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

---

FORM 10-K

(Mark One)

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

For the fiscal year ended March 30, 2006
OR

|o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from
 to

Commission file number 333-122636

---

MARQUEE HOLDINGS INC.(Exact name of registrant as specified in its charter)

Delaware(State or other jurisdiction of
incorporation or organization)

77-0642885(I.R.S. Employer
Identification No.)920 Main
Kansas City, Missouri(Address of principal executive offices)

64105(Zip Code)


Registrant's telephone number, including area code:(816) 221-4000

---

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

---

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

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

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

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. ý

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

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

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter.

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

Title of each class of common stock

Number of shares
Outstanding as of May 26, 2006Class A-1 Common Stock, 1¢ par value

382,475.00000Class A-2 Common Stock, 1¢ par value

382,475.00000Class N Common Stock, 1¢ par value

5,128.77496Class L-1 Common Stock, 1¢ par value

256,085.61252Class L-2 Common Stock, 1¢ par value

256,085.61252


DOCUMENTS INCORPORATED BY REFERENCE

None



---





MARQUEE HOLDINGS INC.        FORM 10-K        FOR THE FISCAL YEAR ENDED MARCH 30, 2006        INDEX

|         |  |                                                                                                              |  | Page
|-------- |  | ------------------------------------------------------------------------------------------------------------ |  | ----
|PART I  
|Item 1.  |  | Business                                                                                                     |  | 4   
|Item 1A. |  | Risk Factors                                                                                                 |  | 16  
|Item 1B. |  | Unresolved Staff Comments                                                                                    |  | 26  
|Item 2.  |  | Properties                                                                                                   |  | 26  
|Item 3.  |  | Legal Proceedings                                                                                            |  | 27  
|Item 4.  |  | Submission of Matters to a Vote of Security Holders                                                          |  | 28  
|PART II 
|Item 5.  |  | Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  | 29  
|Item 6.  |  | Selected Financial Data                                                                                      |  | 30  
|Item 7.  |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                        |  | 33  
|Item 7A. |  | Quantitative and Qualitative Disclosures about Market Risk                                                   |  | 60  
|Item 8.  |  | Financial Statements and Supplementary Data                                                                  |  | 62  
|Item 9.  |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure                         |  | 130 
|Item 9A. |  | Controls and Procedures                                                                                      |  | 130 
|Item 9B. |  | Other Information                                                                                            |  | 130 
|PART III
|Item 10. |  | Directors and Executive Officers of the Registrant                                                           |  | 131 
|Item 11. |  | Executive Compensation                                                                                       |  | 134 
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |  | 138 
|Item 13. |  | Certain Relationships and Related Transactions                                                               |  | 141 
|Item 14. |  | Principal Accountant Fees and Services                                                                       |  | 145 
|PART IV 
|Item 15. |  | Exhibits and Financial Statement Schedules                                                                   |  | 147 

Forward Looking Statements

All statements, other than statements of historical facts, included in this Annual Report on Form 10-K regarding the prospects of our industry
and our prospects, plans, financial position and business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "intend," "estimate," "anticipate," "plan," "foresee," "believe" or "continue" or the negatives of these terms or variations of them or
similar terminology. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been
correct. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contemplated by the relevant forward-looking
statement.

2

---



Important
factors that could cause actual results to differ materially from our expectations include, among others: (i) the cost and availability of films and the performance of films licensed
by us; (ii) competition, including the introduction of alternative forms of entertainment; (iii) construction delays; (iv) the ability to open or close theatres and screens as
currently planned; (v) the ability to sub-lease vacant retail space; (vi) domestic and international political, social and economic conditions; (vii) demographic
changes; (viii) increases in the demand for real estate; (ix) changes in real estate, zoning and tax laws; (x) unforeseen changes in operating requirements; (xi) our
ability to identify suitable acquisition candidates and successfully integrate acquisitions into our operations, including the integration of Loews Cineplex Entertainment Corporation and the
achievement of estimated cost savings and synergies as a result of the Mergers (as defined below) on a timely basis; (xii) results of significant litigation; and (xiii) our ability to
enter into various financing programs. Readers are urged to consider these factors carefully in evaluating the forward-looking statements. For a discussion of these and other risk factors, see Risk
Factors under Part I Item 1A. of this Annual Report on Form 10-K.

All
subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements.
The forward-looking statements included herein are made only as of the date of this Annual Report on Form 10-K, and we do not undertake any obligation to release publicly any
revisions to such forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

3

---





PART I

Item 1. Business

(a)   General Development of Business

Marquee Holdings Inc. ("Holdings") is organized as a holding company with no operations of its own. Holdings was incorporated on July 16, 2004. We conduct our
business through our subsidiaries, including AMC Entertainment Inc. ("AMC Entertainment", "AMCE", or the "Company"). On January 26, 2006, Holdings merged with LCE Holdings, Inc. ("LCE
Holdings"), the parent of Loews Cineplex Entertainment Corporation ("Loews"), with Holdings continuing as the holding company for the merged businesses, and Loews merged with and into AMC
Entertainment, with AMC Entertainment continuing after the merger ("the Merger" and collectively, the "Mergers"). AMC Entertainment's principal directly owned subsidiaries are American
Multi-Cinema, Inc. ("AMC"), Grupo Cinemex, S.A. de C.V. ("Cinemex") and AMC Entertainment International, Inc. ("AMCEI"). We conduct our U.S. and Canada theatrical exhibition business
(formerly, "North American theatrical exhibition") through AMC and its subsidiaries and AMCEI. We are operating theatres outside the United States through Grupo Cinemex, S.A. de C.V. and its
subsidiaries and AMCEI and its subsidiaries.

AMC
Entertainment was founded in Kansas City, Missouri in 1920. It was incorporated under the laws of the state of Delaware on June 13, 1983. We maintain our principal executive
offices at 920 Main Street, Kansas City, Missouri 64105. Our telephone number at such address is (816) 221-4000.

In
March 2002, we acquired the operations and related assets of Gulf States Theatres for a cash purchase price of approximately $45.8 million. The acquisition included five
theatres with 68 screens in the New Orleans, Louisiana area. Operating results of the acquired theatres are included in our consolidated statements of operations from March 15, 2002.

In
March 2002, we acquired GC Companies, Inc. ("GC Companies"), pursuant to the plan of reorganization of GC Companies which we sponsored, for a purchase price of
approximately $168.9 million (net of $6.5 million from the sale of GC Companies' portfolio of venture capital investments on the effective date of the plan of reorganization). The
acquisition included 66 theatres with 621 screens throughout the United States and a 50% interest in a joint venture that operates 18 theatres with 168 screens in Argentina, Chile, Brazil and Uruguay.
Operating results of the acquired theatres are included in our consolidated statements of operations from March 29, 2002. The purchase price for GC Companies included cash payments of
$68.5 million, the issuance of $72.9 million of our 91/2% senior subordinated notes due 2011 with a fair value of $71.8 million and the issuance of
$35.2 million of our Predecessor's common stock, or 2.6 million shares based on a fair value of $13.64 per share (the closing price per share on the effective date of the plan of
reorganization).

In
December 2003, we sold our only theatre in Sweden and incurred a loss on sale of approximately $5.6 million, which included a payment of approximately
$5.3 million to the purchaser. We opened our theatre in Sweden during fiscal 2001, and since that time we had incurred pre-tax losses of approximately $17.2 million,
including an impairment charge of approximately $4.7 million in fiscal 2002 and a loss on sale of approximately $5.6 million in fiscal 2004. The operations and cash flows of the Sweden
theatre have been eliminated from our ongoing operations as a result of the disposal transaction, and we do not have any significant continuing involvement in the operations of the Sweden theatre. The
results of operations of the Sweden theatre have been classified as discontinued operations, and information presented for all periods reflects the new classification. The operations of the Sweden
theatre were previously reported in our International theatrical exhibition operating segment.

In
December 2003, we acquired certain of the operations and related assets of MegaStar Cinemas, LLC ("MegaStar") for a cash purchase price of approximately $15.0 million.
The acquisition included three theatres with 48 screens in the Minneapolis, Minnesota and Atlanta, Georgia areas. Operating

4

---



results
of the acquired theatres are included in our consolidated statements of operations from December 19, 2003.

In
December 2004, we completed a merger in which AMC Entertainment was acquired by Holdings, a newly created investment vehicle owned by J.P. Morgan Partners (BHCA) L.P. and
certain other affiliated funds managed by J.P. Morgan Partners, LLC (collectively, "JPMP") and Apollo Investment Fund V, L.P. and certain related investment funds (collectively, "Apollo" and together
with JPMP, the "Marquee Sponsors") and certain other co-investors. Marquee Inc. ("Marquee"), a wholly-owned subsidiary of Holdings', merged with and into AMC Entertainment, with AMC
Entertainment as the surviving entity. Pursuant to the terms of the merger, each issued and outstanding share of AMC
Entertainment's common stock and Class B stock was converted into the right to receive $19.50 in cash and each issued and outstanding share of AMC Entertainment's preferred stock was converted
into the right to receive $2,727.27 in cash. The total amount of consideration paid in the merger was approximately $1.67 billion. Marquee was a company formed on July 16, 2004. On
December 23, 2004, pursuant to a merger agreement, Marquee merged with AMC Entertainment (the "Predecessor"). Upon the consummation of the merger, AMC Entertainment and its parent Holdings were
the surviving reporting entities (collectively the "Successor"). The merger was treated as a purchase with Marquee being the "accounting acquiror" in accordance with Statement of Financial Accounting
Standards No. 141),Business Combinations. As a result, the Successor applied the purchase method of accounting to the separable assets,
including goodwill, and liabilities of the accounting acquiree and Predecessor, AMC Entertainment, as of December 23, 2004, the merger date. The consolidated financial statements presented
herein are those of the accounting acquiror from its inception on July 16, 2004 through March 30, 2006, and those of its Predecessor, AMC Entertainment, for all prior periods through the
merger date. See Note 2 to the Consolidated Financial Statements under Part II Item 8. of this Annual Report on Form 10-K.

In
March 2005, we contributed certain assets consisting of fixed assets and exhibitor agreements of our subsidiary National Cinema Network, Inc. ("NCN") to a new joint
venture with Regal Entertainment Group called National CineMedia, LLC ("NCM"). NCM markets and sells cinema screen advertising and promotions products, business communications and training services,
and distributes digital alternative content. We paid termination benefits related to the displacement of certain NCN associates. In consideration of the NCN contributions described above, NCM issued a
37% interest in its Class A units to NCN. Since that date, NCN's interest in NCM has declined to 29% due to the entry of new investors.

In
March 2005, we commenced an organizational restructuring related to functions at our home office in Kansas City, Missouri and our film office in Los Angeles, California. Our
new organizational system flattened management structure and aligned systems, resources and areas of expertise to promote faster communication. The primary goal of the restructuring was to create a
simplified organizational structure to enable us to position ourselves in a manner we believe will best serve our existing guests while setting the stage to handle growth with improved infrastructure.

We
recorded $4.9 million and $4.0 million of expenses related to one-time termination benefits and other costs related to the displacement of approximately 200
associates as part of the organizational restructuring and the contribution of assets by NCN to NCM during fiscal 2005 and fiscal 2006, respectively.

In
June 2005, AMCEI sold four of its five theatres in Japan for a sales price of approximately $44.8 million and, on September 1, 2005, sold its remaining Japan
theatre for a sales price of approximately $8.6 million. The results of operations of the Japan theatres have been classified as discontinued operations, and information presented for all
periods reflects the new classification. The operations of the Japan theatres were previously reported in our International theatrical exhibition operating segment.

We
disposed of our only theatre in Hong Kong on January 5, 2006 and entered into a license agreement with the purchaser for continued use of our trademark. This operation did not
meet the criteria for classification as discontinued operations.

5

---



In
January 2006, Holdings merged with LCE Holdings, the parent of Loews, with Holdings continuing as the holding company for the merged businesses, and Loews merged with and into
AMC Entertainment, with AMC Entertainment continuing after the Merger. LCE Holdings, a company formed by investment funds affiliated with Bain Capital Partners, LLC, or Bain Capital Partners, The
Carlyle Group, and Spectrum Equity Investors, acquired 100% of the capital stock of Loews and, indirectly, Cinemex, for an aggregate purchase price of approximately $1.5 billion in
July 2004. The previous stockholders of Holdings, including affiliates of J.P. Morgan Partners, LLC and Apollo Management, L.P., currently hold approximately 60% of Holdings' outstanding
capital stock, and the previous stockholders of LCE Holdings, including affiliates of Bain Capital Partners, The Carlyle Group and Spectrum Equity Investors (collectively with J.P. Morgan Partners,
LLC and Apollo Management, L.P., the "Sponsors"), currently hold approximately 40% of Holdings' outstanding capital stock. Operating results of the acquired theatres are included in our consolidated
statements of operations from January 26, 2006. See Note 2 to the Consolidated Financial Statements under Part II Item 8. of this Annual Report on Form 10-K.

In
conjunction with the Merger, we entered into a Final Judgment with the Antitrust Division of the United States Department of Justice and judgments and consent decrees with various
States. These judgments and decrees require us to hold separate and divest ourselves of certain theatres. As a result, we have classified the assets and liabilities of these theatres as held for sale.
We expect to divest certain of these theatres in our first fiscal quarter of 2007.

In
May 2006, AMCEI and its subsidiary AMC Entertainment International Limited sold its interests in AMC Entertainment España S.A., which owned and operated 4
theatres with 86 screens in Spain, and Actividades Multi-Cinemas E Espectáculos, LDA, which owned and operated 1 theatre with 20 screens in Portugal for a sales price of approximately
$40.0 million. We have classified the assets and liabilities of these theatres as held for sale. These operations did not meet the criteria for classification as discontinued operations.

Subsequent
to the current fiscal year, we sold four theatres with 42 screens in the U.S. as required by and in connection with the approval of the Mergers for an aggregate sales price of
$30.7 million.

(b)   Financial Information about Segments

For information about our operating segments, see Note 16 to the Consolidated Financial Statements under Part II Item 8. of this Annual Report on
Form 10-K.

(c)   Narrative Description of Business

We are one of the world's leading theatrical exhibition companies based on total revenues. As of March 30, 2006, after giving effect to the expected
disposal of 10 theatres and 120 screens in the U.S. in connection with antitrust approval of the Mergers and the disposition of 4 theatres with 86 screens in Spain and 1 theatre with 20 screens in
Portugal, we owned, operated or held interests in 413 theatres with a total of 5,603 screens, of which approximately 82% were located in the United States and Canada and the balance were located in
international markets. We believe that we have one of the most modern theatre circuits among the world's major theatre exhibitors. Our circuit of high-performing theatres is primarily
located in large, urban markets where we have a strong market position which allows us to maximize revenues and manage our costs effectively. For the 52 weeks ended March 30, 2006, we had
revenues of $1.7 billion and a loss from continuing operations of $189.8 million. For the Successor period from inception on July 16, 2004 through March 31, 2005, we had
revenues of $452.9 million and a loss from continuing operations of $44.7 million. For the Predecessor period from April 2, 2004 through December 23, 2004, we had revenues
of $1.3 billion and a loss from continuing operations of $35.3 million.

In
the United States, we operate 314 theatres with 4,437 screens in 29 states and the District of Columbia. We have a significant presence in major urban "Designated Market Areas," or
"DMAs" (television market areas as defined by Nielsen Media Research) and for the 52 weeks ended March 30,

6

---



2006,
we had the number one or two market share in 22 of the top 25 DMAs, including the number one market share in New York City, Chicago, Dallas and Boston. As of March 30, 2006, we had an
average of 14.3 screens per theatre, which we believe to be the highest among the major U.S. and Canada theatre exhibitors. Our U.S. and Canada theatre circuit represented 95% of our revenues for the
52 weeks ended March 30, 2006.

The
following table provides detail with respect to the geographic location of our U.S. and Canada theatre circuit as of March 30, 2006:

United States and Canada

Theatres(1)

Screens(1)California

35

543Texas

27

489Florida

29

440New York

28

286New Jersey

23

284Illinois

19

277Michigan

13

214Georgia

11

177Arizona

9

169Maryland

15

159Pennsylvania

14

158Washington

15

149Massachusetts

11

141Ohio

9

133Virginia

9

131Missouri

8

117Minnesota

6

75Colorado

4

72Louisiana

5

68North Carolina

3

60Kansas

3

55Oklahoma

2

44Indiana

3

40Connecticut

2

30South Carolina

3

28District of Columbia

4

27Nebraska

1

24Kentucky

1

20Wisconsin

1

18Utah

1

9Total United States

314

4,437Canada

7

160Total United States and Canada

321

4,597


---

Our international circuit principally includes theatres in Mexico, South America and Spain. In Mexico, we own and operate theatres primarily
located in the Mexico City Metropolitan Area, or MCMA, through Cinemex. We believe that we have the number one market share in the MCMA with an estimated 48% of MCMA box office revenues in 2005. We
participate in 50% joint ventures in South America (Hoyts General Cinema South America, or HGCSA) and Spain (Yelmo Cineplex, S.L. or Yelmo). In addition, we currently have three wholly-owned theatres
in Europe. Our wholly-owned international circuit represented 4% of our revenues for the 52 weeks ended March 30, 2006.

Revenues
from our international circuit historically have been sufficient to fund its ongoing operating costs, and the debt of our international subsidiaries and joint ventures is
non-recourse to our domestic business. Although we do not consolidate our joint ventures, these ventures can be a source of cash for us.

7

---



For
example, in July 2005, Loews received a distribution from its South Korea circuit, Megabox Cineplex, Inc., or Megabox, of approximately $11.9 million (12.3 billion
South Korean won), net of local withholding taxes. In addition, in December 2005, Loews sold its 50% stake in Megabox, which sale generated approximately $78.4 million
(79.5 billion South Korean won) in proceeds, net of local withholding taxes.

The
following table provides detail with respect to the geographic location of our international theatre circuit as of March 30, 2006:

International

Theatres(1)

Screens(1)Mexico

42

467Argentina(2)

10

95Brazil(2)

1

15Chile(2)

6

50Uruguay(2)

1

8China (Hong Kong)(3)

1

11France

1

14Spain(4)

28

318United Kingdom

2

28Total International

92

1,006


---

Our Competitive Strengths

Key characteristics of our business that we believe make us a particularly effective competitor against other theatrical exhibition companies and position us well
for future growth include:



Market Leader.The Mergers combined two leading theatrical exhibition companies, each with a long
history of operating in the industry. We are now one of the world's leading theatrical exhibition companies based on total revenues, enjoying geographic market diversification and leadership in major
markets worldwide. As of March 30, 2006, after giving effect to the expected disposal of 10 theatres and 120 screens in the U.S. in connection with the approval of the Mergers and the
disposition of 4 theatres with 86 screens in Spain and 1 theatre with 20 screens in Portugal, we owned, operated or held interests in a geographically diverse theatre circuit consisting of 413
theatres and 5,603 screens. We believe the scale of our operations provides a competitive advantage and allows us to achieve economies of scale.

8

---



Modern Theatre Circuit.We are an industry leader in the development and operation of megaplex
theatres, typically defined as a theatre having 14 or more screens and offering amenities to enhance the movie-going experience, such as stadium seating providing unobstructed viewing, digital sound
and enhanced seat design. We believe that the megaplex format provides the operator with enhanced revenue opportunities and better asset utilization while creating convenience for patrons by
increasing film choice and the number of film starting times. We believe that our introduction of the megaplex in 1995 has led to the current industry replacement cycle, which has accelerated the
obsolescence of older, smaller theatres by setting new standards for moviegoers. We continually upgrade the quality of our theatre circuit by adding new screens through new builds (including
expansions) and acquisitions and by disposing of older screens through closures and sales. From April 1995 through March 30, 2006, AMC Entertainment and Loews built 191 theatres with
3,475 new screens, acquired 431 theatres with 3,007 screens and disposed of 666 theatres with 4,018 screens. As of March 30, 2006, 3,168 or approximately 69% of our screens in the United States
and Canada were located in megaplex theatres. The average number of screens per theatre of AMC Entertainment in the United States and Canada increased from 11.2 at the end of 2001 to 14.3 as of
March 30, 2006, which was well above the National Association of Theatre Owners ("NATO") average of 6.5 and indicative of the extent to which we have upgraded our theatre circuit.

Highly Productive Theatres.Our theatres are generally among the most productive in the markets in
which they operate. As measured by Rentrak, we operated 25 of the top 50 theatres in the United States and Canada in terms of box office revenues for the 52 weeks ended March 30, 2006 on a pro
forma basis. Our next closest competitor operated six of the top 50 theatres. In addition, for the 52 weeks ended March 30, 2006, on a pro forma basis, our theatre circuit in the United States
and Canada produced box office revenues per screen at rates approximately 40% higher than the industry average, as measured by Rentrak.

Broad Major Market Coverage in the United States with Prime Theatre Locations.Our theatres are
generally located in large, urban markets, giving us a breadth of market coverage that places us in most major markets in the United States. As of March 30, 2006, we operate in 92% of the Top
25 DMAs. Our theatres are usually located near or within developments that include retail stores, restaurants and other activities that complement the movie-going experience.

Leading Positions in International Markets.We have a significant presence in our principal
international markets. Cinemex has the number one market share in the MCMA with an estimated 48% of box office revenues in 2005. Our HGCSA joint venture is one of the leading exhibitors in Argentina
and Chile, with leading market shares in Buenos Aires (Argentina) and Santiago (Chile). Our joint venture in Spain operates one of Spain's largest film exhibitors based on attendance, with theatres
located in large urban markets, including Madrid and Barcelona. Our international circuit is comprised of modern theatres with an average of 10.9 screens per theatre. Our international markets tend to
have a significantly higher population per screen and lower attendance frequency than the U.S. markets, and we believe that we are well-positioned to benefit from the potential growth in
these markets.

Strong Free Cash Flow Generation.In future years, after anticipated cash obligations for interest,
taxes and capital expenditures, we expect to generate enough free cash flow to repay debt and to invest in our business.

Proven Management Team.Our highly experienced senior management team has an average of
24 years of experience in the theatrical exhibition industry. Management has successfully integrated a number of acquisitions and has demonstrated the ability to successfully manage our
business through all industry and economic cycles, including the years from 1999 to 2001 when all but one of our peer competitors declared bankruptcy.

9

---





Our Strategy

Our strategic plan has three principal elements:



Maximizing Operating Efficiencies.We believe the fundamentals of our business include maximizing
revenues, managing our costs and improving our margins. For example, since fiscal 2001, AMC Entertainment has implemented key initiatives in each of these areas, which have resulted in the following:



Optimizing Our Theatre Portfolio.Asset quality is a function of our selective new build, acquisition
and theatre disposition strategies.

As
a recognized leader in the development and operation of megaplex theatres and based upon our financial resources, we believe that we will continue to have attractive new build
opportunities presented to us by real estate developers and others. We intend to selectively pursue new build opportunities where the characteristics of the location and the overall market meet our
strategic and financial return criteria. As of March 30, 2006, we had 10 theatres with 138 screens under construction and scheduled to open in fiscal 2007 in the United States and Mexico.

There
are approximately 590 theatrical exhibitors in the United States and Canada, and the top five exhibitors account for approximately 52% of the industry's screens. This statistic is
up from 34% in 1999 and is evidence that the theatrical exhibition business in the United States and Canada has been consolidating. AMC Entertainment and Loews each played a key role in this
consolidation process from 2002 through 2004, with AMC Entertainment acquiring three domestic theatre operators with a total of 737 screens and Loews acquiring two domestic theatre operators with a
total of 185 screens. We intend to continue to assess strategic acquisition opportunities as they present themselves.

We
believe that a major factor that further differentiates us from our competitors and has contributed to our overall theatre portfolio quality has been our proactive effort to close or
dispose of older, underperforming theatres. Since fiscal 1995, our last fiscal year before the first megaplex theatre opened, we have closed or disposed of 4,018 screens on a combined basis, 1,508 of
which were owned by AMC Entertainment at the time of disposal, 2,390 of which were owned by Loews, 120 of which will be disposed of to comply with the U.S. Department of Justice and state attorney
general requirements for approval of the Mergers. We have identified 34 multiplex theatres with 307 screens that we may close over the next one to three years due to the expiration of leases or early
lease terminations. In order to maintain a modern, high quality theatre circuit, we will continue to evaluate our theatre portfolio and, where appropriate, dispose of theatres through closures, lease
terminations, lease buyouts, sales or subleases.

The
following table sets forth historical and pro forma information of AMC Entertainment and Loews, on a combined basis, concerning new builds (including expansions), acquisitions and
dispositions (including disposals to comply with the U.S. Department of Justice and State Attorney General requirements for approval of the Mergers and our Portugal and Spain dispositions) and end of
period theatres and screens through March 30, 2006:

10

---



New Builds

Acquisitions

Closures/Dispositions

Total Theatres(1)Fiscal Year

Number of
Theatres

Number of
Screens

Number of
Theatres

Number of
Screens

Number of
Theatres

Number of
Screens

Number of
Theatres

Number of
Screens1996

9

177





42

180

371

2,5691997

20

368





30

133

361

2,8041998

28

674





33

151

356

3,3271999

33

547

314

1,736

73

278

630

5,3322000

33

650





96

490

567

5,4922001

16

262





144

837

439

4,9172002

15

255

5

68

54

338

405

4,9022003

7

123

109

1,155

106

829

415

5,3512004

9

133

3

48

27

190

400

5,3422005

7

89





16

102

391

5,3292006

14

197





45

490

360

5,036191

3,475

431

3,007

666

4,018


---

Enhancing and Extending Our Business and Brands.We believe there are opportunities
to increase our core and ancillary revenues and build brand equity through enhancements of our business, new product offerings and strategic marketing initiatives. We have also explored numerous ways
to grow our ancillary revenues, which are traditionally high growth, high margin prospects. For example:



Film Licensing

We predominantly license "first-run" motion pictures from distributors owned by major film production companies and from independent distributors. We
license films on a film-by-film and theatre-by-theatre basis. We obtain these licenses based on several factors, including number of seats and screens
available for a particular picture, revenue potential and the location and condition of our theatres. We pay rental fees on a negotiated basis.

During
the period from 1990 to 2005, the annual number of first-run motion pictures released by distributors in the United States ranged from a low of 370 in 1995 to a high
of 535 in 2005, according to the Motion Picture Association 2005 MPA Market Statistics. U.S. and Canada film distributors typically establish geographic film licensing zones and generally allocate
available film to one theatre within that zone. Film zones generally encompass a radius of three to five miles in metropolitan and suburban

11

---



markets,
depending primarily upon population density. In film zones where we are the sole exhibitor, we obtain film licenses by selecting a film from among those offered and negotiating directly with
the distributor. As of March 30, 2006, approximately 87% of our screens in the United States and Canada were located in non-competitive film zones.

Licenses
that we enter into typically state that rental fees are based on either aggregate terms established prior to the opening of the picture or on a mutually agreed settlement upon
the conclusion of the picture run. Under an aggregate terms formula, we pay the distributor a specified percentage of box office receipts. The settlement process allows for negotiation based upon how
a film actually performs.

There
are several distributors which provide a substantial portion of quality first-run motion pictures to the exhibition industry. These include Buena Vista Pictures
(Disney), Paramount Pictures, Universal Pictures, Warner Bros. Distribution, New Line Cinema, SONY Pictures Releasing, Lions Gate Film, Focus, Twentieth Century Fox and Weinstein Company. Films
licensed from these distributors accounted for approximately 88% of our U.S. and Canadian admissions revenues during fiscal 2006. Our revenues attributable to individual distributors may vary
significantly from year to year depending upon the commercial success of each distributor's motion pictures in any given year. In fiscal 2006, no single distributor accounted for more than 5% of the
motion pictures that we licensed or for more than 15% of our box office admissions.

Concessions

Concessions sales are our second largest source of revenue after box office admissions. Concessions items include popcorn, soft drinks, candy, hot dogs and other
products. Different varieties of candy and soft drinks are offered at our theatres based on preferences in that particular geographic region. We have also implemented "combo-meals" for patrons which
offer a pre-selected assortment of concessions products and offer co-branded and private label products that are unique to us.

Our
strategy emphasizes prominent and appealing concessions counters designed for rapid service and efficiency. We design our megaplex theatres to have more concessions capacity to make
it easier to
serve larger numbers of customers. In addition, our megaplexes generally feature the "pass-through" concept, which enables the concessionist serving patrons to simply sell concessions
items instead of also preparing them, thus providing more rapid service to customers. Strategic placement of large concessions stands within theatres heightens their visibility, aids in reducing the
length of lines, allows flexibility to introduce new concepts and improves traffic flow around the concessions stands.

We
negotiate prices for our concessions products and supplies directly with concessions vendors on a national or regional basis to obtain high volume discounts or bulk rates and
marketing incentives.

Theatre Management and Support

We use a centralized structure for policy development, strategic planning, asset management, marketing, human resources, finance, accounting and information
systems. These systems are managed at our corporate office located in Kansas City, Missouri.

We
staff our theatres with personnel capable of making day-to-day operating decisions. A portion of management's compensation at each theatre is linked to the
operating results of that theatre. All theatre level personnel complete formal training programs to maximize both customer service and the efficiency of our operations. Theatre managers receive
market-based training within their first 18 months with us which focuses on operations administration, marketing and information systems interpretation.

Theatre
staffing varies depending on the size and configuration of the theatre and levels of attendance. For example, a typical 10-screen movie theatre may have four managers
with 50 associates while a megaplex theatre may have eight managers and 125 associates. We are committed to developing the strongest possible management teams and seek college graduates for career
management positions.

12

---



Employees

As of March 30, 2006, we employed approximately 1,400 full-time and 20,000 part-time employees. Fewer than 4% of our
part-time employees were minors who were paid the minimum wage.

Approximately
2.5% of our domestic employees, consisting primarily of motion picture projectionists, are represented by a union, the International Alliance of Theatrical Stagehand
Employees and Motion Picture Machine Operators (and affiliated local unions). We believe that our relationship with this union is satisfactory. Approximately 80% of our Mexican employees are
represented by unions where we believe our relationships with these unions are satisfactory.

Theatrical Exhibition Industry and Competition

Motion picture theatres are the primary initial distribution channel for new motion picture releases and we believe that the theatrical success of a motion
picture is often the most important factor in establishing its value in the other parts of the product life cycle (i.e., DVD/videocassette, cable television and other ancillary markets).

Theatrical
exhibition has demonstrated long-term steady growth. U.S. and Canada box office revenues increased by a 4.5% Compound Annual Growth Rate ("CAGR") over the last
20 years, driven by increases in both ticket prices and attendance. Ticket prices have grown steadily over the past 20 years, growing at a 3% CAGR. In calendar 2005, industry box office
revenues were $9.0 billion, a decrease of 5.7% from the prior year, and attendance was 1.4 billion, a decrease of 8.7% from the prior year.

The
following table represents information about the exhibition industry obtained from NATO and the Motion Picture Association 2005 MPA Market Statistics.

Calendar Year

Box Office
Revenues
(In millions)

Attendance
(In millions)

Average
Ticket
Price

Number of
Theatres

Indoor
Screens2005

$
8,991

1,403

$
6.41

5,713

37,0922004


9,539

1,536


6.21

5,629

36,0122003


9,488

1,574


6.03

5,700

35,3612002


9,520

1,639


5.80

5,712

35,1702001


8,413

1,487


5.65

5,813

34,4902000


7,661

1,421


5.39

6,550

35,5671999


7,448

1,465


5.06

7,031

36,4481998


6,949

1,481


4.69

6,894

33,4181997


6,365

1,388


4.59

6,903

31,0501996


5,911

1,339


4.42

7,215

28,9051995


5,493

1,263


4.35

7,151

26,995


In
calendar 2005, box office revenues declined 5.7% as compared to the prior year, which in our view is principally the result of the popularity of film product. Historically, the
industry has experienced swings in attendance from time to time. Since 1970, the industry in the United States and Canada has experienced seven distinct attendance cycles, with attendance downturns
ranging from one to two years at an average decline of 8%. Most recently, attendance peaked at 1.639 billion in 2002, marking a 45-year high. However, attendance has since declined
from 2003 through 2005. Ultimately, however, attendance has trended upward from 1970 to present, growing at a 1.2% CAGR.

There
are approximately 590 companies competing in the U.S. and Canada theatrical exhibition industry, approximately 350 of which operate four or more screens. Industry participants vary
substantially in size, from small independent operators to large international chains. Based on information obtained from the NATO 2005-06 Encyclopedia of Exhibition, we believe that the
ten largest exhibitors (in terms of number of screens) operated approximately 63% of the indoor screens in 2005. Since 1995, when megaplex

13

---



theatres
were introduced, U.S. and Canadian screen count has grown from 27,000 to approximately 37,000 at the end of 2005. According to NATO and the Motion Picture Association 2005 MPA Market
Statistics, average screens per theatre have increased from 3.8 in 1995 to 6.5 in 2005, which we believe is indicative of the industry's development of megaplex theatres.

Our
theatres are subject to varying degrees of competition in the geographic areas in which they operate. Competition is often intense with respect to attracting patrons, licensing
motion pictures and finding new theatre sites. Where real estate is readily available, there are few barriers preventing another company from opening a theatre near one of our theatres, which may
adversely effect operations at our theatre.

The
theatrical exhibition industry faces competition from other forms of out-of-home entertainment, such as concerts, amusement parks and sporting events, and
from other distribution channels for filmed entertainment, such as cable television, pay per view and home video systems, as well as from all other forms of entertainment.

Regulatory Environment

The distribution of motion pictures is, in large part, regulated by federal and state antitrust laws and has been the subject of numerous antitrust cases. The
consent decrees resulting from one of those cases, to which we were not a party, have a material impact on the industry and us. Those consent decrees bind certain major motion picture distributors and
require the motion pictures of such distributors to be offered and licensed to exhibitors, including us, on a film-by-film and theatre-by-theatre basis.
Consequently, we cannot assure ourselves of a supply of motion pictures by entering into long-term arrangements with major distributors, but must compete for our licenses on a
film-by-film and theatre-by-theatre basis.

Our
theatres must comply with Title III of the Americans with Disabilities Act of 1990 (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, awards of damages to private litigants or additional capital expenditures to remedy
such noncompliance. Although we believe that our theatres are in substantial compliance with the ADA, in January 1999, the Civil Rights Division of the Department of Justice filed suit against
us alleging that certain of our theatres with stadium-style seating violate the ADA. In separate rulings in 2002 and 2003 the court ruled against us in "line of sight" and "non-line of sight" aspects
of this case. In 2003 the court entered a consent order and final judgment about the non-line of sight aspects of this case. On January 10, 2006, a federal judge in the United States District
Court for the Central District of California ruled in favor of the Department of Justice with respect to a remedy in the line of sight aspects of this case. We have appealed this portion of the
court's order. See Part 1, Item 3 "Legal Proceedings" of this Annual Report on Form 10-K.

As
an employer covered by the ADA, we must make reasonable accommodations to the limitations of employees and qualified applicants with disabilities, provided that such reasonable
accommodations do not pose an undue hardship on the operation of our business. In addition, many of our employees are covered by various government employment regulations, including minimum wage,
overtime and working conditions regulations.

Our
operations also are subject to federal, state and local laws regulating such matters as construction, renovation and operation of theatres, as well as wages and working conditions,
citizenship, health and sanitation requirements and licensing. We believe our theatres are in material compliance with such requirements.

Our
theatres and other properties are subject to federal, state and local laws and regulations relating to environmental protection. Certain of these laws and regulations impose joint
and several liability on

14

---



certain
statutory classes of persons for the costs of investigation or remediation of contamination, regardless of fault or the legality of original disposal. We believe our theatres are in material
compliance with such requirements.

Seasonality

Our revenues are dependent upon the timing of motion picture releases by distributors. The most marketable motion pictures are usually released during the summer
and the year-end holiday seasons. Therefore, our business can be seasonal, with higher attendance and revenues generally occurring during the summer months and holiday seasons. Our results
of operations may vary significantly from quarter to quarter.

(d)   Financial Information About Geographic Areas

For information about the geographic areas in which we operate, see Note 16 to the Consolidated Financial Statements under Part II Item 8. of this
Annual Report on Form 10-K. During fiscal 2006, revenues from our theatre operations outside the United States accounted for 8% of our total revenues. Our U.S. and Canada operations
include megaplexes in Canada as well. There are significant differences between the theatrical exhibition industry in the United States and in these international markets. These include:



Additional
risks associated with our foreign operations include:



There
are also other risks that may limit or disrupt foreign motion picture exhibition and markets, restrict the movement of funds or result in the deprivation of contract rights or the
taking of property by nationalization or appropriation without fair compensation. Such differences in industry structure and regulatory and trade practices may adversely affect our ability to operate
successfully in foreign markets.

15

---



(e)   Available Information.

We make available on our web site (www.amctheatres.com) under "Investor ResourcesSEC Filings", free of charge, AMCE's annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports as soon as reasonably practicable after
we electronically file or furnish such material with the Securities and Exchange Commission.

Item 1A. Risk Factors.

RISK FACTORS        Risks Related to Our Business

The integration of our operations after the Mergers may not benefit the combined business and may lead to higher operating costs.

We have recently begun to integrate Loews' operations with our existing operations. Successful integration of the two companies will depend upon our management's
ability to manage the combined operations effectively and to benefit from cost savings and operating efficiencies through, for example, the reduction of overhead and theatre-level costs.

Other
risks that may result from the Mergers include:



Acquiring or expanding existing circuits and theatres may require additional financing, and we cannot be certain that we will be able to obtain new financing on favorable
terms, or at all.

We estimate that, on a pro forma basis, our net capital expenditures aggregated to approximately $151.0 million (net of proceeds from proposed
sale/leaseback transactions of approximately $35 million) in fiscal 2006 and will aggregate to approximately $140.0 million in fiscal 2007. Actual capital expenditures in fiscal 2007 may
differ materially from our estimates. We may have to seek additional financing or issue additional securities to fully implement our growth strategy. We cannot be certain that we will be able to
obtain new financing on favorable terms, or at all. In addition, covenants under our existing indebtedness limit our ability to incur additional indebtedness, and the performance of any additional
theatres may not be sufficient to service the related indebtedness that we are permitted to incur.

We face significant competition when trying to acquire theatres, and we may not be able to acquire theatres on terms favorable to us.

We anticipate significant competition from other exhibition companies and financial buyers when trying to acquire theatres, and there can be no assurance that we
will be able to acquire such theatres at reasonable prices or on favorable terms. Moreover, some of these possible buyers may be stronger financially than we are. In addition, given our size and
market share after the Mergers, as well as our

16

---



recent
experiences in connection with the Mergers and prior acquisitions, we may be required to dispose of theatres in connection with future acquisitions that we make. As a result of the foregoing,
we may not succeed in acquiring theatres or may have to pay more than we would prefer to make an acquisition.

We may not generate sufficient cash flow from our theatre acquisitions to service our indebtedness.

In any acquisition, we expect to benefit from cost savings through, for example, the reduction of overhead and theatre level costs, and from revenue enhancements
resulting from the acquisition. However, there can be no assurance that we will be able to generate sufficient cash flow from these acquisitions to service any indebtedness incurred to finance such
acquisitions or realize any other anticipated benefits. Nor can there be any assurance that our profitability will be improved by any one or more acquisitions. Any acquisition may involve operating
risks, such as:



Optimizing our theatre circuit through new construction is subject to delay and unanticipated costs.

The availability of attractive site locations is subject to various factors that are beyond our control. These factors include:



In
addition, we typically require 18 to 24 months in the United States and Canada, and at least 32 months elsewhere, from the time we identify a site to the opening of the
theatre. We may also experience cost overruns from delays or other unanticipated costs. Furthermore, these new sites may not perform to our expectations.

We have had significant financial losses in recent years.

AMC Entertainment has reported net losses in each of the last nine fiscal years. AMC Entertainment's cumulative net losses for the period were approximately
$508.0 million. In addition, Loews' subsidiary, Loews Cineplex Theatres, Inc., emerged from bankruptcy in March 2002 after filing for bankruptcy protection under Chapter 11 of the
U.S. Bankruptcy Code in February 2001. On a pro forma basis, our loss from continuing operations for the 52 weeks ended March 30, 2006 was $218.4 million. If we continue to
experience such losses, we may be unable to meet our payment obligations while attempting to expand our circuit and withstand competitive pressures or adverse economic conditions.

