Average ticket price(4)                                                              |                             | $     | 6.52           |       | *                  |      | $                  | 6.41 
|                    | Average concession per patron(5)                                                     |                             | $     | 2.60           |       | *                  |      | $                  | 2.52 

---

25

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Total admissions revenues increased $10.3 million, or 2.3%, to $450.2 million for the Q2 2004 Period, from $439.9 million for the Q2 2003
Period. Total admissions revenues increased $17.9 million, or 2.2%, to $819.1 million for the Fiscal 2004 Period, from $801.2 million for the Fiscal 2003 Period. The increase in
admissions revenues in the Q2 2004 Period compared to the Q2 2003 Period was primarily attributable to a 1.7% increase in average ticket price per patron coupled with a 0.7% increase in attendance.
Attendance for the Q2 2004 Period was favorably impacted by the inclusion of the week leading up to the July 4 holiday, which was not included in the comparative Q2 2003 Period results. The
Fiscal 2004 Period box office results benefited from a 2.7% increase in average ticket prices per patron due to increases in ticket prices and sales of a greater proportion of full-price
tickets from R-rated films during the first quarter of the Fiscal 2004 Period, partially offset by a slight decline in attendance of approximately 0.5%. The Fiscal 2004 Period results
lacked the benefit of the traditionally high attendance week between Christmas and New Year's Day included in the Fiscal 2003 Period results, but benefited from the strong attendance week leading up
to the July 4 holiday, which was not included in the comparative Fiscal 2003 Period results. In addition to the calendar shifts, the Fiscal 2004 Period results include the results of operations
of the acquired Hoyts Cinemas theatres for all periods, whereas the results of operations of the acquired Hoyts Cinemas theatres were excluded from the first three months of the Fiscal 2003 Period
because the Hoyts Cinemas acquisition did not occur until March 28, 2003. Excluding the impact of the calendar shifts and the growth in admission revenues from the acquired Hoyts Cinemas
theatres, the Company's calendar box office growth on a per screen basis, approximated the industry box office growth for the comparative time period in the prior year.



Total concessions revenues increased $6.6 million, or 3.8%, to $179.3 million for the Q2 2004 Period, from $172.7 million for the Q2 2003
Period. Total concessions revenues increased $5.8 million, or 1.9%, to $316.0 million for the Fiscal 2004 Period, from $310.2 million for the Fiscal 2003 Period. The increase in
concessions revenues in the Q2 2004 Period compared to the Q2 2003 Period was due to the 0.7% increase in attendance coupled with a 3.2% increase in average concessions per patron. This increase in
concessions revenue is primarily attributable to film product mix, which was comprised of a higher proportion of family-oriented and concession-friendly film product in the Q2 2004 Period, which
translates into higher concession revenue. The increase in concessions revenues in the Fiscal 2004 Period compared to the Fiscal 2003 Period was due to a 2.5% increase in average concessions per
patron, partially offset by the 0.5% decrease in attendance. The net increase in Fiscal 2004 Period concessions per patron is primarily attributable to price increases and a favorable film product
mix.



Total other operating revenues increased $8.1 million, or 22.8%, to $43.6 million for the Q2 2004 Period, from $35.5 million for the Q2 2003
Period. Total other operating revenues increased $13.7 million, or 21.1%, to $78.5 million for the Fiscal 2004 Period, from $64.8 million for the Fiscal 2003 Period. Included in
other operating revenues are on-screen advertising revenues, business meetings and concert event revenues, marketing revenues from our vendor marketing programs and game revenues. The
increase in other operating revenues was primarily attributable to increases in advertising, meetings and concert event revenues generated by Regal CineMedia during the Q2 2004 Period and the Fiscal
2004 Period and to a lesser extent, the inclusion of Hoyts for the full Fiscal 2004 Period.

26

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Film rental and advertising costs decreased $5.7 million, or 2.3%, to $243.7 million in the Q2 2004 Period, from $249.4 million in the Q2
2003 Period. Film rental and advertising costs as a percentage of admissions revenues decreased to 54.1% in the Q2 2004 Period as compared to 56.7% in the Q2 2003 Period. Film rental and advertising
costs decreased $10.5 million, or 2.4%, to $424.9 million in the Fiscal 2004 Period, from $435.4 million in the Fiscal 2003 Period. Film rental and advertising costs as a
percentage of admissions revenues decreased to 51.9% in the Fiscal 2004 Period as compared to 54.3% in the Fiscal 2003 Period. The decrease in film rental and advertising costs as a percentage of box
office revenues during the Q2 2004 Period and the Fiscal 2004 Period is a result of a favorable film product mix and a continued focus on managing advertising costs.



Cost of concessions increased $2.4 million, or 10.0%, to $26.4 million in the Q2 2004 Period, from $24.0 million in the Q2 2003 Period. Cost
of concessions as a percentage of concessions revenues increased to 14.7% in the Q2 2004 Period as compared to 13.9% in the Q2 2003 Period. Cost of concessions increased $3.2 million, or 7.4%,
to $46.6 million in the Fiscal 2004 Period, from $43.4 million in the Fiscal 2003 Period. Cost of concessions as a percentage of concessions revenues increased to 14.7% in the Fiscal
2004 Period as compared to 14.0% in the Fiscal 2003 Period. The increase in the cost of concessions in the Q2 2004 Period and the Fiscal 2004 Period as a percentage of concessions
revenues is primarily attributable to the mix of film and concession product coupled with slight increases in promotional costs.



Rent expense was $70.3 million for each of the Q2 2004 Period and the Q2 2003 Period. Rent expense as a percentage of total revenues was 10.4% and 10.8%
for the Q2 2004 Period and Q2 2003 Periods, respectively. Rent expense increased $5.7 million or 4.3% to $139.1 million in the Fiscal 2004 Period, from $133.4 million in Fiscal
2003 Period, respectively. Rent expense as a percentage of total revenues was 11.5% and 11.3% for the Fiscal 2004 Period and the Fiscal 2003 Period, respectively. The increase in rent expense in the
Fiscal 2004 Period was primarily attributable to the inclusion of Hoyts and to a lesser extent, marginal increases in contingent rent expense.



Other operating expenses increased $7.6 million, or 5.0%, to $160.1 million in the Q2 2004 Period, from $152.5 million in the Q2 2003 Period.
Other operating expenses as a percentage of total revenues increased to 23.8% in the Q2 2004 Period as compared to 23.5% in the Q2 2003 Period. For the Fiscal 2004 Period, other operating expenses
increased $28.1 million, or 9.7%, to $317.5 million, from $289.4 million in the Fiscal 2003 Period. Other operating expenses as a percentage of total revenues increased to 26.2%
in the Fiscal 2004 Period as compared to 24.6% in the Fiscal 2003 Period. The increase in total other operating expenses in the Q2 2004 Period is primarily related to increases in certain
non-rent occupancy costs and certain other operating costs, and to a lesser extent, incremental expenses associated with Regal CineMedia. The increase in total other operating expenses in
the Fiscal 2004 Period was primarily attributable to increases in certain non-rent occupancy costs and certain other operating costs, incremental costs associated with the inclusion of
Hoyts and incremental expenses associated with Regal CineMedia. The increase in other operating expenses as a percentage of total revenues is primarily attributable to the increases in operating
expenses per screen, as discussed above, outpacing total revenue per screen growth during Q2 2004 Period and Fiscal 2004 Period.

27

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General and administrative expenses increased $0.9 million, or 5.7%, to $16.7 million during the Q2 2004 Period, from $15.8 million in the Q2
2003 Period. General and administrative expenses increased $1.9 million, or 6.3%, to $32.3 million during the Fiscal 2004 Period, from $30.4 million in the Fiscal 2003 Period. As
a percentage of total revenues, general and administrative expenses remained relatively consistent for each of the Q2 2004 Period, Q2 2003 Period, Fiscal 2004 Period and Fiscal 2003 Period. The
increase in general and administrative expenses during the Fiscal 2004 Period was primarily attributable to increases in legal and professional fees related to the Company's refinancing transaction
and to a lesser extent, the inclusion of Hoyts.



Depreciation and amortization increased $4.0 million, or 10.2%, to $43.3 million in the Q2 2004 Period, from $39.3 million in the Q2 2003
Period. Depreciation and amortization increased $11.3 million, or 15.0%, to $86.5 million in the Fiscal 2004 Period, from $75.2 million in the Fiscal 2003 Period. The increase
during the Fiscal 2004 Period in depreciation and amortization is primarily due to the inclusion of Hoyts and increases in Regal CineMedia depreciation expense.