17

---



We may suffer future impairment losses and lease termination charges.

The opening of large megaplexes by us and certain of our competitors has drawn audiences away from some of our older, multiplex theatres. In addition, demographic
changes and competitive pressures have caused some of our theatres to become unprofitable. As a result, we may have to close certain theatres or recognize impairment losses related to the decrease in
value of particular theatres. We review long-lived assets, including intangibles, for impairment as part of our annual budgeting process and whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be fully recoverable. We recognized non-cash impairment losses in 1996 and in each fiscal year thereafter except for 2005. AMC
Entertainment's impairment losses from continuing operations over this period aggregated to $188.1 million. Loews' impairment losses aggregated $4 million in the period since it has
emerged from bankruptcy. Beginning fiscal 1999 through March 30, 2006, AMC Entertainment also incurred lease termination charges aggregating $67.9 million. Historically, Loews has not
incurred lease termination charges on its theatres that were diposed of or closed. Deterioration in the performance of our theatres could require us to recognize additional impairment losses and close
additional theatres.

Our international and Canadian operations are subject to fluctuating currency values.

We own, operate or have interests in megaplexes in Canada, Mexico, Argentina, Brazil, Chile, Uruguay, China (Hong Kong), France, Spain and the United Kingdom.
Because the results of operations and the financial position of Cinemex and our other foreign operations, including our foreign joint ventures, are reported in their respective local currencies and
then translated into U.S. dollars at the applicable exchange rates for inclusion in our consolidated financial statements, our financial results are impacted by currency fluctuations between the
dollar and those local currencies. During the 52 weeks ended
March 30, 2006, revenues from our theatre operations outside the United States accounted for 8% of our total revenues. As a result of our international operations, we have risks from
fluctuating currency values. As of March 30, 2006, a 10% fluctuation in the value of the United States dollar against all foreign currencies of countries where we currently operate theatres
would either increase or decrease loss before income taxes and accumulated other comprehensive loss by approximately $2.0 million and $42.7 million, respectively. We do not currently
hedge against foreign currency exchange rate risk.

Attendance levels at our international theatres depend on the market for local language films, and we sometimes have been unable to obtain the films we want for our theatres in
certain foreign markets.

Consumers in international markets may be less inclined to spend their leisure time attending movies than consumers in the United States and Canada. The fact that
a movie produced in the United States and targeted at U.S. audiences is successful in the United States does not necessarily mean that it will be successful internationally. In addition, there is
generally a smaller market for local language films, and the overall supply of these films may not be adequate to generate a sufficient attendance level at our international theatres. As a result of
such factors, attendance levels at some of our foreign theatres may not be sufficient to permit us to operate them on a positive cash flow basis. In addition, because of existing relationships between
distributors and other theatre owners, we sometimes have been unable to obtain the films we want for our theatres in certain foreign markets. As a result of these factors, attendance at some of our
international theatres may not be sufficient to permit us to operate them profitably.

Our international theatres are subject to local industry structure and regulatory and trade practices, which may adversely affect our ability to operate at a profit.

Risks unique to local markets include:



18

---





Such
risks may limit or disrupt motion picture exhibition and markets, restrict the movement of funds or result in the deprivation of contract rights or the taking of property by
nationalization or appropriation without fair compensation and may adversely affect our ability to expand internationally.

We must comply with the ADA, which could entail significant cost.

Our theatres must comply with Title III of the Americans with Disabilities Act of 1990, or 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 or additional capital expenditures to remedy such noncompliance. See Part 1, Item 3 "Legal Proceedings" of this Annual Report on Form 10-K.

We will not be required to evaluate our internal controls over financial reporting under the standards required by Section 404 of the Sarbanes-Oxley Act of 2002 until
our fiscal year ending in March 2008.

Currently we are not subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 until our fiscal year ending in March 2008.
Section 404 requires management of a reporting company to annually review, assess and disclose the effectiveness of a company's internal controls over financial reporting and to provide an
attestation by an independent public accounting firm, which addresses such assessments. We will not be subject to the formal requirements of Section 404 until our fiscal year ending in
March 2008. We would undertake to notify investors of any changes to our internals controls, including any identification of a material weakness in those internal controls.

19

---





We are party to significant litigation.

We are subject to a number of legal proceedings and claims that arise in the ordinary course of our business. We cannot assure our noteholders that we will
succeed in defending any claims, that judgments will not be entered against us with respect to any litigation or that reserves we may set aside will be adequate to cover any such judgments. If any of
these actions or proceedings against us is successful, we may be subject to significant damages awards. In addition, we are the plaintiff in a number of material lawsuits in which we seek the recovery
of substantial payments. We are incurring significant legal fees in prosecuting these lawsuits, and we may not ultimately prevail in such lawsuits or be able to collect on such judgments if we do. In
addition, the defense and prosecution of these claims divert the attention of our management and other personnel for significant periods of time. For a description of our legal proceedings, see "Legal
Proceedings" under Part I Item 3. of this Annual Report on Form 10-K.

We may be subject to liability under environmental laws and regulations.

We own and operate facilities throughout the United States and in several foreign countries and are subject to the environmental laws and regulations of those
jurisdictions, particularly laws governing the cleanup of hazardous materials and the management of properties. We might in the future be required to participate in the cleanup of a property that we
own or lease, or at which we have been alleged to have disposed of hazardous materials from one of our facilities. In certain circumstances, we might be solely responsible for any such liability under
environmental laws, and such claims could be material.

Our loss of key management personnel or our inability to hire and retain skilled employees at our theatres could adversely affect our business.

Our success is dependent in part on the efforts of key members of our management team. The loss of their services could materially adversely affect our business,
financial condition, results of operations or prospects. We do not currently maintain key person life insurance on any of our key management. In addition, competition for skilled professionals is
intense. The loss of any of these professionals or the inability to recruit these individuals in our markets could adversely affect our ability to operate our business efficiently and profitably and
could harm our ability to maintain our desired levels of service.

We may suffer material losses or damages, or be required to make material payments on existing lease and other guaranty obligations, concerning entities, businesses and assets
Loews no longer owns as a result of the Loews Transactions, and we may not be able to collect on indemnities from the purchaser of our Canadian and German film exhibition operations in order to
satisfy these losses, damages or payments.

We may suffer losses or damages as a result of claims asserted by third parties relating to the Canadian and German entities which Loews no longer owns as a
result of the Loews Transactions. While we cannot predict at this time what claims third parties may potentially assert against us, or the frequency or magnitude of such claims, such claims may
include matters related to Loews' former ownership and operation of the Canadian and German entities and their respective businesses or assets (including matters related to the initial public offering
of the Cineplex Galaxy Income Fund in Canada). In addition, Loews has guaranteed certain real property leases for theatres located in Canada and in Germany which Loews no longer owns following the
Loews Transactions. The Canadian leases are long-term leases and contain options for additional terms which, if exercised, could extend the leases for substantial additional periods.

Under
a purchase agreement for the Canadian transfer, Loews' former investors have indemnified Loews for certain potential liabilities in connection with the sale of its Canadian and
German entities, which indemnity is guaranteed by Cineplex Odeon Corporation, or COC, which was Loews' wholly-owned Canadian subsidiary, prior to its sale. It also contains provisions intended to
restrict the activities of the purchaser of Canadian operations and COC and to cause the indemnifying party and COC collectively to hold a specified amount of assets. However, there can be no
assurance that the assets available to satisfy

20

---



these
obligations will be sufficient. Moreover, the value of the assets required to be so held will be reduced significantly as of December 14, 2006. Accordingly, we may suffer damages or
losses, or be required to make payments on outstanding guaranties, for which we may not be made whole under the indemnity. Such damages or losses, or required payments, may have a material adverse
effect on our business, assets and results of operations.

We
anticipate that we will remain secondarily obligated for lease payments in the event the acquiring entity does not perform under its obligations for certain theaters we are divesting
of in conjunction with the Merger.

We may not be able to generate additional ancillary revenues.

We intend to continue to pursue ancillary revenue opportunities such as advertising, promotions and alternative uses of our theatres during non-peak
hours. Our ability to achieve our business objectives may depend in part on our success in increasing these revenue streams. Some of our domestic competitors have stated that they intend to make
significant capital investments in digital advertising delivery, and the success of this delivery system could make it more difficult for us to compete for advertising revenue. In addition, in
March 2005, we contributed our cinema screen advertising business to NCM, in which we currently hold a 29% interest. As such, although we currently retain three board seats in NCM, we do not
control this business, and therefore do not control our revenues attributable to cinema screen advertising. We cannot assure our noteholders that we will be able to effectively generate additional
ancillary revenue and our inability to do so could have an adverse effect on our business and results of operations.

We are controlled by the Sponsors, whose interests may not be aligned with our noteholders.

The Sponsors have the power to control our affairs and policies and will control the election of directors, the appointment of management, the entering into of
mergers, sales of substantially all of our assets and other extraordinary transactions. The directors elected by the Sponsors will have the authority, subject to the terms of our debt, to issue
additional stock, implement stock repurchase programs, declare dividends, pay advisory fees and make other decisions, and they may have an interest in our doing so. The interests of the Sponsors could
conflict with our noteholders' interests in material respects. For example, the Sponsors could cause us to make acquisitions that increase the amount of our indebtedness or sell revenue-generating
assets. In addition, because the taking of certain significant actions requires a majority vote of our Sponsors, a deadlock (i.e., equal votes for and against a matter) may occur. A deadlock would
only occur if the former sponsors of AMC Entertainment, JPMP and Apollo, were to vote differently than both Bain Capital Partners and The Carlyle Group. If a deadlock occurs, the matter will be deemed
not to have been approved, subject to applicable law, which may be harmful to us and conflict with our noteholders' interests. Furthermore, the Sponsors are in the business of making investments in
companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. The Sponsors may also pursue acquisition opportunities that may be
complementary to our business, and as a result, those acquisition opportunities may not be available to us. So long as the Sponsors continue to own a significant amount of the outstanding shares of
our common stock, they will continue to be able to strongly influence or effectively control our decisions.

Risks Related to Our Industry

We have no control over distributors of the films and our business may be adversely affected if our access to motion pictures is limited or delayed.

We rely on distributors of motion pictures, over whom we have no control, for the films that we exhibit. Major motion picture distributors are required by law to
offer and license film to exhibitors, including us, on a film-by-film and theatre-by-theatre basis. Consequently, we cannot assure ourselves of a supply
of motion pictures by entering into long-term arrangements with major distributors, but must compete for our licenses on a film-by-film and
theatre-by-theatre basis. Our business depends on

21

---



maintaining
good relations with these distributors, as this affects our ability to negotiate commercially favorable licensing terms for first-run films or to obtain licenses at all. Our
business may be adversely affected if our access to motion pictures is limited or delayed because of a deterioration in our relationships with one or more distributors or for some other reason. To the
extent that we are unable to license a popular film for exhibition in our theatres, our operating results may be adversely affected.

We are subject, at times, to intense competition.

Our theatres are subject to varying degrees of competition in the geographic areas in which we operate. Competitors may be national circuits, regional circuits or
smaller independent exhibitors. Competition among theatre exhibition companies is often intense with respect to the following factors:



The
theatrical exhibition industry also faces competition from other forms of out-of-home entertainment, such as concerts, amusement parks and sporting events and
from other distribution channels for filmed entertainment, such as cable television, pay per view and home video systems and from other forms of in-home entertainment.

An industry-wide oversupply of screens has affected and may continue to affect the performance of some of our theatres.

In recent years, theatrical exhibition companies have emphasized the development of large megaplexes, some of which have as many as 30 screens in a single
theatre. The industry-wide strategy of aggressively building megaplexes generated significant competition and rendered many older, multiplex theatres obsolete more rapidly than expected.
Many of these theatres are under long-term lease commitments that make closing them financially burdensome, and some companies have elected to continue operating them notwithstanding their
lack of profitability. In other instances, because theatres are typically limited use design facilities, or for other reasons, landlords have been willing to make rent concessions to keep them open.
In recent years many older theatres that had closed are being reopened by small theatre operators and in some instances by sole proprietors that are able to negotiate significant rent and other
concessions from landlords. As a result, there is an oversupply of screens in the U.S. and Canadian exhibition industry. This has affected and may continue to affect the performance of some of our
theatres.

An increase in the use of alternative film delivery methods or other forms of entertainment may drive down our attendance and limit our ticket prices.

We compete with other movie delivery methods, including network, cable and satellite television, DVDs and video cassettes, as well as
video-on-demand, pay-per-view services and downloads via the Internet. We also compete for the public's leisure time and disposable income with other
forms of entertainment, including sporting events, live music concerts, live theatre and restaurants. An increase in

22

---



the
popularity of these alternative film delivery methods and other forms of entertainment could reduce attendance at our theatres, limit the prices we can charge for admission and materially
adversely affect our business and results of operations.

General political, social and economic conditions can reduce our attendance.

Our success depends on general political, social and economic conditions and the willingness of consumers to spend money at movie theatres. If going to motion
pictures becomes less popular or consumers spend less on concessions, which accounted for 27% of AMC Entertainment's revenues in fiscal 2006, our operations could be adversely affected. In addition,
our operations could be adversely affected if consumers' discretionary income falls as a result of an economic downturn. Political events, such as terrorist attacks, could cause people to avoid our
theatres or other public places where large crowds are in attendance.

Industry-wide conversion to electronic-based media may increase our costs.

The industry is in the early stages of conversion from film-based media to electronic-based media. There are a variety of constituencies associated
with this anticipated change that may significantly impact industry participants, including content providers, distributors, equipment providers and venue operators. While content providers and
distributors have indicated they would bear the costs of this change, there can be no assurance that we will have access to adequate capital to finance the conversion costs associated with this
potential change should the conversion process rapidly accelerate or the content providers and distributors elect to not bear the related costs. Furthermore, it is impossible to accurately predict how
the roles and allocation of costs between various industry participants will change if the industry changes from physical media to electronic media.

Risks Related to our Debt

Our substantial debt could adversely affect our operations and prevent us from satisfying our obligations under our notes.

We have a significant amount of debt. As of March 30, 2006, we had outstanding $205.1 million of indebtedness related to our 12.0% Senior Discount
Notes due 2014 ("Discount Notes due 2014"). Our subsidiaries (including AMC Entertainment) had $3,159.1 million of indebtedness and other liabilities to which our notes are effectively
subordinated. In addition, as of March 30, 2006 AMC Entertainment had $175.9 million committed for borrowing as additional senior debt under its new senior secured credit facility, that
would be effectively senior to our Discount Notes due 2014. As of March 30, 2006, AMC Entertainment and its subsidiaries had approximately $5.4 billion of undiscounted rental payments
under operating leases (with initial base terms of between 15 and 20 years).

The
amount of our indebtedness and lease and other financial obligations could have important consequences to us. For example, it could:



23

---





If
we fail to make any required payment under our senior secured credit facility or to comply with any of the financial and operating covenants, we would be in default. Lenders under our
senior secured credit facility could then vote to accelerate the maturity of the indebtedness under the senior secured credit facility and foreclose upon the stock and personal property of our
subsidiaries that is pledged to secure the senior secured credit facility. Other creditors might then accelerate other indebtedness. If the lenders under the senior secured credit facility accelerate
the maturity of the indebtedness thereunder, we might not have sufficient assets to satisfy our obligations under the senior secured credit facility or our other indebtedness, including our notes.

Our
indebtedness under our senior secured credit facility and our senior floating rate notes due 2010 bears interest at rates that fluctuate with changes in certain prevailing interest
rates (although, subject to certain conditions, such rates may be fixed for certain periods). If interest rates increase, we may be unable to meet our debt service obligations under our senior secured
credit facility, our senior floating rate notes due 2010 and other indebtedness.

If our cash flows prove inadequate to service our debt and provide for our other obligations, we may be required to refinance all or a portion of our existing debt or future
debt at terms unfavorable to us.

Our ability to make payments on and refinance our debt, including our notes, and other financial obligations, and to fund our capital expenditures and
acquisitions will depend on our ability to generate substantial operating cash flow. This will depend on our future performance, which will be subject to prevailing economic conditions and to
financial, business and other factors beyond our control. In addition, our notes require us to repay or refinance those notes when they come due. If our cash flows were to prove inadequate to meet our
debt service, rental and other obligations in the future, we may be required to refinance all or a portion of our existing or future debt, on or before maturity, to sell assets or to obtain additional
financing. We cannot assure our noteholders that we will be able to refinance any of our indebtedness, including our new senior secured credit facility, sell any such assets or obtain additional
financing on commercially reasonable terms or at all.

Holdings is a holding company with no operations of its own. The senior discount notes due 2014 ("Discount Notes due 2014") are not obligations of Holdings' subsidiaries and
our noteholders' rights to receive payments on the notes is effectively subordinated to the claims of the creditors of Holdings' subsidiaries.

Holdings is a holding company with no operations of its own. Consequently, Holdings' ability to service its debt, including the Discount Notes due 2014, and pay
dividends is dependent upon the earnings from the businesses conducted by its subsidiaries, including AMC Entertainment. The distribution of those earnings, or advances or other distribution of funds
by these subsidiaries to Holdings, all of which are subject to statutory or contractual restrictions, are contingent upon such subsidiaries' earnings and are subject to various business
considerations.

Holdings'
subsidiaries (including AMC Entertainment) are separate and distinct legal entities and have no obligation to pay any amounts due on the Discount Notes due 2014 or to provide
Holdings with funds for its payment obligations, whether by dividends, distributions, loans or other payments. Holdings' right to receive any assets of any of its subsidiaries upon a subsidiary's
foreclosure, dissolution, winding-up, liquidation, reorganization or other bankruptcy proceeding, and therefore the right of the holders of the Discount Notes due 2014 to receive a share
of those assets, are effectively subordinated to the claims of that subsidiary's creditors, including holders of AMC Entertainment's Senior Floating Rate Notes due 2010 and Senior Notes due 2012
("Existing Senior Notes") and Senior Subordinated Notes due 2011, 2012, 2014 and 2016 ("Existing Subordinated Notes"), the lenders under AMC Entertainment's new senior secured credit facility and bank
and trade creditors. Holdings' guarantee of AMC Entertainment's obligations under the new senior secured credit facility is secured by a pledge by Holdings of the stock of

24

---



AMC
Entertainment and, therefore, the Discount Notes due 2014 are effectively subordinated to Holdings' obligations under the new senior secured credit facility.

Certain
of Holdings' domestic subsidiaries guarantee AMC Entertainment's obligations under the new senior secured credit facility, the Existing Senior Notes and the Existing Subordinated
Notes. However, Holdings' subsidiaries (including AMCE) are not obligors or guarantors of the Discount Notes due 2014. Therefore, the claims of creditors of such subsidiaries, including claims of
lenders under the new senior secured credit facility and holders of the Existing Senior Notes and the Existing Subordinated Notes, the claims of trade creditors and claims of preferred stockholders
(if any) of such subsidiaries generally will have priority with respect to the assets and earnings of such subsidiaries over the claims of the holders of the Discount Notes due 2014. The Discount
Notes due 2014, therefore, are structurally subordinated to creditors (including trade creditors) and preferred stockholders (if any) of Holdings' subsidiaries. As of March 30, 2006, these
notes are effectively subordinated to $3,159.1 million of indebtedness and other liabilities (including trade payables) of our subsidiaries. Accordingly, there can be no assurance that, in the
event of Holdings' bankruptcy, after providing for claims of creditors and preferred stockholders (if any) of Holdings' subsidiaries, there would be sufficient assets available to pay amounts due to
our noteholders.

Despite our indebtedness levels, Holdings' subsidiaries may be able to incur substantially more indebtedness, which may increase the risks created by our substantial
indebtedness.

The terms of the indenture governing the Discount Notes due 2014 do not prohibit our subsidiaries from incurring additional indebtedness. If Holdings and its
subsidiaries are in compliance with the financial covenants set forth in the new senior secured credit facility and the indentures governing the notes, the Existing Senior Notes and the Existing
Subordinated Notes, Holdings' subsidiaries may be able to incur substantial additional indebtedness. If any of Holdings' subsidiaries incurs additional indebtedness, the related risks that Holdings
faces may intensify.

The indentures governing our notes and those of our subsidiaries contain covenants that may limit our ability to take advantage of certain business opportunities advantageous
to us that may arise.

The indentures governing our notes and those of our subsidiaries contain various covenants that limit our ability to, among other things:



These
restrictions could limit our ability to obtain future financing, make acquisitions or needed capital expenditures, withstand economic downturns in our business or the economy in
general, conduct operations or otherwise take advantage of business opportunities that may arise.

Although
the indentures for our notes and those of our subsidiaries contain a fixed charge coverage test that limits our ability to incur indebtedness, this limitation is subject to a
number of significant exceptions and qualifications. Moreover, the indentures do not impose any limitation on our incurrence of capital or finance lease obligations or liabilities that are not
considered "Indebtedness" under the indentures (such as operating leases), nor do they impose any limitation on the amount of liabilities incurred by subsidiaries, if any, that might be designated as
"unrestricted subsidiaries", which are subsidiaries that we designate, which are not subject to the restrictive covenants contained in the indentures governing our notes and those of our subsidiaries.
Furthermore, there are no restrictions in the indentures on our ability to invest in other entities (including unaffiliated entities) and no restrictions on

25

---



the
ability of our subsidiaries to enter into agreements restricting their ability to pay dividends or otherwise transfer funds to us. Also, although the indentures limit our ability to make
restricted payments, these restrictions are subject to significant exceptions and qualifications.

We must offer to repurchase our notes upon a change of control, which could also result in an event of default under our senior secured credit facility.

The indentures governing our notes require that, upon the occurrence of a "change of control," as such term is defined in the relevant indenture, we must make an
offer to repurchase the notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase.

Certain
events involving a change of control will result in an event of default under our senior secured credit facility and may result in an event of default under other indebtedness
that we may incur in the future. An event of default under our senior secured credit facility or other indebtedness could result in an acceleration of such indebtedness. We cannot assure our
noteholders that we would have sufficient resources to repurchase any of the notes or pay our obligations if the indebtedness under our senior secured credit facility or other indebtedness were
accelerated upon the occurrence of a change of control. The acceleration of indebtedness and our inability to repurchase all the tendered notes would constitute events of default under the indentures
governing the notes. No assurance can be given that the terms of any future indebtedness will not contain cross default provisions based upon a change of control or other defaults under such debt
instruments.

Item 1B. Unresolved Staff Comments.

Not applicable.

Item 2. Properties.

The following table sets forth the general character and ownership classification of our theatre circuit, excluding unconsolidated joint ventures, as of
March 30, 2006:

Property Holding Classification

Theatres

ScreensOwned

13

127Leased pursuant to ground leases

9

101Leased pursuant to building leases

297

4,353Build to suit and ground leases (Cinemex)

41

455Total

360

5,036


Our theatre leases generally have initial terms ranging from 15 to 20 years, with options to extend the lease for up to 20 additional years. The leases
typically require escalating minimum annual rent payments and additional rent payments based on a percentage of the leased theatre's revenue above a base amount and require us to pay for property
taxes, maintenance, insurance and certain other property-related expenses. In some instances our escalating minimum annual rent payments are contingent upon increases in the consumer price index. In
some cases, our rights as tenant are subject and subordinate to the mortgage loans of lenders to our lessors, so that if a mortgage were to be foreclosed, we could lose our lease. Historically, this
has never occurred.

We
lease our corporate headquarters in Kansas City, Missouri.

The
majority of the concessions, projection, seating and other equipment required for each of our theatres is owned.

26

---



Item 3. Legal Proceedings.

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

United States of America v. AMC Entertainment Inc. and American Multi-Cinema, Inc.(No. 99-01034 FMC
(SHx), filed in the U.S. District Court for the Central District of California). On January 29, 1999, the Department of Justice (the "Department") filed suit alleging that AMC Entertainment's
stadium-style theatres violate the ADA and related regulations. The Department alleged that AMC Entertainment had failed to provide persons in wheelchairs seating arrangements with lines of sight
comparable to the general public. The Department alleged various non-line of sight violations as well. The Department sought declaratory and injunctive relief regarding existing and future
theatres with stadium-style seating, compensatory damages in the approximate amount of $75,000 and a civil penalty of $110,000.

On
November 20, 2002 the trial court entered summary judgment in favor of the Justice Department on the line of sight aspects of this case. The trial court ruled that wheelchair
spaces located solely on the sloped floor portion of the stadium-style auditoriums fail to provide lines of sight comparable to the general public. The trial court did not address specific changes
that might be required of AMC Entertainment's existing stadium-style auditoriums, holding thatper serules are simply not possible because the
requirements of comparable lines of sight will vary based on theatre layout.

On
January 10, 2006, the trial court ruled in favor of the Department regarding the appropriate remedy in the line of sight aspects of this case. In its decision, the court issued
a comprehensive order regarding line of sight and other related remedies, which covers the remaining line of sight issues at the majority of AMC Entertainment's existing and all of its future
construction stadium-style theatres nationwide, as well as other related forms of relief sought by the United States in this action.

AMC
Entertainment estimates that the cost of the betterments related to the remedies for line of sight violations of the ADA will be $20 million, which is expected to be incurred
over a 4-5 year term. Additionally, the order calls for payments of $300,000 to the United States and individual complainants. AMC Entertainment has appealed the court's order.

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

On
January 21, 2003, the trial court entered summary judgment in favor of the Department on non-line of sight aspects of the case, which involve such matters as
parking areas, signage, ramps, location of toilets, counter heights, ramp slopes, companion seating and the location and size of handrails. In its non-line of sight decision, the trial
court concluded that AMC Entertainment has violated numerous sections of the ADA and engaged in a pattern and practice of violating the ADA.

On
December 5, 2003, the trial court entered a consent order and final judgment on non-line of sight issues under which AMC Entertainment agreed to remedy certain
violations at twelve of its stadium-style theatres and to survey and make required betterments for its patrons with disabilities at its stadium-style theatres and at certain theatres it may open in
the future. Currently AMC Entertainment estimates that

27

---



these
betterments will be required at approximately 140 stadium-style theatres. AMC Entertainment estimates that the total cost of these betterments will be $47.5 million, which is expected to
be incurred over the remaining term of the consent order of 2.7 years. Through March 30, 2006 AMC Entertainment has incurred approximately $7.1 million of these costs. The
estimate is based on actual costs incurred on remediation work completed to date. The actual costs of betterments may vary based on the results of surveys of the remaining theatres.

American Multi-Cinema, Inc. v. Midwest Drywall Company, Inc., Haskell Constructors, Ltd. etal. (Case
No. 00CV84908, Circuit Court of Platte County, Missouri) andAmerican Multi-Cinema, Inc. v. Bovis Construction Corp. et al.(Civil Action
No. 0207139, Court of Common Pleas of Bucks County, Pennsylvania). AMC Entertainment is the plaintiff in these and related suits in which it seeks to recover damages from the construction
manager, certain fireproofing applicators and other parties to correct the defective application of certain fireproofing materials at 21 theatres. AMC Entertainment currently estimates its claim for
repair costs at these theatres will aggregate approximately $33.6 million of which it has expended approximately $27.4 million through March 30, 2006. The remainder is for
projected costs of repairs yet to be performed. AMC Entertainment also is seeking additional damages for lost profits, interest and legal and other expenses incurred.

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

Metreon Arbitration.In May 1997, Loews entered into a 21-year lease with Metreon, Inc. ("Metreon")
to operate a megaplex theatre in an entertainment/retail center developed by Metreon in San Francisco. Since that theatre opened in June 1999, Loews has had a dispute with Metreon with respect
to (1) construction costs that Metreon claims are the Loews' responsibility under the lease and (2) the percentage of the center occupied by the theatre and the nature, magnitude and
allocation of the costs that Metreon is seeking to include as operating expenses under the lease. The amount of operating expenses claimed by Metreon to be allocable to this theatre is based upon the
landlord's assertion that Loews occupies at least 48.5% of the center. Loews asserted that it occupied substantially less of the center and that various expenses included in operating expenses charged
to Loews were improper. Loews arbitrated this dispute in June 2003 and prevailed but the award was later vacated by the California Court of Appeals. Westfield Group purchased the property in
April 2006 and renewed settlement discussions with AMC Entertainment.

We
are a party to various other legal proceedings in the ordinary course of business, none of which is expected to have a material adverse effect on us.

Item 4. Submission of Matters to a Vote of Security Holders.

The Merger was approved by a vote of security holders during the thirteen weeks ended March 30, 2006.

In
connection with the Merger, each of Stephan Oppenheimer and Marc J. Rowan voluntarily resigned from the Boards of Directors of AMC Entertainment and Holdings on January 26,
2006. Immediately following such resignations, four new directors were elected to Holdings' and AMC Entertainments' respective Boards of Directors: John Connaughton, Managing Director of Bain Capital,
LLC; Michael Connelly, Managing Director of The Carlyle Group; Benjamin Coughlin, Managing Director of Spectrum Equity Investors; and Travis Reid, former President, Chief Executive Officer and
director of Loews. Peter C. Brown, Chairman of the Board, Chief Executive Officer and President of Holdings and AMC Entertainment; Michael R. Hannon; Stephen P. Murray; Stan
Parker; and Aaron J. Stone will remain on the respective Boards of Directors of Holdings and AMC Entertainment.

28

---



PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Our common equity consists of Class A-1, Class A-2, Class N, Class L-1 and Class L-2 Common Stock. There is currently no
established public trading market for our Common Stock.

Common Stock

On May 26, 2006, the number of stockholders of record of our Common Stock were as follows:

Class A Common Stock

32Class A-1 Common Stock

32Class N Common Stock

8Class L-1 Common Stock

7Class L-2 Common Stock

7


We
have not declared a dividend on shares of Common Stock since fiscal 1989. Any payment of cash dividends on Common Stock in the future will be at the discretion of the Board and will
also depend upon such factors as compliance with debt covenants, earnings levels, capital requirements, our financial condition and other factors deemed relevant by the Board.

Pursuant
to the terms of the Merger Agreement, on January 26, 2006, in connection with the consummation of the Merger, Holdings issued 256,085.61252 voting shares of
Class L-1 Common Stock, par value $0.01 per share ("Class L-1 Common Stock"), 256,085.61252 voting shares of Class L-2 Common Stock, par value $0.01 per share ("Class L-2
Common Stock" and, together with the Class L-1 Common Stock, the "Class L Common Stock"), 382,475 voting shares of Class A-1 Common Stock, par value $0.01 per share (the
"Class A-1 Common Stock"), 382,475 voting shares of Class A-2 Common Stock, par value $0.01 per share (the "Class A-2 Common Stock" and, together with the Class A-1 Common
Stock, the "Class A Common Stock"), and 5,128.77496 nonvoting shares of Class N Common Stock, par value $0.01 per share (the Class N Common Stock"), such that (i) the
former non-management stockholders of LCE Holdings, including the Bain Investors, the Carlyle Investors and the Spectrum Investors (collectively, the "Former LCE Sponsors"), hold all of the
outstanding shares of Class L Common Stock, (ii) the pre-existing non-management stockholders of Holdings, including the JPMP Investors and the Apollo Investors (collectively, the
"Pre-Existing Holdings Sponsors" and, the Pre-Existing Holdings Sponsors together with the Former LCE Sponsors, the "Sponsors") and other co-investors (the "Coinvestors"), hold all of the outstanding
shares of Class A Common Stock, and (iii) management
stockholders of Holdings (the "Management Stockholders" and, together with the Sponsors and Coinvestors, the "Stockholders") hold all of the non-voting Class N Common Stock.

The
Class L Common Stock, Class A Common Stock and Class N Common Stock will automatically convert on a one-for-one basis into shares of residual voting common
stock, par value $0.01 per share, upon (i) written consent of each of the Sponsors or (ii) the completion of an initial public offering of capital stock of Holdings or AMCE (an "IPO").

The
issuance of the equity securities was exempt from registration under the Securities Act of 1933 and the rules promulgated thereunder (the "Securities Act") in reliance on
Section 4(2) of the Securities Act, as transactions by an issuer not involving a public offering.

The
fair value of the shares issued by Holdings for LCE Holdings in connections with the Merger was estimated to be $540,671,000.

Issuer Purchase of Equity Securities

There were no repurchases of Common Stock during the thirteen weeks ended March 30, 2006.

29

---





Item 6. Selected Financial Data.

|                                                                |                                         | Years Ended(1)(3)(7)         |          
|--------------------------------------------------------------- | --------------------------------------- | ---------------------------- | ---------
|
|
|Statement of Operations Data:                                   |                                         |                              |          
|Revenues                                                        |                                         |                              |          
|                                                                | Admissions                              |                              | $        
|                                                                | Concessions                             |                              |          
|                                                                | Other revenue                           |                              |          
|                                                                |                                         |                              |          
|Total revenues                                                  |                                         |                              | 1,730,450
|                                                                |                                         |                              |          
|Costs and Expenses                                              |                                         |                              |          
|                                                                | Film exhibition costs                   |                              |          
|                                                                | Concession costs                        |                              |          
|                                                                | Operating expense                       |                              |          
|                                                                | Rent                                    |                              |          
|                                                                | General and administrative:             |                              |          
|                                                                |                                         | Merger and acquisition costs |          
|                                                                |                                         | Management fee               |          
|                                                                |                                         | Other(9)                     |          
|                                                                | Preopening expense                      |                              |          
|                                                                | Theatre and other closure expense       |                              |          
|                                                                | Restructuring charge(10)                |                              |          
|                                                                | Depreciation and amortization           |                              |          
|                                                                | Impairment of long-lived assets         |                              |          
|                                                                | Disposition of assets and other gains   |                              |          
|                                                                |                                         |                              |          
|Total costs and expenses                                        |                                         |                              | 1,710,487
|                                                                |                                         |                              |          
|Other expense (income)(6)                                       |                                         |                              | (11,712  
|Interest expense                                                |                                         |                              |          
|                                                                | Corporate borrowings                    |                              |          
|                                                                | Capital and financing lease obligations |                              |          
|Investment (income) expense                                     |                                         |                              | 4,393    
|                                                                |                                         |                              |          
|Earnings (loss) from continuing operations before income taxes  |                                         |                              | (117,706 
|Income tax provision (benefit)                                  |                                         |                              | 72,100   
|                                                                |                                         |                              |          
|Loss from continuing operations                                 |                                         |                              | (189,806 
|Loss from discontinued operations, net of income tax benefit(2) |                                         |                              | (22,409  
|                                                                |                                         |                              |          
|Net loss                                                        |                                         | $                            | (212,215 
|                                                                |                                         |                              |          
|Preferred dividends                                             |                                         |                              |         
|                                                                |                                         |                              |          
|Net loss for shares of common stock                             |                                         | $                            | (212,215 
|                                                                |                                         |                              |          

30

---



|                                                    |  | Years Ended(1)(3)(7) |          
|--------------------------------------------------- |  | -------------------- | ---------
|
|
|Balance Sheet Data (at period end):                 |  |                      |          
|Cash and equivalents                                |  | $                    | 232,366  
|Corporate borrowings                                |  |                      | 2,455,686
|Other long-term liabilities                         |  |                      | 419,474  
|Capital and financing lease obligations             |  |                      | 68,130   
|Stockholders' equity (deficit)                      |  |                      | 1,040,503
|Total assets                                        |  |                      | 4,407,351
|Cash Flow Data:                                     |  |                      |          
|Net cash provided by (used in) operating activities |  | $                    | 25,694   
|Net cash provided by (used in) investing activities |  |                      | 107,538  
|Net cash provided by (used in) financing activities |  |                      | 21,434   
|Other Data:                                         |  |                      |          
|Capital expenditures                                |  | $                    | (117,668 
|Proceeds from sale/leasebacks                       |  |                      | 35,010   
|Operating Data (at period end):                     |  |                      |          
|Screen additions                                    |  |                      | 137      
|Screen acquisitions                                 |  |                      | 2,117    
|Screen dispositions                                 |  |                      | 150      
|Average screens(11)                                 |  |                      | 3,767    
|Number of screens operated                          |  |                      | 5,829    
|Number of theatres operated                         |  |                      | 428      
|Screens per theatre                                 |  |                      | 13.6     
|Attendance (in thousands)(11)                       |  |                      | 171,421  

---

31

---





32

---





Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Overview

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

In
connection with the Mergers as discussed below, we acquired Loews on January 26, 2006, which significantly increased our size. In the Merger, we acquired 112 theatres with
1,308 screen in the United States and 40 theatres with 443 screens in Mexico that are included in our consolidated results of operations from January 26, 2006. Accordingly, results of
operations for the fifty-two weeks ended March 30, 2006, which include nine weeks of operations of the businesses we acquired, are not comparable to our results for the
fifty-two weeks ended March 31, 2005. For additional information about the Merger, see Note 2 to the Consolidated Financial Statements under Part II Item 8. of
this Annual Report on Form 10-K.

We
completed a merger on December 23, 2004 in which Marquee Holdings Inc. ("Holdings") acquired AMC Entertainment Inc. ("AMC Entertainment"). Marquee Inc.
("Marquee") was formed on July 16, 2004. On December 23, 2004, pursuant to a merger agreement, Marquee merged with AMC Entertainment (the "Predecessor"). Upon the consummation of the
merger between Marquee and AMC Entertainment on December 23, 2004, AMC Entertainment and its parent Holdings were the surviving reporting entities (collectively, the "Successor"). The merger
was treated as a purchase with Marquee being the "accounting acquirer" in accordance with Statement of Financial Accounting Standards No. 141,Business
Combinations. As a result, the Successor applied the purchase method of accounting to the separable assets, including goodwill, and liabilities of the accounting acquiree and
Predecessor, AMC Entertainment, as of December 23, 2004, the merger date.

We
are organized as an intermediate holding company. Following the consummation of the merger with Marquee on December 23, 2004, we became a privately held company, wholly owned
by Holdings. Holdings is wholly owned by J.P. Morgan Partners L.P., Apollo Investment Fund V, L.P., other co-investors and certain members of management. Our principal directly owned
subsidiaries are American Multi-Cinema, Inc. ("AMC"), Grupo Cinemex, S.A. de C.V. ("Cinemex") and AMC Entertainment International, Inc. ("AMCEI"). We conduct our U.S. and Canada
theatrical exhibition business through AMC and its subsidiaries and AMCEI and its subsidiaries. We are operating theatres outside the United States primarily through Cinemex and AMCEI and its
subsidiaries.

On
March 29, 2005, AMC Entertainment and another exhibitor combined their respective cinema screen advertising businesses into a new joint venture company called National
CineMedia, LLC ("NCM"). The new company engages in the marketing and sale of cinema advertising and promotions products; business communications and training services; and the distribution of digital
alternative content. We contributed fixed assets and exhibitor agreements to NCM. Additionally, we paid termination benefits related to the displacement of certain National Cinema Network, Inc.
("NCN") associates. In consideration of the NCN contributions described above, NCM issued a 37% interest in its Class A units to NCN. Since that date, NCN's interest has declined to 29% due to
the entry of new investors.

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

33

---



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

In
connection with the Merger, on January 26, 2006, AMC Entertainment entered into the following financing transactions:



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

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

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

In
May 2006, AMCEI and its subsidiary AMC Entertainment International Limited sold its interests in AMC Entertainment España S.A., which owned and operated 4
theatres with 86 screens in Spain, and Actividades Multi-Cinemas E Espectáculos, LDA, which owned and operated 1 theatre with 20 screens in Portugal. These operations did not meet the
criteria for reporting as discontinued operations.

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

Our
U.S. and Canada and International theatrical exhibition revenues are generated primarily from box office admissions and theatre concession sales. The balance of our revenues are
generated from ancillary sources, including on-screen advertising, rental of theatre auditoriums, fees and other revenues generated from the sale of gift certificates and theatre tickets
and arcade games located in theatre lobbies.

Box
office admissions are our largest source of revenue. We predominantly license "first-run" motion pictures from distributors owned by major film production companies and
from independent distributors.