Income from operations totaled approximately $113.9 million for the Q2 2004 Period, which represents an increase of $20.6 million, or 22.1% from
$93.3 million in the Q2 2003 Period. Income from operations totaled approximately $175.5 million for the Fiscal 2004 Period, which represents an increase of $9.6 million, or 5.8%
from $165.9 million in the Fiscal 2003 Period. The increase in operating income during the Q2 2004 Period is primarily attributable to the favorable shift in the Q2 2004 Period calendar,
changes in certain of the above operating expense line items (primarily film and advertising) and increases in Regal CineMedia advertising, business meetings and concert event revenues. The increase
in operating income during the Fiscal 2004 Period is primarily attributable to the inclusion of the results of operations of the acquired Hoyts Cinemas theatres, increases in Regal CineMedia
advertising, business meetings and concert event revenues, a gain on settlement of a lawsuit and certain realized benefits associated with the integration of Hoyts, partially offset by the shifts in
our fiscal 2004 calendar which resulted in slightly lower attendance.



Net interest expense increased $6.0 million, or 39.0%, to $21.4 million in the Q2 2004 Period, from $15.4 million in the Q2 2003 Period. Net
interest expense increased $11.5 million, or 39.5%, to $40.6 million in the Fiscal 2004 Period, from $29.1 million in the Fiscal 2003 Period. The increase in interest expense in
the Q2 2004 Period and the Fiscal 2004 Period is principally due to higher outstanding indebtedness as a result of the financing arrangements consummated in the Q2 2003 Period and the Q2 2004 Period
in connection with the Q2 2003 Period and Q2 2004 Period extraordinary dividend transactions. Such increase is partially offset by the redemption the Company's higher-rate debt consisting
of approximately $298.1 million aggregate principal amount of the Regal Cinemas 93/8% Senior Subordinated Notes along with a $502.9 million principal payment to extinguish
the Regal Cinemas third amended and restated senior credit facility.



The provision for income taxes of $6.1 million and $30.7 million for the Q2 2004 Period and the Q2 2003 Period reflect effective tax rates of
approximately 45.2% and 39.5%, respectively. The provision for income taxes of $21.2 million and $54.1 million for the Fiscal 2004 Period and the Fiscal 2003 Period reflect effective tax
rates of approximately 41.2% and 39.6%, respectively. The effective tax

28

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rates
for the Q2 2004 Period and the Fiscal 2004 Period reflect the impact of certain non-deductible expenses.



Net income totaled $7.4 million for the Q2 2004 Period, which represents a decrease of $39.7 million, or 84.3%, from $47.1 million in the Q2
2003 Period. Net income totaled $30.2 million for the Fiscal 2004 Period, which represents a decrease of $52.2 million, of 63.3%, from $82.4 million in the Fiscal 2003 Period. The
decrease in net income in primarily attributable to a loss on extinguishment of debt of $76.0 million recorded in the as a result of the Q2 2004 Period refinancing transactions described
further in Notes 1 and 3 to the accompanying unaudited condensed consolidated financial statements.

EBITDA

EBITDA (earnings before interest, taxes, depreciation and amortization) was approximately $78.2 million, or 11.6% of total revenue, for the Q2 2004 Period
and $132.5 million, or 20.4% of total revenue, for the Q2 2003 Period. We believe EBITDA provides a useful measure of liquidity and financial performance for our investors because EBITDA is an
industry comparative measure of cash flows generated by our operations and because it is a primary financial measure used by management to assess the Company's performance and liquidity. EBITDA is not
a measurement of liquidity or financial performance under accounting principles generally accepted in the United States of America and should not be considered in isolation or construed as a
substitute for net income or other operations data or cash flow data prepared in accordance with accounting principles generally accepted in the United States of America for purposes of analyzing our
profitability or liquidity. In addition, not all funds depicted by EBITDA are available for management's discretionary use. For example, a substantial portion of such funds are subject to contractual
restrictions and functional requirements for debt service, to fund necessary capital expenditures and to meet other commitments from time to time as described in more detail elsewhere in this
quarterly report on Form 10-Q. EBITDA, as calculated, may not be comparable to similarly titled measures reported by other companies. A reconciliation of net cash provided by
operating activities to EBITDA and net income is calculated as follows (in millions):

|                                           |  | Q2 2004 Period |       | Q2 2003 Period |   | Fiscal 2004 Period |   | Fiscal 2003 Period |      
|------------------------------------------ |  | -------------- | ----- | -------------- | - | ------------------ | - | ------------------ | -----
|Net cash provided by operating activities  |  | $              | 138.3 |                | $ | 162.7              |   | $                  | 163.9
|Changes in working capital items and other |  |                | (24.4 | )              |   | (69.4              | ) |                    | 11.6 
|                                           |  |                |       |                |   |                    |   |                    |      
|Income from operations                     |  |                | 113.9 |                |   | 93.3               |   |                    | 175.5
|Depreciation and amortization              |  |                | 43.3  |                |   | 39.3               |   |                    | 86.5 
|Loss on extinguishment of debt             |  |                | (76.0 | )              |   |                   |   |                    | (76.0
|Minority interest and other, net           |  |                | (3.0  | )              |   | (0.1               | ) |                    | (7.5 
|                                           |  |                |       |                |   |                    |   |                    |      
|EBITDA                                     |  |                | 78.2  |                |   | 132.5              |   |                    | 178.5
|Depreciation and amortization              |  |                | (43.3 | )              |   | (39.3              | ) |                    | (86.5
|Interest expense, net                      |  |                | (21.4 | )              |   | (15.4              | ) |                    | (40.6
|Provisions for income taxes                |  |                | (6.1  | )              |   | (30.7              | ) |                    | (21.2
|                                           |  |                |       |                |   |                    |   |                    |      
|Net income                                 |  | $              | 7.4   |                | $ | 47.1               |   | $                  | 30.2 
|                                           |  |                |       |                |   |                    |   |                    |      

29

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The following table summarizes certain cash flow data for the Fiscal 2004 and Fiscal 2003 Periods (in millions):

Fiscal 2004 Period

Fiscal 2003 PeriodNet cash provided by operating activities

$
163.9

$
240.0Net cash used in investing activities


(48.4
)

(112.2
)Net cash provided by (used in) financing activities


(48.2
)

497.6Net increase in cash and cash equivalents

$
67.3

$
625.4


Cash
flows generated from operating activities were approximately $163.9 million for the Fiscal 2004 Period compared to approximately $240.0 million for the Fiscal 2003
Period. The $76.1 million net decrease was attributable to a $52.2 million decrease in net income offset by a net increase of $77.9 million in adjustments to reconcile net income
to cash provided by operating activities. Such adjustments primarily included a $76.0 million loss on the extinguishment of debt (See Note 3"Debt Obligations") and an
increase in depreciation and amortization of $11.3 million, which is primarily attributable to increases in depreciation expense related to Regal CineMedia and the inclusion of Hoyts during the
entire Fiscal 2004 Period as compared to only three months during the Fiscal 2003 Period because Hoyts was acquired on March 28, 2003. In addition, a net decrease of $101.8 million in
changes in operating assets and liabilities contributed to the decrease in net cash provided by operating activities. The net decrease in operating assets and liabilities was primarily related to a
$100.3 million decrease in the change in prepaid expenses and other current assets, accounts payable, income taxes payable and accrued expenses and other liabilities. The changes in working
capital were primarily related to the change in the Company's calendar for the Fiscal 2004 Period as compared to the Fiscal 2003 Period. Capital expenditures were $46.0 million for the Fiscal
2004 Period compared to $53.9 million for the Fiscal 2003 Period. Such decrease is primarily due to fewer capital expenditures associated with Regal CineMedia during the Fiscal 2004 period.
During the Q2 2004 Period, the Company consummated two acquisitions for an aggregate purchase price of $26.9 million. Also during the Fiscal 2004 Period, Regal Cinemas entered into a sale and
leaseback transaction involving one of its owned theatres for total sale proceeds of approximately $11.5 million. Cash flows used in financing activities were approximately $48.2 million
for the Fiscal 2004 Period compared to cash flows provided by financing activities of approximately $497.6 million for the Fiscal 2003 Period. The net decrease in cash flows used in financing
activities during the Fiscal 2004 Period is primarily attributable to the June 2, 2004 extraordinary dividend payment, redemption of a portion of the Regal Cinemas 93/8% Senior
Subordinated Notes, repayment of the third amended and restated Regal Cinemas senior credit facility and increases in our Fiscal 2004 Period dividend payments, partially offset
by borrowings under the new Regal Cinemas Senior Credit Facility. See Notes 1 and 3 to the unaudited condensed consolidated financial statements for further description of such financing transactions.

Liquidity and Capital Resources

We expect our primary uses of cash to be for operating expenses, general corporate purposes related to corporate operations, debt service and the Company's
quarterly dividend. Our principal sources of liquidity are from our operating subsidiaries. Our operating subsidiaries principal uses of cash are for operating expenses, capital expenditures, and debt
service. The principal sources of liquidity for our subsidiaries are cash generated from operations, cash on hand and the Revolving Facility provided for under Regal Cinemas' new Senior Credit
Facility.

Our
revenues are generally collected in cash through admissions and concessions revenues. Our 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

30

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and
the cost of the Company's concessions are generally paid to vendors approximately 30 days from purchase. Our current liabilities generally include items that will become due within twelve
months and, as a result, at any given time, our balance sheet is likely to reflect a working capital deficit.