34

---



We
license films on a film-by-film and theatre-by-theatre basis. Film exhibition costs are accrued based on the applicable admissions revenues and
estimates of the final settlement pursuant to our film licenses. Licenses that we enter into typically state that rental fees are based on either aggregate terms established prior to the opening of
the picture or on a mutually agreed settlement upon the conclusion of the picture run. Under an aggregate terms formula, we pay the distributor a specified percentage of box office receipts. The
settlement process allows for negotiation based upon how a film actually performs.

Concessions
sales are our second largest source of revenue after box office admissions. Concessions items include popcorn, soft drinks, candy, hot dogs and other products. We negotiate
prices for our concessions products and supplies directly with concessions vendors on a national or regional basis to obtain high volume discounts or bulk rates and marketing incentives.

Our
revenues are dependent upon the timing and popularity of motion picture releases by distributors. The most marketable motion pictures are usually released during the summer and the
year-end holiday seasons. Therefore, our business can be seasonal, with higher attendance and revenues generally occurring during the summer months and holiday seasons. Our results of
operations may vary significantly from quarter to quarter.

During
fiscal 2006, films licensed from our ten largest distributors based on revenues accounted for approximately 88% of our U.S. and Canada admissions revenues. Our revenues
attributable to individual distributors may vary significantly from year to year depending upon the commercial success of each distributor's motion pictures in any given year.

During
the period from 1990 to 2005, the annual number of first-run motion pictures released by distributors in the United States ranged from a low of 370 in 1995 to a high
of 535 in 2005, according to Motion Picture Association 2005 MPA Market Statistics.

We
continually upgrade the quality of our theatre circuit by adding new screens through new builds (including expansions) and acquisitions and by disposing of older screens through
closures and sales. We believe our introduction of the megaplex concept in 1995 has led to the current industry replacement cycle, which has accelerated the obsolescence of older, smaller theatres by
setting new standards for moviegoers. From 1995 through March 30, 2006, AMC Entertainment and Loews added 191 theatres with 3,475 new screens, acquired 431 theatres with 3,007 screens and
disposed of 666 theatres with 4,018 screens. As of March 30, 2006, approximately 69%, or 3,168, of our screens were located in megaplex theatres.

CRITICAL ACCOUNTING ESTIMATES

The accounting estimates identified below are critical to our business operations and the understanding of our results of operations. The impact of, and any
associated risks related to, these estimates on our business operations are discussed throughout Management's Discussion and Analysis of Financial Condition and Results of Operations where such
estimates affect our reported and expected financial results. For a detailed discussion on the application of these estimates and other accounting policies, see Notes to the Consolidated Financial
Statements under Part II Item 8. of this Annual Report on Form 10-K. The methods and judgments we use in applying our accounting estimates have a significant impact on
the results we report in our financial statements. Some of our accounting estimates require us to make difficult and subjective judgments, often as a result of the need to make estimates of matters
that are inherently uncertain. Our most critical accounting estimates include the assessment of recoverability of long-lived assets, including intangibles, which impacts impairment of
long-lived assets when we impair assets or accelerate their depreciation; recoverability of goodwill, which creates the potential for write-offs of goodwill; recognition and
measurement of current and deferred income tax assets and liabilities, which impacts our tax provision; recognition and measurement of our remaining lease obligations to landlords on our closed
theatres and other vacant space, which impacts theatre and other closure expense; estimation of self-insurance reserves which impacts theatre operating and general and administrative
expenses; recognition and measurement of net periodic benefit costs for our pension and other defined benefit programs,

35

---



which
impacts general and administrative expense; estimation of film settlement terms and measurement of film rental fees, which impacts film exhibition costs and estimation of the fair value of
assets acquired, liabilities assumed and consideration paid for acquisitions, which impacts the measurement of assets acquired (including goodwill) and liabilities assumed in a business combination.
Below, we discuss these areas further, as well as the estimates and judgments involved.

Impairments.We review long-lived assets, including intangibles and investments in unconsolidated subsidiaries
accounted for under the equity method, for impairment as part of our annual budgeting process and whenever events or changes in circumstances indicate that the carrying amount of the assets may not be
fully recoverable. We review internal management reports on a quarterly basis as well as monitor current and potential future competition in the markets where we operate for indicators of triggering
events or circumstances that indicate impairment of individual theatre assets. We evaluate theatres using historical and projected data of theatre level cash flow as our primary indicator of potential
impairment and consider the seasonality of our business when evaluating theatres for impairment. Because Christmas and New Years holiday results comprise a significant portion of our operating cash
flow, the actual results from this period, which are available during the fourth quarter of each fiscal year, are an integral part of our impairment analysis. As a result of these analyses, if the sum
of the estimated future cash flows, undiscounted and without interest charges, are less than the carrying amount of the asset, an impairment loss is recognized in the amount by which the carrying
value of the asset exceeds its estimated fair value. Assets are evaluated for impairment on an individual theatre basis, which we believe is the lowest level for which there are identifiable cash
flows. The impairment evaluation is based on the estimated cash flows from continuing use until the expected disposal date or the fair value of furniture, fixtures and equipment. The expected disposal
date does not exceed the remaining lease period and is often less than the remaining lease period when we do not expect to operate the theatre to the end of its lease term. The fair value of assets is
determined as either the expected selling price less selling costs (where appropriate) or the present value of the estimated future cash flows. The fair value of furniture, fixtures and equipment has
been determined using similar asset sales and in some instances the assistance of third party valuation studies. The discount rate used in determining the present value of the estimated future cash
flows was 20% and was based on management's expected return on assets during fiscal 2006, 2005 and 2004. There is considerable management judgment necessary to determine the future cash flows, fair
value and the expected operating period of a theatre, and, accordingly, actual results could vary significantly from such estimates. We have recorded impairments of long-lived assets of
$12.0 million, $0 and $16.3 million during fiscal 2006, 2005 and 2004, respectively.

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

Income taxes.In determining income for financial statement purposes, we must make certain estimates and judgments. These
estimates and judgments occur in the calculation of certain tax liabilities and in the determination of the recoverability of certain of the deferred tax assets, which arise from temporary differences
between the tax and financial statement recognition of revenue and expense as well as operating loss and tax credit carryforwards. We must assess the likelihood that we will be able to recover

36

---



our
deferred tax assets in each domestic and foreign tax jurisdiction in which we operate. If recovery is not more likely than not, we must record a valuation allowance for the deferred tax assets
that we estimate are more likely than not unrealizable. Valuation allowances recorded against our net deferred tax assets in U.S. tax jurisdictions during fiscal 2006 increased our provision for
income taxes by approximately $116 million. As of March 30, 2006, we had recorded approximately $9.0 million of net deferred tax assets (net of valuation allowances of
$441 million) related to the estimated future tax benefits of temporary differences between the tax bases of assets and liabilities and amounts reported in the accompanying consolidated balance
sheets, as well as operating loss and tax credit carryforwards. The recoverability of these deferred income tax assets is dependent upon our ability to generate future taxable income in the relevant
taxing jurisdictions. Projections of future taxable income require considerable management judgment about future attendance levels, revenues and expenses.

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

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

Pension and Postretirement Assumptions.Pension and postretirement benefit obligations and the related effects on operations
are calculated using actuarial models. Two critical assumptions, discount rate and expected return on assets, are important elements of plan expense and/or liability measurement. We evaluate these
critical assumptions at least annually. Other assumptions involve demographic factors such as retirement, expected increases in compensation, mortality and turnover. These assumptions are evaluated
periodically and are updated to reflect our experience. Actual results in any given year will often differ from actuarial assumptions because of economic and other factors.

The
discount rate enables us to state expected future cash flows at a present value on the measurement date. We have little latitude in selecting this rate, as it is required to
represent the market rate for high-quality fixed income investments. A lower discount rate increases the present value of benefit obligations and increases pension and postretirement
expense. For our principal pension plans, a 50 basis point decrease in the discount rate would increase pension expense by approximately $630,000. For our

37

---



postretirement
plans, a 50 basis point decrease in the discount rate would increase postretirement expense by approximately $41,000. We maintained our discount rate at 53/4% for the AMC
Entertainment plans and 51/2% for the Loews' plans for fiscal 2007. We have recorded expenses for our pension and postretirement plans of $4.7 million and $1.8 million
during the Successor periods ended March 30, 2006 and March 31, 2005, respectively, and $5.3 million and, $6.0 million during the Predecessor periods ended
December 23, 2004 and April 1, 2004, respectively. We expect that our total pension and postretirement expense will increase by approximately $2.5 million from fiscal 2006 to
fiscal 2007, $0.9 million of which results from the acquisition of LCE plan. Our unrecognized net actuarial gain for pension and postretirement plans was $5.5 million as of
March 30, 2006. In connection with a recent reorganization, there was a reduction in certain pension and postretirement plan participants, which resulted in curtailment gains in fiscal 2006 for
accounting purposes of $2.3 million.

To
determine the expected long-term rate of return on pension plan assets, we consider the current and expected asset allocations, as well as historical and expected returns
on various categories of plan assets obtained from our investment portfolio manager. A 50 basis point decrease in the expected return on assets of our qualified defined benefit pension plan would
increase pension expense on our principal plans by approximately $223,000 per year. Note 11 to the Consolidated Financial Statements under Part II Item 8. of this Annual Report on
Form 10-K includes disclosure of our pension plan and postretirement plan assumptions and information about our pension plan assets.

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

Licenses
that we enter into typically state that rental fees are based on either aggregate terms established prior to the opening of the picture or on a mutually agreed settlement upon
the conclusion of the picture run. Under an aggregate terms formula, we pay the distributor a specified percentage of box office receipts. The settlement process allows for negotiation based upon how
a film actually performs.

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

As
of March 30, 2006 and March 31, 2005, we had recorded film payables of $66 million and $53 million, respectively. We have recorded film exhibition costs of
$611 million and $157 million during the Successor periods ended March 30, 2006 and March 31, 2005 and $465 million and, $622 million during the Predecessor
periods ended December 23, 2004 and April 1, 2004, respectively.

Acquisitions.We account for our acquisitions of theatrical exhibition businesses using the purchase method. The purchase
method requires that we estimate the fair value of the individual assets and liabilities acquired as well as various forms of consideration given including cash, common stock, senior subordinated
notes and bankruptcy related claims. We have obtained independent third party valuation studies for certain of the assets and liabilities acquired to assist us in determining fair value. The
estimation of the fair value of the assets and liabilities acquired including deferred tax assets and liabilities related to such amounts and consideration given involves a number of judgments and
estimates that could differ materially from the actual amounts.

38

---



We
completed the Merger with Loews on January 26, 2006. The acquisition was treated as a purchase in accordance with Statement of Financial Accounting Standards No. 141, Business Combinationsfor
an estimated purchase price of $540,671,000. Consideration was provided through a stock issuance by Holdings. The consolidated
financials include only the results of Loews operations from the date of the Merger.

We
completed the merger with Marquee on December 23, 2004. The merger was treated as a purchase with Marquee being the "accounting acquirer" in accordance with Statement of
Financial Accounting Standards No. 141,Business Combinations. As a result, the Successor applied the purchase method of accounting to the
separable assets, including goodwill, and liabilities of the accounting acquiree and Predecessor, AMC Entertainment, as of December 23, 2004, the merger date. The consolidated financial
statements presented herein are those of the accounting acquirer from its inception on July 16, 2004 through March 30, 2006, and those of its Predecessor, AMC Entertainment, for all
periods presented through the merger date.

We
also consummated acquisitions in fiscal 2004 as discussed in Note 2 to the Consolidated Financial Statements under Part II Item 8. of this Annual Report on
Form 10-K. During fiscal 2004 we acquired the assets of Megastar for a cash purchase price of $15 million.

Operating Results

As a result of the December 23, 2004 merger with Marquee described above, our Predecessor does not have financial results for the fourteen week period
ended March 31, 2005. In order to present Management's Discussion and Analysis in a way that offers investors a meaningful period to period comparison, we have combined the prior year
Predecessor theatrical exhibition and Other operation information (38 weeks) with prior year Successor operating information (14 weeks), on an unaudited pro forma combined basis. The unaudited pro
forma combined data consist of unaudited Predecessor information for the 38 weeks ended December 23, 2004 and unaudited Successor information for the 14 weeks ended March 31, 2005. The
pro forma information for the 52 week period ended March 31, 2005 does not purport to represent what our consolidated results of operations would have been if the Successor had actually began
theatrical exhibition operations on April 1, 2004, nor have we made any attempt to either include or exclude expenses or income that would have resulted had the Merger or merger with Marquee
actually occurred on April 1, 2004

Set
forth in the table below are the pro forma summary of revenues, costs and expenses attributable to our United States and Canada and International theatrical exhibition operations and
Other businesses. Reference is made to Note 16 to the Consolidated Financial Statements under Part II Item 8. of this Annual Report on Form 10-K for additional
information about our operations by operating segment.

39

---



OPERATING RESULTS

|(Dollars in thousands)                                |                                   | 52 Weeks
Ended
March 30, 2006 |           | 14 Weeks
Ended
March 31, 2005 |           | 38 Weeks
Ended
December 23, 2004 |         | Pro Forma
52 Weeks
Ended
March 31, 2005 |           | 52 Weeks
Ended
April 1, 2004 |          
|----------------------------------------------------- | --------------------------------- | ----------------------------- | --------- | ----------------------------- | --------- | -------------------------------- | ------- | --------------------------------------- | --------- | ---------------------------- | ---------
|
|Revenues                                              |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|U.S. and Canada theatrical exhibition                 |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|                                                      | Admissions                        |                               | $         | 1,110,464                     |           | $                                | 292,514 |                                         | $         | 836,254                      |          
|                                                      | Concessions                       |                               |           | 443,580                       |           |                                  | 115,997 |                                         |           | 326,086                      |          
|                                                      | Other theatre                     |                               |           | 76,485                        |           |                                  | 14,052  |                                         |           | 43,306                       |          
|                                                      |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|                                                      |                                   |                               | 1,630,529 |                               |           | 422,563                          |         |                                         | 1,205,646 |                              |          
|                                                      |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|International theatrical exhibition                   |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|                                                      | Admissions                        |                               |           | 58,762                        |           |                                  | 14,428  |                                         |           | 35,945                       |          
|                                                      | Concessions                       |                               |           | 23,099                        |           |                                  | 4,569   |                                         |           | 11,517                       |          
|                                                      | Other theatre                     |                               |           | 5,153                         |           |                                  | 873     |                                         |           | 2,049                        |          
|                                                      |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|                                                      |                                   |                               | 87,014    |                               |           | 19,870                           |         |                                         | 49,511    |                              |          
|Other                                                 |                                   |                               | 12,907    |                               |           | 10,467                           |         |                                         | 38,811    |                              |          
|                                                      |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|                                                      |                                   | Total revenues                |           | $                             | 1,730,450 |                                  | $       | 452,900                                 |           | $                            | 1,293,968
|                                                      |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|Costs and Expenses                                    |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|U.S. and Canada theatrical exhibition                 |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|                                                      | Film exhibition costs             |                               | $         | 583,626                       |           | $                                | 150,557 |                                         | $         | 447,412                      |          
|                                                      | Concession costs                  |                               |           | 47,922                        |           |                                  | 12,575  |                                         |           | 37,161                       |          
|                                                      | Theatre operating expense         |                               |           | 421,665                       |           |                                  | 103,578 |                                         |           | 286,706                      |          
|                                                      | Rent                              |                               |           | 317,181                       |           |                                  | 77,804  |                                         |           | 214,927                      |          
|                                                      | Preopening expense                |                               |           | 5,768                         |           |                                  | 39      |                                         |           | 1,292                        |          
|                                                      | Theatre and other closure expense |                               |           | 1,313                         |           |                                  | 988     |                                         |           | 10,758                       |          
|                                                      |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|                                                      |                                   |                               | 1,377,475 |                               |           | 345,541                          |         |                                         | 998,256   |                              |          
|                                                      |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|International theatrical exhibition                   |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|                                                      | Film exhibition costs             |                               |           | 26,974                        |           |                                  | 6,782   |                                         |           | 17,674                       |          
|                                                      | Concession costs                  |                               |           | 4,662                         |           |                                  | 773     |                                         |           | 2,564                        |          
|                                                      | Theatre operating expense         |                               |           | 25,551                        |           |                                  | 5,031   |                                         |           | 15,133                       |          
|                                                      | Rent                              |                               |           | 24,120                        |           |                                  | 6,100   |                                         |           | 17,281                       |          
|                                                      | Preopening expense                |                               |           | 839                           |           |                                  |        |                                         |           |                             |          
|                                                      | Theatre and other closure expense |                               |           | (712                          | )         |                                  |        |                                         |           |                             |          
|                                                      |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|                                                      |                                   |                               | 81,434    |                               |           | 18,686                           |         |                                         | 52,652    |                              |          
|                                                      |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|Other                                                 |                                   |                               | 14,969    |                               |           | 10,461                           |         |                                         | 31,440    |                              |          
|Theatre and other closure expense (included in Other) |                                   |                               |          |                               |           | 279                              |         |                                         |          |                              |          
|General and administrative expense:                   |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|                                                      | Merger and Acquisition Costs      |                               |           | 12,523                        |           |                                  | 22,286  |                                         |           | 42,732                       |          
|                                                      | Management Fee                    |                               |           | 2,000                         |           |                                  | 500     |                                         |           |                             |          
|                                                      | Other                             |                               |           | 38,308                        |           |                                  | 14,731  |                                         |           | 33,908                       |          
|Restructuring Charge                                  |                                   |                               | 3,980     |                               |           | 4,926                            |         |                                         |          |                              |          
|Depreciation and amortization                         |                                   |                               | 168,821   |                               |           | 45,263                           |         |                                         | 90,259    |                              |          
|Impairment of long-lived assets                       |                                   |                               | 11,974    |                               |           |                                 |         |                                         |          |                              |          
|Disposition of assets and other gains                 |                                   |                               | (997      | )                             |           | (302                             | )       |                                         | (2,715    | )                            |          
|                                                      |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          
|                                                      |                                   | Total costs and expenses      |           | $                             | 1,710,487 |                                  | $       | 462,371                                 |           | $                            | 1,246,532
|                                                      |                                   |                               |           |                               |           |                                  |         |                                         |           |                              |          

40

---



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

Revenues.Total revenues decreased 0.9%, or $16,418,000, during the year ended March 30, 2006 compared to the pro
forma year ended March 31, 2005. This decrease was mitigated by approximately $118,840,000 of additional admission and concessions revenues resulting from the Merger.

U.S.
and Canada theatrical exhibition revenues increased 0.1%, or $2,320,000 during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005.
Admissions revenues decreased 1.6% or $18,304,000 during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005, due to a 5.4% decrease in total attendance,
partially offset by a 4.0% increase in average ticket prices and the increased attendance and admissions revenues ($70,846,000) due to the Merger. Attendance at comparable theatres (theatres opened on
or before April 2, 2004 and operated throughout the last two fiscal years) was down 11.8%. Industry-wide box office declined 4%, with attendance estimated to be down nearly 7% in the aggregate
(down 10.0% for comparable screens), offset by average ticket price increases estimated to be up 3%. The year over year performance of our U.S. and Canada comparable screens versus industry-wide
comparable screens was impacted primarily by competition from new build openings. The increase in average ticket price was primarily due to our practice of periodically reviewing ticket prices and the
discounts we offer and making selective adjustments based upon such factors as general inflationary trends and conditions in local markets. Concessions revenues increased 0.3%, or $1,497,000, during
the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005 due to a 6.0% increase in average concessions per patron related to price increases and an increase in
units sold per patron, partially offset by the decrease in attendance. Concession revenues increased by $27,276,000 due to the Merger. Other theatre revenues increased 33.3% during the year ended
March 30, 2006 compared to the pro forma year ended March 31, 2005. Included in other theatre revenues are our share of on-screen advertising revenues generated by NCN and
NCM. The increase in other theatre revenues was primarily due to increases in on-screen advertising revenues.

International
theatrical exhibition revenues increased 25.4%, or $17,633,000, during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005.
Admissions revenues increased 16.7%, or $8,389,000, during the year ended March 30, 2006 compared to the pro forma year ended
March 31, 2005 due to a 39.1% increase in total attendance and a 6.3% decrease in attendance at comparable theatres, partially offset by a 16.2% decrease in average ticket price caused by the
lower average ticket prices from the theatres acquired in Mexico. The decline in attendance at comparable theatres was offset by the increased attendance from the Merger. Admissions revenues increased
by $12,791,000 due to the Merger. Concession revenues increased 43.6%, or $7,013,000, during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005 due to the
increase in attendance and a 3.2% increase in concessions per patron. Concession revenues increased by $7,942,000 due to the Merger. International revenues were negatively impacted by a stronger U.S.
dollar, although this did not contribute materially to consolidated loss from continuing operations.

Revenues
from Other decreased 73.8% during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005 due to the contribution of NCN's net assets to
NCM on March 29, 2005. The revenues of NCN during fiscal 2006 are related to run-off of customer contracts entered into prior to March 29, 2005. Our share of advertising
revenues generated by NCM are included in U.S. and Canada other theatre revenues.

Costs and expenses.Total costs and expenses increased 0.1%, or $1,584,000, during the year ended March 30, 2006
compared to the pro forma year ended March 31, 2005. The effect of the Merger was an increase in total costs and expenses of approximately $110,401,000.

U.S.
and Canada theatrical exhibition costs and expenses increased 2.5% during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005. Film
exhibition costs decreased 2.4% during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005 due to the decrease in admissions revenues, offset by a decrease
in the percentage of admissions paid to film

41

---



distributors.
As a percentage of admissions revenues, film exhibition costs were 52.6% in the current period as compared with 53.0% in the pro forma prior period due to more favorable film rental
terms primarily from the Merger. Concession costs decreased 3.6% during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005 due to the decrease in
concessions costs as a percentage of concession revenues, partially offset by the increase in concessions revenues. As a percentage of concessions revenues concession costs were 10.8% in the current
period compared with 11.3% in the pro forma prior period. As a percentage of revenues, theatre operating expense was 25.9% in the current period as compared to 24.0% in the pro forma prior period.
Rent expense increased 8.4% during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005 primarily due to the Merger which increased rent expense by
$18,415,000. During the year ended March 30, 2006, we recognized $601,000 of theatre and other closure expense due primarily to accretion of the closure liability related to theatres closed
during prior periods. During the pro forma year ended March 31, 2005, we recognized $11,746,000 of theatre and other closure expense related primarily to the closure of three theatres with 22
screens.

International
theatrical exhibition costs and expenses increased 14.2% during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005. Film
exhibition costs increased 10.3% during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005 due to the increase in admissions revenues, partially offset by
a decrease in the percentage of admissions paid to film distributors. As a percentage of admissions revenues, film exhibition costs were 45.9% in the current period as compared with 48.6% in the pro
forma prior period due to the effect of more favorable film rental terms in Mexico as a result of the Merger. Concession costs increased 39.7% during the year ended March 30, 2006 compared to
the pro forma year ended March 31, 2005 due to the increase in concession revenues, partially offset by a decrease in concession costs as a percentage of revenue from 20.8% in the pro forma
prior period to 20.2% in the current period As a percentage of revenues, theatre operating expense was 29.4% in the current period compared to 29.1% in the pro forma prior period. Rent expense
increased 3.2% during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005 primarily as a result of the Merger. We continually monitor the performance of our
international theatres and factors such as our ability to obtain film product, changing consumer preferences for filmed entertainment in international markets and our ability to sublease vacant retail
space which could negatively impact operating results and result in future closures, sales, dispositions and theatre closure charges prior to expiration of underlying lease agreements. International
theatrical exhibition costs and expenses were positively impacted by a stronger U.S. dollar, although this did not contribute materially to consolidated loss from continuing operations.

Costs
and expenses from Other decreased 64.3% during the year ended March 30, 2006 compared to the pro forma year ended March 31, 2005 due to the contribution of net assets
by NCN to NCM.



Merger and acquisition costs.Merger and acquisition costs decreased $52,495,000 from $65,018,000 to $12,523,000 during the
year ended March 30, 2006 compared to the pro forma year ended March 31, 2005. The prior year costs were higher primarily due to the costs associated with our merger with Marquee
consummated during the third quarter of fiscal 2005. Current year costs are primarily comprised of costs related to the Merger and other potential acquisition and divestiture activities.

Management fees.Management fees increased $1,500,000 during the current period. For fiscal 2007, management fees of
$1,250,000 will be paid quarterly, in advance, to our Sponsors in exchange for consulting and other services.

Other.Other general and administrative expense decreased 21.2%, or $10,331,000, during the year ended March 30, 2006
compared to the pro forma year ended March 31, 2005 primarily due to a $4,648,000

42

---



decrease
in incentive-based compensation, due to our decline in operating results and a $6,102,000 decrease in salaries and benefits as a result of our organizational restructuring activities.

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

Depreciation and Amortization.Depreciation and amortization increased 24.6%, or $33,299,000, compared to the pro forma prior
period, due primarily to increased asset values associated with fair value adjustments recorded as a result of the merger with Marquee and the Merger.

Impairment of Long-Lived Assets.During fiscal 2006 we recognized a non-cash impairment loss of
$11,974,000 on four theatres with 66 screens (in Ohio, Illinois, New York and New Jersey). The entire charge was taken against property. The estimated future cash flows of these theatres, undiscounted
and without interest charges, were less than the carrying value of the theatre assets. We continually evaluate the future plans for certain of our theatres, which may include selling theatres or
closing theatres and terminating the leases. No impairment loss was recorded in fiscal 2005.

Disposition of Assets and Other Gains.Disposition of assets and other gains were $997,000 in the current period compared to
$3,017,000 in the pro forma prior period. The current and pro forma prior periods include $935,000 and $2,610,000, respectively, of settlements received related to fireproofing claims at various
theatres (see Note 12Commitments and Contingencies to Consolidated Financial Statements). The current period also includes miscellaneous disposal gains of $62,000. The pro forma
prior period also included miscellaneous gains of $407,000.

Other Income.Other income includes $8,699,000 of income related to the derecognition of stored value card liabilities where
we believe future redemption to be remote, insurance recoveries of $3,032,000 for property losses related to Hurricane Katrina, net of disposition losses of $346,000, $1,968,000 of business
interruption insurance recoveries related to Hurricane Katrina and $1,894,000 of income related to the remeasurement of liability-classified shares of common stock, partially offset by financing costs
incurred with the write off of our deferred financing charges of $3,535,000. Other income, for the prior
year on a pro forma basis, primarily included $6,745,000 of income related to the derecognition of stored value card liabilities.

Interest Expense.Interest expense was $144,988,000, $54,549,000 and $74,259,000 for the Successor period ended
March 30, 2006, the Successor period ended March 31, 2005 and the Predecessor period ended December 23, 2004, respectively. Interest expense for the Successor period ended
March 30, 2006 compared to the pro forma year ended March 31, 2005 has increased by $36,126,000 after adjustment for $19,946,000 of interest expense recorded in the prior year Successor
and Predecessor periods. The interest on the Fixed Notes due 2012 and the Floating Notes due 2010 was required to be consolidated into the Predecessor period ended December 23, 2004 as well as
the Successor period ended March 31, 2005 pursuant to FIN 46R. See Note 1The Company and Significant Accounting Policies for additional information about FIN 46R. Interest
expense increased $17,593,000 compared to the pro forma year ended March 31, 2005 related to the Fixed Notes due 2012 and the Floating Notes due 2010. The increase in interest was also due to
an increase in interest related to the Holdings Discount Notes due 2014 which increased by $10,068,000 compared to the pro forma year ended March 31, 2005.

On
January 26, 2006, we issued $325,000,000 of 11% senior subordinated notes due 2016 ("Notes due 2016") and secured the new Senior Secured Credit Facility for $850,000,000, of
which $650,000,000 is currently outstanding as a variable rate term note. Interest on these notes was $6,528,000 and $7,985,000,

43

---



respectively
during fiscal 2006. We also incurred interest expense related to debt held by Cinemex of $2,110,000 during fiscal 2006.

On
August 18, 2004, Marquee issued $250,000,000 of 85/8% senior unsecured fixed rate notes due 2012 ("Fixed Notes due 2012") and $205,000,000 of senior unsecured
floating rate notes due 2010 ("Floating Notes due 2010"), the interest rate of which is currently 9.00% per annum. We assumed Marquee's obligations under the Fixed Notes due 2012 and the Floating
Notes due 2010 in the merger with Marquee. On August 18, 2004, Holdings issued $304,000,000 aggregate principal amount at maturity of 12% senior discount notes due 2014 ("Discount Notes due
2014") for gross proceeds of $169,917,760. Interest expense associated with the Discount Notes due 2014 is only included in the Consolidated Statement of Operations of the Predecessor through
December 23, 2004.

Investment Loss (Income).Investment loss was $4,393,000 for the Successor period ended March 30, 2006 compared to
income of $3,351,000 and $6,476,000 for the Successor period ended March 31, 2005 and the Predecessor period ended December 23, 2004, respectively. Equity in losses of
non-consolidated entities were $7,807,000 in the Successor period ended March 30, 2006 compared to income of $293,000 in the prior year. Current year equity in losses related to our
investment in NCM were $5,476,000. Interest income for the Successor period ended March 30, 2006 was $3,193,000. Prior year periods interest income was higher primarily due to the escrow funds
and increased cash available for investment during the period. The interest on these funds was required to be included in the Predecessor period ended December 23, 2004 pursuant to FIN 46R. See
Note 1Basis of Presentation in the Consolidated Financial Statements for additional information about FIN 46R.

Income Tax Provision (Benefit).The provision for income taxes from continuing operations was $72,100,000 for the Successor
period ended March 30, 2006 compared to a benefit of $9,200,000 for the Successor period ended March 31, 2005 and a provision of $15,000,000 for the Predecessor period ended
December 23, 2004. The provision for the Successor period ended March 30, 2006 included a charge for a full valuation allowance on all U.S. tax jurisdiction net deferred tax assets with
the exception of those U.S. net deferred tax assets acquired in connection with the Merger. The Successor period ended March 31, 2005 included $20,000,000 in costs associated with the merger
with Marquee which were treated as non-deductible and the Predecessor period ended December 23, 2004 included $41,032,000 of costs associated with the merger with Marquee which were
treated as non-deductible. See Note 9 to the Consolidated Financial Statements.

Loss From Discontinued Operations, Net.On June 30, 2005 we sold Japan AMC Theatres, Inc., including four
theatres in Japan with 63 screens. The results of operations of these theatres have been classified as discontinued operations. Additionally, on September 1, 2005 we sold the remaining Japan
theatre with 16 screens and have classified its operations as discontinued operations. The information presented for all periods reflects the new classification. See Note 3 to the Consolidated
Financial Statements for the components of the loss from discontinued operations.

Loss for Shares of Common Stock.Loss for shares of common stock was $212,215,000, $44,390,000 and $140,178,000 for the
Successor period ended March 30, 2006, the Successor period ended March 31, 2005 and the Predecessor period ended December 23, 2004, respectively. Preferred Stock dividends of
1,023 shares of Preferred Stock valued at $2,362,000 for the period from April 1, 2004 to April 19, 2004, cash dividends of $9,349,000 for the period from April 19, 2004 through
September 30, 2004, special Preferred Stock dividends and 33,408 shares of Preferred Stock valued at $91,113,000 and accretion of $1,476,000 were recorded during the Predecessor period ended
December 23, 2004. In connection with the merger with Marquee, each outstanding share of Preferred Stock converted into the right to receive $2,727.27 in cash.

44

---





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

Revenues.Total revenues increased 1.4%, or $24,429,000, on a pro forma basis, during the year ended March 31, 2005
compared to the year ended April 1, 2004.

U.S.
and Canada theatrical exhibition revenues increased 1.2%, on a pro forma basis, from the prior year. Admissions revenues increased 0.3%, on a pro forma basis, due to a 3.8% increase
in average ticket price partially offset by a 3.4% decrease in attendance. The increase in average ticket prices was primarily due to our practice of periodically reviewing ticket prices and the
discounts we offer and making selective adjustments based upon such factors as general inflationary trends and conditions in local markets. Attendance decreased primarily due to a 5.8% decrease in
attendance at comparable theatres (theatres opened on or before April 4, 2003) related to overall popularity and mix of film product and a decrease in attendance due to theatre closures,
partially offset by an increase in attendance at new theatres. We closed 6 theatres with 42 screens and opened three theatres with 44 screens since fiscal 2004. Concessions revenues increased 1.9%, on
a pro forma basis, due to a 5.4% increase in average concessions per patron related to price increases partially offset by the decrease in attendance.

International
theatrical exhibition revenues increased 14.1%, on a pro forma basis. Admissions revenues increased 11.3%, on a pro forma basis, due to a 6.4% increase in average ticket
price due primarily to the weaker U.S. dollar and a 4.6% increase in attendance, primarily at new theatres. Attendance at comparable theatres was approximately the same. Concession revenues, on a pro
forma basis, increased 21.7% due to a 16.3% increase in concessions per patron and the increase in total attendance. Concessions per patron increased primarily due to the weaker U.S. dollar.

Revenues
from NCN and other decreased 6.1%, on a pro forma basis, from the prior year due to a decrease in advertising revenues resulting from a reduction in screens served by NCN. This
decline resulted from an initiative to improve profitability by eliminating marginally profitable contracts with certain theatre circuits.

Costs and expenses.Total costs and expenses increased 4.9%, on a pro forma basis, or $80,225,000, during the year ended
March 31, 2005 compared to the year ended April 1, 2004.

U.S.
and Canada theatrical exhibition costs and expenses increased 1.8%, on a pro forma basis, from the prior year. Film exhibition costs decreased 0.3%, on a pro forma basis, due to a
decrease in the percentage of admissions paid to film distributors partially offset by the increase in admissions revenues. As a percentage of admissions revenues, film exhibition costs were 53.0% in
the current year as compared with 53.3% in the prior year. Concession costs increased 7.7%, on a pro forma basis, due to the increase in concession costs as a percentage of concessions revenues and
the increase in concession revenues. As a percentage of concessions revenues, concession costs were 11.3%, on a pro forma basis, in the current year compared with 10.6% in the prior year. As a
percentage of revenues, theatre operating expense was 24.0% in the current year, on a pro forma basis, as compared to 24.2% in the prior year. Rent expense increased 5.5%, on a pro forma basis, due
primarily to the opening of theatres and screens since April 1, 2004 and the sale and lease back of the real estate assets associated with three theatres for proceeds of $63,911,000 on
March 30, 2004. During fiscal 2005, on a pro forma basis, we recognized $11,746,000 of theatre and other closure expense related primarily to accruals for future minimum rentals on three
theatres with 22 screens closed during the current period. During fiscal 2004, we incurred $3,570,000 of theatre and other closure expense related primarily to a payment to a landlord to terminate a
lease on a theatre closed during the current period and due to accruals for future minimum rentals on three theatres with 20 screens closed during the year. Theatres closed prior to their lease
expiration may require payments to the landlords to terminate the leases, which we estimate could approximate $250,000, in the aggregate, over the next three years.

International
theatrical exhibition costs and expenses increased 9.6%, on a pro forma basis. Film exhibition costs increased 10.7%, on a pro forma basis, due to the increase in
admissions revenues partially

45

---



offset
by a decrease in the percentage of admissions paid to film distributors. As a percentage of admissions revenues, film exhibition costs were 48.6%, on a pro forma basis, in the current period as
compared with 48.8% in the prior period. Concession costs increased 10.5%, on a pro forma basis, due to the increase in concession revenues partially offset by a decrease in concession costs as a
percentage of concession revenues. As a percentage of concessions revenues, concession costs were 20.7%, on a pro forma basis, in the current year compared with 22.9% in the prior year. Theatre
operating expense increased 14.1%, on a pro forma basis, primarily at new theatres, and rent expense increased 9.5%, on a pro forma basis, primarily at new theatres. We continually monitor the
performance of our international theatres, and factors such as our ability to obtain film product, changing consumer preferences for filmed entertainment in international markets and our ability to
sublease vacant retail space could negatively impact operating results and result in future closures, sales, dispositions and theatre closure charges prior to expiration of underlying lease
agreements. International theatrical exhibition costs and expenses were negatively impacted by a weaker U.S. dollar, although this did not contribute materially to consolidated loss from continuing
operations.

Costs
and expenses from NCN and other decreased 10.9%, on a pro forma basis, due primarily to the reduction in overhead costs associated with the integration of NCN's administrative
functions into our home office location and decreased revenues.



Restructuring Charge.Restructuring charges were $4,926,000 during the current year. These expenses are related to
one-time termination benefits and other costs related to the displacement of approximately 200 associates related to an organizational restructuring, which was completed to create a
simplified organizational structure, and a contribution of assets by NCN to NCM.

Depreciation and Amortization.Depreciation and amortization increased 12.1%, on a pro forma basis, or $14,655,000, due
primarily to an increase in asset basis of approximately $130,000,000 resulting from the application of fair value accounting in connection with the merger with Marquee and increases in depreciation
resulting from new theatres.

Impairment of Long-Lived Assets.No impairment loss was recorded in fiscal 2005. During fiscal 2004, we
recognized a non-cash impairment loss of $16,272,000 on 10 theatres with 176 screens. We recognized an impairment loss of $9,866,000 on seven U.S. theatres with 114 screens (in Texas,
Maryland, California,

46

---



Illinois,
Wisconsin and Minnesota), $3,525,000 on one theatre in the United Kingdom with 12 screens and $2,881,000 on two Canadian theatres with 50 screens. Our impairment loss included $16,209,000
related to property and $63,000 related to intangible assets. Included in these losses is an impairment of $3,482,000 on 3 theatres with 70 screens that were included in impairment losses recognized
in previous periods. The estimated future cash flows of these theatres, undiscounted and without interest charges, were less than the carrying value of the theatre assets. We continually evaluate the
future plans for certain of our theatres, which may include selling theatres or closing theatres and terminating the leases. We have identified 30 multiplex theatres with 261 screens that we may close
over the next one to three years due to expiration of leases or early lease terminations. Prior to and including fiscal 2004, $10,763,000 of impairment charges have been taken on these theatre assets
and the economic lives of these theatre assets have been revised to reflect management's best estimate of the economic lives of the theatre assets for purposes of recording depreciation.

Disposition of Assets and Other Gains.Disposition of assets and other gains increased from a gain of $2,590,000 during the
prior year to a gain of $3,017,000 during the current year, on a pro forma basis. The pro forma current period includes settlement gains of $2,610,000 related to various fireproofing claims at two
theatres and a $111,000 settlement that was received from a construction contractor related to one Canadian theatre. The pro forma current period also includes a gain of $334,000 related to a sale of
NCN equipment. The prior period includes a $1,298,000 gain on the disposition of three theatres and two parcels of real estate held for sale, settlements of $925,000 received related to various
fireproofing claims at two theatres and $367,000 related to a settlement with a construction contractor at one theatre.

Other Income and Expense.During the current year, on a pro forma basis, we recognized $6,745,000 of income related to the
derecognition of stored value card liabilities where management believes future redemption to be remote. In the prior year, on March 25, 2004, we redeemed $200,000,000 of our
91/2% Senior Subordinated Notes due 2009 for $204,750,000. We recognized a loss of $8,590,000 in connection with the redemption, including a call premium of $4,750,000, unamortized
issue costs of $3,291,000 and unamortized discount of $549,000. On March 25, 2004, we redeemed $83,406,000 or our 91/2 Senior Subordinated Notes due 2011 for $87,367,000. We
recognized a loss of $5,357,000 was recognized in connection with the redemption including a call premium of $3,961,000, unamortized issue costs of $1,126,000 and unamortized discount of $270,000. The
losses are included within other expense in the Consolidated Statements of Operations for the year ended April 1, 2004.

Interest Expense.Interest expense was $54,549,000, $74,259,000 and $77,717,000 for the Successor period ended
March 31, 2005, the Predecessor period ended December 23, 2004 and the Predecessor period ended April 1, 2004, respectively. The current year increase is primarily due to
increased borrowing related to the merger with Marquee. Interest expense of $12,811,000 is included in both the Successor period ended March 31, 2005 and the Predecessor period ended
December 23, 2004 related to
our 85/8% Senior notes due 2012 (the "Fixed Notes due 2012") and our Senior floating notes due 2010, (the "Floating Notes due 2010" and collectively, the "Senior Notes"). The interest
on these notes was required to be included in the Predecessor period ended December 23, 2004 pursuant to FASB Interpretation No. 46R,Consolidation of Variable
Interest Entities("FIN 46R").