We
fund the cost of our operating subsidiaries' capital expenditures through internally generated cash flows, cash on hand and financing activities. Our capital requirements have
historically arisen principally in connection with acquisitions of theatres, new theatre openings, adding new screens to existing theatres, development of our DCN, upgrading the Company's theatre
facilities and replacing equipment. We intend to continue to grow our theatre circuit through selective expansion and acquisition opportunities. We currently expect capital expenditures for theatre
development, replacement, expansion, upgrading and maintenance to be in the range of $125 million to $130 million in fiscal 2004, exclusive of acquisitions. In addition to capital
expenditures associated with our theatre operations, we expect to incur capital expenditures of approximately $15 million to $20 million in connection with Regal CineMedia during fiscal
2004. Regal CineMedia capital expenditures will be made in connection with the deployment of our DCN to provide advertising and promotional services and digital distribution content capabilities to
additional markets coupled with expenditures for other in-lobby advertising and promotional initiatives. During the Fiscal 2004 Period, we invested an aggregate of approximately
$46.0 million in capital expenditures.

Concurrent
with the issuance of our $240.0 million 33/4% Convertible Senior Notes, we entered into convertible note hedge and warrant transactions with respect to
our Class A Common Stock in order to reduce the potential dilution from conversion of the notes into shares of our Class A Common Stock. The net cost of the convertible note hedge and
warrant transactions was approximately $18.8 million
and is included as a component of stockholders' equity. See Note 3 to the accompanying unaudited condensed consolidated financial statements for further description of the 33/4%
Convertible Senior Notes and the related convertible note hedge and warrant transactions. The $240.0 million 33/4% Convertible Senior Notes allow us to settle any conversion, and
we have the ability and intent to settle any conversion, by remitting to the note holder the accreted value of the note in cash, while settling the conversion spread (the excess conversion value over
the accreted value) in the shares of our Class A Common Stock. Based upon our ability to generate cash flow from operations, our financial capacity and ability to raise capital and available
cash on hand, we believe that we have the ability to generate the liquidity necessary to settle in cash the principal amount of the 33/4% Convertible Senior Notes upon a conversion
event.

On
April 26, 2004, the Company signed an agreement with Signature Theatres to acquire 30 theatres comprising 309 screens in California and Hawaii. Consummation of this acquisition
is subject to customary closing conditions, including antitrust clearance. On April 29, 2004, Regal acquired five theatres representing 49 screens in the Northeastern United States. On
May 5, 2004, Regal acquired an additional two theatres with 26 screens in the Northeastern United States. The total aggregate cash purchase price for the combined acquisitions is estimated to
be approximately $226.9 million, including approximately $200 million for the Signature Theatres acquisition, which is expected to close during the second half of fiscal 2004.

On
May 10, 2004, Regal Cinemas entered into its new Senior Credit Facility with Credit Suisse First Boston, acting through its Cayman Islands Branch, as Administrative Agent, and
the other lenders and agents party thereto, which consists of a $1,650.0 million Term Facility and a Revolving Facility of up to $100.0 million, in order to, among other things,
refinance its existing indebtedness (the "Refinancing"). The Revolving Facility has a sublimit of $10.0 million for short-term loans and a sublimit of $30.0 million for
letters of credit. The Term Facility matures on November 10, 2010 and the Revolving Facility matures on May 10, 2009. Interest is payable (a) in the case of base rate loans,
quarterly in arrears, and (b) in the case of Eurodollar rate loans, at the end of each interest period, but in no event less often than every 3 months. As of July 1, 2004, the
interest rate on the Term Facility was approximately 4.2%. The Term Facility amortizes in equal quarterly installments in an aggregate

31

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annual
amount equal to 1.0% of the original principal amount of the Term Facility during the first six years thereof, with the balance payable in two equal installments, the first on June 30,
2010 and the second on November 10, 2010. Approximately $918.3 million of the proceeds from the Senior Credit Facility, together with a portion of Regal Cinemas' available cash, was
distributed by Regal Cinemas to Regal, which used approximately $718.3 million of the proceeds to pay an extraordinary dividend to its stockholders on June 2, 2004, as described below,
and set aside the remaining balance for the fiscal 2004 acquisitions described under Note 2 to the accompanying unaudited condensed consolidated financial statements and for general corporate
purposes. Upon consummation of the Refinancing, Regal recognized a loss on debt extinguishment of approximately $76.0 million. The increase in indebtedness under the Senior Credit Facility will
substantially increase our interest and principal payment obligations. For a detailed summary of other material terms of the Senior Credit Facility, please refer to the information provided under
Note 3"Debt ObligationsRegal Cinemas Fourth Amended and Restated Credit Agreement" to the accompanying unaudited condensed consolidated financial statements.

On
May 12, 2004, we, through our subsidiary RCBC, completed a cash tender offer and consent solicitation for Regal Cinemas' 93/8% Senior Subordinated Notes due
2012. Consideration for each $1,000 principal amount of Notes tendered was $1,169.05, plus a consent payment of $20.00 per $1,000 principal amount of Notes for those holders who properly tendered
their Notes with a consent on or before April 27, 2004. Approximately $298.1 million aggregate principal amount of the Notes was purchased in the tender offer, resulting in our payment
of approximately $56.3 million in excess of the $298.1 million aggregate principal amount of the Notes tendered in connection with the tender offer and consent solicitation. The
aggregate consideration paid in respect of the tender offer and consent solicitation was financed with a portion of the proceeds from Regal Cinemas' new Senior Credit Facility. For a detailed summary
of the tender offer and consent solicitation, please refer to the information provided under Note 3"Debt ObligationsRegal Cinemas 93/8% Senior
Subordinated Notes" to the accompanying unaudited condensed consolidated financial statements.

On
May 13, 2004, Regal declared an extraordinary cash dividend of $5.00 per share on each outstanding share of its Class A and Class B common stock. Stockholders of
record at the close of business on May 21, 2004 were paid this dividend on June 2, 2004. The dividend was recorded as a reduction of additional paid-in capital upon
declaration. A portion of the net proceeds from Regal Cinemas' Senior Credit Facility was used to fund the approximate $718.3 million extraordinary dividend.

As
of July 1, 2004, we had approximately $1,595.9 million outstanding under the Regal Cinemas Term Facility and $51.9 million aggregate principal amount remaining
under the Notes, which aggregate principal amount remaining under the Notes was reduced on July 15, 2004 by an additional $361,000 in connection with Regal's private repurchase of additional
Notes from a holder that did not timely tender its notes in connection with the tender offer and consent solicitation. As of July 1, 2004, Regal Cinemas had used in connection with the
Refinancing or distributed to Regal all of the net proceeds from the Term Facility and had approximately $83.6 million available for drawing under the $100.0 million Revolving Facility.
Regal Cinemas maintains a letters of credit facility of up to $30.0 million (of which approximately $16.4 million was outstanding as of July 1, 2004), which reduces availability
under the Revolving Facility.

During
the two quarters ended July 1, 2004, Regal paid two cash dividends of $0.18 per share on each share of the Company's Class A and Class B common stock, or
$51.5 million in the aggregate. On July 27, 2004, the Company declared a cash dividend of $0.20 per share on each share of the Company's Class A and Class B common stock,
payable on September 15, 2004, to stockholders of record on September 1, 2004. We, at the discretion of the board of directors and subject to applicable law, anticipate paying regular
quarterly dividends on our Class A and Class B common stock for the foreseeable future. The amount, if any, of the dividends to be paid in the future will depend upon our

32

---



then
available cash, anticipated cash needs, overall financial condition, loan agreement restrictions, future prospects for earnings and cash flows, as well as other relevant factors.



The Company primarily leases its theatres pursuant to long-term non-cancelable operating leases. As of July 1, 2004, the Company's
estimated contractual cash obligations and commercial commitments over the next several years are as follows (in millions):

|                                         |  | Payments Due By Period
|---------------------------------------- |  | ----------------------
|
|Contractual Cash Obligations             |  |                       
|Debt obligations(1)                      |  | $                     
|Capital lease obligations(2)             |  |                       
|Lease financing arrangements(2)          |  |                       
|Bankruptcy claims and liabilities(3)     |  |                       
|Operating leases(4)                      |  |                       
|Other long term and purchase obligations |  |                       
|                                         |  |                       
|Total contractual cash obligations       |  | $                     
|                                         |  |                       

|                                |  | Amount of Commitment Expiration per Period
|------------------------------- |  | ------------------------------------------
|
|Other Commercial Commitments    |  |                                           
|Total commercial commitments(5) |  | $                                         
|                                |  |                                           

---

33

---



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

Debt Obligations

On May 10, 2004, Regal Cinemas entered into the Senior Credit Facility which consists of a Term Facility in an aggregate principal amount of up to
$1,650.0 million and a Revolving Facility in an aggregate principal amount of up to $100.0 million. For a detailed summary of the material terms of our Senior Credit Facility, please
refer to the information provided under Note 3 to the accompanying unaudited condensed consolidated financial statements, which information is incorporated herein by reference. In addition, the
Senior Credit Facility is filed herewith as Exhibit 4.1.