On
August 18, 2004, we issued $250,000,000 of our Fixed Notes due 2012 and $205,000,000 of our Floating Notes due 2010, the interest rate of which is currently 7.04% per annum. On
August 18, 2004, Holdings issued $304,000,000 aggregate principal amount at maturity of 12% Discount Notes due 2014 for gross proceeds of $169,917,760. Interest expense associated with the
Discount Notes due 2014 is included in our Consolidated Statements of Operations through December 23, 2004. See Note 1 to the Consolidated Financial Statements under Part II Item
8. of this Annual Report on Form 10-K.

On
February 24, 2004, we sold $300,000,000 aggregate principal amount of our Notes due 2014. We used the net proceeds (approximately $294,000,000) to redeem our Notes due 2009 and
a portion of our

47

---



Notes
due 2011. On March 25, 2004, we redeemed $200,000,000 of our Notes due 2009 and $83,406,000 of our Notes due 2011.

Investment Income.Investment income was $3,351,000, $6,476,000 and $2,861,000 for the Successor period ended
March 31, 2005, the Predecessor period ended December 23, 2004 and the prior year ended April 1, 2004. Investment income for the Predecessor period ended December 23, 2004
compared to the Predecessor period ended April 1, 2004 increased primarily due to the interest income on funds held in escrow related to the merger with Marquee and increased cash available for
investment during the current period. Interest income of $2,225,000 is included in both the Successor period ended March 31, 2005 and the Predecessor period ended December 23, 2004
related to the escrow funds. The interest on these funds was required to be included in the Predecessor period ended December 23, 2004 pursuant to FIN 46R. See Note 1 to the Consolidated
Financial Statements under Part II Item 8. of this Annual Report on Form 10-K for additional information about the application of FIN 46R to our Consolidated Financial
Statements.

Income Tax Provision.The benefit for income taxes from continuing operations for the Successor period ended March 31,
2005 was $9,200,000. The Successor period includes $20,000,000 in costs related to the merger with Marquee which are currently being treated as non-deductible. The provision for income
taxes from continuing operations for the Predecessor period ended December 23, 2004 was $15,000,000 and includes $41,032,000 in costs related to the merger with Marquee which are currently
being treated as non-deductible. The effective tax rate for the Successor period ended March 31, 2005 was 17.2% as compared to the Predecessor effective tax rates of (73.7%) and
221.9% for the periods ended December 23, 2004 and April 1, 2004, respectively. The difference in effective rate from the statutory rate of 35% during the Successor period ended
March 31, 2005 and Predecessor period ended December 23, 2004 was primarily due to currently non-deductible costs
related to the merger with Marquee and increase in foreign deferred tax assets for which we provided a valuation allowance. The difference in effective rate from the statutory rate of 35% during
fiscal 2004 was primarily due to foreign deferred tax assets (primarily in Spain, the United Kingdom and France) for which we provided a $6,681,000 valuation allowance.

Loss From Discontinued Operations, Net.On December 4, 2003, we sold one theatre in Sweden with 18 screens and
incurred a loss on sale of $5,591,000. During fiscal 2006 we disposed of five theatres in Japan. The results of operations of the Sweden theatre and Japan theatres have been classified as discontinued
operations and information presented for all periods reflects the new classification. See Note 3 to the Consolidated Financial Statements included herein for the components of the loss from
discontinued operations.

Loss for Shares of Common Stock.Loss for shares of common stock for the year was $44,390,000, $140,178,000 and $50,991,000
for the Successor period ended March 31, 2005, the Predecessor period ended December 23, 2004 and the Predecessor period ended April 1, 2004. Preferred stock dividends of 1,023
shares of Preferred Stock valued at $2,362,000 for the period from April 1, 2004 to April 19, 2004, cash dividends of $9,349,000 for the period from April 19, 2004 through
September 30, 2004, special Preferred Stock dividends and 33,408 shares of Preferred Stock valued at $91,113,000 and accretion of $1,476,000 were recorded during the Predecessor period ended
December 23, 2004. Preferred Stock dividends of 19,697 shares of Preferred Stock valued at $40,277,000 were recorded in fiscal 2004.

LIQUIDITY AND CAPITAL RESOURCES

Our consolidated revenues are primarily collected in cash, principally through box office admissions and theatre concessions sales. We have an operating "float"
which partially finances our operations and which generally permits us to maintain a smaller amount of working capital capacity. This float exists because admissions revenues are received in cash,
while exhibition costs (primarily film rentals) are ordinarily paid to distributors from 20 to 45 days following receipt of box office admissions revenues. Film

48

---



distributors
generally release the films which they anticipate will be the most successful during the summer and holiday seasons. Consequently, we typically generate higher revenues during such
periods.

Holding Company Status

Holdings is a holding company with no operations of its own and has no ability to service interest or principal on its Discount Notes due 2014 other than through
any dividends it may receive from AMC Entertainment.

Under
certain circumstances, AMC Entertainment will be restricted from paying dividends to Holdings by the terms of the indentures relating to its notes and its New Credit Facility. AMC
Entertainment's New Credit Facility and note indentures contain provisions which limit the amount of dividends and advances which it may pay or make to Holdings. Under the most restrictive of these
provisions, set forth in the New Credit Facility, the amount of loans and dividends which the Company could make to Holdings could not exceed $118 million in the aggregate. Under the note
Indentures, a loan to Holdings would have to be on terms no less favorable to the Company than could be obtained in a comparable transaction on an arm's length basis with an unaffiliated third party
and be in the best interest of the Company. Provided no event of default has occurred or would result, the New Credit Facility also permits AMC Entertainment to pay cash dividends to Holdings for
specified purposes, including indemnification claims, taxes, up to $4 million annually for operating expenses, repurchases of equity awards to satisfy tax withholding obligations, specified
management fees, fees and expenses of permitted equity and debt offerings and to pay for the repurchase of stock from employees, directors and consultants under benefit plans up to specified amounts.
Depending on the net senior secured leverage ratio, as defined in the New Credit Facility, AMC Entertainment may also pay Holdings a portion of net cash proceeds from specified asset sales.

Cash Flows from Operating Activities

Cash flows provided by (used in) operating activities, as reflected in the Consolidated Statements of Cash Flows, were $25,694,000, $(45,364,000), $145,364,000
and $163,939,000 for the Successor period ended March 30, 2006, Successor period ended March 31, 2005, the Predecessor period ended December 23, 2004 and the Predecessor period
ended April 1, 2004, respectively. The decrease in cash provided by operating activities for the Successor period ended March 30, 2006 compared with the pro forma combined period for the
prior year is primarily due to declines in attendance and the timing of payments for accrued expenses and other liabilities. The cash used in operating activities for the Successor period ended
March 31, 2005 was primarily due to payments of $37,061,000 in transaction costs related to the merger with Marquee. The decrease in operating cash flows for the Predecessor period ended
December 23, 2004 compared to the Predecessor period ended April 1, 2004 was also primarily due to transaction costs related to the merger with Marquee of which $23,971,000 were paid
during the Predecessor period ended December 23, 2004. We had a working capital deficit as of March 30, 2006 of $115,995,000 versus a deficit as of March 31, 2005 of $134,330,000.
We have the ability to borrow against our credit facility to meet obligations as they come due (subject to limitations on the incurrence of indebtedness in our various debt instruments) and had
approximately $90,000,000 and $163,000,000 available on our credit facility to meet these obligations for the periods ended March 30, 2006 and March 31, 2005, respectively.

Cash Flows from Investing Activities

Cash flows provided by (used in) investing activities, as reflected in the Consolidated Statements of Cash Flows, were $107,538,000, $(1,260,301,000),
$(692,395,000) and $(69,378,000) for the Successor period ended March 30, 2006, Successor period ended March 31, 2005, the Predecessor period ended December 23, 2004 and the
Predecessor period ended April 1, 2004, respectively. Cash flows for the Successor period ended March 30, 2006 include cash acquired from the Merger of $142,512,000, proceeds from the
sale leaseback of two theatres of $35,010,000 and proceeds from the sale of the Japan theatres of

49

---



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

On
December 23, 2004 we completed the merger with Marquee. Pursuant to the terms of the merger agreement, each issued and outstanding share of AMC Entertainment's common stock and
Class B stock was converted into the right to receive $19.50 in cash and each issued and outstanding share of AMC Entertainment's preferred stock was converted into the right to receive
$2,727.27 in cash. The total amount of consideration paid in the merger with Marquee was $1,665,200,000.

Holdings
used the net proceeds from the sale of our notes (as described below), together with our existing cash balances and the proceeds from the equity contribution from Holdings
(consisting of equity contributed by the Marquee Sponsors, the co-investors and certain members of management and the net proceeds of an offering of Holdings' notes), to finance the merger
with Marquee.

In
connection with and as a result of the merger with Marquee, AMC Entertainment's stock is no longer publicly traded and we delisted AMC Entertainment's common stock,
662/3¢ par value, from the American Stock Exchange on December 23, 2004.

On
December 19, 2003, we acquired certain of the operations and related assets of MegaStar Cinemas, L.L.C. for an estimated cash purchase price of $15,037,000. In connection with
the acquisition, we assumed leases on three theatres with 48 screens in Minneapolis and Atlanta. All three of the theatres feature stadium seating and have been built since 2000.

On
March 29, 2002, we acquired GC Companies pursuant to a stock purchase agreement and a plan of reorganization that was confirmed by the bankruptcy court on March 18,
2002. Our purchase price of $168,931,000 (net of $6.5 million from the sale of GC Companies' portfolio of venture capital investments on the effective date) included anticipated cash payments
of $68,472,000, the issuance of $72,880,000 aggregate principal amount of our Notes due 2011 with a fair value of $71,787,000 and the issuance of 2,578,581 shares of AMC Entertainment common stock
with an aggregate fair value of $35,172,000 based on a fair value of $13.64 per share (the closing price per share on the effective date of the plan). We used available cash for the cash payments
under the plan of reorganization.

The
final purchase price for GC Companies was not determinable until all creditor claims disputed by the GC Companies post-confirmation unsecured creditors committee were
consensually resolved or determined by the bankruptcy court. The GC Companies bankruptcy case was closed on May 26, 2004. Through March 31, 2005, we had issued $72,880,000 aggregate
principal amount of our senior subordinated notes due 2011 and 2,430,433 shares of AMC Entertainment common stock and paid approximately $66,118,000 in cash to creditors of GC Companies.

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

50

---



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

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

Subsequent
to the current fiscal year, in May 2006, AMCEI and its subsidiary AMC Entertainment International Limited sold its interests in AMC Entertainment España
S.A., which owned and operated four theatres with 86 screens in Spain, and Actividades Multi-Cinemas E Espectáculos, LDA, which owned and operated one theatre with 20 screens in
Portugal for a sales price of approximately $40.0 million.

Subsequent
to the end of fiscal year 2006, we sold four theatres with 42 screens in the U.S. as required by and in connection with the approval of the Mergers for an aggregate net sales
price of approximately $30.7 million. We expect additional sales proceeds of approximately $40.5 million related to six theatres with 78 screens required to be disposed of in
connection with the approval of the Mergers.

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

During
fiscal 1998, we sold the real estate assets associated with 13 theatres to Entertainment Properties Trust ("EPT") for an aggregate purchase price of $283,800,000 (the "Sale and
Lease Back Transaction"). We leased the real estate assets associated with the theatres from EPT pursuant to non-cancelable operating leases with terms ranging from 13 to 15 years
at an initial lease rate of 10.5% with options to extend for up to an additional 20 years. The leases are triple net leases that require us to pay substantially all expenses associated with the
operation of the theatres, such as taxes and other governmental charges, insurance, utilities, service, maintenance and any ground lease payments. During fiscal 2000, we sold the building and
improvements associated with one of our theatres to EPT for proceeds of $17,600,000 under terms similar to the above Sale and Leaseback Transaction. During fiscal 2002, we sold the land at this
theatre to EPT for proceeds of $7,486,000 under terms similar to the above Sale and Leaseback Transaction and at an initial lease rate of 10.75%. During fiscal 2003, we sold the real estate assets
associated with 2 theatres to EPT for proceeds of $43,665,000 and then leased the real estate assets associated with these theatres pursuant to non-cancelable operating leases with terms
of 20 years at an initial lease rate of 11% with options to extend for up to an additional 15 years. On March 30, 2004, we sold the real estate assets associated with 3 theatres
to EPT for proceeds of $63,911,000 and then leased the real estate assets associated with these theatres pursuant to non-cancelable operating leases with terms of 20 years at an
initial lease rate of 9.5% with options to extend for up to 15 additional years. On March 31, 2005, we sold the real estate assets associated with one theatre and adjoining retail space to EPT
for proceeds of $50,910,000 and then leased the real estate assets associated with the theatre pursuant to a non-cancelable operating lease with terms of 20 years at an initial
lease rate of 9.24% with options to extend for up to 14 additional years. On March 30, 2006, we sold the real estate assets associated with two theatres to EPT for proceeds of $35,010,000 and
then leased the real estate assets associated with the theatres pursuant to a non-cancelable operating lease with terms of approximately 15 and 17 years at an initial lease rate of
9.25% with options to extend each for up to 15 additional years

51

---



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

Cash Flows from Financing Activities

Cash flows provided by (used in) financing activities, as reflected in the Consolidated Statements of Cash Flows, were $21,434,000, $1,376,763,000, $611,034,000
and $(5,274,000) for the Successor period ended March 30, 2006, Successor period ended March 31, 2005, the Predecessor period ended December 23, 2004 and the Predecessor period
ended April 1, 2004, respectively. Cash flows from financing activities for the Successor period ended March 30, 2006 primarily include proceeds of $325,000,000 from the issuance of the
Notes due 2016 and $650,000,000 from the Term Loan B which were used to repurchase $939,363,000 of debt, as well as $24,895,000 paid for financing costs which will
be deferred and amortized over the life of the debt. On September 29, 2005 we received $6,661,000 additional construction allowance from our landlord Entertainment Properties Trust related to
three of our Canada theatres which allowed for sale leaseback accounting at these locations and reduced our financing lease obligations by approximately $31,292,000, reduced the net book value of
building assets related to these locations by approximately $15,839,000 and resulted in a deferred gain of $22,114,000. The deferred gain is amortized as a reduction of rent expense over the remaining
terms of the leases. Cash flows from financing activities for the Successor period ended March 31, 2005 include proceeds from Holdings' issuance of common stock of $769,350,000, proceeds of
$169,918,000 related to the issuance of Holdings' Discount Notes due 2014 and proceeds of $455,000,000 related to the issuance of Senior Notes. Cash flows from financing activities for the Predecessor
period ended December 23, 2004, include proceeds related to the issuance of notes of $624,918,000 to finalize the merger with Marquee, which includes gross proceeds of $169,918,000 from the
Holdings' Discount Notes due 2014.

For
a discussion of our most recent financing transactions in fiscal year 2006, see "Merger with Loews Financing Transactions" below.

As
a result of the merger with Marquee, AMC Entertainment became the obligor of $250,000,000 in aggregate principal amount of 85/8% Senior Notes due 2012 (the "Fixed Notes
due 2012") and $205,000,000 in aggregate principal amount of Senior Floating Notes due 2010 (the "Floating Notes due 2010" and collectively, the "Senior Notes") that were previously issued by
Marquee Inc. on August 18, 2004. The Senior Notes (i) rank senior in right of payment to any of AMC Entertainment's existing and future subordinated indebtedness, rank equally in
right of payment with any of its existing and future senior indebtedness and are effectively subordinated in right of payment to any of its secured indebtedness and (ii) are fully and
unconditionally guaranteed on a joint and several, senior unsecured basis by each of AMC Entertainment's existing and future wholly owned subsidiaries that is a guarantor or direct borrower under its
other indebtedness. The Senior Notes are structurally subordinated to all existing and future liabilities and preferred stock of AMC Entertainment's subsidiaries that do not guarantee the notes.

The
Fixed Notes due 2012 bear interest at the rate of 85/8% per annum, payable on February 15 and August 15 of each year, commencing February 15,
2005. The Fixed Notes due 2012 are redeemable at our option, in whole or in part, at any time on or after August 15, 2008 at 104.313% of the principal amount thereof, declining ratably to 100%
of the principal amount thereof on or after August 15, 2010. The Floating Notes due 2010 bear interest at a rate per annum, reset quarterly, equal to 41/4% plus the three-month
LIBOR interest rate. Interest on the Floating Notes due 2010 is payable quarterly on February 15, May 15, August 15 and November 15 and interest payments commenced on
November 15, 2004. The interest rate is 9.01% per annum for the quarterly period ending May 14, 2006 and is 9.42% for the quarterly period ending August 14, 2006. The Floating
Notes due 2010 are redeemable, in whole or in part, on or after August 15, 2006 at 103.00% of the principal amount thereof, declining ratably to 100% of the

52

---



principal
amount thereof on or after August 15, 2009. The Fixed Notes due 2012 and Floating Notes due 2010 also contain covenants which restrict the incurrence of additional senior indebtedness
based on the senior leverage ratio as defined in the indentures.

In
connection with the merger with Marquee, Holdings issued $304,000,000 principal amount at maturity of its 12% senior discount notes due 2014 ("Discount Notes due 2014") for gross
proceeds of $169,917,760. The only operations of Holdings prior to the merger with Marquee were related to this financing. Because AMC Entertainment was the primary beneficiary of Holdings, which was
considered a variable interest entity as defined in FIN 46(R),Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51,the
Predecessor was required to consolidate Holdings' operations and financial position into its financial statements as of and through the period ended December 23, 2004. The results of operations
of Holdings included within the Predecessor's Consolidated Statements of Operations for the period from April 2, 2004 through December 23, 2004 include interest expense of $7,135,000 and
interest income of $831,000.

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

On
any interest payment date prior to August 15, 2009, Holdings may elect to commence paying cash interest (from and after such interest payment date) in which case
(i) Holdings will be obligated to pay cash interest on each subsequent interest payment date, (ii) the Discount Notes due 2014 will cease to accrete after such interest payment date and
(iii) the outstanding principal amount at the maturity of each note will be equal to the accreted value of such note as of such interest payment date.

Concurrently
with the consummation of the merger with Marquee, AMC Entertainment entered into an amendment to its credit facility. We refer to this amended credit facility as the
"amended credit facility." The amended credit facility modified a previous Second Amended and Restated Credit Agreement dated as of March 26, 2004 which was superseded in connection with the
execution of the "amended credit facility" which was scheduled to mature on April 9, 2009. The amended credit facility was replaced with the New Credit Facility on January 26, 2006.

On
February 24, 2004, AMC Entertainment sold $300,000,000 aggregate principal amount of 8% Senior Subordinated Notes due 2014 (the "Notes due 2014"). It used the net proceeds
(approximately $294,000,000) to redeem its notes due 2009 and a portion of our notes due 2011. The Notes due 2014 bear interest at the rate of 8% per annum, payable in March and September. The Notes
due 2014 are redeemable at our option, in whole or in part, at any time on or after March 1, 2009 at 104.000% of the principal amount thereof, declining ratably to 100% of the principal amount
thereof on or after March 1, 2012, plus in each case interest accrued to the redemption date. The Notes due 2014 are unsecured and are subordinated to all AMC Entertainment's existing and
future senior indebtedness (as defined in the indenture governing the Notes due 2014). The Notes due 2014 rank equally with AMC Entertainment's Notes due 2011, Notes due 2012 and Notes due 2016.

On
January 16, 2002, AMC Entertainment sold $175,000,000 aggregate principal amount of its 97/8% Senior Subordinated notes due 2012 (the "Notes due 2012"). Net
proceeds from the issuance of the Notes due 2012 (approximately $168,000,000) were used to reduce borrowings under AMC Entertainment's credit facility, to pursue our current business strategy,
including the acquisition of GC Companies, and for general corporate purposes. The Notes due 2012 bear interest at the rate of 97/8% per annum, payable February 1 and
August 1 of each year. The Notes due 2012 are redeemable at our option, in whole or in part, at any time on or after February 1, 2007 at 104.938% of the principal amount thereof,
declining ratably to 100% of the principal amount thereof on or after February 1, 2010, plus in each case interest accrued to the redemption date. The Notes due 2012 are unsecured and are
subordinated to all AMC

53

---



Entertainment's
existing and future senior indebtedness (as defined in the indenture governing the Notes due 2012). The Notes due 2012 rank equally with its Notes due 2011, Notes due 2014 and Notes
due 2016.

On
January 27, 1999, AMC Entertainment sold $225,000,000 aggregate principal amount of its 91/2% Senior Subordinated notes due 2011 (the "Notes dues 2011"). Net
proceeds from the issuance of the Notes due 2011 (approximately $219,000,000) were used to reduce borrowings under its credit facility. On March 29, 2002, AMC Entertainment issued an additional
$72,880,000 aggregate principal amount of Notes due 2011 (with a fair value of $71,787,000) as part of our acquisition of GC Companies, Inc. The Notes due 2011 bear interest at the rate of
91/2% per annum, payable February 1 and August 1 of each year. The Notes due 2011 are redeemable at our option, in whole or in part, at any time on or after
February 1, 2004 at 104.75% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after February 1, 2007, plus in each case interest accrued to
the redemption date. The Notes due 2011 are unsecured and are subordinated to all AMC Entertainment's existing and future senior indebtedness (as defined in the indenture governing the Notes due
2011). On March 25, 2004, AMC Entertainment redeemed $83,406,000 of its notes due 2011 for $87,367,000. A loss of $5,357,000 was recognized in connection with the redemption including a call
premium of $3,962,000, unamortized issue costs of $1,125,000 and unamortized discount of $270,000. The loss is included within other expense on the Consolidated Statements of Operations.

The
merger with Marquee constituted a "change of control" under the Notes due 2011 in the aggregate principal amount of $214,474,000, which allowed the holders of those notes to require
AMC Entertainment to repurchase their notes at 101% of their aggregate principal amount plus accrued and unpaid interest to the date of purchase. We commenced this change of control offer on
January 11, 2005 and were required to purchase the notes no later than 60 days from that date. The change of control offer was required to remain open for at least 20 business days and
expired on February 10, 2005. Bondholders tendered $1,663,000 of the Notes due 2011 which were repurchased using existing cash.

On
March 19, 1997, AMC Entertainment sold $200,000,000 aggregate principal amount of its 91/2% Senior Subordinated notes due 2009 (the "Notes due 2009"). It used
the net proceeds from the issuance of the Notes due 2009 (approximately $194,000,000) to reduce borrowings under its credit facility. The Notes due 2009 were redeemed on March 25, 2004 for
$204,750,000. A loss on redemption of
$8,590,000 was recognized in connection with the redemption including a call premium of $4,750,000, unamortized issue costs of $3,291,000 and unamortized discount of $549,000. The loss is included
within other expense on the Consolidated Statements of Operations.

The
indentures relating to our outstanding notes allow us to incur all permitted indebtedness (as defined therein) without restriction, which includes all amounts borrowed under our
credit facility. The indentures also allow us to incur any amount of additional debt as long as we can satisfy the coverage ratio of each indenture, both at the time of the event (under the indenture
for the Notes due 2011) and after giving effect thereto on a pro forma basis (under the indentures for the Notes due 2011, Notes due 2012, Fixed Notes due 2012, Floating Notes due 2010 and Discount
Notes due 2014). Under the indenture relating to the Notes due 2012, Notes due 2014 and 11% Senior Subordinated Notes due 2016 ("Notes due 2016"), the most restrictive of the indentures, we could
borrow approximately $6.3 million as of March 30, 2006 in addition to permitted indebtedness (assuming an interest rate of 11% per annum on the additional borrowings). If we cannot
satisfy the coverage ratios of the indentures, generally we can incur, in addition to amounts borrowed under the credit facility, no more than $100.0 million of new "permitted indebtedness"
under the terms of the indentures relating to the 2011, 2012, 2014 and 2016 notes and Discount Notes due 2014.

The
indentures relating to the above-described notes also contain covenants limiting dividends, purchases or redemptions of stock, transactions with affiliates, and mergers and sales of
assets, and require us to make an offer to purchase the notes upon the occurrence of a change in control, as defined in the indentures. Upon a change of control (as defined in the indentures), we
would be required to make an

54

---



offer
to repurchase all of the outstanding, Notes due 2016, Notes due 2011, Notes due 2012, Notes due 2014, Fixed Notes due 2012, Floating Notes due 2010 and Discount Notes due 2014 at a price equal
to 101% of the principal amount thereof plus accrued and unpaid interest to the date of repurchase.

Merger with Loews Financing Transactions

In connection with the Merger with Loews, on January 26, 2006, we entered into the following financing transactions:



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

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



The New Credit Facility is with a syndicate of banks and other financial institutions and provides AMC Entertainment financing of up to $850.0 million,
consisting of a $650.0 million term loan facility with a maturity of seven years and a $200.0 million revolving credit facility with a maturity of six years. The revolving credit
facility will include borrowing capacity available for Mexican peso-denominated revolving loans, for letters of credit and for swingline borrowings on same-day notice.

Borrowings
under the New Credit Facility bear interest at a rate equal to an applicable margin plus, at our option, either a base rate or LIBOR. The initial applicable margin for
borrowings under the revolving credit facility is 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR borrowings, and the initial applicable margin for borrowings under the term
loan facility is 1.50% with respect to base rate borrowings and 2.125% with respect to LIBOR borrowings. The
applicable margin for such borrowings may be reduced, subject to AMCE attaining certain leverage ratios. In addition to paying interest on outstanding principal under the New Credit Facility, AMC
Entertainment is required to pay a commitment fee to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder at a rate equal to 0.375% (subject to reduction
upon attainment of certain leverage ratios). It will also pay customary letter of credit fees. AMC Entertainment may voluntarily repay outstanding loans under the New Credit Facility at any time
without premium or penalty, other than customary "breakage" costs with respect to LIBOR loans. AMC Entertainment is required to repay $1,625,000 of the term loan quarterly, beginning March 30,
2006 through September 30, 2012, with any remaining balance due on January 26, 2013.

All
obligations under the New Credit Facility are guaranteed by each of AMC Entertainment's wholly-owned domestic subsidiaries. All obligations under the New Credit Facility, and the
guarantees of those obligations (as well as cash management obligations and any interest hedging or other swap agreements),

55

---



are
secured by substantially all of AMC Entertainment's assets as well as those of each subsidiary guarantor.

The
New Credit Facility contains a number of covenants that, among other things, restrict, subject to certain exceptions, AMC Entertainment's ability, and the ability of our
subsidiaries, to sell assets; incur additional indebtedness; prepay other indebtedness (including the Notes); pay dividends and distributions or repurchase their capital stock; create liens on assets;
make investments; make certain acquisitions; engage in mergers or consolidations; engage in certain transactions with affiliates; amend certain charter documents and material agreements governing
subordinated indebtedness, including the notes due 2011, 2012, 2014 and 2016; change the business conducted by it and its subsidiaries; and enter into agreements that restrict dividends from
subsidiaries.

In
addition, the New Credit Facility requires, commencing with the fiscal quarter ended March 30, 2006, that AMC Entertainment and its subsidiaries maintain a maximum net senior
secured leverage ratio as long as the commitments under the revolving credit facility remain outstanding. The New Credit Facility also contains certain customary affirmative covenants and events of
default.



The notes were issued by AMC Entertainment under an indenture, dated January 26, 2006, with HSBC Bank USA, National Association, as trustee, bear interest
at a rate of 11% per annum, payable on February 1 and August 1 of each year (commencing on August 1, 2006), and have a maturity date of February 1, 2016.

The
notes are general unsecured senior subordinated obligations of AMC Entertainment, fully and unconditionally guaranteed, jointly and severally, on a senior subordinated basis by each
of our existing and future domestic restricted subsidiaries that guarantee our other indebtedness.

AMC
Entertainment may redeem some or all of the notes at any time on or after February 1, 2011 at 105.5% of the principal amount thereof, declining ratably to 100% of the
principal amount thereof on or after February 1, 2014. In addition, AMC Entertainment may redeem up to 35% of the aggregate principal amount of the notes using net proceeds from certain equity
offerings completed on or prior to February 1, 2009. If AMC Entertainment experiences a change of control (as defined in the Indenture), it will be required to make an offer to repurchase the
notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase.

The
Indenture contains covenants limiting other indebtedness, dividends, purchases or redemptions of stock, transactions with affiliates and mergers and sales of assets. The Indenture
also contains provisions subordinating our obligations under the notes to our obligations under our New Credit Facility and other senior indebtedness.

On
May 15, 2006, we made an offer to exchange, by prospectus, up to $325,000,000 in aggregate principal amount of 11% Series B Senior Subordinated Notes due 2016, which
have been registered under the Securities Act of 1933, as amended, for our outstanding 11% Series A Senior Subordinated Notes due 2016. We completed the exchange offer on June 13, 2006.



In August 2004, Cadena Mexicana de Exhibición S.A. de C.V., a wholly-owned subsidiary of Cinemex and an indirect wholly-owned subsidiary of
Loews, entered into a senior secured credit facility, which remains in place after the consummation of the Merger with Loews. The initial amount drawn under the Cinemex senior secured credit facility
was 1,026.4 million Mexican pesos (approximately $90.0 million as of August 16, 2004). Cinemex drew 106.4 million Mexican pesos (approximately $10 million in August
2005) under the delayed draw feature of its senior secured credit facility. Approximately $103.9 million was outstanding under the senior secured credit facility as of March 30, 2006. In
December 2005, Cadena

56

---



Mexicana
entered into an amended and restated senior secured revolving credit facility which provides for an available revolving credit line of the peso equivalent of $25.0 million with Banco
Inbursa, S.A. and Scotiabank Inverlat, S.A. (the revolving credit facility is peso-denominated debt). During January and February of 2006 Cinemex drew 105.4 million Mexican pesos
under the revolving credit facility (approximately $9.8 million was outstanding as of March 30, 2006). All obligations of Cadena Mexicana under the Cinemex senior secured credit facility
and revolving credit facility are guaranteed by Cinemex and each existing and future operating subsidiary of Cadena Mexicana, except for specified excluded subsidiaries.

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

The
Cinemex senior secured credit facilities contain customary affirmative and negative covenants with respect to Cadena Mexicana and each of the guarantors and, in certain instances,
Cadena Mexicana's subsidiaries that are not guarantors, as defined in the credit agreement. Affirmative covenants include the requirement to furnish periodic financial statements and ensure that the
obligations of Cadena Mexicana and the guarantors under the Cinemex senior secured credit facilities rank at leastpari passuwith all existing debt of
such parties. Negative covenants include limitations on disposition of assets, capital expenditures, dividends and additional indebtedness and liens. The senior secured credit facilities also include
certain financial covenants, including, without limitation, a maximum total leverage
ratio, a maximum total net debt to equity ratio, a minimum interest coverage ratio, a maximum true-lease adjusted leverage ratio and a minimum consolidated net worth requirement.

For
additional information relating to covenants contained in the indentures governing the notes, see Note 7 to our Consolidated Financial Statements under Part II Item 8.
of this Annual Report on Form 10-K for the fiscal year ended March 30, 2006.

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

We
believe that cash generated from operations and existing cash and equivalents will be sufficient to fund operations and planned capital expenditures and potential acquisitions for at
least the next twelve months and enable us to maintain compliance with covenants related to the new Credit Facility and the notes.

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

On
April 19, 2001, AMC Entertainment issued shares of Series A convertible preferred stock and Series B exchangeable preferred stock for an aggregate purchase price
of $250,000,000. Net proceeds from the sale (including transaction expenses) of approximately $225,000,000 were used to reduce outstanding

57

---



indebtedness
under our credit facility. On September 13, 2001, pursuant to the certificate of designations relating to the preferred stock, all shares of Series B exchangeable preferred
stock were exchanged for an equal number of shares of Series A convertible preferred stock. Dividends on the Series A convertible preferred stock accumulated at an annual rate of 6.75%
and were payable in additional shares of Series A convertible preferred stock until April 2004. At our option, dividends on Series A convertible preferred stock were payable in
cash or additional shares of Series A convertible preferred stock from April 2004 until April 2008. All outstanding shares of preferred stock were redeemed in connection with the
merger with Marquee.

Commitments and Contingencies

Minimum
annual cash payments required under existing capital and financing lease obligations, maturities of corporate borrowings, future minimum rental payments under existing operating
leases, FF&E and leasehold purchase provisions, ADA related betterments and pension funding that have initial or remaining non-cancelable terms in excess of one year as of March 30,
2006 are as follows:

|(In thousands) |  | Minimum
Capital and
Financing
Lease
Payments |         | Principal
Amount of
Corporate
Borrowings |   | Interest
Payments on
Corporate
Borrowings(1) |  | Minimum
Operating
Lease
Payments |           | Capital
Related
Betterments(2) |   | Pension
Funding(3) |  | Total
Commitments
|-------------- |  | -------------------------------------------- | ------- | ---------------------------------------- | - | -------------------------------------------- |  | -------------------------------- | --------- | ------------------------------ | - | ------------------ |  | -----------------
|2007           |  | $                                            | 11,056  |                                          | $ | 26,690                                       |  | $                                | 197,707   |                                | $ | 408,007            |  | $                
|2008           |  |                                              | 10,333  |                                          |   | 28,392                                       |  |                                  | 195,143   |                                |   | 422,674            |  |                  
|2009           |  |                                              | 9,969   |                                          |   | 46,283                                       |  |                                  | 192,323   |                                |   | 419,634            |  |                  
|2010           |  |                                              | 9,925   |                                          |   | 40,600                                       |  |                                  | 203,301   |                                |   | 416,863            |  |                  
|2011           |  |                                              | 9,975   |                                          |   | 424,311                                      |  |                                  | 204,161   |                                |   | 408,945            |  |                  
|Thereafter     |  |                                              | 85,306  |                                          |   | 1,988,283                                    |  |                                  | 474,539   |                                |   | 3,341,769          |  |                  
|               |  |                                              |         |                                          |   |                                              |  |                                  |           |                                |   |                    |  |                  
|Total          |  | $                                            | 136,564 |                                          | $ | 2,554,559                                    |  | $                                | 1,467,174 |                                | $ | 5,417,892          |  | $                
|               |  |                                              |         |                                          |   |                                              |  |                                  |           |                                |   |                    |  |                  

---



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

In
addition, the Management Fee Agreement will provide for reimbursements by Holdings and AMCE to the Sponsors for their out-of-pocket expenses, and by AMCE to
Holdings of up to $3.5 million for fees payable by Holdings in any single fiscal year in order to maintain AMCE's corporate existence, corporate overhead expenses and salaries or other
compensation of certain employees.

Upon
the consummation of a change in control transaction or an IPO, the Sponsors will receive, in lieu of quarterly payments of the annual management fee, a fee equal to the net present
value of the

58

---



aggregate
annual management fee that would have been payable to the Sponsors during the remainder of the term of the fee agreement (assuming a twelve year term from the date of the original fee
agreement), calculated using the treasury rate having a final maturity date that is closest to the twelfth anniversary of the date of the original fee agreement date.

The
Management Fee Agreement also provides that AMCE will indemnify the Sponsors against all losses, claims, damages and liabilities arising in connection with the management services
provided by the Sponsors under the fee agreement.

Conclusion

We
believe that cash generated from operations and existing cash and equivalents will be sufficient to fund operations and planned capital expenditures currently and for at least the
next 12 months and enable us to maintain compliance with covenants related to the new senior secured credit facility and the notes. We are considering various options with respect to the
utilization of cash and equivalents in excess of our anticipated operating needs. Such options might include, but are not limited to, acquisitions of theatres or theatre companies and repayment of
corporate borrowings.

Impact of Inflation

Historically, the principal impact of inflation and changing prices upon us has been to increase the costs of the construction of new theatres, the purchase of
theatre equipment, rent and the utility and labor costs incurred in connection with continuing theatre operations. Film exhibition costs, our largest cost of operations, are customarily paid as a
percentage of admissions revenues and hence, while the film exhibition costs may increase on an absolute basis, the percentage of admissions revenues represented by such expense is not directly
affected by inflation. Except as set forth above, inflation and changing prices have not had a significant impact on our total revenues and results of operations.

New Accounting Pronouncements

In February 2006, the FASB agreed to issue FASB Staff Position (FSP) No. 123(R)-4,Classification of Options and
Similar Instruments Issued as Employee Compensation That Allow for Cash Settlement upon the Occurrence of a Contingent Event, which requires companies to consider the
probability of the occurrence of a contingent event that is outside the employees' control (i.e., change in control, or death or disability) in determining the classification of an employee stock
option or similar instrument under FASB Statement No. 123(R),Share-Based Payment, where the award requires or permits cash settlement upon the
contingent event. The FSP requires companies to classify employee stock options and similar instruments with contingent cash settlement features as equity awards provided the contingent event that
permits or requires cash settlement is not considered probable of occurring. As we have already adopted SFAS 123(R), we would be required to apply the guidance in the first reporting period
beginning after the date the final FSP is posted to the FASB website and would be required to apply the proposed guidance retrospectively to prior-period results to which SFAS 123(R) was
applied. We do not believe the adoption of FSP 123 R-4 will have an impact on our consolidated financial position, results of operations, or cash flows.

In
October 2005, the FASB issued FASB Staff Position (FSP) 13-1,Accounting for Rental Costs Incurred during a Construction
Period. FSP 13-1 clarifies there is no distinction between the right to use a leased asset during the construction period and the right to use that asset after the
construction period. Accordingly, we will no longer be able to capitalize rental costs during the construction period and will begin expensing them as preopening expense prior to the theatre opening
date. This FSP is effective for the first reporting period beginning after December 15, 2005. We have adopted this FSP during the fourth quarter of fiscal 2006 which results in recognition of
preopening expense during the "rent holiday".

59

---



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

In
March 2004, the FASB issued Emerging Issues Task Force Issue No. 03-1.The Meaning of Other Than Temporary Impairment and its Application to Certain
Investments("EITF 03-1"). EITF 03-1 includes new guidance for evaluating and recording impairment losses on debt and equity investments, as well as new disclosure requirements
for investments that are deemed to be temporarily impaired. In September 2004, the FASB issued Staff Position EITF Issue 03-1-1, which delays the effective date until additional guidance is issued for
the application of the recognition and measurement provisions of EITF 03-1 to
investment in securities that are impaired. We do not believe that the adoption of EITF 03-1 will have a material impact on our financial condition or result of operations.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various market risks including interest rate risk and foreign currency exchange rate risk.

Derivatives

On July 28, 2003, Grupo Cinemex entered into an interest rate swap agreement with a maturity of December 26, 2007 to manage its exposure to interest
rate movements by effectively converting its previous long-term senior secured credit facility from a variable to a fixed rate. The notional amount of the interest rate swap reduces in
accordance with the repayment provisions of Grupo Cinemex's previous long-term senior secured credit facility. Although this senior secured facility was repaid on August 13, 2004,
the swap agreement remains outstanding and was redesignated as a hedge of the Grupo Cinemex Term Loan.

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

On
August 5, 2005, Grupo Cinemex entered into a new interest rate swap with a face amount of 382.8 million Mexican pesos ($35.1 million) as a complement to the
July 28, 2003 interest rate swap noted above. The new interest rate swap was entered into in order to hedge the outstanding debt balance not covered by the July 28, 2003 interest rate
swap. This new interest rate swap provides for the exchange of variable rate payment for fixed rate payments. The variable rate is based on the 28-day TIIE rate and the fixed rate is
9.89%. The fair market value of this interest rate swap was $2,257,000 as of March 30, 2006.

We
are exposed to credit loss in the event of non-performance by the counterparties to the interest rate swap agreements. However, we do not anticipate
non-performance by the counterparties.