For
information regarding our other material debt instruments, including our 33/4% Convertible Senior Notes and Regal Cinemas' 93/8% Senior Subordinated
Notes, please see the information under Note 3"Debt Obligations" to the accompanying unaudited condensed consolidated financial statements, which information is incorporated by
reference herein.

Critical Accounting Policies

For a discussion of accounting policies that we consider critical to our business operations and the understanding of our results of operations and affect the
more significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements, please refer to Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of OperationsCritical Accounting Policies" contained in our annual report on Form 10-K for the fiscal year ended January 1, 2004,
the information under which is incorporated herein by reference. As of July 1, 2004, there were no significant changes in our critical accounting policies or estimation procedures.

Recent Accounting Pronouncements

For a discussion of the recent accounting pronouncements relevant to our operations, please refer to the information provided under Notes 8 and 9 to the
accompanying unaudited condensed consolidated financial statements, which information is incorporated herein by reference.

Seasonality

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

34

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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's market risk is confined to interest rate exposure of its and its wholly owned subsidiaries' debt obligations that bear interest based on floating
rates. The Senior Credit Agreement provides for variable rate interest that could be adversely affected by an increase in interest rates. As of July 1, 2004, term borrowings of
$1,595.9 million under the Senior Credit Facility were outstanding. Borrowings under the Term Facility bear interest, at the Company's option, at either an adjusted Eurodollar rate or a base
rate plus, in each case, an applicable margin. The base rate is the higher of Prime Rate and the Federal Funds Effective Rate plus 0.5%. The borrowings outstanding under the Term Facility bore
interest of approximately 4.2% as of July 1, 2004. A one-half percent rise in the interest rate on the Company's variable rate indebtedness held at July 1, 2004, would have
increased reported interest expense by approximately $2.0 million for the quarter ended July 1, 2004.

On
July 13, 2004, the Regal Cinemas entered into four interest rate swap agreements with final maturity terms ranging from three to five years each for the purpose of hedging
approximately $800 million of variable interest rate risk under the Senior Credit Facility. Under the terms of the interest rate swap agreements, the Regal Cinemas pays interest at a weighted
average fixed rate of 3.87% plus an applicable margin of 2.25% (as of July 27, 2004) and will receive interest at a variable rate based on the 3-month LIBOR. For a further
description of the swap agreements, see Note 10 to the accompanying unaudited condensed consolidated financial statements, which information is incorporated herein by reference.

Item 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit
to the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified by the Commission's
rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officers (whom we refer to in this periodic report as
our Certifying Officers), as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our Certifying Officers, the effectiveness of our
disclosure controls and procedures as of July 1, 2004, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that,
as of July 1, 2004, our disclosure controls and procedures were effective.

There
were no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.

35

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PART IIOTHER INFORMATION

Item 1. LEGAL PROCEEDINGS

On May 19, 2004, Teachers' Retirement System of Louisiana ("TRSL"), derivatively and on behalf of the Company, filed a lawsuit in the
Delaware Chancery Court alleging that the members of our Board of Directors breached their fiduciary duties by authorizing the Company's recapitalization in order to pay the extraordinary cash
dividend of $5.00 per Class A and Class B common share, payable on June 2, 2004, to stockholders of record on May 21, 2004. The lawsuit sought to block the Company's
payment of the extraordinary dividend and to award the Company unspecified compensatory damages. On June 1, 2004, the Delaware Chancery Court denied TRSL's emergency motion to
halt the dividend payment. On June 11, 2004, TRSL agreed to release the Company's Board of Directors from all claims related to the special dividend in exchange for our agreement not to
countersue TRSL or its counsel. On June 29, 2004, the Delaware Chancery Court dismissed the lawsuit.

Other
information required to be furnished by us under this Part II, Item 1 (Legal Proceedings) is incorporated by reference to Note 6 (Commitments and Contingencies) of
our notes to unaudited condensed consolidated financial statements included in Part I, Item 1 (Financial Statements) of this report on Form 10-Q.

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

Our 2004 annual meeting of stockholders was held on May 12, 2004 in Knoxville, Tennessee. The matters submitted for a vote at the meeting and the related
election results were as follows:

For

WithheldThomas D. Bell, Jr.