Market risk on variable-rate financial instruments.We maintain an $850,000,000 New Credit Facility comprised of
a $200,000,000 revolving credit facility and a $650,000,000 term loan facility, which permits borrowings at a rate equal to an applicable margin plus, at our option, either a base rate or LIBOR.
Increases in market interest rates would cause interest expense to increase and earnings before income taxes to decrease. The change in interest expense and earnings before income taxes would be
dependent upon the weighted average outstanding borrowings during the reporting period following an increase in market interest rates. We had no borrowings on our new revolving credit facility as of
March 30, 2006 and

60

---



had
$650,000,000 outstanding under the term loan facility, therefore, a 100 basis point increase in market interest rates would have increased or decreased interest expense on the new credit facility
by $1,104,000 during the fifty-two weeks ended March 30, 2006. Also included in long-term debt are $205,000,000 of our Floating Notes due 2010. A 1% fluctuation in
market interest rates would have increased or decreased interest expense on the Floating Notes due 2010 by $2,050,000 during the fifty-two weeks ended March 30, 2006

Market risk on fixed-rate financial instruments.Included in long-term debt are $325,000,000 of our
Notes due 2016, $212,811,000 of our Notes due 2011, $175,000,000 of our Notes due 2012, $300,000,000 of our Notes due 2014, $250,000,000 of our Fixed Notes due 2012 and $205,127,000 of our Discount
Notes due 2014. Increases in market interest rates would generally cause a decrease in the fair value of the Notes due 2016, Notes due 2011, Notes due 2012, Notes due 2014, Fixed Notes due 2012 and
Discount Notes due 2014 and a decrease in market interest rates would generally cause an increase in fair value of the Notes due 2016, Notes due 2011, Notes due 2012, Notes due 2014, Fixed Notes due
2012 and Discount Notes due 2014.

Foreign currency exchange rates.We currently operate theatres in Mexico, France, Portugal, Spain, the United Kingdom and
Canada. As a result of these operations, we have assets, liabilities, revenues and expenses denominated in foreign currencies. The strengthening of the U.S. dollar against the respective currencies
causes a decrease in the carrying values of assets, liabilities, revenues and expenses denominated in such foreign currencies and the weakening of the U.S. dollar against the respective currencies
causes an increase in the carrying values of these items. The increases and decreases in assets, liabilities, revenues and expenses are included in accumulated other comprehensive income. Changes in
foreign currency exchange rates also impact the comparability of earnings in these countries on a year-to-year basis. As the U.S. dollar strengthens, comparative translated
earnings decrease, and as the U.S. dollar weakens comparative translated earnings from foreign operations increase. Although we do not currently hedge against foreign currency exchange rate risk, we
do not intend to repatriate funds from the operations of our international theatres but instead intend to use them to fund current and future operations. A 10% fluctuation in the value of the U.S.
dollar against all foreign currencies of countries where we currently operate theatres would either increase or decrease loss before income taxes and accumulated other comprehensive income (loss) by
approximately $2.0 million and $42.7 million, respectively.

61

---





Item 8. Financial Statements and Supplementary Data

RESPONSIBILITY FOR PREPARATION OF FINANCIAL STATEMENTS
Marquee Holdings Inc.

TO THE STOCKHOLDERS OF MARQUEE HOLDINGS INC.

The
accompanying consolidated financial statements and related notes of Marquee Holdings Inc. and subsidiaries were prepared by management in conformity with accounting principles generally accepted
in the United States of America appropriate in the circumstances. In preparing the financial statements, management has made judgments and estimates based on currently available information.
Management is responsible for the information; representations contained elsewhere in this Annual Report are consistent with the financial statements.

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

The
Audit Committee of the Board of Directors (consisting solely of Directors not employed by the Company) reviews the process involved in the preparation of the Company's annual audited financial
statements, and in this regard meets (jointly and separately) with the independent registered public accounting firm, management and internal auditors to review matters relating to financial reporting
and accounting procedures and policies, the adequacy of internal controls and the scope and results of the audit performed by the independent registered public accounting firm.

GRAPHIC

Chairman
of the Board, Chief Executive Officer
and President

GRAPHIC

Executive
Vice President and
Chief Financial Officer

62

---



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF MARQUEE HOLDINGS INC.

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of stockholders' equity and of cash flows present fairly, in
all material respects, the financial position of Marquee Holdings Inc. and its subsidiary, (the "Successor"), at March 30, 2006 and March 31, 2005, and the results of their operations
and their cash flows for the year ended March 30, 2006 and for the period from July 16, 2004 (date of inception) through March 31, 2005, in conformity
with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Successor's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/
PricewaterhouseCoopers LLP

Kansas
City, Missouri
June 27, 2006

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF MARQUEE HOLDINGS INC.

In
our opinion, the accompanying consolidated statements of operations, of stockholders' equity and of cash flows present fairly, in all material respects, the results of operations and of cash flows
of AMC Entertainment Inc. and its subsidiaries (the "Predecessor") for the period from April 2, 2004 through December 23, 2004 and for the fiscal year in the period ended
April 1, 2004, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Predecessor's management.
Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/
PricewaterhouseCoopers LLP

Kansas
City, Missouri
June 21, 2005, except for Note 3, as to which the date is October 21, 2005

63

---



Marquee Holdings Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS

|(In thousands)                                                          |                                       | 52 Weeks Ended
March 30, 2006           |          | From Inception July 16, 2004 through March 31, 2005 |           | April 2, 2004 through December 23, 2004 |         | 52 Weeks Ended April 1, 2004 |         
|----------------------------------------------------------------------- | ------------------------------------- | --------------------------------------- | -------- | --------------------------------------------------- | --------- | --------------------------------------- | ------- | ---------------------------- | --------
|
|Revenues                                                                |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|                                                                        | Admissions                            |                                         | $        | 1,169,226                                           |           | $                                       | 306,942 |                              | $       
|                                                                        | Concessions                           |                                         |          | 466,679                                             |           |                                         | 120,566 |                              |         
|                                                                        | Other theatre                         |                                         |          | 94,545                                              |           |                                         | 25,392  |                              |         
|                                                                        |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|                                                                        |                                       | Total revenues                          |          |                                                     | 1,730,450 |                                         |         | 452,900                      |         
|                                                                        |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|Costs and Expenses                                                      |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|                                                                        | Film exhibition costs                 |                                         |          | 610,600                                             |           |                                         | 157,339 |                              |         
|                                                                        | Concession costs                      |                                         |          | 52,584                                              |           |                                         | 13,348  |                              |         
|                                                                        | Operating expense                     |                                         |          | 462,185                                             |           |                                         | 119,070 |                              |         
|                                                                        | Rent                                  |                                         |          | 341,301                                             |           |                                         | 83,904  |                              |         
|                                                                        | General and administrative:           |                                         |          |                                                     |           |                                         |         |                              |         
|                                                                        |                                       | Merger and acquisition costs            |          |                                                     | 12,523    |                                         |         | 22,286                       |         
|                                                                        |                                       | Management fee                          |          |                                                     | 2,000     |                                         |         | 500                          |         
|                                                                        |                                       | Other                                   |          |                                                     | 38,308    |                                         |         | 14,731                       |         
|                                                                        | Preopening expense                    |                                         |          | 6,607                                               |           |                                         | 39      |                              |         
|                                                                        | Theatre and other closure expense     |                                         |          | 601                                                 |           |                                         | 1,267   |                              |         
|                                                                        | Restructuring charges                 |                                         |          | 3,980                                               |           |                                         | 4,926   |                              |         
|                                                                        | Depreciation and amortization         |                                         |          | 168,821                                             |           |                                         | 45,263  |                              |         
|                                                                        | Impairment of long-lived assets       |                                         |          | 11,974                                              |           |                                         |        |                              |         
|                                                                        | Disposition of assets and other gains |                                         |          | (997                                                | )         |                                         | (302    | )                            |         
|                                                                        |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|                                                                        |                                       | Total costs and expenses                |          |                                                     | 1,710,487 |                                         |         | 462,371                      |         
|                                                                        |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|Other expense (income)                                                  |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|                                                                        | Other expense (income)                |                                         |          | (11,712                                             | )         |                                         | (6,778  | )                            |         
|                                                                        | Interest expense                      |                                         |          |                                                     |           |                                         |         |                              |         
|                                                                        |                                       | Corporate borrowings                    |          |                                                     | 139,042   |                                         |         | 52,502                       |         
|                                                                        |                                       | Capital and financing lease obligations |          |                                                     | 5,946     |                                         |         | 2,047                        |         
|                                                                        | Investment expense (income)           |                                         |          | 4,393                                               |           |                                         | (3,351  | )                            |         
|                                                                        |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|Total other expense                                                     |                                       |                                         | 137,669  |                                                     |           | 44,420                                  |         |                              | 67,783  
|                                                                        |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|Earnings (loss) from continuing operations before income taxes          |                                       |                                         | (117,706 | )                                                   |           | (53,891                                 | )       |                              | (20,347 
|Income tax provision (benefit)                                          |                                       |                                         | 72,100   |                                                     |           | (9,200                                  | )       |                              | 15,000  
|                                                                        |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|Loss from continuing operations                                         |                                       |                                         | (189,806 | )                                                   |           | (44,691                                 | )       |                              | (35,347 
|Earnings (loss) from discontinued operations, net of income tax benefit |                                       |                                         | (22,409  | )                                                   |           | 301                                     |         |                              | (531    
|                                                                        |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|Net loss                                                                |                                       | $                                       | (212,215 | )                                                   | $         | (44,390                                 | )       | $                            | (35,878 
|                                                                        |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|Preferred dividends                                                     |                                       |                                         |         |                                                     |           |                                        |         |                              | 104,300 
|                                                                        |                                       |                                         |          |                                                     |           |                                         |         |                              |         
|Loss for shares of common stock                                         |                                       | $                                       | (212,215 | )                                                   | $         | (44,390                                 | )       | $                            | (140,178
|                                                                        |                                       |                                         |          |                                                     |           |                                         |         |                              |         

See Notes to Consolidated Financial Statements.

64

---



Marquee Holdings Inc.
CONSOLIDATED BALANCE SHEETS

|(In thousands, except share data)                                                                                            |                                                                                                                                                                                      | March 30, 2006 |                                            | March 31, 2005 |  
|---------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------- | ------------------------------------------ | -------------- | -
|
|Assets                                                                                                                       |                                                                                                                                                                                      |                |                                            |                |  
|Current assets:                                                                                                              |                                                                                                                                                                                      |                |                                            |                |  
|Cash and equivalents                                                                                                         |                                                                                                                                                                                      | $              | 232,366                                    |                | $
|Receivables, net of allowance for doubtful accounts of $1,339 and $862 as of March 30, 2006 and March 31, 2005, respectively |                                                                                                                                                                                      |                | 54,725                                     |                |  
|Other current assets                                                                                                         |                                                                                                                                                                                      |                | 34,647                                     |                |  
|Current assets held for sale                                                                                                 |                                                                                                                                                                                      |                | 4,726                                      |                |  
|                                                                                                                             |                                                                                                                                                                                      |                |                                            |                |  
|                                                                                                                             |                                                                                                                                                                                      |                | Total current assets                       |                |  
|Property, net                                                                                                                |                                                                                                                                                                                      |                | 1,501,048                                  |                |  
|Intangible assets, net                                                                                                       |                                                                                                                                                                                      |                | 273,308                                    |                |  
|Goodwill                                                                                                                     |                                                                                                                                                                                      |                | 2,018,318                                  |                |  
|Deferred income taxes                                                                                                        |                                                                                                                                                                                      |                | 3,564                                      |                |  
|Other long-term assets                                                                                                       |                                                                                                                                                                                      |                | 172,312                                    |                |  
|Non-current assets held for sale                                                                                             |                                                                                                                                                                                      |                | 112,337                                    |                |  
|                                                                                                                             |                                                                                                                                                                                      |                |                                            |                |  
|                                                                                                                             |                                                                                                                                                                                      |                | Total assets                               |                | $
|                                                                                                                             |                                                                                                                                                                                      |                |                                            |                |  
|Liabilities and Stockholders' Equity                                                                                         |                                                                                                                                                                                      |                |                                            |                |  
|Current liabilities:                                                                                                         |                                                                                                                                                                                      |                |                                            |                |  
|                                                                                                                             | Accounts payable                                                                                                                                                                     |                | $                                          | 150,383        |  
|                                                                                                                             | Accrued expenses and other liabilities                                                                                                                                               |                |                                            | 157,227        |  
|                                                                                                                             | Deferred revenues and income                                                                                                                                                         |                |                                            | 95,812         |  
|                                                                                                                             | Current maturities of corporate borrowings and capital and financing lease obligations                                                                                               |                |                                            | 30,804         |  
|                                                                                                                             | Current liabilities held for sale                                                                                                                                                    |                |                                            | 8,233          |  
|                                                                                                                             |                                                                                                                                                                                      |                |                                            |                |  
|                                                                                                                             |                                                                                                                                                                                      |                | Total current liabilities                  |                |  
|Corporate borrowings                                                                                                         |                                                                                                                                                                                      |                | 2,428,996                                  |                |  
|Capital and financing lease obligations                                                                                      |                                                                                                                                                                                      |                | 64,016                                     |                |  
|Other long-term liabilities                                                                                                  |                                                                                                                                                                                      |                | 419,474                                    |                |  
|Non-current liabilities held for sale                                                                                        |                                                                                                                                                                                      |                | 11,903                                     |                |  
|                                                                                                                             |                                                                                                                                                                                      |                |                                            |                |  
|                                                                                                                             |                                                                                                                                                                                      |                | Total liabilities                          |                |  
|                                                                                                                             |                                                                                                                                                                                      |                |                                            |                |  
|Commitments and contingencies                                                                                                |                                                                                                                                                                                      |                |                                            |                |  
|Stockholders' equity:                                                                                                        |                                                                                                                                                                                      |                |                                            |                |  
|                                                                                                                             | Common Stock ($.01 par value, 7,000,000 shares authorized; 0 and 769,350 shares issued and outstanding as of March 30, 2006 and March 31, 2005, respectively)                        |                |                                            |               |  
|                                                                                                                             | Class A-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00000 and 0 shares issued and outstanding as of March 30, 2006 and March 31, 2005, respectively) |                |                                            | 4              |  
|                                                                                                                             | Class A-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00000 and 0 shares issued and outstanding as of March 30, 2006 and March 31, 2005, respectively) |                |                                            | 4              |  
|                                                                                                                             | Class N Common Stock nonvoting ($.01 par value, 375,000 shares authorized; 5,128.77496 and 0 shares issued and outstanding as of March 30, 2006 and March 31, 2005, respectively)    |                |                                            |               |  
|                                                                                                                             | Class L-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61252 and 0 shares issued and outstanding as of March 30, 2006 and March 31, 2005, respectively) |                |                                            | 3              |  
|                                                                                                                             | Class L-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61252 and 0 shares issued and outstanding as of March 30, 2006 and March 31, 2005, respectively) |                |                                            | 3              |  
|                                                                                                                             | Additional paid-in capital                                                                                                                                                           |                |                                            | 1,307,752      |  
|                                                                                                                             | Accumulated other comprehensive income (loss)                                                                                                                                        |                |                                            | (10,658        | )
|                                                                                                                             | Accumulated deficit                                                                                                                                                                  |                |                                            | (256,605       | )
|                                                                                                                             |                                                                                                                                                                                      |                |                                            |                |  
|                                                                                                                             |                                                                                                                                                                                      |                | Total stockholders' equity                 |                |  
|                                                                                                                             |                                                                                                                                                                                      |                |                                            |                |  
|                                                                                                                             |                                                                                                                                                                                      |                | Total liabilities and stockholders' equity |                | $
|                                                                                                                             |                                                                                                                                                                                      |                |                                            |                |  

See Notes to Consolidated Financial Statements.

65

---



Marquee Holdings Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS

|(In thousands)                                           |                                                                                                                                                                             | 52 Weeks Ended March 30, 2006          |         | From Inception July 16, 2004 through March 31, 2005 |         | April 2, 2004 through December 23, 2004 |            | 52 Weeks Ended April 1, 2004 |        
|-------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------- | ------- | --------------------------------------------------- | ------- | --------------------------------------- | ---------- | ---------------------------- | -------
|
|INCREASE (DECREASE) IN CASH AND EQUIVALENTS              |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|Cash flows from operating activities:                    |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|                                                         | Net loss                                                                                                                                                                    |                                        | $       | (212,215                                            | )       | $                                       | (44,390    | )                            | $      
|                                                         | Adjustments to reconcile net loss to net cash provided by operating activities:                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|                                                         | Depreciation and amortization                                                                                                                                               |                                        |         | 169,527                                             |         |                                         | 46,084     |                              |        
|                                                         | Amortization of discount on corporate borrowings                                                                                                                            |                                        |         | 20,190                                              |         |                                         | 12,043     |                              |        
|                                                         | Non-cash portion of stock-based compensation                                                                                                                                |                                        |         | 1,319                                               |         |                                         | 1,201      |                              |        
|                                                         | Non-cash portion of pension and postretirement expense                                                                                                                      |                                        |         | 4,706                                               |         |                                         | 1,815      |                              |        
|                                                         | Impairment of long-lived assets                                                                                                                                             |                                        |         | 11,974                                              |         |                                         |           |                              |        
|                                                         | Deferred income taxes                                                                                                                                                       |                                        |         | 90,640                                              |         |                                         | (7,582     | )                            |        
|                                                         | Equity in (earnings) loss from investments                                                                                                                                  |                                        |         | 7,807                                               |         |                                         |           |                              |        
|                                                         | Disposition of assets and other gains                                                                                                                                       |                                        |         |                                                    |         |                                         | (2         | )                            |        
|                                                         | Loss on salediscontinued operations                                                                                                                                        |                                        |         |                                                    |         |                                         |           |                              |        
|                                                         | Loss on repurchase of Notes due 2009 and 2011                                                                                                                               |                                        |         |                                                    |         |                                         |           |                              |        
|                                                         | Change in assets and liabilities, net of effects from acquisitions:                                                                                                         |                                        |         |                                                     |         |                                         |            |                              |        
|                                                         |                                                                                                                                                                             | Receivables                            |         |                                                     | 9,797   |                                         |            | 14,152                       |        
|                                                         |                                                                                                                                                                             | Other assets                           |         |                                                     | 31,053  |                                         |            | (23,758                      | )      
|                                                         |                                                                                                                                                                             | Accounts payable                       |         |                                                     | (46,035 | )                                       |            | 6,785                        |        
|                                                         |                                                                                                                                                                             | Accrued expenses and other liabilities |         |                                                     | (63,139 | )                                       |            | (52,320                      | )      
|                                                         | Other, net                                                                                                                                                                  |                                        |         | 70                                                  |         |                                         | 608        |                              |        
|                                                         |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|                                                         | Net cash provided by (used in) operating activities                                                                                                                         |                                        |         | 25,694                                              |         |                                         | (45,364    | )                            |        
|                                                         |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|Cash flows from investing activities:                    |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|                                                         | Capital expenditures                                                                                                                                                        |                                        |         | (117,668                                            | )       |                                         | (18,622    | )                            |        
|                                                         | Proceeds from sale/leasebacks                                                                                                                                               |                                        |         | 35,010                                              |         |                                         | 50,910     |                              |        
|                                                         | Net change in reimbursable construction advances                                                                                                                            |                                        |         | (1,252                                              | )       |                                         |           |                              |        
|                                                         | Increase in restricted cash                                                                                                                                                 |                                        |         |                                                    |         |                                         | (627,338   | )                            |        
|                                                         | Release of restricted cash                                                                                                                                                  |                                        |         |                                                    |         |                                         | 627,338    |                              |        
|                                                         | Acquisition of Loews, net of cash acquired                                                                                                                                  |                                        |         | 142,512                                             |         |                                         |           |                              |        
|                                                         | Acquisition of AMCE, net of cash acquired                                                                                                                                   |                                        |         |                                                    |         |                                         | (1,268,564 | )                            |        
|                                                         | Acquisition of MegaStar Cinemas, L.L.C., net of cash acquired                                                                                                               |                                        |         |                                                    |         |                                         |           |                              |        
|                                                         | Acquisition of GC Companies, Inc., net of cash acquired and proceeds from sale of venture capital investments                                                               |                                        |         |                                                    |         |                                         |           |                              |        
|                                                         | Purchase of leased furniture, fixtures and equipment                                                                                                                        |                                        |         |                                                    |         |                                         | (25,292    | )                            |        
|                                                         | Proceeds (payments) on disposaldiscontinued operations                                                                                                                     |                                        |         | 53,456                                              |         |                                         |           |                              |        
|                                                         | Proceeds from disposition of long-term assets                                                                                                                               |                                        |         | 3,032                                               |         |                                         | 173        |                              |        
|                                                         | Other, net                                                                                                                                                                  |                                        |         | (7,552                                              | )       |                                         | 1,094      |                              |        
|                                                         |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|                                                         | Net cash provided by (used in) investing activities                                                                                                                         |                                        |         | 107,538                                             |         |                                         | (1,260,301 | )                            |        
|                                                         |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|Cash flows from financing activities:                    |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|                                                         | Proceeds from issuance of 11% Senior Subordinated Notes due 2016                                                                                                            |                                        |         | 325,000                                             |         |                                         |           |                              |        
|                                                         | Proceeds from issuance of Senior Secured Credit Facility                                                                                                                    |                                        |         | 650,000                                             |         |                                         |           |                              |        
|                                                         | Proceeds from issuance of 8% Senior Subordinated Notes due 2014                                                                                                             |                                        |         |                                                    |         |                                         |           |                              |        
|                                                         | Repayment of LCE credit facility                                                                                                                                            |                                        |         | (620,425                                            | )       |                                         |           |                              |        
|                                                         | Repurchase of LCE 9% Senior Subordinated Notes due 2014                                                                                                                     |                                        |         | (318,938                                            | )       |                                         |           |                              |        
|                                                         | Repurchase of Notes due 2009 and 2011                                                                                                                                       |                                        |         |                                                    |         |                                         | (1,663     | )                            |        
|                                                         | Borrowing under Cinemex credit facility                                                                                                                                     |                                        |         | 6,000                                               |         |                                         |           |                              |        
|                                                         | Proceeds from issuance of Common Stock                                                                                                                                      |                                        |         |                                                    |         |                                         | 769,350    |                              |        
|                                                         | Proceeds from issuance of 85/8% senior unsecured fixed rate notes due 2012                                                                                                  |                                        |         |                                                    |         |                                         | 250,000    |                              |        
|                                                         | Proceeds from issuance of senior unsecured floating rate notes due 2010                                                                                                     |                                        |         |                                                    |         |                                         | 205,000    |                              |        
|                                                         | Proceeds from issuance of 12% senior discount notes due 2014                                                                                                                |                                        |         |                                                    |         |                                         | 169,918    |                              |        
|                                                         | Proceeds from financing lease obligations                                                                                                                                   |                                        |         | 6,661                                               |         |                                         |           |                              |        
|                                                         | Principal payments under capital and financing lease obligations                                                                                                            |                                        |         | (3,163                                              | )       |                                         | (856       | )                            |        
|                                                         | Principal payments under mortgage obligations                                                                                                                               |                                        |         | (10                                                 | )       |                                         |           |                              |        
|                                                         | Deferred financing costs                                                                                                                                                    |                                        |         | (24,895                                             | )       |                                         | (19,733    | )                            |        
|                                                         | Change in construction payables                                                                                                                                             |                                        |         | 1,204                                               |         |                                         | 4,747      |                              |        
|                                                         | Cash portion of preferred dividends                                                                                                                                         |                                        |         |                                                    |         |                                         |           |                              |        
|                                                         | Proceeds from exercise of stock options                                                                                                                                     |                                        |         |                                                    |         |                                         |           |                              |        
|                                                         | Treasury stock purchases and other                                                                                                                                          |                                        |         |                                                    |         |                                         |           |                              |        
|                                                         |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|                                                         | Net cash provided by (used in) financing activities                                                                                                                         |                                        |         | 21,434                                              |         |                                         | 1,376,763  |                              |        
|                                                         | Effect of exchange rate changes on cash and equivalents                                                                                                                     |                                        |         | 4,755                                               |         |                                         | 1,847      |                              |        
|                                                         |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|Net increase in cash and equivalents                     |                                                                                                                                                                             |                                        | 159,421 |                                                     |         | 72,945                                  |            |                              | 63,388 
|Cash and equivalents at beginning of year                |                                                                                                                                                                             |                                        | 72,945  |                                                     |         |                                        |            |                              | 333,248
|                                                         |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|Cash and equivalents at end of year                      |                                                                                                                                                                             | $                                      | 232,366 |                                                     | $       | 72,945                                  |            | $                            | 396,636
|                                                         |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:       |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|Cash paid (refunded) during the period for:              |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|                                                         | Interest (including amounts capitalized of $2,239, $203, $658 and $2,658 during successor periods 2006 and 2005 and predecessor periods 2005 and fiscal 2004, respectively) |                                        | $       | 115,753                                             |         | $                                       | 47,788     |                              | $      
|                                                         | Income taxes, net                                                                                                                                                           |                                        |         | (4,488                                              | )       |                                         | 838        |                              |        
|Schedule of non-cash investing and financing activities: |                                                                                                                                                                             |                                        |         |                                                     |         |                                         |            |                              |        
|                                                         | Assets capitalized under EITF 97-10                                                                                                                                         |                                        | $       |                                                    |         | $                                       | 4,941      |                              | $      
|                                                         | Preferred dividends                                                                                                                                                         |                                        |         |                                                    |         |                                         |           |                              |        

Refer to Note 2Acquisitions for discussion of non-cash activities related to acquisitions.

See Notes to Consolidated Financial Statements.

66

---



Marquee Holdings Inc.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

|                                                                      
|----------------------------------------------------------------------
|
|
|
|
|
|Successor from Inception on July 16, 2004 through March 30, 2006      
|Balance, July 16, 2004                                                
|Comprehensive loss:                                                   
|Net loss                                                              
|Foreign currency translation
    adjustment                           
|Unrealized loss on marketable securities                              
|Comprehensive loss                                                    
|Stock-based compensationoptions                                      
|Issuance of Common Stock                                              
|                                                                      
|Balance, March 31, 2005                                               
|Comprehensive loss:                                                   
|Net loss                                                              
|Foreign currency translation
    adjustment                           
|Additional minimum pension liability                                  
|Unrealized gain on Cinemex swap agreements                            
|Unrealized loss on marketable securities                              
|Comprehensive loss                                                    
|Stock-based compensation-options                                      
|Issuance of Common Stock for Merger                                   
|                                                                      
|Balance, March 30, 2006                                               
|                                                                      
|Predecessor from April 3, 2003 through December 23, 2004              
|Balance, April 3, 2003                                                
|Comprehensive loss:                                                   
|Net loss                                                              
|Foreign currency translation adjustment                               
|Additional minimum pension liability                                  
|Unrealized gain on marketable securities                              
|Comprehensive loss                                                    
|Preferred Stock for dividends                                         
|Preferred Stock dividends                                             
|Preferred Stock accretion                                             
|Stock awards, options exercised and other (net of tax benefit of $664)
|Deferred compensation  restricted stock awards                       
|Unissued restricted stock awards                                      
|Treasury stock purchase                                               
|                                                                      
|Balance, April 1, 2004                                                
|Comprehensive loss:                                                   
|Net loss                                                              
|Foreign currency translation adjustment                               
|Unrealized gain on marketable securities                              
|Comprehensive loss                                                    
|Preferred Stock for dividends                                         
|Preferred Stock dividends                                             
|Preferred Stock accretion                                             
|Stock awards, options exercised and other (net of tax benefit of $20) 
|Deferred stock units and awards                                       
|Stock issued in connection with acquisition of GC                     
|Treasury stock purchase                                               
|Elimination of Predecessor Company stockholders' equity               
|                                                                      
|Balance, December 23, 2004                                            
|                                                                      
|See Notes to Consolidated Financial Statements.                       

67

---



|                                                                       | 
|---------------------------------------------------------------------- | 
|
|
|
|
|Successor from Inception on July 16, 2004 through March 30, 2006       | 
|Balance, July 16, 2004                                                 | 
|Comprehensive loss:                                                    | 
|Net loss                                                               | 
|Foreign currency translation
    adjustment                            | 
|Unrealized loss on marketable securities                               | 
|Comprehensive loss                                                     | 
|Stock-based compensationoptions                                       | 
|Issuance of Common Stock                                               | 
|                                                                       | 
|Balance, March 31, 2005                                                | 
|Comprehensive loss:                                                    | 
|Net loss                                                               | 
|Foreign currency translation
    adjustment                            | 
|Additional minimum pension liability                                   | 
|Unrealized gain on Cinemex swap agreements                             | 
|Unrealized loss on marketable securities                               | 
|Comprehensive loss                                                     | 
|Stock-based compensation-options                                       | 
|Issuance of Common Stock for Merger                                    | 
|                                                                       | 
|Balance, March 30, 2006                                                | 
|                                                                       | 
|Predecessor from April 3, 2003 through December 23, 2004               | 
|Balance, April 3, 2003                                                 | 
|Comprehensive loss:                                                    | 
|Net loss                                                               | 
|Foreign currency translation adjustment                                | 
|Additional minimum pension liability                                   | 
|Unrealized gain on marketable securities                               | 
|Comprehensive loss                                                     | 
|Preferred Stock for dividends                                          | 
|Preferred Stock dividends                                              | 
|Preferred Stock accretion                                              | 
|Stock awards, options exercised and other (net of tax benefit of $664) | 
|Deferred compensation  restricted stock awards                        | 
|Unissued restricted stock awards                                       | 
|Treasury stock purchase                                                | 
|                                                                       | 
|Balance, April 1, 2004                                                 | 
|Comprehensive loss:                                                    | 
|Net loss                                                               | 
|Foreign currency translation adjustment                                | 
|Unrealized gain on marketable securities                               | 
|Comprehensive loss                                                     | 
|Preferred Stock for dividends                                          | 
|Preferred Stock dividends                                              | 
|Preferred Stock accretion                                              | 
|Stock awards, options exercised and other (net of tax benefit of $20)  | 
|Deferred stock units and awards                                        | 
|Stock issued in connection with acquisition of GC                      | 
|Treasury stock purchase                                                | 
|Elimination of Predecessor Company stockholders' equity                | 
|                                                                       | 
|Balance, December 23, 2004                                             | 
|                                                                       | 
|See Notes to Consolidated Financial Statements.                        | 

68

---



Marquee Holdings Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years Ended March 30, 2006, March 31, 2005 and April 1, 2004

NOTE 1THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES

Marquee Holdings Inc. ("Holdings") is an investment vehicle owned by J.P. Morgan Partners, LLC Apollo Management, L.P. and certain related investment funds
and affiliates of Bain Capital Partners, The Carlyle Group and Spectrum Equity Investors. Holdings was formed for the purpose of acquiring AMC Entertainment Inc. ("AMCE") pursuant to a definitive
merger agreement approved by AMCE's Board of Directors on July 22, 2004. Holdings is a holding company with no operations of its own and it has one direct subsidiary, AMCE.

AMCE,
through its direct and indirect subsidiaries, including American Multi-Cinema, Inc. ("AMC") and its subsidiaries' Grupo Cinemex, S.A. de C.V. ("Cinemex") and AMC
Entertainment International, Inc. ("AMCEI") and its subsidiaries (collectively with Holdings and AMCE, unless the context otherwise requires, the "Company"), is principally involved in the
theatrical exhibition business and owns, operates or has interests in theatres located in the United States and Canada ("U.S. and Canada" formerly, North American theatrical exhibition) and in Mexico,
Argentina, Brazil, Chile, Uruguay, China (Hong Kong), France, Spain and the United Kingdom. The Company discontinued its operations in Japan during the first quarter of fiscal 2006. The Company's U.S.
and Canada theatrical exhibition business is conducted through AMC and AMCEI. The Company's International theatrical exhibition business is conducted primarily through Cinemex and AMCEI. See
Note 2 for a discussion of the Merger with Loews on January 26, 2006.

The
Company completed a merger on December 23, 2004 in which Holdings' subsidiary, Marquee Inc. ("Marquee") acquired the Company. See Note 2Acquisitions for
additional information regarding this merger. Holdings is a company formed on July 16, 2004. On December 23, 2004, pursuant to a merger agreement, Marquee merged with AMCE (the
"Predecessor"). Upon the consummation of the merger between Marquee and AMCE on December 23, 2004, Marquee merged with and into AMCE, with AMCE and Holdings as the surviving reporting entities
(collectively the "Successor"). The merger with Marquee was treated as a purchase with Marquee being the "accounting acquirer" in accordance with Statement of Financial Accounting Standards
No. 141Business Combinations. As a
result, the Successor applied the purchase method of accounting to the separable assets, including goodwill, and liabilities of the accounting acquiree and Predecessor, AMCE, as of December 23,
2004, the merger date. The consolidated balance sheets presented herein are those of the Successor and the consolidated statements of operations and cash flows presented herein are those of the
Successor for the fifty-two weeks ended March 30, 2006 and the period from inception July 16, 2004 through March 31, 2005 and those of its Predecessor, AMCE for the
period April 2, 2004 through December 23, 2004 and the fifty-two weeks ended April 1, 2004.

In
association with the merger transaction discussed above, two merger entities were formed on July 16, 2004, Marquee and Holdings. To finance the merger and related transactions,
on August 18, 2004, (i) Marquee issued $250,000,000 aggregate principal amount of 85/8% senior unsecured fixed rate Notes due 2012 ("Fixed Notes due 2012") and
$205,000,000 aggregate principal amount of senior unsecured floating rate Notes due 2010 ("Floating Notes due 2010") and (ii) Holdings issued $304,000,000 aggregate principal amount at maturity
of its 12% senior discount Notes due 2014 ("Discount Notes due 2014") for gross proceeds of $169,917,760. The only operations of Marquee and Holdings prior to the merger with Marquee were related to
these financings. Because AMCE was the primary beneficiary of the two merger entities, which were considered variable interest entities as defined in FIN 46 (R),Consolidation
of Variable Interest Entities, an Interpretation of ARB No. 51, AMCE was required to consolidate the merger entities' operations and financial position into AMCE's
financial statements as of and through the period ended December 23, 2004. Upon consummation of the merger, Marquee was merged with and into AMCE and the letters of credit which gave rise to
consolidation of the entities under FIN 46 were cancelled. As such,

69

---



Marquee's
operations and financial position are included within AMCE's Consolidated Financial Statements and Holding's results of operations are included within the Predecessor Company's Consolidated
Financial Statements from its inception on July 16, 2004 through December 23, 2004. Subsequent to December 23, 2004 AMCE deconsolidated Holding's assets and liabilities.

The
results of operations of Holdings included within the Predecessor Company's Consolidated Statements of Operations for the period from April 2, 2004 through December 23,
2004 include interest expense of $7,135,000 and interest income of $831,000.

Holdings
has no ability to service interest or principal on the Discount Notes due 2014 other than through any dividends it may receive from the AMCE. AMCE is restricted, in certain
circumstances, from paying dividends to Holdings by the terms of the indentures governing the Fixed Notes due 2012, the Floating Notes due 2010 and the Existing Subordinated Notes and the amended
credit facility. AMCE has not guaranteed the indebtedness of Holdings nor pledged any of its assets as collateral.

Discontinued Operations:The results of operations for the Company's discontinued operations have
been eliminated from the Company's continuing operations and classified as discontinued operations for each period presented within the Company's Consolidated Statements of Operations. See
Note 3Discontinued Operations.

Assets held for Sale:In conjunction with the Merger (see Note 2), the Company entered into a
Final Judgment with the Antitrust Division of the United States Department of Justice and judgments and consent decrees with various States. These judgments and decrees require the Company to hold
separate and divest itself of certain theatres. As a result, the Company has classified the assets and liabilities of these theatres asheld for sale.The Company expects to divest certain of these theatres in the first fiscal quarter of 2007.

Additionally,
the Company entered into an agreement to sell its consolidated operations in Spain and Portugal and as a result, the Company has classified the assets and liabilities of
these theatres asheld for sale.These sales were subsequently consummated on May 11, 2006.

Use of Estimates:The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Principles of Consolidation:The consolidated financial statements include the accounts of Holdings
and all subsidiaries and the Predecessor accounts include the results of operations of Holdings and Marquee from their inception on July 16, 2004 through December 23, 2004 due to
consolidation under FIN 46 (R), as discussed above. All significant intercompany balances and transactions have been eliminated.

Fiscal Year:The Company has a 52/53 week fiscal year ending on the Thursday closest to the last day
of March. Fiscal 2006, 2005 and 2004 reflect 52 week periods.

Revenues:Revenues are recognized when admissions and concessions sales are received at the theatres.
The Company defers 100% of the revenue associated with the sales of stored value cards, discounted theatre tickets and gift certificates (no revenue or income recognition for
non-presentment) until such time as the items are redeemed or the gift certificate liabilities are extinguished or management believes future redemption of stored value cards to be remote
or the discounted theatre tickets expire. The Company recognizes revenues related to on-screen advertising over the period that the related advertising is delivered on-screen
or in-theatre pursuant to the specific terms of its agreements with advertisers. During the Successor periods ended March 30, 2006 and March 31, 2005, the Company recognized

70

---



$8,699,000
and $6,745,000 of income related to the derecognition of stored value card liabilities where management believes future redemption to be remote which was recorded in other expense (income)
in the Consolidated Statements of Operations.

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

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

NCN and Other:The Company recognizes revenues related to on-screen advertising over the
period the related advertising is delivered on-screen or in-theatre pursuant to the specific terms of its agreements with advertisers. Its on-screen advertising
subsidiary (NCN) operates its advertising program through agreements with other theatre circuits. These circuit agreements stipulate the amount of circuit payments a theatre will receive for running
on-screen slides, on-film programs and other related in-theatre products and services. The Company's circuit agreements have terms of 1 to 5 years, with an
annual cancellation provision included in select agreements. Certain circuits have agreements requiring an annual minimum exhibitor share payment. The Company recognizes the minimum exhibitor share
payments as an expense on a straight-line basis over the terms of the agreements and any excess minimum exhibitor share payments are recognized when earned.

On
March 29, 2005, the Company and Regal Entertainment Group combined their respective cinema screen advertising businesses into a new joint venture company called National
CineMedia, LLC ("NCM"). The company engages in the marketing and sale of cinema advertising and promotions products; business communications and training services; and the distribution of digital
alternative content. The Company records its share of on-screen advertising revenues generated by NCN and NCM in other theatre revenues. The Company contributed fixed assets, exhibitor agreements and
goodwill (recorded in connection with the merger with Marquee) of its cinema screen advertising subsidiary NCN to NCM. Additionally, the Company paid termination benefits related to the displacement
of certain NCN associates. In consideration of the NCN contributions described above, NCM, issued a 37% interest in its Class A units to NCN. Since that date, NCN's interest in NCM has declined
to 29% due to the entry of new investors.

Loyalty Program:The Company records the estimated incremental cost of providing free concession
items for awards under itsMoviewatcherloyalty program when the awards are earned. Historically, the costs of these awards have not been significant.

Cash and Equivalents:Cash and equivalents consist of cash on hand and temporary cash investments
with original maturities of three months or less. The Company invests excess cash in deposits with major banks and in temporary cash investments. Such investments are made only in instruments issued
or enhanced by high quality financial institutions (investment grade or better). Amounts invested in a single institution are limited to minimize risk.

Under
the Company's cash management system, checks issued but not presented to banks frequently result in overdraft balances for accounting purposes and are classified within accounts
payable in the

71

---



balance
sheet. The amount of these checks included in accounts payable as of March 30, 2006 and March 31, 2005 was $13,829,000 and $35,320,000, respectively.

Property:Property is recorded at cost or fair value, in the case of property resulting from the
acquisitions. The Company uses the straight-line method in computing depreciation and amortization for financial reporting purposes and accelerated methods, with respect to certain assets,
for income tax purposes. The estimated useful lives for leasehold improvements reflect the shorter of the base terms of the corresponding lease agreements or the useful lives of the assets. The
estimated useful lives are as follows:

Buildings and improvements

5 to 40 yearsLeasehold improvements

1 to 20 yearsFurniture, fixtures and equipment

1 to 10 years


Expenditures
for additions (including interest during construction), major renewals and betterments are capitalized, and expenditures for maintenance and repairs are charged to expense
as incurred. The cost of assets retired or otherwise disposed of and the related accumulated depreciation and amortization are eliminated from the accounts in the year of disposal. Gains or losses
resulting from property disposals are credited or charged to operations.

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

Investments:The Company accounts for its investments in non-consolidated entities using
the cost and equity methods of accounting, has recorded the investments within other long-term assets in its consolidated balance sheets and records equity in earnings or losses of these
entities accounted for following the equity method of accounting within investment income in its consolidated statements of operations. As of March 30, 2006, the Company holds a 50% interest in
Hoyts General Cinemas South America ("HGCSA") a partnership that operates 18 theatres in South America; a 29% interest in NCM, a joint venture that markets and sells cinema advertising and promotions;
a 27% interest in Movietickets.com, a joint venture that provides moviegoers with a convenient way to buy movie tickets online, access local showtime information, view trailers and read reviews; a 50%
interest in Yelmo Cineplex, a joint venture that operates 27 theatres in Spain; and a 50% interest in three theatres that are accounted for following the equity method of accounting. The Company's
recorded investments exceed its proportional ownership of the underlying equity in these entities by approximately $33,806,000. These differences will be amortized to equity in earnings or losses over
the estimated useful lives of the related assets (1-5 years) or evaluated for impairment. There was no impairment of the Company's investments as of March 30, 2006. As of
March 30, 2006 the Company holds a 9% interest in Fandango, a joint venture that provides moviegoers
with a convenient way to buy movie tickets online, access local showtime information, view trailers and read reviews that is accounted for following the cost method of accounting.

Acquisitions:The Company accounts for its acquisitions of theatrical exhibition businesses using the
purchase method. The purchase method requires that the Company estimate the fair value of the

72

---



individual
assets and liabilities acquired as well as various forms of consideration given including cash, common stock, senior subordinated notes and bankruptcy related claims. The allocation of
purchase price is based on management's judgment after evaluating several factors, including actuarial estimates for pension liabilities, market prices of its indebtedness and valuation assessments
prepared by a valuation specialist.

Goodwill:Goodwill represents the excess of cost over fair value of net tangible and identifiable
intangible assets related to acquisitions. The Company is not required to amortize goodwill as a charge to earnings; however, the Company is required to conduct an annual review of goodwill for
impairment.

The
Company's recorded goodwill was $2,018,318,000 as of March 30, 2006 and $1,401,740,000 as of March 31, 2005. The Company evaluates goodwill for impairment as of the end
of the fourth fiscal quarter and any time an event occurs or circumstances change that would reduce the fair value for a reporting unit below its carrying amount. The Company's goodwill is recorded in
its U.S. and Canada theatrical exhibition operating segment, in Cinemex and in our Spain and Portugal theatres which are also the reporting units for purposes of evaluating recorded goodwill for
impairment. If the carrying value of the reporting unit exceeds its fair value the Company is required to reallocate the fair value of the reporting unit as if the reporting unit had been acquired in
a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. The Company determines fair value by considering multiples applied to cash flow
estimates less net indebtedness which it believes is an appropriate method to determine fair value. There is considerable management judgment with respect to cash flow estimates and appropriate
multiples to be used in determining fair value. There was no goodwill impairment as of March 30, 2006.

Other Long-term Assets:Other long-term assets are comprised principally of
investments in partnerships and joint ventures, costs incurred in connection with the issuance of debt securities, which are being amortized to interest expense over the respective lives of the
issuances, and investments in real estate, which are recorded at the lower of historical cost or fair value.

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

Theatre and Other Closure Expense:Theatre and other closure expense is primarily related to payments
made or expected to be made to landlords to terminate leases on certain of the Company's closed theatres, other vacant space or theatres where development has been discontinued. Theatre and other
closure expense is recognized at the time the theatre closes, space becomes vacant or development is discontinued. Expected payments to landlords are based on actual or discounted contractual amounts.
Accretion expense for exit activities initiated after December 31, 2002 and all accretion expense subsequent to the merger with Marquee is included as a component of theatre and other closure
expense. The Successor recorded theatre and other closure expense of $601,000 and $1,267,000 for the periods ended March 30, 2006 and March 31, 2005, respectively, and the Predecessor
recorded theatre and other closure expense of $10,758,000 and $4,068,000 for the periods ended December 23, 2004 and April 1, 2004, respectively. Accrued theatre and other closure
expense is generally classified as current based upon management's intention to negotiate termination of the related lease obligations within one year.

Restructuring Charge:The Company recognizes restructuring charges based upon the nature of the costs
incurred. Costs resulting from one-time termination benefits where employees are not required to render future service to receive the benefits are recognized and a liability is recorded
when management commits to a plan of termination which identifies the number of employees to be terminated, their job classifications, locations, expected termination dates and when the plan is
communicated to the employees and establishes the detailed terms of the benefits to be received by employees.

If
employees are required to render service until they are terminated in order to receive the termination benefits, the benefits are measured at the fair value of the costs and related
liabilities at the

73

---



communication
date and are recognized ratably over the future service period from the communication date.

On
March 24, 2005, the Company commenced an organizational restructuring related to functions at its Home Office and its Film Office. The Company's new organizational structure
flattens management structure and aligns systems, resources and areas of expertise to promote faster communication. The primary goal of the restructuring is to create a simplified organizational
structure.

The
Company recorded $4,926,000 of expenses, primarily at its home office and at its NCN and other operating segment, related to one-time termination benefits and other costs
for the displacement of approximately 200 associates in connection with the organizational restructuring and the contribution of assets by NCN to NCM during fiscal 2005. The Company incurred an
additional $3,139,000 in one-time termination benefits and approximately $841,000 related to closure of offices during fiscal 2006. The Company's restructuring activities were complete as
of March 30, 2006.

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

Leases:The majority of the Company's operations are conducted in premises occupied under lease
agreements with initial base terms ranging generally from 15 to 20 years (see Note 18Related Party Transactions), with certain leases containing options to extend the leases
for up to an additional 20 years. The Company does not believe that exercise of the renewal options in its leases are reasonably assured at the inception of the lease agreements and therefore,
considers the initial base term as the lease term under Statement of Financial Accounting Standards No. 13,Accounting for Leases("SFAS
No. 13"). The leases provide for fixed and escalating rentals, contingent escalating rentals based on the Consumer Price Index not to exceed certain specified amounts and contingent rentals
based on revenues with a guaranteed minimum.

The
Company has historically recorded rent expense for its operating leases with reasonably assured rent increases in accordance with FASB Technical Bulletin 85-3 Accounting for Operating Leases with Scheduled Rent
Increaseson a straight-line basis from the "lease commencement date" (the theatre
opening date) as specified in the lease agreement until the end of the base lease term. The Company has historically viewed "rent holidays" as an inducement contained in the lease agreement that
provides for a period of "free rent" during the lease term and believed that it did not have "rent holidays" in its lease agreements.

During
fiscal 2005, the Company determined that its lease terms commence at the time it obtains "control and access" to the leased premises which is generally a date prior to the "lease
commencement date" contained in the lease agreements. The Company has evaluated the impact of a change in the commencement date of its lease terms based on when it has "control and access" to the
leased premises and has determined that the impact was immaterial to the prior periods.

The
Company records rent expense for its operating leases on a straight-line basis over the base term of the lease agreements commencing with the date the Company has
"control and access" to the leased premises. Rent expense related to the "rent holiday" is recorded as a component of preopening expense until construction of the leased premises is complete and the
premises are ready for their intended use. Rent charges upon completion of the leased premises subsequent to the theatre opening date are expensed as a component of rent expense. The estimated useful
lives for leasehold improvements reflect the shorter of the base terms of the corresponding lease agreements or the economic life of the leasehold improvements.

74

---



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

The
Company evaluates the classification of its leases following the guidance in SFAS No. 13. Leases that qualify as capital leases are recorded at the present value of the future
minimum rentals over the base term of the lease using the Company's incremental borrowing rate. Capital lease assets are assigned an estimated useful life at the inception of the lease that
corresponds with the base term of the lease.

Occasionally,
the Company is responsible for the construction of leased theatres and for paying project costs that are in excess of an agreed upon amount to be reimbursed from the
developer. Emerging Issues Task Force (EITF) Issue No. 97-10The Effect of Lessee Involvement in Asset Constructionrequires the
Company to be considered the owner (for accounting purposes) of these types of projects during the construction period and therefore is required to account for these projects as sale and leaseback
transactions. As a result, the Company has recorded $25,144,000 and $43,372,000 as financing lease obligations for failed sale leaseback transactions on its Consolidated Balance Sheets related to
these types of projects as of March 30, 2006 and March 31, 2005, respectively.

Sale and Leaseback Transactions:The Company accounts for the sale and leaseback of real estate
assets in accordance with Statement of Financial Accounting Standards No. 98Accounting For Leases.Losses on sale leaseback transactions are
recognized at the time of sale if the fair value of the property sold is less than the undepreciated cost of the property. Gains on sale and leaseback transactions are deferred and amortized over the
remaining lease term.

Impairment of Long-lived Assets:Management reviews long-lived assets,
including intangibles and investments in non-consolidated entities, for impairment as part of the Company's annual budgeting process and whenever events or changes in circumstances
indicate that the carrying amount of the assets may not be fully recoverable. Management reviews internal management reports on a quarterly basis as well as monitors current and potential future
competition in the markets where the Company operates for indicators of triggering events or circumstances that indicate potential impairment of individual theatre assets. Management evaluates its
theatres using historical and projected data of theatre level cash flow as its primary indicator of potential impairment and considers the seasonality of its business when evaluating theatres for
impairment. Because the Christmas and New Years holiday results comprise a significant portion of the Company's operating cash flow, the actual results from this period, which are available during the
fourth quarter of each fiscal year, are an integral part of the Company's impairment analysis. As a result of these analyses, if the sum of the estimated future cash flows, undiscounted and without
interest charges, are less than the carrying amount of the asset, an impairment loss is recognized in the amount by which the carrying value of the asset exceeds its estimated fair value. Assets are
evaluated for impairment on an individual theatre basis, which management believes is the lowest level for which there are identifiable cash flows. The impairment evaluation is based on the estimated
cash flows from continuing use until the expected disposal date or the fair value of furniture, fixtures and equipment. The expected disposal date does not exceed the remaining lease period and is
often less than the remaining lease period when management does not expect to operate the theatre to the end of its lease term. The fair
value of assets is determined as either the expected selling price less selling costs (where appropriate) or the present value of the estimated future cash flows. Fair value for furniture, fixtures
and equipment has been determined using factors such as similar asset sales and in some instances third party valuation studies. There is considerable management judgment necessary to determine the
future cash flows, fair value and the expected operating period of a theatre, and accordingly, actual results could vary significantly from such estimates.

If
theatres currently have sufficient estimated future cash flows to realize the related carrying amount of theatre assets, but management believes that it is not likely the theatre will
be operated to the end of its

75

---



lease
term, the estimated economic life of the theatre assets are revised to reflect management's best estimate of the economic life of the theatre assets for purposes of recording depreciation.

Impairment
losses by operating segment are as follows:

|Impairment of long-lived assets (In thousands) |  | 52 weeks
Ended
March 30, 2006 |        | From Inception July 16, 2004 through March 31, 2005 |   | April 2, 2004 through December 23, 2004 |  | 52 weeks Ended April 1, 2004
|---------------------------------------------- |  | ----------------------------- | ------ | --------------------------------------------------- | - | --------------------------------------- |  | ----------------------------
|
|U.S. and Canada theatrical exhibition          |  | $                             | 11,974 |                                                     | $ |                                        |  | $                           
|International theatrical exhibition            |  |                               |       |                                                     |   |                                        |  |                             
|Total impairments of long-lived assets         |  | $                             | 11,974 |                                                     | $ |                                        |  | $                           

Foreign Currency Translation:Operations outside the United States are generally measured using the
local currency as the functional currency. Assets and liabilities are translated at the rates of exchange at the balance sheet date. Income and expense items are translated at average rates of
exchange. The resultant translation adjustments are included in foreign currency translation adjustment, a separate component of accumulated other comprehensive income (loss). Gains and losses from
foreign currency transactions, except those intercompany transactions of a long-term investment nature, are included in net loss and have not been material.

Stock-based Compensation:Holdings granted options on 39,476.72872 shares to certain employees during
the Successor periods ended March 31, 2005 and March 30, 2006. The Successor has reflected the stock-based compensation expense associated with the options within its consolidated
statements of operations. The options have a ten year term and the options granted during fiscal 2005 step-vest in equal amounts over five years with the final vesting occurring on
December 23, 2009. The options granted during fiscal 2006 step vest in equal amounts over three years with final vesting occurring on December 23, 2008, but vesting may accelerate for
certain participants if there is a change of control (as defined in the plan). The Successor has recorded $1,319,000 of stock-based compensation expense during its period ended March 30, 2006
and $1,201,000 of stock-based compensation expense during its period ended March 31, 2005 and the Predecessor has recorded no stock compensation expense for its period ended December 23,
2004.

The
options have been accounted for using the fair value method of accounting for stock-based compensation arrangements as prescribed by Statement of Financial Accounting Standards
No. 123 (R),Share-Based Payment("SFAS 123(R)") and Staff Accounting Bulletin ("SAB") No. 107,Share-Based
Payment, and the Company has valued the options using the Black-Scholes formula. There is no cash impact related to the options included in the Successor's Consolidated
Statements of Cash Flows.

Two
of the holders of Holdings' stock and stock options have written put rights associated with their options and underlying shares whereby they can require Holdings to repurchase their
options and shares. These liability-classified options and shares are required to be remeasured during each reporting period. The successor has recorded $1,894,000 of other income related to the
re-measurement of the
liability-classified shares during the Successor period ended March 30, 2006. One holder of Holdings' stock has an amount-specific put right whereby the holder can require Holdings to
repurchase his shares for $600,000 on or prior to December 31, 2006. A liability of $2,881,000 and $4,509,000 is recorded within other long term liabilities in the Consolidated Balance Sheets
as of March 30, 2006 and March 31, 2005, respectively, for all shares and options containing written put rights.

The
Predecessor accounted for its stock options, restricted stock awards and deferred stock units under plans that it sponsored following the recognition and measurement provisions of
APB Opinion No. 25,Accounting for Stock issued to Employees(APB No. 25) and related interpretations. Stock-based employee compensation
expense related to restricted stock awards and deferred stock units of $8,727,000 was reflected in net loss for fiscal 2004. No stock-based employee compensation expense for stock options

76

---



was
reflected in net loss for fiscal 2004, as all stock options granted under those plans had an exercise price equal to the fair market value of the underlying common stock on the date of grant.

The
following table reflects the weighted average fair value per option granted during each year, as well as the significant weighted average assumptions used in determining fair value
using the Black-Scholes option-pricing model:

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

---

The
following table illustrates the effect on net loss as if the fair value method had been applied to all stock awards and outstanding and unvested options in each period:

|(In thousands) |             | April 2, 2004 through December 23, 2004                                                          |   | 52 Weeks Ended April 1, 2004 |  
|-------------- | ----------- | ------------------------------------------------------------------------------------------------ | - | ---------------------------- | -
|
|Net loss:      |             |                                                                                                  |   |                              |  
|               | As reported |                                                                                                  | $ | (35,878                      | )
|               |             | Add: Stock based compensation expense included in reported net loss, net of related tax effects  |   |                              | 
|               |             | Deduct: Total stock-based compensation expense determined under fair value method for all awards |   |                              | 
|               |             |                                                                                                  |   |                              |  
|               | Pro forma   |                                                                                                  | $ | (35,878                      | )
|               |             |                                                                                                  |   |                              |  

Income Taxes:AMCE joins with Holdings in filing a consolidated U.S. Corporation Income Tax return
and, in certain states, consolidated state income tax returns. With respect to the consolidated federal and state income tax returns, the Successor remits income taxes to the applicable taxing
jurisdiction and records income taxes payable and receivable from other members of the group as if each member filed separate federal and state income tax returns. Additionally, the Successor's
provision for income taxes is computed as if it filed separate income tax returns. The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards No. 109
("SFAS 109")Accounting for Income Taxes. Under SFAS 109, deferred income tax effects of transactions reported in different periods for
financial reporting and income tax return purposes are recorded by the liability method. This method gives consideration to the future tax consequences of deferred income or expense items and
immediately recognizes changes in income tax laws upon enactment. The income statement effect is generally derived from changes in deferred income taxes on the balance sheet.

AMCE
entered into a tax sharing agreement with Holdings under which AMCE agreed to make cash payments to Holdings to enable it to pay any (i) federal, state or local income taxes
to the extent that such income taxes are directly attributable to AMCE or its subsidiaries' income and (ii) franchise taxes and other fees required to maintain Holdings' legal existence.

77

---



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

New Accounting Pronouncements:In February 2006, the FASB agreed to issue FASB Staff Position
(FSP) No. 123(R)-4,Classification of Options and Similar Instruments Issued as Employee Compensation That Allow for Cash Settlement upon the Occurrence of a
Contingent Event, which requires companies to consider the probability of the occurrence of a contingent event that is outside the employees' control (i.e., change in control,
or death or disability) in determining the classification of an employee stock option or similar instrument under FASB Statement No. 123(R),Share-Based
Payment, where the award requires or permits cash settlement upon the contingent event. The FSP requires companies to classify employee stock options and similar instruments
with contingent cash settlement features as equity awards provided the contingent event that permits or requires cash settlement is not considered probable of occurring. As the Company has already
adopted SFAS 123(R), the Company would be required to apply the guidance in the first reporting period beginning after the date the final FSP is posted to the FASB website and would be required
to apply the proposed guidance retrospectively to prior-period results to which SFAS 123(R) was applied. The Company does not believe the adoption of FSP 123 R-4 will have an impact
on the consolidated financial position, results of operations, or cash flows.

In
October 2005, the FASB issued FASB Staff Position (FSP) 13-1,Accounting for Rental Costs Incurred during a Construction
Period. FSP 13-1 clarifies there is no distinction between the right to use a leased asset during the construction period and the right to use that asset after the
construction period. Accordingly, the Company will no longer be able to capitalize rental costs during the construction period and will begin expensing them as preopening expense prior to the theatre
opening date. This FSP was effective for the first reporting period beginning after December 15, 2005. The Company early adopted this FSP during the fourth quarter of fiscal 2006 which results
in recognition of preopening expense during the "rent holiday".

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

In
March 2004, the FASB issued Emerging Issues Task Force Issue No. 03-1,The Meaning of Other Than Temporary Impairment and Its Application to
Certain Investments("EITF 03-1"). EITF 03-1 includes new guidance for evaluating and recording impairment losses on debt and equity investments, as well as new
disclosure requirements for investments that are deemed to be temporarily impaired. In September 2004, the FASB issued Staff Position EITF Issue 03-1-1, which delays the effective date until
additional guidance is issued for the application of the recognition and measurement provisions of EITF 03-1 to investments in securities that are impaired. The Company does not believe that the
adoption of EITF 03-1 will have a material impact on our financial condition or results of operations.

78

---



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

NOTE 2ACQUISITIONS

Merger with Loews

On June 20, 2005, Holdings entered into a merger agreement with LCE Holdings, Inc. ("LCE Holdings"), the parent of Loews Cineplex Entertainment
Corporation ("Loews"), pursuant to which LCE Holdings merged with and into Holdings, with Holdings continuing as the holding company for the
merged businesses, and Loews merged with and into AMCE, with AMCE continuing after the merger (the "Merger" and collectively, the "Mergers"). The transaction closed on January 26, 2006. Upon
completion of the Mergers, the existing stockholders of Holdings, including affiliates of J.P. Morgan Partners, LLC and Apollo Management, L.P., currently hold approximately 60% of its outstanding
capital stock, and the previous stockholders of LCE Holdings, including affiliates of Bain Capital Partners, LLC, The Carlyle Group and Spectrum Equity Investors (collectively with J.P. Morgan
Partners, LLC and Apollo Management, L.P., the "Sponsors"), hold approximately 40% of the outstanding capital stock of Holdings.

The
Company has accounted for the Merger as a purchase in accordance with SFAS No. 141,Business Combinations,for an estimated
purchase price of $540,671,000. The acquisition included 112 theatres with 1,308 screens in the United States, 40 theatres with 443 screens in Mexico (Cinemex), 4 managed/joint venture theatres with
55 screens in the United States and a 50% interest in Yelmo Cineplex, S.L. operating 27 theatres with 311 screens in Spain that is accounted for using the equity method. The financing of the Merger is
described in Note 7. The Merger did not constitute a change in control.

79

---



The following is a summary of the preliminary allocation of the purchase price to the assets and liabilities of LCE Holdings based on management's judgment after evaluating several
factors, including actuarial estimates for pension liabilities, estimates of fair value for issuance of common stock and a valuation assessment prepared by a valuation specialist:

(In thousands)Cash and equivalents

$
142,512Current assets


46,879Property, net


838,172Intangible assets, net


107,561Goodwill


738,739Deferred income taxes


6,740Other long-term assets


50,362Current liabilities


(196,389
)Corporate borrowings


(1,054,192
)Capital and financing lease obligations


(32,524
)Other long-term liabilities


(107,189
)Total estimated purchase price

$
540,671


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

The
Merger included the acquisition of intangible assets including; $43,145,000 related to favorable leases with remaining lease terms ranging from one to thirteen years, $9,595,000
related to Loews and Cinemex trademark and tradenames, $52,452,000 related to advertising and management contracts, and $6,805,000 related to Cinemex non-compete agreement. The Loews'
tradename amortization period is 5 years. These fair values are based on management's best estimate using available evidence including a study performed by a valuation specialist. The Cinemex
trademark and tradename are indefinite-lived intangible assets which are not subject to amortization, but do require impairment evaluation during each reporting period to determine whether events and
circumstances continue to support an indefinite useful life. The weighted average amortization period for LCE and Cinemex favorable leases was approximately eight years. Acquired intangible assets are
more fully discussed in Note 5.

Merger with Marquee

On December 23, 2004, the Company completed a merger in which Holdings acquired AMCE pursuant to an Agreement and Plan of Merger, dated as of
July 22, 2004, by and among AMCE, Holdings and Marquee. Marquee, a wholly owned subsidiary of Holdings, merged with and into AMCE, with AMCE remaining as the surviving entity and becoming a
wholly owned subsidiary of Holdings. The merger was voted on and approved by the Company's shareholders on December 23, 2004.

Pursuant
to the terms of the merger agreement, each issued and outstanding share of AMCE's Common Stock and Convertible Class B stock was converted into the right to receive
$19.50 in cash and each issued and outstanding share of the Company's Series A Convertible Preferred Stock was converted into the right to receive $2,727.27 in cash. The total amount of
consideration paid in the merger with Marquee was approximately $1,665,200,000. AMCE made payments to holders of its Common Stock, Convertible Class B Stock and Series A Convertible
Preferred Stock in the aggregate amount of $1,647,300,000 and Holdings made payments of $17,900,000 to the holders of 1,451,525 vested in-the-money options and holders of
520,350 deferred stock units that vested upon consummation of the

80

---



merger.
The Company has recorded $63,057,000 ($20,325,000 Successor and $42,732,000 Predecessor) of general and administrative expenses related to the merger with Marquee all of which were paid as of
March 31, 2005. Included in these amounts are $20,000,000 of Successor transaction fees paid to J.P. Morgan Partners (BHCA), L.P. and Apollo Investment Fund V, L.P. and certain related
investment funds.

Marquee
used the net proceeds from the sale of AMCE's notes (as described in Note 7), together with existing cash balances of AMCE and the proceeds from the equity contribution
from Holdings (consisting of equity contributed by the former sponsors, the co-investors and certain members of management and the net proceeds of an offering of Holdings notes), to
finance the merger with Marquee.

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

The
following is a summary of the allocation of the purchase price to the estimated fair values of assets and liabilities acquired in the merger with Marquee. The allocation of purchase
price is based on management's judgment after evaluating several factors, including actuarial estimates for pension liabilities, market prices of our indebtedness and a valuation assessment prepared
by a valuation specialist (in thousands):

Cash and equivalents

$
396,636Other current assets


99,794Property, net


894,293Intangible assets


205,148Goodwill


1,377,196Deferred income taxes


64,106Other long-term assets


61,006Current liabilities


(344,908
)Corporate borrowings


(709,283
)Capital and financing lease obligations


(66,525
)Other long-term liabilities


(312,263
)Total estimated purchase price

$
1,665,200


The
merger with Marquee included the acquisition of intangible assets including; $74,000,000 related to the AMC trademark and tradename, $54,993,000 related to favorable leases, and
$46,000,000 related to the Company's Moviewatcher customer loyalty program (A customer relationship intangible asset). These fair values are based on management's best estimate using available
evidence including a study performed by a valuation specialist. The AMC trademark and tradename is an indefinite-lived intangible asset which is not subject to amortization, but does require
impairment evaluation during each reporting period to determine whether events and circumstances continue to support an indefinite useful life. The weighted average amortization period for favorable
leases was approximately fourteen years. In determining the useful life of the Moviewatcher customer relationship intangible asset, the Company utilized information tracking the behavior pattern of
the customers participating in this program. The data suggests that the Moviewatcher customers exhibit a higher frequency of trips to the theatres and many of the members remain active within
the program for extended periods. The membership data was utilized in developing an

81

---



attrition/retention
rate used in the valuation analysis. The analysis indicates that an active base of members contribute incremental cash flow to the business over a period of at least
8 years. However, it should be noted that over two-thirds of the cash flow generated from this asset is derived in the first 5 years. The amortization of the fair value of
this asset reflects the pattern in which the economic benefits of the intangible asset are consumed or otherwise used up. Accordingly the Company has calculated the consumption pattern of this asset
by comparing the undiscounted cash flows for each year with the sum of the undiscounted cash flows generated by this asset to develop the ratio of the fair value of the asset that would be amortized
during the period.

Amounts
recorded for goodwill are not subject to amortization, are not expected to be deductible for tax purposes and have been allocated to the Company's U.S. and Canada theatrical
exhibition operating segment, Other operating segment, Japan AMC Theatres Inc., the Company's Japan branch and the Company's consolidated Spain and Portugal operations conducted through AMC
Entertainment Espana S.A. and Actividades Multi-Cinemas E Espectaculos, LDA (the reporting units). The Company has performed it annual impairment test for goodwill and recorded no impairment as of
March 30, 2006. The goodwill of $29,973,000, allocated to the Other operating segment, was contributed to a cinema screen advertising joint venture between the Company and Regal Entertainment
Group, National CineMedia LLC ("NCM"), and is included in the Company's investment in NCM together with certain of NCN's other contributed assts. Goodwill of $44,774,000 was allocated to Japan AMC
Theatres Inc., which was disposed of in connection with the consummation of the sale of that entity on June 30, 2005, and goodwill of $6,599,000 was allocated to the remaining Japan
location, which was disposed of in connection with the consummation of the sale of that entity on September 1, 2005. Goodwill of $11,712,000 was allocated to the Spain and Portugal theatres and
is included in non-current assets held for sale.

Pro Forma Effect of Merger Transactions

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

82

---



|                                                    |                               | Fifty-two week periods |          
|--------------------------------------------------- | ----------------------------- | ---------------------- | ---------
|
|
|Revenues                                            |                               | $                      | 2,388,052
|Cost of operations                                  |                               |                        | 1,534,504
|Rent                                                |                               |                        | 434,204  
|General and administrative:                         |                               |                        |          
|                                                    | Merger and acquisition costs* |                        |          
|                                                    | Management fee                |                        |          
|                                                    | Other                         |                        |          
|Preopening expense                                  |                               |                        | 10,635   
|Theatre and other closure expense                   |                               |                        | 601      
|Restructuring charge                                |                               |                        | 3,980    
|Depreciation and amortization                       |                               |                        | 282,285  
|Impairment of long-lived assets                     |                               |                        | 11,974   
|Disposition of assets and other gains               |                               |                        | (1,300   
|                                                    |                               |                        |          
|                                                    | Total costs and expenses      |                        |          
|Other expense (income)                              |                               |                        | (11,712  
|Interest expense                                    |                               |                        | 228,518  
|Investment expense (income)                         |                               |                        | 5,127    
|                                                    |                               |                        |          
|Total other expense                                 |                               |                        | 221,933  
|                                                    |                               |                        |          
|Loss from continuing operations before income taxes |                               |                        | (210,808 
|Income tax provision                                |                               |                        | 10,055   
|                                                    |                               |                        |          
|Loss from continuing operations                     |                               |                        | (220,863 
|Loss from discontinued operations                   |                               |                        | (22,409  
|                                                    |                               |                        |          
|Net loss                                            |                               | $                      | (243,272 
|                                                    |                               |                        |          

---

Acquisition of MegaStar Cinemas, L.L.C.

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

83

---



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

(In thousands)Cash and equivalents

$
40Current assets


94Property


6,762Other long-term assets


84Other long-term liabilities


(3,297
)Goodwill


11,354Total purchase price

$
15,037


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

NOTE 3DISCONTINUED OPERATIONS

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

The
operations and cash flows of the Japan theatres have been eliminated from the Company's ongoing operations as a result of the disposal transactions. The Company will not have any
significant continuing involvement in the operations of the Japan theatres after the disposal transactions. The results of operations of the Japan theatres have been classified as discontinued
operations, and information presented for all periods reflects the new classification. The operations of the Japan theatres were previously reported in the Company's International theatrical
exhibition operating segment. Components

84

---



of
amounts reflected as loss from discontinued operations in the Company's Consolidated Statements of Operations are presented in the following table:

Statements of operations data:

|(In thousands)                               |                                  | 52 Weeks Ended March 30, 2006 |         | From Inception July 16, 2004 through March 31, 2005 |        | From April 2, 2004 through December 23, 2004 |        | 52 Weeks Ended April 1, 2004 |     
|-------------------------------------------- | -------------------------------- | ----------------------------- | ------- | --------------------------------------------------- | ------ | -------------------------------------------- | ------ | ---------------------------- | ----
|
|Revenues                                     |                                  |                               |         |                                                     |        |                                              |        |                              |     
|                                             | Admissions                       |                               | $       | 11,293                                              |        | $                                            | 13,083 |                              | $   
|                                             | Concessions                      |                               |         | 2,134                                               |        |                                              | 2,551  |                              |     
|                                             | Other revenue                    |                               |         | 363                                                 |        |                                              | 268    |                              |     
|                                             |                                  |                               |         |                                                     |        |                                              |        |                              |     
|                                             |                                  | Total revenues                |         |                                                     | 13,790 |                                              |        | 15,902                       |     
|                                             |                                  |                               |         |                                                     |        |                                              |        |                              |     
|Costs and Expenses                           |                                  |                               |         |                                                     |        |                                              |        |                              |     
|                                             | Film exhibition costs            |                               |         | 6,076                                               |        |                                              | 7,534  |                              |     
|                                             | Concession costs                 |                               |         | 323                                                 |        |                                              | 352    |                              |     
|                                             | Operating expense                |                               |         | 3,243                                               |        |                                              | 2,944  |                              |     
|                                             | Rent                             |                               |         | 3,918                                               |        |                                              | 3,744  |                              |     
|                                             | General and administrativeother |                               |         | 1,833                                               |        |                                              | 206    |                              |     
|                                             | Depreciation and amortization    |                               |         | 706                                                 |        |                                              | 821    |                              |     
|                                             | Impairment of long-lived assets  |                               |         |                                                    |        |                                              |       |                              |     
|                                             |                                  |                               |         |                                                     |        |                                              |        |                              |     
|                                             |                                  | Total costs and expenses      |         |                                                     | 16,099 |                                              |        | 15,601                       |     
|                                             |                                  |                               |         |                                                     |        |                                              |        |                              |     
|Investment income                            |                                  |                               |        |                                                     |        |                                             |        |                              |    
|Earnings (loss) before income taxes          |                                  |                               | (2,309  | )                                                   |        | 301                                          |        |                              | (531
|Income tax provision                         |                                  |                               | 20,100  |                                                     |        |                                             |        |                              |    
|                                             |                                  |                               |         |                                                     |        |                                              |        |                              |     
|Earnings (loss) from discontinued operations |                                  | $                             | (22,409 | )                                                   | $      | 301                                          |        | $                            | (531
|                                             |                                  |                               |         |                                                     |        |                                              |        |                              |     

Goodwill
of $44,774,000 was allocated to Japan AMC Theatres Inc. and goodwill of $6,599,000 was allocated to the Company's Japan branch and disposed of in connection with the
consummation of the sale of those entities and there was no gain or loss on the sales. The goodwill is not deductible for tax purposes and is discussed in Note 9.

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

The
operations and cash flows of the Sweden theatre have been eliminated from the Company's ongoing operations as a result of the disposal transaction and the Company does not have any
significant continuing involvement in the operations of the Sweden theatre after the disposal transaction. The results of operations of the Sweden theatre have been classified as discontinued
operations, and information presented for all periods reflects the new classification. The operations of the Sweden theatre were previously reported in the Company's International operating segment.
Components of amounts reflected

85

---



as
loss from discontinued operations in the Company's Consolidated Statements of Operations are presented in the following table:

(In thousands)

52 Weeks Ended
April 1, 2004(Predecessor)RevenuesAdmissions

$
3,378Concessions


949Other revenue


198Total revenues


4,525ExpenseFilm exhibition costs


1,698Concession costs


321Operating expense


1,572Rent


1,678General and administrative expenseother


54Depreciation and amortization


42Disposition of assets and other gains


5,591Total costs and expenses


10,956Investment income


Loss before income taxes


(6,431
)Income tax benefit


(2,600
)Loss from discontinued operations

$
(3,831
)


NOTE 4PROPERTY

A summary of property is as follows:

(In thousands)

March 30, 2006

March 31, 2005(Successor)

(Successor)Property owned:Land

$
38,361

$
8,804Buildings and improvements


252,640


208,888Leasehold improvements


918,740


482,308Furniture, fixtures and equipment


1,116,763


988,8452,326,504


1,688,845Less-accumulated depreciation and amortization


828,574


840,5871,497,930


848,258Property leased under capital leases:Buildings and improvements


23,725


28,459Less-accumulated amortization


20,607


22,2543,118


6,205$
1,501,048

$
854,463


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

86

---



NOTE 5GOODWILL AND OTHER INTANGIBLE ASSETS

Activity of goodwill by operation segment is presented below.

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

---

|                            |                                |                                                  |                    | March 30, 2006 |  | March 31, 2005 |        
|--------------------------- | ------------------------------ | ------------------------------------------------ | ------------------ | -------------- |  | -------------- | -------
|
|Acquired Intangible Assets: |                                |                                                  |                    |                |  |                |        
|                            | Amortizable Intangible Assets: |                                                  |                    |                |  |                |        
|                            |                                | Favorable leases                                 |                    | 1 to 13 years  |  | $              | 116,047
|                            |                                | Loyalty program                                  |                    | 4 years        |  |                | 46,000 
|                            |                                | LCE trade name                                   |                    | 5 years        |  |                | 2,300  
|                            |                                | LCE/Cinemex advertising and management contracts |                    | 3 to 25 years  |  |                | 48,951 
|                            |                                | Cinemex non-compete                              |                    | 2 years        |  |                | 6,462  
|                            |                                | Other intangible assets                          |                    | 1 to 16 years  |  |                | 30,701 
|                            |                                |                                                  |                    |                |  |                |        
|                            |                                |                                                  | Total, amortizable |                |  |                | $      
|                            |                                |                                                  |                    |                |  |                |        
|                            | Unamortized Intangible Assets: |                                                  |                    |                |  |                |        
|                            |                                | AMC trademark                                    |                    |                |  | $              | 74,000 
|                            |                                | Cinemex trademark                                |                    |                |  |                | 7,032  
|                            |                                |                                                  |                    |                |  |                |        
|                            |                                |                                                  | Total, unamortized |                |  |                | $      
|                            |                                |                                                  |                    |                |  |                |        

Amortization expense associated with the intangible assets noted above is as follows:

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

Estimated amortization expense for the next five fiscal years for intangible assets owned as of March 30, 2006 is projected below:

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

87

---



NOTE 6SUPPLEMENTAL BALANCE SHEET INFORMATION

Other assets and liabilities consist of the following:

(In thousands)

March 30, 2006

March 31, 2005(Successor)

(Successor)Other current assets:Prepaid rent

$
3,166

$
27,955Deferred income taxes


5,416


18,560Income taxes receivable


6,830


6,345Prepaid Insurance


5,089


2,156Merchandise Inventory


8,204


4,526Other


5,942


6,430$
34,647

$
65,972Other long-term assets:Investments in real estate

$
7,100

$
10,458Deferred financing costs


42,245


22,792Investments in joint ventures


89,952


57,862Other


33,015


27,286$
172,312

$
118,398Accrued expenses and other liabilities:Taxes other than income

$
44,621

$
31,598Interest


19,970


12,695Payroll and vacation


12,536


10,375Casualty claims and premiums


8,850


8,930Accrued bonus


4,192


11,761Theatre and other closure


16,193


26,506Merger exit costs


4,618


Rent


10,455


2,285Merger severance liability


10,571


Restructuring reserve





4,926Group Insurance


3,046


2,038Merger and acquisition costs


4,300


952Other


17,875


7,736157,227

$
119,802Other long-term liabilities:Unfavorable lease obligations

$
229,893

$
249,207Deferred rent


23,921


4,234Casualty claims and premiums


17,523


13,150Pension and other benefits


71,784


55,020Deferred income


21,877


12,414Deferred gain


21,426


Advance sale leaseback proceeds


6,178


6,916Theatre and other closure


5,523


2,000Deferred compensation liability


5,307


5,517Deferred rebates


9,269


Other


6,773


5,782$
419,474

$
354,240


88

---



NOTE 7CORPORATE BORROWINGS AND CAPITAL AND FINANCING LEASE OBLIGATIONS

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

(In thousands)

March 30, 2006

March 31, 2005(Successor)

(Successor)New Senior Secured Credit Facility (6.9% as of March 30, 2006)

$
650,000

$
85/8% Senior Fixed Rate Notes due 2012


250,000


250,000Senior Floating Rate Notes due 2010 (9.0% as of March 30, 2006)


205,000


205,0008% Senior Subordinated Notes due 2014


298,648


298,53097/8% Senior Subordinated Notes due 2012


187,808


189,45591/2% Senior Subordinated Notes due 2011


218,138


218,98511% Senior Subordinated Notes due 2016


325,000


12% Senior Discount Notes due 2014


205,127


182,561Capital and financing lease obligations, 103/4%


68,130


65,470Cinemex Credit Facility


113,665


Mortgage Payable


2,300


2,523,816


1,410,001Less: current maturities


30,804


3,445$
2,493,012

$
1,406,556


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

|           |  | Capital and Financing Lease Obligations |         |  |   |       
|---------- |  | --------------------------------------- | ------- |  | - | ------
|
|
|2007       |  | $                                       | 11,056  |  | $ | 6,942 
|2008       |  |                                         | 10,333  |  |   | 6,705 
|2009       |  |                                         | 9,969   |  |   | 6,250 
|2010       |  |                                         | 9,925   |  |   | 5,826 
|2011       |  |                                         | 9,975   |  |   | 5,355 
|Thereafter |  |                                         | 85,306  |  |   | 37,356
|           |  |                                         |         |  |   |       
|Total      |  | $                                       | 136,564 |  | $ | 68,434
|           |  |                                         |         |  |   |       

New Senior Secured Credit Facility

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

Borrowings
under the new senior secured credit facility bear interest at a rate equal to an applicable margin plus, at the Company's option, either a base rate or LIBOR. The initial
applicable margin for

89

---



borrowings
under the revolving credit facility is 0.75% with respect to base rate borrowings and 1.75% with respect to LIBOR borrowings, and the initial applicable margin for borrowings under the term
loan facility is 1.50% with respect to base rate borrowings and 2.125% with respect to LIBOR borrowings. The applicable margin for such borrowings may be reduced, subject to the Company attaining
certain leverage ratios. As of March 30, 2006 the annual interest rate on the term loan was 6.9%. In addition to paying interest on outstanding principal under the new senior secured credit
facility, the Company is required to pay a commitment fee to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder at a rate equal to 0.375% (subject to
reduction upon attainment of certain leverage ratios). The Company will also pay customary letter of credit fees. The Company may voluntarily repay outstanding loans under the new senior secured
credit facility at any time without premium or penalty, other than customary "breakage" costs with respect to LIBOR loans. The Company is required to repay $1,625,000 of the term loan quarterly,
beginning March 31, 2006 through September 30, 2012, with any remaining balance due on January 26, 2013.