936,749,759

1,268,135Craig D. Slater

929,626,447

8,391,447


For

Against

Abstain

Broker Non-Vote937,923,257

92,697

1,940

0


36

---



Item 6. EXHIBITS AND REPORTS ON FORM 8-K



|Exhibit No. |  | Exhibit Description                                                                                                                                                                                                                                                                                            
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1         |  | Fourth Amended and Restated Credit Agreement, dated as of May 10, 2004, among Regal Cinemas Corporation, the several lenders from time to time parties thereto and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Sole Lead
Arranger and Sole Book Runner and as Administrative Agent
|4.1.1       |  | First Amendment to Fourth Amended and Restated Credit Agreement, dated as of July 26, 2004, among Regal Cinemas Corporation, the lenders parties thereto and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Sole Lead
Arranger and Sole Book Runner and as Administrative Agent      
|4.2         |  | Sixth Supplemental Indenture, dated as of April 27, 2004, among Regal Cinemas Corporation, each of the Guarantors party thereto, and U.S. Bank National Association, as Trustee under the Indenture referred to therein                                                                                        
|4.3         |  | Amended and Restated Guarantee and Collateral Agreement, dated as of May 10, 2004, among Regal Cinemas Corporation, each of the Guarantors party thereto and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Sole Lead
Arranger as Administrative Agent                               
|10.1        |  | Merger Agreement, dated as of April 26, 2004, among Regal Cinemas, Inc., RCI/RMS, Inc. and Signature Theatre Investors, LLC                                                                                                                                                                                    
|10.2        |  | Asset Purchase Agreement, dated as of April 26, 2004, among Regal Cinemas, Inc., Signature Theatres, LLC, Turlock Cinemas, LLC and Signature Desert Cinemas, LLC                                                                                                                                               
|31.1        |  | Rule 13a-14(a) Certification of Co-Chief Executive Officer of Regal                                                                                                                                                                                                                                            
|31.2        |  | Rule 13a-14(a) Certification of Co-Chief Executive Officer of Regal                                                                                                                                                                                                                                            
|31.3        |  | Rule 13a-14(a) Certification of Chief Financial Officer of Regal                                                                                                                                                                                                                                               
|32          |  | Section 1350 Certifications                                                                                                                                                                                                                                                                                    



37

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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: August 10, 2004 |  | By:                      
|Date: August 10, 2004 |  | By:                      
|Date: August 10, 2004 |  | By:                      

38

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REGAL ENTERTAINMENT GROUP  Exhibit Index

|Exhibit No. |  | Exhibit Description                                                                                                                                                                                                                                                                                            
|----------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1         |  | Fourth Amended and Restated Credit Agreement, dated as of May 10, 2004, among Regal Cinemas Corporation, the several lenders from time to time parties thereto and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Sole Lead
Arranger and Sole Book Runner and as Administrative Agent
|4.1.1       |  | First Amendment to Fourth Amended and Restated Credit Agreement, dated as of July 26, 2004, among Regal Cinemas Corporation, the lenders parties thereto and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Sole Lead
Arranger and Sole Book Runner and as Administrative Agent      
|4.2         |  | Sixth Supplemental Indenture, dated as of April 27, 2004, among Regal Cinemas Corporation, each of the Guarantors party thereto, and U.S. Bank National Association, as Trustee under the Indenture referred to therein                                                                                        
|4.3         |  | Amended and Restated Guarantee and Collateral Agreement, dated as of May 10, 2004, among Regal Cinemas Corporation, each of the Guarantors party thereto and Credit Suisse First Boston, acting through its Cayman Islands Branch, as Sole Lead
Arranger as Administrative Agent                               
|10.1        |  | Merger Agreement, dated as of April 26, 2004, among Regal Cinemas, Inc., RCI/RMS, Inc. and Signature Theatre Investors, LLC                                                                                                                                                                                    
|10.2        |  | Asset Purchase Agreement, dated as of April 26, 2004, among Regal Cinemas, Inc., Signature Theatres, LLC, Turlock Cinemas, LLC and Signature Desert Cinemas, LLC                                                                                                                                               
|31.1        |  | Rule 13a-14(a) Certification of Co-Chief Executive Officer of Regal                                                                                                                                                                                                                                            
|31.2        |  | Rule 13a-14(a) Certification of Co-Chief Executive Officer of Regal                                                                                                                                                                                                                                            
|31.3        |  | Rule 13a-14(a) Certification of Chief Financial Officer of Regal                                                                                                                                                                                                                                               
|32          |  | Section 1350 Certifications                                                                                                                                                                                                                                                                                    

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