All
obligations under the new senior secured credit facility are guaranteed by each of the Company's 100% owned domestic subsidiaries. All obligations under the new senior secured credit
facility, and the guarantees of those obligations (as well as cash management obligations and any interest hedging or other swap agreements), are secured by substantially all of the Company's assets
as well as those of each subsidiary guarantor.

The
new senior secured credit facility contains a number of covenants that, among other things, restrict, subject to certain exceptions, the Company's ability, and the ability of the
Company's subsidiaries, to sell assets; incur additional indebtedness; prepay other indebtedness (including the Notes); pay dividends and distributions or repurchase its capital stock; create liens on
assets; make investments; make certain acquisitions; engage in mergers or consolidations; engage in certain transactions with affiliates; amend certain charter documents and material agreements
governing subordinated indebtedness, including the Notes; change the business conducted by it and its subsidiaries; and enter into agreements that restrict dividends from subsidiaries.

In
addition, the new senior secured credit facility requires the Company, commencing with the fiscal quarter ended September 30, 2006, to maintain a maximum net senior secured
leverage ratio as long as the commitments under the revolving credit facility remain outstanding. The new senior secured credit facility also contains certain customary affirmative covenants and
events of default. Costs related to the issuance of the New Senior Secured Credit Facility were capitalized and are charged to interest expense following the interest method, over the lives of the
facilities. Unamortized issuance costs were $14,408,000 as of March 30, 2006.

Cinemex Credit Facility

In August 2004, Cadena Mexicana de Exhibición S.A. de C.V., a 100% owned subsidiary of Cinemex and an indirect 100% subsidiary of AMCE,
entered into a senior secured credit facility, which remains in place after the consummation of the Merger with Loews. The initial amount drawn under the Cinemex senior secured credit facility was
1,026.4 million Mexican pesos (approximately $90.0 million as of August 16, 2004). Cinemex drew 106.4 million Mexican pesos (approximately $10 million in August
2005) under the delayed draw feature of its senior secured credit facility. Approximately $103.9 million was outstanding under the senior secured credit facility as of March 30, 2006. In
December 2005, Cadena Mexicana entered into an amended and restated senior secured revolving credit facility which provides for an available revolving credit line of the peso equivalent of
$25.0 million with Banco Inbursa, S.A. and Scotiabank Inverlat, S.A. (the revolving credit facility is peso-denominated debt). During January and February of 2006, Cinemex drew
105.4 million Mexican pesos under the revolving credit facility (approximately $9.8 million was outstanding as of March 30, 2006). All obligations of Cadena Mexicana under the
Cinemex senior secured credit facility and revolving credit facility are guaranteed by Cinemex and each existing and future operating subsidiary of Cadena Mexicana, except for specified excluded
subsidiaries.

90

---



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

The
Cinemex senior secured credit facilities contain customary affirmative and negative covenants with respect to Cadena Mexicana and each of the guarantors and, in certain instances,
Cadena Mexicana's subsidiaries that are not guarantors, as defined in the credit agreement. Affirmative covenants include the requirement to furnish periodic financial statements and ensure that the
obligations of Cadena Mexicana and the guarantors under the Cinemex senior secured credit facilities rank at leastpari passuwith all existing debt of
such parties. Negative covenants include limitations on disposition of assets, capital expenditures, dividends and additional indebtedness and liens. The senior secured credit facilities also include
certain financial covenants, including, without limitation, a maximum total leverage ratio, a maximum total net debt to equity ratio, a minimum interest coverage ratio, a maximum
true-lease adjusted leverage ratio and a minimum consolidated net worth requirement.

Notes Due 2011

On January 27, 1999, the Company sold $225,000,000 aggregate principal amount of its 91/2% Senior Subordinated Notes due 2011 ("Notes due
2011") and on March 29, 2002, the Company issued an additional $72,880,000 aggregate principal amount of Notes due 2011 in connection with the acquisition of GC Companies. The Notes due 2011
bear interest at the rate of 91/2% per annum, payable in February and August. The Notes due 2011 are redeemable at the option of the Company, in whole or in part, at any time on or
after February 1, 2004 at 104.75% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after February 1, 2007, plus in each case interest
accrued to the redemption date. Upon a change of control (as defined in the indenture governing the Notes due 2011), the Company will be required to make an offer to repurchase each holder's notes at
a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase. The Notes due 2011 are subordinated to all existing and future senior indebtedness of
the Company. The Notes due 2011 are unsecured senior subordinated indebtedness of the Company ranking equally with the Company's Notes due 2012, Notes due 2014 and Notes due 2016.

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

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

The
indenture governing the Notes due 2011 contains certain covenants that, among other things, may limit the ability of the Company and its subsidiaries to incur additional indebtedness
and pay dividends or make distributions in respect of their capital stock. If the Notes due 2011 attain "investment grade status",

91

---



the
covenants in the indenture governing the Notes due 2001 limiting the Company's ability to incur additional indebtedness and pay dividends will cease to apply.

In
connection with the merger with Marquee, the carrying value of the Notes due 2011 was adjusted to fair value. As a result, a premium of $7,073,000 was recorded and will be amortized
to interest expense
over the remaining term of the notes. The unamortized premium as of March 30, 2006 is $5,327,000. Unamortized issuance costs were $0 as of March 30, 2006.

Notes Due 2012

On January 16, 2002, the Company sold $175,000,000 aggregate principal amount of 97/8% Senior Subordinated Notes due 2012 (the "Notes due
2012"). The Notes due 2012 bear interest at the rate of 97/8% per annum, payable in February and August. The Notes due 2012 are redeemable at the option of the Company, in whole or in
part, at any time on or after February 1, 2007 at 104.938% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after February 1, 2010, plus
in each case interest accrued to the redemption date. Upon a change of control (as defined in the indenture governing the Notes due 2012), the Company will be required to make an offer to repurchase
each holder's notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the date of repurchase. The Notes due 2012 are subordinated to all existing and future
senior indebtedness of the Company. The Notes due 2012 are unsecured senior subordinated indebtedness of the Company ranking equally with the Company's Notes due 2011, Notes due 2014 and Notes due
2016.

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

In
connection with the merger with Marquee, the carrying value of the Notes due 2012 was adjusted to fair value. As a result, a premium of $17,078,000 was recorded and will be amortized
to interest expense over the remaining term of the notes. The unamortized premium as of March 30, 2006 is $12,808,000. Unamortized issuance costs were $0 as of March 30, 2006.

Notes Due 2014

On February 24, 2004, the Company sold $300,000,000 aggregate principal amount of 8% Senior Subordinated Notes due 2014 (the "Notes due 2014"). The Company
applied the net proceeds from the sale of Notes due 2014, plus cash on hand, to redeem all outstanding $200,000,000 aggregate principal amount of its 91/2% Senior Subordinated Notes due
2009 and $83,406,000 aggregate principal amount of its Notes due 2011. The Notes due 2014 bear interest at the rate of 8% per annum, payable in March and September. The Notes due 2014 are
redeemable at the option of the Company, in whole or in part, at any time on or after March 1, 2009 at 104.000% of the principal amount thereof, declining ratably to 100% of the principal
amount thereof on or after March 1, 2012, plus in each case interest accrued to the redemption date. Upon a change of control (as defined in the indenture governing the Notes due 2014), the
Company will be required to make an offer to repurchase each holder's notes at a price equal to 101% of the principal amount thereof plus accrued and unpaid interest to the date of
repurchase. The Notes due 2014 are subordinated to all existing and future senior indebtedness of the Company. The Notes due 2014 are unsecured senior subordinated indebtedness of the Company ranking
equally with the Company's Notes due 2011, Notes due 2012 and Notes due 2016.

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

In
connection with the merger with Marquee the carrying value of the Notes due 2014 was adjusted to fair value. As a result, a discount of $1,500,000 was recorded and will be amortized
to interest expense over

92

---



the
remaining term of the notes. The unamortized discount as of March 30, 2006 is $1,352,000. Unamortized issuance costs were $0 as of March 30, 2006.

Fixed Notes and Floating Notes.

In connection with the merger with Marquee, the Company became the obligor of $250,000,000 aggregate principal amount of 85/8% Senior Notes due
2012 (the "Fixed Notes due 2012") and $205,000,000 aggregate principal amount of Senior Floating Notes due 2010 (the "Floating Notes due 2010" and, together with the Fixed Notes due 2012, the "Senior
Notes") that were each previously issued by Marquee on August 18, 2004. The Senior Notes (i) rank senior in right of payment to any of the Company's existing and future subordinated
indebtedness, rank equally in right of payment with any of the Company's existing and future senior indebtedness and are effectively subordinated in right of payment to any of the Company's secured
senior indebtedness, including the amended credit facility, and (ii) are fully and unconditionally guaranteed on a joint and several, senior unsecured basis by each of the Company's existing
and future 100% owned subsidiaries that is a guarantor or direct borrower under the Company's other indebtedness. The Senior Notes are structurally subordinated to all existing and future liabilities
and preferred stock of the Company's subsidiaries that do not guarantee the notes.

The
Fixed Notes due 2012 bear interest at the rate of 85/8% per annum, payable on February 15 and August 15 of each year, commencing February 15,
2005. The Fixed Notes due 2012 are redeemable at the Company's option, in whole or in part, at any time on or after August 15, 2008 at 104.313% of the principal amount thereof, declining
ratably to 100% of the principal amount thereof on or after August 15, 2010. Costs related to the issuance of the Fixed Notes due 2012 were capitalized and are charged to interest expense,
following the interest method, over the life of the notes. Unamortized issuance costs of $7,080,000 as of March 30, 2006, are included in other long-term assets.

The
Floating Notes due 2010 bear interest at a rate per annum, reset quarterly, equal to 41/4% plus the three-month LIBOR interest rate. Interest on the Floating Notes due
2010 is payable quarterly on February 15, May 15, August 15, and November 15 of each year and interest payments commenced on November 15, 2004. The interest rate is
currently 9.0% per annum for the quarterly period ending May 14, 2006 and the interest rate is 9.42% per annum for the quarterly period ending August 14, 2006. The Floating Notes due
2010 are redeemable, in whole or in part, on or after August 15, 2006 at 103.000% of the principal amount thereof, declining ratably to 100% of the principal amount thereof on or after
August 15, 2009. Costs related to the issuance of the Fixed Notes due 2010 were capitalized and are charged to interest expense, following the interest method, over the life of the notes.
Unamortized issuance costs were $5,534,000 as of March 30, 2006.

11% Senior Subordinated Notes Due 2016

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

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

The
Company may redeem some or all of the Notes due 2016 at any time on or after February 1, 2011 at 105.5% of the principal amount thereof, declining ratably to 100% of the
principal amount thereof on or after February 1, 2014. In addition, the Company may redeem up to 35% of the aggregate principal amount of the notes using net proceeds from certain equity
offerings completed on or prior to February 1, 2009. If the Company experiences a change of control (as defined in the indenture governing the Notes

93

---



due
2016), the Company will be required to make an offer to repurchase the Notes due 2016 at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the
date of purchase.

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

As
of March 30, 2006, the Company was in compliance with all financial covenants relating to the New Senior Secured Credit Facility, the Cinemex Credit Facility, the 11% Senior
Subordinated Notes due 2016, the 91/2% Senior Subordinated Notes due 2011, the 97/8% Senior Subordinated Notes due 2012, the 8% Senior Subordinated Notes due 2014, the
Fixed Notes due 2012 and the Floating Notes due 2010.

Holdings Discount Notes Due 2014

To help finance the merger with Marquee, Holdings issued $304,000,000 aggregate principal amount at maturity of its 12% Senior Discount Notes due 2014 ("Discount
Notes due 2014") for gross proceeds of $169,917,760. The only operations of Holdings prior to the merger were related to this financing. Because AMCE was the primary beneficiary of Holdings, which was
considered a variable interest entity as defined in FIN 46(R),Consolidation of Variable Interest Entities, an Interpretation of ARB
No. 51,the Predecessor was required to consolidate Holdings' operations and financial position into AMCE's financial statements as of and through the period ended
December 23, 2004. Subsequent to December 23, 2004, the Successor deconsolidated Holdings' assets and liabilities. The results of operations of Holdings included within the Predecessor's
Consolidated Statements of Operations for the period from April 2, 2004 through December 23, 2004 include interest expense of $7,135,000 and interest income of $831,000. Costs related to
the issuance of the Discount Notes due 2014 were capitalized and are charged to interest expense following the interest method over life of the notes. Unamortized issuance costs were $4,396,000 as of
March 30, 2006.

Holdings
is a holding company with no operations of its own and has no ability to service interest or principal on the Discount Notes due 2014 other than through any dividends it may
receive from AMCE. AMCE will be restricted, in certain circumstances, from paying dividends to Holdings by the terms of the indentures governing the Fixed Notes due 2012, the Floating Notes due 2010,
the Notes due 2011, the Notes due 2012, the Notes due 2014, the Notes due 2016 and the new senior secured credit facility. AMCE has not guaranteed the indebtedness of Holdings nor pledged any of its
assets as collateral.

94

---



Prior to August 15, 2009, unless Holdings elects to pay cash interest as described below, interest on the Discount Notes due 2014 will accrete from the date of issuance of the
notes until August 15, 2009, compounded semiannually.

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

Derivatives

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

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

On
August 5, 2005, Cinemex entered into a new interest rate swap with a face amount of 382.8 million Mexican pesos ($35.1 million) as a complement to the
July 28, 2003 interest rate swap noted above. The new interest rate swap was entered into in order to hedge the outstanding debt balance not covered by the July 28, 2003 interest rate
swap. This new interest rate swap provides for the exchange of variable rate payments for fixed rate payments. The variable rate is based on the 28-day TIIE rate and the fixed rate is
9.89%. The fair market value of this interest rate swap was $2,257,000 as of March 30, 2006.

NOTE 8STOCKHOLDERS' EQUITY

Pursuant to the terms of the Merger Agreement, on January 26, 2006, in connection with the consummation of the Merger, Holdings issued 256,085.61252 voting
shares of Class L-1 Common Stock, par value $0.01 per share ("Class L-1 Common Stock"), 256,085.61252 voting shares of Class L-2 Common Stock, par value $0.01 per share
("Class L-2 Common Stock" and, together with the Class L-1 Common Stock, the "Class L Common Stock"), 382,475 voting shares of Class A-1 Common Stock, par value $0.01 per
share (the "Class A-1 Common Stock"), 382,475 voting shares of Class A-2 Common Stock, par value $0.01 per share (the "Class A-2 Common Stock" and, together with the
Class A-1 Common Stock, the "Class A Common Stock"), and 5,128.77496 nonvoting shares of Class N Common Stock, par value $0.01 per share (the Class N Common Stock"), such
that (i) the former non-management stockholders of LCE Holdings, including the Bain Investors, the Carlyle Investors and the Spectrum Investors (collectively, the "Former LCE Sponsors"), hold
all of the outstanding shares of Class L Common Stock, (ii) the pre-existing non-management stockholders of Holdings, including the JPMP Investors and the Apollo Investors (collectively,
the "Pre-Existing Holdings Sponsors" and, the Pre-Existing Holdings Sponsors together with the Former LCE Sponsors, the "Sponsors") and other co-investors (the "Coinvestors"), hold all of the
outstanding shares of Class A Common Stock, and (iii) management stockholders of Holdings (the "Management Stockholders" and, together with the Sponsors and Coinvestors, the
"Stockholders") hold all of the non-voting Class N Common Stock.

The
Class L Common Stock, Class A Common Stock and Class N Common Stock will automatically convert on a one-for-one basis into shares of residual voting common
stock, par value $0.01 per share,

95

---



upon
(i) written consent of each of the Sponsors or (ii) the completion of an initial public offering of capital stock of Holdings or AMCE (an "IPO").

The
issuance of the equity securities was exempt from registration under the Securities Act of 1933 and the rules promulgated thereunder (the "Securities Act") in reliance on
Section 4(2) of the Securities Act, as transactions by an issuer not involving a public offering.

The
fair value of the shares issued by Holdings for LCE Holdings in connections with the Merger was estimated to be $540,671,000.

In
connection with the merger with Marquee, each issued and outstanding share of the Predecessor's common stock and class B stock was converted into the right to receive $19.50 in
cash and each issued and outstanding share of the Predecessor's preferred stock was converted into the right to receive $2,727.27 in cash.

See
Note 2Acquisitions and the Consolidated Statements of Stockholders' Equity within this Form 10-K for additional information regarding the
impact on stockholder's equity of these mergers.

Stock-Based Compensation

Holdings, has adopted a stock-based compensation plan that permits grants of up to 49,107.44682 options on Holdings stock and has granted options on 600.00000 and
38,876.72872 of its shares to certain employees during the Successor periods ended March 30, 2006 and March 31, 2005, respectively. As of March 30, 2006, there was $7,541,000 of
total estimated unrecognized compensation cost related to nonvested stock-based compensation arrangements under the Holdings plan.

Holdings
is required to reflect the stock-based compensation expense associated with the options within its consolidated statements of operations. The options have a ten year term, the
options granted during fiscal 2005 step-vest in equal amounts over five years with the final vesting occurring on December 23, 2009, the options granted during fiscal 2006 step vest
in equal amounts over three years with final vesting occurring on December 23, 2008, but vesting may accelerate for certain participants if there is a change of control (as defined in the
plan). The Successor has recorded $1,319,000 and $1,201,000 of stock-based compensation expense related to these options and has recognized an income tax benefit of approximately $527,000 and $492,000
in its Consolidated Statements of Operations during the Successor periods ended March 30, 2006 and March 31, 2005, respectively. Two of the holders of stock options and shares have
written put rights associated with their options and shares whereby they can require Holdings to repurchase their shares, options and shares underlying the options; one holder of shares has a written
put right associated with their shares whereby they can require Holdings to repurchase the shares on or prior to December 31, 2006 and as such $2,881,000 and $4,509,000 of the Stock-based
Compensation obligation is recorded in other long term liabilities in the Consolidated Balance Sheets at March 30, 2006 and March 31, 2005, respectively. The Successor accounts for stock
options using the fair value method of accounting as prescribed by SFAS 123 (R) and SAB 107 and has valued the options using the Black-Scholes formula. See Note 1The
Company and Significant Accounting Policies, Stock-based Compensation for more information regarding Holdings stock option plan.

During
the second quarter of fiscal 2004 the Predecessor's shareholders approved and the Predecessor adopted the 2003 AMC Entertainment Inc. Long-Term Incentive Plan
(the "2003 LTIP"). The 2003 LTIP provides for five basic types of awards: (i) grants of stock options which are either incentive or non-qualified stock options, (ii) grants
of restricted stock awards, (iii) grants of deferred stock units, (iv) grants of deferred cash awards and (v) performance grants which may be settled in stock options, shares of
common stock, restricted stock, deferred stock units, deferred cash awards, or cash, or any combination thereof. The number of shares of Common Stock which could have been sold or granted under the
plan was not to exceed 6,500,000 shares. The 2003 LTIP provided that the option exercise price

96

---



for
stock options was not to be less than the fair market value of stock at the date of grant, options may not have been repriced and unexercised options expired no later than ten years after date of
grant.

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

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

The
Predecessor accounted for the stock options, restricted stock awards and deferred stock units under plans that it sponsored following the recognition and measurement provisions of
APB No. 25,Accounting for Stock issued to Employeesand related interpretations. No stock-based employee compensation expense related to
restricted stock awards and deferred stock units was recorded during the Predecessor period ended December 23, 2004 and $8,727,000 was reflected in net earnings for the Predecessor period ended
April 1, 2004. No stock-based employee compensation expense for stock options was reflected in net earnings for the period, as all stock options granted under those plans had an exercise price
equal to the fair market value of the underlying common stock on the date of grant. Holdings made payments of $7,750,000 to the holders of 1,451,525 vested in-the-money options
that vested upon closing the merger with Marquee which was considered as a part of the purchase price in connection with this merger.

There
are currently no outstanding share-based awards under the Company's 2003 LTIP subsequent to the merger with Marquee.

A
summary of stock option activity under all plans is as follows:

|                                   |  | March 30, 2006 |  | From Inception July  16, 2004 through March 31, 2005 |       | April 2, 2004 through December 23, 2004 |              | April 1, 2004
|---------------------------------- |  | -------------- |  | ---------------------------------------------------- | ----- | --------------------------------------- | ------------ | -------------
|
|
|Outstanding at beginning of year   |  | 38,876.72872   |  | $                                                    | 1,000 |                                         |             |              
|Granted(2)                         |  | 600.0000       |  | $                                                    | 1,000 |                                         | 38,876.72872 |              
|Canceled                           |  |               |  |                                                      |      |                                         |             |              
|Exercised(1)                       |  |               |  |                                                      |      |                                         |             |              
|                                   |  |                |  |                                                      |       |                                         |              |              
|Outstanding at end of year(3)      |  | 39,476.72872   |  | $                                                    | 1,000 |                                         | 38,876.72872 |              
|                                   |  |                |  |                                                      |       |                                         |              |              
|Exercisable at end of year         |  | 7,775.34574    |  | $                                                    |      |                                         |             |              
|                                   |  |                |  |                                                      |       |                                         |              |              
|Available for grant at end of year |  | 9,630.71809    |  |                                                      |       |                                         | 10,230.71809 |              
|                                   |  |                |  |                                                      |       |                                         |              |              

---

97

---



Stock Appreciation Rights

In November 2004, Loews entered into a Stock Appreciation Rights Agreement (the "SAR Agreement") with the Chief Executive Officer of Cinemex under which
stock appreciation rights ("SARs") based upon the equity value of Cinemex were granted. The SARs granted allow for the receipt of cash payments equivalent to the increase in value of 4,405 units
(representing 4,405 shares of Cinemex Common Stock and 67,737 shares of Cinemex Preferred Stock) from July 30, 2004. The SARs equity valuation is based upon the equity of Cinemax.

No
stock-based compensation expense related to the SARs granted is reflected for the fifty-two weeks ended March 30, 2006, as there has been no appreciation in the
equity value (as defined in the SARs Agreement) of Cinemex from the date of the Merger.

NOTE 9INCOME TAXES

Income tax provision reflected in the Consolidated Statements of Operations for the periods in the three years ended March 30, 2006 consists of the
following components:

(In thousands)

March 30, 2006

From Inception July 16, 2004 through March 31, 2005

April 2, 2004
through December 23, 2004

April 1, 2004(Successor)

(Successor)

(Predecessor)

(Predecessor)Current:Federal

$
(232
)
$
(1,416
)
$
851

$
(6,130
)Foreign


562








State


1,230


(202
)

3,571


(17
)Total current


1,560


(1,618
)

4,422


(6,147
)Deferred:Federal


79,212


(7,826
)

9,046


11,635Foreign


834


80


240


1,619State


10,594


164


1,292


1,293Total deferred


90,640


(7,582
)

10,578


14,547Total provision


92,200


(9,200
)

15,000


8,400Tax benefit (provision) of discontinued operations


(20,100
)







2,600Total provision (benefit) from continuing operations

$
72,100

$
(9,200
)
$
15,000

$
11,000


98

---



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

March 30, 2006

From Inception
July 16, 2004
through March 31, 2005

April 2, 2004
through
December 23, 2004

April 4, 2003
through April 1, 2004(Successor)

(Successor)

(Predecessor)

(Predecessor)Federal statutory rate

35.0
%
35.0
%
35.0
%
35.0
%Merger costs



(13.1
)
(68.8
)
State income taxes, net of federal tax benefit

4.9



(7.0
)
(35.8
)Valuation allowance

(96.5
)
(1.0
)
(28.8
)
(358.3
)Non-deductible goodwill and other permanent items

(17.1
)




Other, net

(3.1
)
(3.7
)
(2.2
)
(3.9
)Effective tax rate

(76.8
)%
17.2
%
(71.8
)%
(363.0
)%


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

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

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

March 30, 2006

March 31, 2005Deferred Income Tax

Deferred Income Tax(Successor)

(Successor)(In thousands)Assets

Liabilities

Assets

LiabilitiesProperty

$
62,037

$
(135,030
)
$
50,416

$
(169,537
)Capital lease obligations


1,808





5,176


Accrued reserves and liabilities


89,456





67,496


Deferred rents


84,670





97,877


Alternative minimum tax credit carryover


11,581





11,932


Capital loss carryforward


27,128





38,698


Net operating loss carryforward


280,424





40,547


Other


55,247


(27,191
)

53,929


(6,236
)Total

$
612,351

$
(162,221
)
$
366,071

$
(175,773
)Less: Valuation allowance


(441,150
)




(118,719
)

Net


171,201


(162,221
)

247,352


(175,773
)Less: Current deferred income taxes


5,416





18,560


Total noncurrent deferred income taxes

$
165,785

$
(162,221
)
$
228,792

$
(175,773
)Net noncurrent deferred income taxes

$
3,564




$
53,019


99

---



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

The
Company's foreign subsidiaries had losses before income taxes of $16,531,000 and $1,565,000 during the Successor period ended March 30, 2006 and March 31, 2005,
respectively and $17,189,000 and $20,900,000 during Predecessor periods ended December 23, 2004 and April 1, 2004, respectively.

As
of March 30, 2006, management believed it was more likely than not that net deferred tax assets related to tax net operating loss carryforwards and certain deferred tax assets
of foreign subsidiaries would not be realized due to uncertainties as to the timing and amounts of future taxable income as a result of the Mergers. The Successor has recorded a full valuation
allowance against its net deferred tax assets in U.S. and certain foreign jurisdictions of $439,460,000 and a partial valuation allowance of $1,690,000 related to deferred tax assets in the Mexico tax
jurisdiction as of March 30, 2006.

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

The
Company had a valuation allowance of $441,150,000, $118,719,200, $26,485,000, $20,592,000 and $10,254,000 as of March 30, 2006, March 31, 2005, April 1, 2004,
April 3, 2003 and March 28, 2002, respectively. All changes in the valuation allowance were recorded in the income tax provision except for $206,647,000 which was recorded during the
Successor period ended March 30, 2006 as part of the purchase price allocation in connection with the Merger and merger with Marquee, $40,062,000 which was recorded during the Successor period
ended March 31, 2005 as part of the purchase price allocation in connection with the merger with Marquee and $2,600,000 which was recorded in loss from discontinued operations in the year ended
March 28, 2002.

NOTE 10LEASES

During fiscal 1998, the Company sold the real estate assets associated with 13 theatres to Entertainment Properties Trust ("EPT") for an aggregate purchase price
of $283,800,000 (the "Sale and Lease Back Transaction"). The Company leased the real estate assets associated with the theatres from EPT pursuant to non-cancelable operating leases with
terms ranging from 13 to 15 years at an initial lease rate of 10.5% with options to extend for up to an additional 20 years. The leases are triple net leases that require the Company to
pay substantially all expenses associated with the operation of the theatres, such as taxes and other governmental charges, insurance, utilities, service, maintenance and any ground lease payments.
The Company has accounted for this transaction as a sale and leaseback in accordance with Statement of Financial Accounting Standards No. 98Accounting for
Leases. The land and building improvements have been removed from the Consolidated Balance Sheets. During fiscal 2000, the Company sold the building and improvements associated
with one of the Company's theatres to EPT for proceeds of $17,600,000 under terms similar to the above Sale and Leaseback Transaction. During fiscal 2002, the Company sold the land at this theatre to
EPT for proceeds of $7,500,000 under terms similar to the above Sale and Leaseback Transaction and at an initial lease rate of 10.75%. During fiscal 2003, the Company sold the real estate assets
associated with 2 theatres to EPT for proceeds of $43,665,000 and then leased the real estate assets associated with these theatres pursuant to non-cancelable operating leases with terms
of 20 years at an initial lease rate of 11% with options to extend for up to an additional 15 years. On March 30, 2004, the Company sold the real estate assets associated with 3
theatres to EPT for proceeds of $63,911,000 and then leased the real estate assets associated with these theatres pursuant to non-cancelable operating leases with terms of 20 years
at an initial lease rate of 9.5% with options to extend for up to 15 additional years. On March 31, 2005, the Company sold the real estate assets associated with one theatre and adjoining
retail

100

---



space
to EPT for proceeds of $50,910,000 and then leased the real estate assets associated with this theatre pursuant to non-cancelable operating lease with a term of 20 years at an
initial lease rate of 9.2% with options to extend for up to 14 additional years. On March 30, 2006, the Company sold the real estate assets associated with 2 theatres to EPT for proceeds of
$35,010,000 and then leased the real estate assets associated with these theatres pursuant to non-cancelable operating leases with terms of 15 and 18 years at an initial lease rate
of 9.25% with options to extend for up to 20 additional years.

Following
is a schedule, by year, of future minimum rental payments required under existing operating leases that have initial or remaining non-cancelable terms in excess of
one year as of March 30, 2006 (Cinemex operating lease totals include an inflationary factor in the annual minimum lease commitments for all applicable leases):

(In thousands)

Minimum operating
lease payments2007

$
408,0072008


422,6742009


419,6342010


416,8632011


408,945Thereafter


3,341,769Total minimum payments required

$
5,417,892


The
Company has also entered into agreements to lease space for the operation of 13 theatres with 206 screens not yet fully constructed. The future minimum rental payments required under
the terms of these leases included above total approximately $438,000,000. The Company records rent expense on a straight-line basis over the base term of the lease commencing with the
date the Company has "control and access" to the leased premises.

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

Rent
expense is summarized as follows:

(In thousands)

March 30, 2006

From Inception July 16, 2004 through March 31, 2005

From April 2, 2004 through December 23, 2004

52 Weeks April 1, 2004(Successor)

(Successor)

(Predecessor)

(Predecessor)Minimum rentals

$
301,164

$
73,553

$
202,113

$
259,775Common area expenses


34,816


8,513


22,843


28,365Percentage rentals based on revenues


4,435


1,130


3,827


4,373Furniture, fixtures and equipment rentals


886


708


3,425


6,432Theatre Rent


341,301


83,904


232,208


298,945NCN and other





38


587


1,021G & A and other


1,559


443


954


3,084Total

$
342,860

$
84,385


233,749

$
303,050


101

---



NOTE 11EMPLOYEE BENEFIT PLANS

The Company sponsors a non-contributory qualified defined benefit pension plan generally covering all employees age 21 or older who have completed at
least 1,000 hours of service in their first twelve months of employment, or in a calendar year ending thereafter, and who are not covered by a collective bargaining agreement.

Under
the plan, benefits are integrated with Social Security and paid to participants at retirement based primarily upon years of credited service with the Company (not exceeding
thirty-five) and the employee's highest five year average compensation. Contributions to the plan reflect benefits attributed to employee's services to date, as well as services expected
to be earned in the future. The Company expects to contribute $1,400,000 to the defined benefit pension plan during fiscal 2007. Plan assets are invested in pooled separate accounts with an insurance
company pursuant to which the plan's benefits are paid to retired and terminated employees and the beneficiaries of deceased employees. The Company also sponsors two non-contributory
nonqualified deferred compensation plans which provide additional pension benefits to certain eligible employees.

As
a result of the Merger, the Company acquired two pension plans in the U.S and one in Mexico. One of the U.S. plans is a frozen cash balance plan and neither of the U.S. plans have
admitted new participants post-merger. The future existence of the U.S. plans will serve to pay benefits to the current participants under the requirements of the plan. In Mexico, a
Seniority Premium and Termination Indemnity for Retirement Plan (the "Mexico Plan") is provided to all eligible employees of Servicios Cinematograficos Especializados, S.A. de C.V. ("SCE") and a
Termination Indemnity Retirement Plan to all eligible employees of Servino, S.A. de C.V. ("Servino"). Both SCE and Servino are wholly owned subsidiaries of Cinemex. The Mexico Plan establishes
compensation upon retirement (pension and seniority premium) based on years of service rendered and the employee's age and salary at the date of retirement. This plan has not been funded as of
March 30, 2006.

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

The
Company's reorganization activities commencing during fiscal 2005 resulted in a partial curtailment of the Company's postretirement and one of its non-contributory nonqualified
deferred compensation plans. The Company defers curtailment gains until they are realized and, as such, curtailment gains of $2,251,000 were recognized for the year ended March 30, 2006.

The
reorganization activities also prompted an amendment to the non-contributory nonqualified deferred compensation plan whereby participants who are terminated as a result of
reorganization activities and who have at least 15 years of service are eligible to receive benefits under the plan. Prior to this amendment, participants were required to have reached
age 55 and have 15 years of service to be eligible for benefits.

102

---



The
measurement date used to determine pension and other postretirement benefits is January 1 of the fiscal year for which measurements are made. The assumptions to determine
benefit obligations and net periodic benefit cost are as follows:

|                                                                       |               | LCE   |       | AMCE      |       | LCE   |       | AMCE 
|---------------------------------------------------------------------- | ------------- | ----- | ----- | --------- | ----- | ----- | ----- | -----
|
|
|
|Weighted-average assumptions used to determine benefit obligations at: |               |       |       |           |       |       |       |      
|                                                                       | Discount rate |       | 5.50% |           | 5.75% |       | 5.75% |      
|Rate of compensation increase                                          |               | 4.79% |       | 3.5%-6.0% |       | 5.50% |       | 5.97%

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

103

---



Net periodic benefit cost for the four plans consists of the following:

|                                         |                                                    |  |   |        |   |   |       |   |   | Other Benefits
|---------------------------------------- | -------------------------------------------------- |  | - | ------ | - | - | ----- | - | - | --------------
|
|
|
|
|Components of net periodic benefit cost: |                                                    |  |   |        |   |   |       |   |   |               
|                                         | Service cost                                       |  | $ | 3,918  |   | $ | 941   |   | $ | 2,318         
|                                         | Interest cost                                      |  |   | 4,703  |   |   | 1,256 |   |   | 3,063         
|                                         | Expected return on plan assets                     |  |   | (3,737 | ) |   | (892  | ) |   | (2,426        
|                                         | Recognized net actuarial loss                      |  |   | 50     |   |   |      |   |   | 760           
|                                         | Amortization of unrecognized transition obligation |  |   |       |   |   |      |   |   | 129           
|                                         | Amortization of prior service cost                 |  |   |       |   |   |      |   |   | 70            
|                                         | Plan amendment                                     |  |   | 455    |   |   |      |   |   |              
|                                         | Curtailment                                        |  |   | (1,141 | ) |   |      |   |   |              
|                                         |                                                    |  |   |        |   |   |       |   |   |               
|                                         | Net periodic benefit cost                          |  | $ | 4,248  |   | $ | 1,305 |   | $ | 3,914         
|                                         |                                                    |  |   |        |   |   |       |   |   |               

The following tables set forth the plan's change in benefit obligations and plan assets and the accrued liability for benefit costs included in
the Consolidated Balance Sheets for the years ended March 30, 2006 and March 31, 2005:

Pension Benefits

Other Benefits(In thousands)

52 Weeks
Ended
March 30,
2006

From
Inception
July 16,
2004
through
March 31,
2005

April 2,
2004
through
December 23,
2004

52 Weeks
Ended
March 30,
2006

From
Inception
July 16,
2004
through
March 31,
2005

April 2,
2004
through
December 23,
2004(Successor)

(Successor)

(Predecessor)

(Successor)

(Successor)

(Predecessor)Change in benefit obligation:Benefit obligation at beginning of period

$
80,446

$


$
67,477

$
18,563

$


$
17,144Benefit obligation related to acquisition of LCE


12,345








9,704





Transferred balance from Predecessor





78,270








17,740


Service cost


3,918


941


2,318


514


185


444Interest cost


4,703


1,256


3,063


1,054


325


772Plan participant's contributions











204





165Actuarial (gain) loss


(5,864
)

(9
)

7,445


266


313


35Benefits paid


(2,458
)

(12
)

(2,033
)

(905
)




(820
)Plan amendment


455














Curtailment


(1,141
)







(1,423
)




Currency translation adjustment


48














Benefit obligation at end of period

$
92,452

$
80,446

$
78,270

$
27,977

$
18,563

$
17,740


104

---



Pension Benefits

Other Benefits(In thousands)

52 Weeks
Ended
March 30,
2006

From
Inception
July 16,
2004
through
March 31,
2005

April 2,
2004
through
December 23,
2004

52 Weeks
Ended
March 30,
2006

From
Inception
July 16,
2004
through
March 31,
2005

April 2,
2004
through
December 23,
2004(Successor)

(Successor)

(Predecessor)

(Successor)

(Successor)

(Predecessor)Change in plan assets:Fair value of plan assets at beginning of period

$
43,789

$


$
39,833

$


$


$
Transferred balance from Predecessor





43,642











Plan assets related to acquisition of LCE


7,893














Actual return on plan assets


3,171


159


4,006








Employer contribution


1,615





1,836


700





655Plan participant's contributions











205





165Benefits paid


(2,458
)

(12
)

(2,033
)

(905
)




(820
)Fair value of plan assets at end of period

$
54,010

$
43,789

$
43,642

$


$


$
Net liability for benefit cost:Funded status

$
(38,442
)
$
(36,657
)
$
(34,628
)
$
(27,977
)
$
(18,563
)
$
(17,740
)Unrecognized net actuarial (gain) loss


(5,459
)

(113
)

20,125


266


313


289Unrecognized transition obligation

















197Unrecognized prior service cost








685








2,252Net liability recognized

$
(43,901
)
$
(36,770
)
$
(13,818
)
$
(27,711
)
$
(18,250
)
$
(15,002
)


Pension Benefits

Other Benefits(In thousands)

March 30, 2006

March 31, 2005

March 30, 2006

March 31, 2005(Successor)

(Successor)

(Successor)

(Successor)Amounts recognized in the balance sheet:Accrued benefit liability

$
(44,073
)
$
(36,770
)
$
(27,711
)
$
(18,250
)Accumulated other comprehensive income


172








Net liability recognized

$
(43,901
)
$
(36,770
)
$
(27,711
)
$
(18,250
)


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

105

---



For its Defined Benefit Pension Plan investments, the Company employs a long-term risk-controlled approach using diversified investment options with minimal
exposure to volatile investment options like derivatives. The Company uses a diversified allocation of equity, debt, short-term and real estate exposures that are customized to the Plan's
cash flow benefit needs. The percentage of plan assets by category for fiscal 2006 and 2005 are as follows:

March 30, 2006

March 31, 2005(Successor)

(Successor)Equity Securities

61
%
60
%Debt Securities

31
%
32
%Real Estate Investments & Other

8
%
8
%100
%
100
%


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

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

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

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

The
Company's retiree health plan provides a benefit to its retirees that is at least actuarially equivalent to the benefit provided by theMedicare Prescription
Drug, Improvement and Modernization Act of 2003("Medicare Part D"). Since the Company's plan is more generous than Medicare Part D, it is considered at least
actuarially equivalent to Medicare Part D and the government provides a federal subsidy to the plan. The Company made no adjustment to its participation rates due to Medicare Part D and
estimated a $400 per year subsidy at age 75 for the initial year of 2006, with the amount of the subsidy moving in direct relation to the participant's age.

The
Plan's accumulated plan benefit obligation as of January 1, 2006 was reduced by $1,934,000 for the subsidy related to benefits attributed to past service. The Company
recognized a reduction of $140,000 in net periodic postretirement benefit cost during the period ended March 30, 2006 and the subsidy will in the future also continue to reduce net periodic
postretirement benefit cost by adjusting the interest cost, service cost and actuarial gain or loss to reflect the effects of the subsidy. The Company estimates that it

106

---



will
receive annual subsidies of $50,000 during fiscal 2007 increasing to $80,000 during fiscal 2011 and an additional $500,000 through fiscal 2016.

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

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

NOTE 12COMMITMENTS AND CONTINGENCIES

The Company, in the normal course of business, is party to various legal actions. Except as described below, management believes that the potential exposure, if
any, from such matters would not have a material adverse effect on the financial condition, cash flows or results of operations of the Company.

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

United States of America v. AMC Entertainment Inc. and American Multi-Cinema, Inc.(No. 99-01034 FMC
(SHx), filed in the U.S. District Court for the Central District of California). On January 29, 1999, the Department of Justice (the "Department") filed suit alleging that AMCE's stadium-style
theatres violate the ADA and related regulations. The Department alleged that AMCE had failed to provide persons in wheelchairs seating arrangements with lines of sight comparable to the general
public. The Department alleged various non-line of sight violations as well. The Department sought declaratory and injunctive relief regarding existing and future theatres with
stadium-style seating, compensatory damages in the approximate amount of $75,000 and a civil penalty of $110,000.

On
November 20, 2002 the trial court entered summary judgment in favor of the Justice Department on the line of sight aspects of this case. The trial court ruled that wheelchair
spaces located solely on the sloped floor portion of the stadium-style auditoriums fail to provide lines of sight comparable to the general public. The trial court did not address specific changes
that might be required of AMCE's existing stadium-style auditoriums, holding thatper serules are simply not possible because the requirements of
comparable lines of sight will vary based on theatre layout.

107

---



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

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

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

On
January 21, 2003, the trial court entered summary judgment in favor of the Department on non-line of sight aspects of the case, which involve such matters as
parking areas, signage, ramps, location of toilets, counter heights, ramp slopes, companion seating and the location and size of handrails. In its non-line of sight decision, the trial
court concluded that AMCE has violated numerous sections of the ADA and engaged in a pattern and practice of violating the ADA.

On
December 5, 2003, the trial court entered a consent order and final judgment on non-line of sight issues under which AMCE agreed to remedy certain violations at
twelve of its stadium-style theatres and to survey and make required betterments for its patrons with disabilities at its stadium-style theatres and at certain theatres it may open in the future.
Currently AMCE estimates that these betterments will be required at approximately 140 stadium-style theatres. AMC estimates that the total cost of these betterments will be $47.5 million, which
is expected to be incurred over the remaining term of the consent order of 2.7 years. Through March 30, 2006 AMCE has incurred approximately $7.1 million of these costs. The
estimate is based on actual costs incurred on
remediation work completed to date. The actual costs of betterments may vary based on the results of surveys of the remaining theatres.

American Multi-Cinema, Inc. v. Midwest Drywall Company, Inc., Haskell Constructors, Ltd. etal. (Case
No. 00CV84908, Circuit Court of Platte County, Missouri) andAmerican Multi-Cinema, Inc. v. Bovis Construction Corp. et al.(Civil Action
No. 0207139, Court of Common Pleas of Bucks County, Pennsylvania). AMCE is the plaintiff in these and related suits in which it seeks to recover damages from the construction manager, certain
fireproofing applicators and other parties to correct the defective application of certain fireproofing materials at 21 theatres. AMCE currently estimates its claim for repair costs at these theatres
will aggregate approximately $33.6 million of which it has expended approximately $27.4 million through March 30, 2006. The remainder is for projected costs of repairs yet to be
performed. AMCE also is seeking additional damages for lost profits, interest and legal and other expenses incurred.

AMCE
has received settlement payments from various parties in connection with this matter of $935,000, $2,610,000 and $925,000 during fiscal 2006, 2005 and 2004, respectively. AMCE
received additional settlement payments of $1,350,000 from various parties in connection with this matter subsequent to March 30, 2006 and has entered into settlement agreements with various
parties providing for additional settlement payments to AMCE aggregating $3,850,000. Gain contingencies are recognized upon receipt and recorded in disposition of assets and other gains in the
Consolidated Statements of Operations.

Metreon Arbitration.In May 1997, Loews entered into a 21-year lease with Metreon, Inc. ("Metreon")
to operate a megaplex theatre in an entertainment/retail center developed by Metreon in San Francisco. Since that theatre opened in June 1999, Loews has had a dispute with Metreon with respect
to (1) construction costs that Metreon claims are Loews' responsibility under the lease and (2) the percentage of the center occupied by the theatre and the nature, magnitude and
allocation of the costs that Metreon is

108

---



seeking
to include as operating expenses under the lease. The amount of operating expenses claimed by Metreon to be allocable to this theatre is based upon the landlord's assertion that Loews occupies
at least 48.5% of the center. Loews asserted that it occupied substantially less of the center and that various expenses included in operating expenses charged to Loews were improper. Loews arbitrated
this dispute in June 2003 and prevailed but the award was later vacated by the California Court of Appeals. Westfield Group purchased the property in April 2006 and renewed settlement
discussions with AMCE.

We
are a party to various other legal proceedings in the ordinary course of business, none of which is expected to have a material adverse effect on us.

NOTE 13THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS

The Company has provided reserves for estimated losses from theatres which have been closed, vacated office space, and from terminating the operation of fast food
and other restaurants operated adjacent to certain of the Company's theatres. As of March 30, 2006, the Company has reserved $26,334,000 for lease terminations which have either not been
consummated or paid, related primarily to 10 U.S. and Canada theatres with 73 screens and vacant restaurant and office space. In connection with the Merger, the Company accrued $4,845,000 for future
lease obligations at facilities that had been closed or were duplicate facilities that were planned to be closed following the Merger. The accrual was primarily related to the planned closing of the
New York City home office. The Company is obligated under long-term lease commitments with remaining terms of up to 14 years for theatres which have been closed. As of
March 30, 2006, base rents aggregated approximately $7,651,000 annually and $27,435,000 over the remaining terms of the leases. The estimated future lease obligation of the Loews' properties
were discounted at the estimated borrowing rate at the date of the Merger of 8.82%. In connection with the merger with Marquee, the carrying value of the theatre closure liability was remeasured by
using the Company's estimated borrowing rate on the date of the Merger of 7.55%.

A
rollforward of reserves for theatre and other closure is as follows (in thousands):

|                  |                                                         | Fifty-two Week Period |        |        |   |       |       |   |       
|----------------- | ------------------------------------------------------- | --------------------- | ------ | ------ | - | ----- | ----- | - | ------
|
|
|
|
|Beginning Balance |                                                         | $                     | 28,506 |        | $ |      |       | $ | 28,506
|                  | Transferred balance from Predecessor                    |                       |        |       |   |       |      |   |       
|                  | Merger adjustment                                       |                       |        |       |   |       | 4,845 |   |       
|                  | Theatre and other closure expense                       |                       |        | 557    |   |       | 44    |   |       
|                  | Restructuring charge                                    |                       |        | 841    |   |       |      |   |       
|                  | Interest expense                                        |                       |        |       |   |       |      |   |       
|                  | General and administrative expense                      |                       |        |       |   |       |      |   |       
|                  | Transfer of deferred rent and capital lease obligations |                       |        | 677    |   |       |      |   |       
|                  | Acquisition remeasurement                               |                       |        |       |   |       |      |   |       
|                  | Payments                                                |                       |        | (8,865 | ) |       | (271  | ) |       
|                  |                                                         |                       |        |        |   |       |       |   |       
|Ending balance    |                                                         | $                     | 21,716 |        | $ | 4,618 |       | $ | 26,334
|                  |                                                         |                       |        |        |   |       |       |   |       

---

109

---



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

March 30, 2006

March 31, 2005(Successor)

(Successor)U.S. and Canada Theatrical Exhibition

$
20,811

$
26,507International Theatrical Exhibition


471


1,384Other


315


295Total segment reserves


21,597


28,186Corporate


4,737


320$
26,334

$
28,506


NOTE 14RESTRUCTURING

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

Fifty-two Week Period
March 30, 2006

From Inception
July 16, 2004
through
March 31, 2005(In thousands)

Restructuring Severance
Benefits

Merger
Severance
Benefits

Total

Restructuring Severance Benefits(Successor)

(Successor)

(Successor)

(Successor)Beginning Balance

$
4,926

$


$
4,926

$
Restructuring charge


3,139





3,139


4,926Merger adjustment





27,090


27,090


Payments


(8,065
)

(16,519
)

(24,584
)

Ending balance

$


$
10,571

$
10,571

$
4,926


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

March 30, 2006

March 31, 2005(Successor)

(Successor)U.S. and Canada Theatrical Exhibition

$


$
International Theatrical Exhibition





Other





817Total segment reserves





817Corporate


10,571


4,109$
10,571

$
4,926


NOTE 15FAIR VALUE OF FINANCIAL INSTRUMENTS

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

110

---



The
carrying value of cash and equivalents approximates fair value because of the short duration of those instruments. The fair value of publicly held corporate borrowings was based upon
quoted market prices.

The
estimated fair values of the Company's financial instruments are as follows:

March 30, 2006

March 31, 2005(In thousands)

Carrying
Amount

Fair
Value

Carrying
Amount

Fair
Value(Successor)

(Successor)Financial assets:Cash and equivalents

$
230,115

$
230,115

$
72,945

$
72,945Financial liabilities:Cash overdrafts

$
13,829

$
13,829

$
35,320

$
35,320Corporate borrowings


2,455,686


2,427,095


1,344,531


1,370,991Interest rate swaps


2,701


2,701








NOTE 16OPERATING SEGMENTS

The Company has identified three reportable segments around differences in products and services and geographical areas. United States, Canada and International
theatrical exhibition operations are identified as separate segments based on dissimilarities in international markets from United States and Canada. Other is identified as a separate segment due to
differences in products and services offered.

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

The
Company's segments follow the same accounting policies as discussed in Note 1 to the Consolidated Financial Statements.

111

---



Information
about the Company's operations by operating segment is as follows:

|Revenues (In thousands)                |  | 52 Weeks
Ended
March 30, 2006 |           | From Inception
July 16, 2004
through
March 31, 2005 |   | April 2, 2004
through
December 23, 2004 |   | 52 Weeks
Ended
April 1, 2004 |          
|-------------------------------------- |  | ----------------------------- | --------- | --------------------------------------------------- | - | --------------------------------------- | - | ---------------------------- | ---------
|
|U. S. and Canada theatrical exhibition |  | $                             | 1,630,529 |                                                     | $ | 422,563                                 |   | $                            | 1,205,646
|International theatrical exhibition    |  |                               | 87,014    |                                                     |   | 19,870                                  |   |                              | 49,511   
|Other                                  |  |                               | 31,962    |                                                     |   | 16,108                                  |   |                              | 57,711   
|Intersegment elimination               |  |                               | (19,055   | )                                                   |   | (5,641                                  | ) |                              | (18,900  
|                                       |  |                               |           |                                                     |   |                                         |   |                              |          
|Total revenues                         |  | $                             | 1,730,450 |                                                     | $ | 452,900                                 |   | $                            | 1,293,968
|                                       |  |                               |           |                                                     |   |                                         |   |                              |          

|Segment Adjusted EBITDA (In thousands) |  | 52 Weeks
Ended
March 30, 2006 |         | From Inception
July 16, 2004
through
March 31, 2005 |   | April 2, 2004
through
December 23, 2004 |  | 52 Weeks
Ended
April 1, 2004 |        
|-------------------------------------- |  | ----------------------------- | ------- | --------------------------------------------------- | - | --------------------------------------- |  | ---------------------------- | -------
|
|U.S. and Canada theatrical exhibition  |  | $                             | 270,802 |                                                     | $ | 84,794                                  |  | $                            | 219,440
|International theatrical exhibition    |  |                               | 5,707   |                                                     |   | 1,184                                   |  |                              | (3,141 
|Other(1)                               |  |                               | (2,062  | )                                                   |   | 6                                       |  |                              | 7,371  
|                                       |  |                               |         |                                                     |   |                                         |  |                              |        
|Total segment Adjusted EBITDA          |  | $                             | 274,447 |                                                     | $ | 85,984                                  |  | $                            | 223,670
|                                       |  |                               |         |                                                     |   |                                         |  |                              |        

112

---



A
reconciliation of earnings (loss) from continuing operations before income taxes to segment Adjusted EBITDA is as follows:

|(In thousands)                                                 |                                                 | 52 Weeks
Ended
March 30, 2006 |          | From Inception
July 16, 2004
through
March 31, 2005 |        | April 2, 2004
through
December 23, 2004 |        | 52 Weeks
Ended
April 1, 2004 |        
|-------------------------------------------------------------- | ----------------------------------------------- | ----------------------------- | -------- | --------------------------------------------------- | ------ | --------------------------------------- | ------ | ---------------------------- | -------
|
|Earnings (loss) from continuing operations before income taxes |                                                 | $                             | (117,706 | )                                                   | $      | (53,891                                 | )      | $                            | (20,347
|Plus:                                                          |                                                 |                               |          |                                                     |        |                                         |        |                              |        
|                                                               | Interest expense                                |                               |          | 144,988                                             |        |                                         | 54,549 |                              |        
|                                                               | Depreciation and amortization                   |                               |          | 168,821                                             |        |                                         | 45,263 |                              |        
|                                                               | Impairment of long-lived assets                 |                               |          | 11,974                                              |        |                                         |       |                              |        
|                                                               | Preopening expense                              |                               |          | 6,607                                               |        |                                         | 39     |                              |        
|                                                               | Theatre and other closure expense               |                               |          | 601                                                 |        |                                         | 1,267  |                              |        
|                                                               | Restructuring charge                            |                               |          | 3,980                                               |        |                                         | 4,926  |                              |        
|                                                               | Disposition of assets and other gains           |                               |          | (997                                                | )      |                                         | (302   | )                            |        
|                                                               | Investment loss (income)                        |                               |          | 4,393                                               |        |                                         | (3,351 | )                            |        
|                                                               | Other income(2)                                 |                               |          | (1,045                                              | )      |                                         | (33    | )                            |        
|                                                               | General and administrative expenseunallocated: |                               |          |                                                     |        |                                         |        |                              |        
|                                                               |                                                 | Management fee                |          |                                                     | 2,000  |                                         |        | 500                          |        
|                                                               |                                                 | Merger and acquisition costs  |          |                                                     | 12,523 |                                         |        | 22,286                       |        
|                                                               |                                                 | Other(3)                      |          |                                                     | 38,308 |                                         |        | 14,731                       |        
|                                                               |                                                 |                               |          |                                                     |        |                                         |        |                              |        
|Total Segment Adjusted EBITDA                                  |                                                 | $                             | 274,447  |                                                     | $      | 85,984                                  |        | $                            | 223,670
|                                                               |                                                 |                               |          |                                                     |        |                                         |        |                              |        

|Long-term Assets (In thousands)                 |  | March 30, 2006 |           | March 31, 2005 |   | April 1, 2004 |  
|----------------------------------------------- |  | -------------- | --------- | -------------- | - | ------------- | -
|
|U.S. and Canada theatrical exhibition           |  | $              | 4,169,212 |                | $ | 3,136,730     |  
|International theatrical exhibition             |  |                | 396,329   |                |   | 151,401       |  
|Other                                           |  |                |          |                |   |              |  
|                                                |  |                |           |                |   |               |  
|Total segment long-term assets                  |  |                | 4,565,541 |                |   | 3,288,131     |  
|Construction in progress                        |  |                | 34,796    |                |   | 29,078        |  
|Corporate                                       |  |                | 254,717   |                |   | 232,387       |  
|Accumulated depreciationproperty               |  |                | (783,882  | )              |   | (856,392      | )
|Accumulated amortizationintangible assets      |  |                | (61,286   | )              |   | (40,185       | )
|Accumulated amortizationother long-term assets |  |                | (41,336   | )              |   | (35,855       | )
|Noncurrent assets held for sale                 |  |                | 112,337   |                |   |              |  
|                                                |  |                |           |                |   |               |  
|Consolidated long-term assets, net(4)           |  | $              | 4,080,887 |                | $ | 2,617,164     |  
|                                                |  |                |           |                |   |               |  

|Long-term Assets, net of accumulated depreciation and amortization
(In thousands) |  | March 30, 2006 |           | March 31, 2005 |   | April 1, 2004
|--------------------------------------------------------------------------------- |  | -------------- | --------- | -------------- | - | -------------
|
|U.S. and Canada theatrical exhibition                                             |  | $              | 3,347,777 |                | $ | 2,360,480    
|International theatrical exhibition                                               |  |                | 364,630   |                |   | 61,303       
|Other                                                                             |  |                |          |                |   |             
|                                                                                  |  |                |           |                |   |              
|Total segment long-term assets(4)                                                 |  |                | 3,712,407 |                |   | 2,421,783    
|Construction in progress                                                          |  |                | 34,796    |                |   | 29,078       
|Corporate                                                                         |  |                | 221,347   |                |   | 166,303      
|Noncurrent assets held for sale                                                   |  |                | 112,337   |                |   |             
|                                                                                  |  |                |           |                |   |              
|Consolidated long-term assets, net(4)                                             |  | $              | 4,080,887 |                | $ | 2,617,164    
|                                                                                  |  |                |           |                |   |              

113

---



The
components of the reportable segments' long-term assets to long-term assets presented in the Consolidated Balance Sheet are as follows:

|Consolidated Balance Sheet (In thousands) |  | March 30, 2006 |           | March 31, 2005 |   | April 1, 2004
|----------------------------------------- |  | -------------- | --------- | -------------- | - | -------------
|
|Property, net                             |  | $              | 1,501,048 |                | $ | 854,463      
|Intangible assets, net                    |  |                | 273,308   |                |   | 189,544      
|Goodwill                                  |  |                | 2,018,318 |                |   | 1,401,740    
|Deferred income taxes                     |  |                | 3,564     |                |   | 53,019       
|Other long-term assets                    |  |                | 172,312   |                |   | 118,398      
|Noncurrent assets held for sale           |  |                | 112,337   |                |   |             
|                                          |  |                |           |                |   |              
|Consolidated long-term assets, net(4)     |  | $              | 4,080,887 |                | $ | 2,617,164    
|                                          |  |                |           |                |   |              

|Additions to long-term assets, net of acquisitions (In thousands) |  | 52 Weeks
Ended
March 30, 2006 |         | From Inception
July 16, 2004
through
March 31, 2005 |   | April 2, 2004
through
December 23, 2004 |  | 52 Weeks
Ended
April 1, 2004
|----------------------------------------------------------------- |  | ----------------------------- | ------- | --------------------------------------------------- | - | --------------------------------------- |  | ----------------------------
|
|U.S. and Canada theatrical exhibition                             |  | $                             | 90,356  |                                                     | $ | 40,271                                  |  | $                           
|International theatrical exhibition                               |  |                               | 7,570   |                                                     |   | 366                                     |  |                             
|Other                                                             |  |                               | 1       |                                                     |   | 4                                       |  |                             
|                                                                  |  |                               |         |                                                     |   |                                         |  |                             
|Total segment capital expenditures                                |  |                               | 97,927  |                                                     |   | 40,641                                  |  |                             
|Construction in progress                                          |  |                               | 13,634  |                                                     |   | 1,468                                   |  |                             
|Corporate                                                         |  |                               | 6,107   |                                                     |   | 1,805                                   |  |                             
|                                                                  |  |                               |         |                                                     |   |                                         |  |                             
|Total additions to long-term assets, net of acquisitions(2)       |  | $                             | 117,668 |                                                     | $ | 43,914                                  |  | $                           
|                                                                  |  |                               |         |                                                     |   |                                         |  |                             

A
reconciliation of the reportable segments' additions to net assets to the Consolidated Statements of Cash Flow is as follows:

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

114

---



Information
about the Company's revenues and assets by geographic area is as follows:

|Revenues (In thousands) |  | 52 Weeks
Ended
March 30, 2006 |           | From Inception
July 16, 2004
through
March 31, 2005 |   | April 2, 2004
through
December 23, 2004 |  | 52 Weeks
Ended
April 1, 2004
|----------------------- |  | ----------------------------- | --------- | --------------------------------------------------- | - | --------------------------------------- |  | ----------------------------
|
|United States           |  | $                             | 1,593,976 |                                                     | $ | 418,977                                 |  | $                           
|Canada                  |  |                               | 49,460    |                                                     |   | 14,054                                  |  |                             
|China (Hong Kong)       |  |                               | 5,567     |                                                     |   | 2,522                                   |  |                             
|France                  |  |                               | 4,492     |                                                     |   | 1,338                                   |  |                             
|Portugal                |  |                               | 9,173     |                                                     |   | 3,184                                   |  |                             
|Spain                   |  |                               | 34,399    |                                                     |   | 10,256                                  |  |                             
|United Kingdom          |  |                               | 10,465    |                                                     |   | 2,569                                   |  |                             
|Mexico                  |  |                               | 22,918    |                                                     |   |                                        |  |                             
|                        |  |                               |           |                                                     |   |                                         |  |                             
|Total revenues          |  | $                             | 1,730,450 |                                                     | $ | 452,900                                 |  | $                           
|                        |  |                               |           |                                                     |   |                                         |  |                             

|Long-term assets (In thousands), Gross |  | March 30, 2006 |           | March 31, 2005 |   | April 1, 2004
|-------------------------------------- |  | -------------- | --------- | -------------- | - | -------------
|
|United States                          |  | $              | 4,428,750 |                | $ | 3,289,380    
|Canada                                 |  |                | 56,717    |                |   | 100,909      
|China (Hong Kong)                      |  |                |          |                |   | 11,863       
|Japan                                  |  |                |          |                |   | 46,393       
|France                                 |  |                | 9,229     |                |   | 9,797        
|Portugal                               |  |                | 16,343    |                |   | 17,315       
|Spain                                  |  |                | 68,559    |                |   | 60,899       
|United Kingdom                         |  |                | 12,603    |                |   | 13,040       
|Mexico                                 |  |                | 375,190   |                |   |             
|                                       |  |                |           |                |   |              
|Total long-term assets(4)              |  | $              | 4,967,391 |                | $ | 3,549,596    
|                                       |  |                |           |                |   |              

---

115

---



NOTE 17CONDENSED CONSOLIDATING FINANCIAL INFORMATION

The accompanying condensed consolidating financial information of the Predecessor ("AMCE") has been prepared and presented pursuant to SEC
Regulation S-X Rule 3-10 "Financial statements of guarantors and issuers of guaranteed securities registered or being registered." This information is not
necessarily intended to present the financial position, results of operations and cash flows of the individual companies or groups of companies in accordance with accounting principles generally
accepted in the United States of America. Each of the subsidiary guarantors are 100% owned by AMCE. The subsidiary guarantees of AMCE's debts are full and unconditional and joint and several. The
Company's investments in its consolidated subsidiaries are presented under the equity method of accounting.

Condensed
consolidating financial information of the Successor is not presented as AMCE has not guaranteed the outstanding borrowings of Holdings, nor has Holdings guaranteed the
outstanding borrowings of AMCE.

116

---



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

|(In thousands)                                               |                                       | Parent
Obligor                                |          | Subsidiary
Guarantors |        | Subsidiary
Non-Guarantors |           | Consolidating
Adjustments |         | Consolidated AMC
Entertainment, Inc. |       
|------------------------------------------------------------ | ------------------------------------- | --------------------------------------------- | -------- | --------------------- | ------ | ------------------------- | --------- | ------------------------- | ------- | ------------------------------------ | ------
|
|Revenues                                                     |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|                                                             | Admissions                            |                                               | $        |                      |        | $                         | 841,183   |                           | $       | 31,016                               |       
|                                                             | Concessions                           |                                               |          |                      |        |                           | 326,715   |                           |         | 10,888                               |       
|                                                             | Other theatre                         |                                               |          |                      |        |                           | 81,204    |                           |         | 2,962                                |       
|                                                             |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|                                                             |                                       | Total revenues                                |          |                       |       |                           |           | 1,249,102                 |         |                                      | 44,866
|                                                             |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|Costs and Expenses:                                          |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|                                                             | Film exhibition costs                 |                                               |          |                      |        |                           | 449,781   |                           |         | 15,305                               |       
|                                                             | Concession costs                      |                                               |          |                      |        |                           | 37,298    |                           |         | 2,427                                |       
|                                                             | Operating expense                     |                                               |          |                      |        |                           | 319,118   |                           |         | 14,161                               |       
|                                                             | Rent                                  |                                               |          |                      |        |                           | 217,240   |                           |         | 14,968                               |       
|                                                             | General and administrative expense    |                                               |          |                       |        |                           |           |                           |         |                                      |       
|                                                             |                                       | Merger and acquisition costs                  |          |                       |       |                           |           | 42,732                    |         |                                      |      
|                                                             |                                       | Other                                         |          |                       | 143    |                           |           | 33,093                    |         |                                      | 672   
|                                                             | Preopening expense                    |                                               |          |                      |        |                           | 1,292     |                           |         |                                     |       
|                                                             | Theatre and other closure expense     |                                               |          |                      |        |                           | 10,758    |                           |         |                                     |       
|                                                             | Depreciation and amortization         |                                               |          |                      |        |                           | 85,108    |                           |         | 5,151                                |       
|                                                             | Disposition of assets and other gains |                                               |          |                      |        |                           | (2,715    | )                         |         |                                     |       
|                                                             |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|                                                             | Total costs and expenses              |                                               |          | 143                   |        |                           | 1,193,705 |                           |         | 52,684                               |       
|                                                             |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|Other expense (income)                                       |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|                                                             | Equity in net losses of subsidiaries  |                                               |          | 21,531                |        |                           | 13,816    |                           |         |                                     |       
|                                                             | Interest expense                      |                                               |          |                       |        |                           |           |                           |         |                                      |       
|                                                             |                                       | Corporate borrowings (including intercompany) |          |                       | 62,691 |                           |           | 36,817                    |         |                                      | 4,473 
|                                                             |                                       | Capital and financing lease obligations       |          |                       |       |                           |           | 5,758                     |         |                                      | 1,650 
|                                                             | Investment income                     |                                               |          | (38,987               | )      |                           | (3,563    | )                         |         | (1,056                               | )     
|                                                             |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|Total other expense                                          |                                       |                                               | 45,235   |                       |        | 52,828                    |           |                           | 5,067   |                                      |       
|                                                             |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|Loss from continuing operations before income taxes          |                                       |                                               | (45,378  | )                     |        | 2,569                     |           |                           | (12,885 | )                                    |       
|Income tax provision (benefit)                               |                                       |                                               | (9,500   | )                     |        | 24,100                    |           |                           | 400     |                                      |       
|                                                             |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|Loss from continuing operations                              |                                       | $                                             | (35,878  | )                     | $      | (21,531                   | )         | $                         | (13,285 | )                                    | $     
|Loss from discontinued operations, net of income tax benefit |                                       |                                               |         |                       |        |                          |           |                           | (531    | )                                    |       
|                                                             |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|Net loss                                                     |                                       | $                                             | (35,878  | )                     | $      | (21,531                   | )         | $                         | (13,816 | )                                    | $     
|                                                             |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|Preferred dividends                                          |                                       |                                               | 104,300  |                       |        |                           |           |                           |         |                                      |       
|                                                             |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       
|Net loss for shares of common stock                          |                                       | $                                             | (140,178 | )                     |        |                           |           |                           |         |                                      |       
|                                                             |                                       |                                               |          |                       |        |                           |           |                           |         |                                      |       

117

---



52 weeks ended April 1, 2004 (Predecessor):

|(In thousands)                                                 |                                       | Parent
Obligor                                |         | Subsidiary
Guarantors |        | Subsidiary
Non-Guarantors |           | Consolidating
Adjustments |         | Consolidated AMC
Entertainment, Inc. |       
|-------------------------------------------------------------- | ------------------------------------- | --------------------------------------------- | ------- | --------------------- | ------ | ------------------------- | --------- | ------------------------- | ------- | ------------------------------------ | ------
|
|Revenues                                                       |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|                                                               | Admissions                            |                                               | $       |                      |        | $                         | 1,133,170 |                           | $       | 38,010                               |       
|                                                               | Concessions                           |                                               |         |                      |        |                           | 434,857   |                           |         | 12,387                               |       
|                                                               | Other theatre                         |                                               |         |                      |        |                           | 100,745   |                           |         | 3,270                                |       
|                                                               |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|                                                               |                                       | Total revenues                                |         |                       |       |                           |           | 1,668,772                 |         |                                      | 53,667
|                                                               |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|Costs and Expenses:                                            |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|                                                               | Film exhibition costs                 |                                               |         |                      |        |                           | 603,129   |                           |         | 18,719                               |       
|                                                               | Concession costs                      |                                               |         |                      |        |                           | 46,380    |                           |         | 2,832                                |       
|                                                               | Theatre operating expense             |                                               |         |                      |        |                           | 437,468   |                           |         | 16,722                               |       
|                                                               | Rent                                  |                                               |         |                      |        |                           | 280,621   |                           |         | 18,324                               |       
|                                                               | General and administrative expense    |                                               |         |                       |        |                           |           |                           |         |                                      |       
|                                                               |                                       | Merger and acquisition costs                  |         |                       |       |                           |           | 5,508                     |         |                                      |      
|                                                               |                                       | Other                                         |         |                       | 195    |                           |           | 56,117                    |         |                                      | 188   
|                                                               | Preopening expense                    |                                               |         |                      |        |                           | 2,921     |                           |         | 937                                  |       
|                                                               | Theatre and other closure expense     |                                               |         |                      |        |                           | 4,068     |                           |         |                                     |       
|                                                               | Depreciation and amortization         |                                               |         |                      |        |                           | 113,683   |                           |         | 7,184                                |       
|                                                               | Impairment of long-lived assets       |                                               |         |                      |        |                           | 12,747    |                           |         | 3,525                                |       
|                                                               | Disposition of assets and other gains |                                               |         |                      |        |                           | (2,223    | )                         |         | (367                                 | )     
|                                                               |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|                                                               | Total costs and expenses              |                                               |         | 195                   |        |                           | 1,560,419 |                           |         | 68,064                               |       
|                                                               |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|Other expense (income)                                         |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|                                                               | Equity in net losses of subsidiaries  |                                               |         | 2,621                 |        |                           | 19,277    |                           |         |                                     |       
|                                                               | Other expense                         |                                               |         |                      |        |                           | 13,947    |                           |         |                                     |       
|                                                               | Interest expense                      |                                               |         |                       |        |                           |           |                           |         |                                      |       
|                                                               |                                       | Corporate borrowings (including intercompany) |         |                       | 67,928 |                           |           | 53,633                    |         |                                      | 3,488 
|                                                               |                                       | Capital and financing lease obligations       |         |                       |       |                           |           | 8,579                     |         |                                      | 2,175 
|                                                               | Investment income                     |                                               |         | (54,630               | )      |                           | (3,993    | )                         |         | (2,324                               | )     
|                                                               |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|Total other expense                                            |                                       |                                               | 15,919  |                       |        | 91,443                    |           |                           | 3,339   |                                      |       
|                                                               |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|Earnings (loss) from continuing operations before income taxes |                                       |                                               | (16,114 | )                     |        | 16,910                    |           |                           | (17,736 | )                                    |       
|Income tax provision (benefit)                                 |                                       |                                               | (5,400  | )                     |        | 15,700                    |           |                           | 700     |                                      |       
|                                                               |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|Earnings (loss) from continuing operations                     |                                       |                                               | (10,714 | )                     |        | 1,210                     |           |                           | (18,436 | )                                    |       
|Loss from discontinued operations, net of income tax benefit   |                                       |                                               |        |                       |        | (3,831                    | )         |                           | (841    | )                                    |       
|                                                               |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|Net loss                                                       |                                       | $                                             | (10,714 | )                     | $      | (2,621                    | )         | $                         | (19,277 | )                                    | $     
|                                                               |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|Preferred dividends                                            |                                       |                                               | 40,277  |                       |        |                           |           |                           |         |                                      |       
|                                                               |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       
|Net loss for shares of common stock                            |                                       | $                                             | (50,991 | )                     |        |                           |           |                           |         |                                      |       
|                                                               |                                       |                                               |         |                       |        |                           |           |                           |         |                                      |       

118

---



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

|(In thousands)                                                   |                                                                            | Parent
Obligor |          | Subsidiary
Guarantors |   | Subsidiary Non-
Guarantors |         | Consolidating
Adjustments |        | Consolidated AMC
Entertainment, Inc. |  
|---------------------------------------------------------------- | -------------------------------------------------------------------------- | -------------- | -------- | --------------------- | - | -------------------------- | ------- | ------------------------- | ------ | ------------------------------------ | -
|Net cash provided by (used in) operating activities              |                                                                            | $              | 13,042   |                       | $ | 130,915                    |         | $                         | 1,407  |                                      | $
|                                                                 |                                                                            |                |          |                       |   |                            |         |                           |        |                                      |  
|Cash flows from investing activities:                            |                                                                            |                |          |                       |   |                            |         |                           |        |                                      |  
|                                                                 | Capital expenditures                                                       |                |          |                      |   |                            | (63,857 | )                         |        | (2,298                               | )
|                                                                 | Increase in restricted cash                                                |                |          | (627,338              | ) |                            |        |                           |        |                                     |  
|                                                                 | Proceeds from disposition of long-term assets                              |                |          |                      |   |                            | 307     |                           |        | (30                                  | )
|                                                                 | Other, net                                                                 |                |          |                      |   |                            | (2,570  | )                         |        | 3,391                                |  
|                                                                 |                                                                            |                |          |                       |   |                            |         |                           |        |                                      |  
|Net cash (used in) provided by investing activities              |                                                                            |                | (627,338 | )                     |   | (66,120                    | )       |                           | 1,063  |                                      |  
|                                                                 |                                                                            |                |          |                       |   |                            |         |                           |        |                                      |  
|Cash flows from financing activities:                            |                                                                            |                |          |                       |   |                            |         |                           |        |                                      |  
|                                                                 | Proceeds from issuance of 85/8% Senior Unsecured Fixed Rate Notes due 2012 |                |          | 250,000               |   |                            |        |                           |        |                                     |  
|                                                                 | Proceeds from issuance of Senior Unsecured Floating Rate Notes due 2010    |                |          | 205,000               |   |                            |        |                           |        |                                     |  
|                                                                 | Proceeds from issuance of 12% Senior Discount Notes due 2014               |                |          | 169,918               |   |                            |        |                           |        |                                     |  
|Principal payments under capital and financing lease obligations |                                                                            |                |         |                       |   | (1,807                     | )       |                           | (213   | )                                    |  
|Change in intercompany advances                                  |                                                                            |                | (992     | )                     |   | (6,379                     | )       |                           | 7,371  |                                      |  
|Change in construction payables                                  |                                                                            |                |         |                       |   | (2,234                     | )       |                           |       |                                      |  
|Cash portion of preferred dividends                              |                                                                            |                | (9,349   | )                     |   |                           |         |                           |       |                                      |  
|Proceeds from exercise of stock options                          |                                                                            |                | 52       |                       |   |                           |         |                           |       |                                      |  
|Treasury stock purchases and other                               |                                                                            |                | (333     | )                     |   |                           |         |                           |       |                                      |  
|                                                                 |                                                                            |                |          |                       |   |                            |         |                           |        |                                      |  
|Net cash provided by (used in) financing activities              |                                                                            |                | 614,296  |                       |   | (10,420                    | )       |                           | 7,158  |                                      |  
|                                                                 |                                                                            |                |          |                       |   |                            |         |                           |        |                                      |  
|Effect of exchange rate changes on cash and equivalents          |                                                                            |                |         |                       |   |                           |         |                           | (615   | )                                    |  
|                                                                 |                                                                            |                |          |                       |   |                            |         |                           |        |                                      |  
|Net increase (decrease) in cash and equivalents                  |                                                                            |                |         |                       |   | 54,375                     |         |                           | 9,013  |                                      |  
|Cash and equivalents at beginning of period                      |                                                                            |                |         |                       |   | 304,409                    |         |                           | 28,839 |                                      |  
|                                                                 |                                                                            |                |          |                       |   |                            |         |                           |        |                                      |  
|Cash and equivalents at end of period                            |                                                                            | $              |         |                       | $ | 358,784                    |         | $                         | 37,852 |                                      | $
|                                                                 |                                                                            |                |          |                       |   |                            |         |                           |        |                                      |  

119

---



52 weeks ended April 1, 2004 (Predecessor):

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

120

---



NOTE 18RELATED PARTY TRANSACTIONS

Amended and Restated Fee Agreement

In connection with the Mergers, Holdings, AMCE and the Sponsors entered into an Amended and Restated Fee Agreement, which provides for an annual management fee of
$5.0 million, payable quarterly and in advance to each Sponsor, on a pro rata basis, for the twelve year duration of the agreement, as well as reimbursements for each Sponsor's respective
out-of-pocket expenses in connection with the management services provided under the agreement. In addition, the fee agreement will provide for reimbursements by AMCE to the
Sponsors for their out-of-pocket expenses and to Holdings of up to $3.5 million for fees payable by Holdings in any single fiscal year in order to maintain AMCE's
corporate existence, corporate overhead expenses and salaries or other compensation of certain employees.

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

The
fee agreement also provides that AMCE will indemnify the Sponsors against all losses, claims, damages and liabilities arising in connection with the management services provided by
the Sponsors under the fee agreement.

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

---

Continuing Service Agreement

In connection with the termination of his current employment agreement with Loews, the Company is paying Mr. Travis Reid severance of $87,500 per month for
18 months following the closing of the Mergers, has paid him a lump sum payment of $1,575,000, and will provide outplacement assistance and automobile benefits through December 31, 2006.
In addition, in order to facilitate integration following the Mergers, the Company has entered into an agreement with Mr. Reid, whereby Mr. Reid is providing certain transitional
consulting services to the Company and reports to Mr. Peter C. Brown, the Company's Chief Executive Officer. Pursuant to the continuing service agreement, which may be terminated by
Mr. Reid at any time or by the Company after December 31, 2006, the Company is paying Mr. Reid a consulting fee for each month of service at the following rate: $50,000 for each
of the first four months, $33,333 for each of the next four months and $16,667 for any month thereafter. Under certain circumstances, Mr. Reid will have the right to require Holdings to
purchase, and Holdings will have the right to require Mr. Reid to sell, on one occasion, all shares of common stock of Holdings that Mr. Reid received in the Merger in exchange for
payment to him of his original purchase price for his shares of Loews common stock. The continuing

121

---



service
agreement is not intended to create an employment relationship between Mr. Reid and the Company and his services are being provided on an independent contractor basis.

Option Grant to Travis Reid

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

Cinemex

Cinemex from time to time purchases services or enters into arrangements with parties related to its employees. For example, Miguel Angel Dávila,
Chief Executive Officer and President of Cinemex and on the board of Cinemex, and Adolfo Fastlicht Kurián, a Director of Cinemex, are minority investors in the construction of the new
shopping center where one of Cinemex's new theatres opened in December 2004. Mr. Kurián's father is the general manager of three construction companies that provide
theatre construction services to Cinemex and Mr. Kurián is an investor in these companies. In addition, Cinemex signed a waiver to allow a McDonald's restaurant owned by
Mr. Kurián's wife to open in a shopping center where, under the lease, the landlord was prohibited from leasing space to a business that would compete with the theatre's
concessions. A relative of Mr. Dávila is the manager of Consultores en Información Electrónica, S.A. de C.V., the company which renders web hosting,
electronic marketing, e-mail and software services to one of Cinemex's subsidiaries. This arrangement may be terminated by Cinemex upon 30-days notice.

Market Making Transactions

On August 18, 2004, Holdings sold $304,000,000 in aggregate principal amount at maturity of its 12% Senior Discount Notes due 2014 (the "Holdco Notes"). On
the same date, Marquee sold $250,000,000 in aggregate principal amount of its 85/8% Senior Notes due 2012 and $205,000,000 in aggregate principal amount of its Senior Floating Notes due
2010 (Collectively, the "Senior Notes"). J.P. Morgan Securities Inc., an affiliate of JPMP which owns approximately 20.8% of Holdings, was an initial purchaser of both the Holdco Notes and the
Senior Notes.

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

Stockholder Transactions

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

In
connection with the merger with Marquee, Apollo received an aggregate amount of cash proceeds for its shares of approximately (i) $869.8 million, including
$91.1 million attributable to the special change in control distribution payable to Apollo pursuant to the terms of the Series A convertible preferred stock.

122

---



The
Company was required to pay the Marquee Sponsors an annual management fee of up to $2.0 million in the aggregate, payable quarterly, under the Management Fee Agreement. In connection with
the merger with Marquee, Holdings, Marquee and the Marquee Sponsors entered into a management fee agreement pursuant to which AMCE, as the surviving corporation in the merger with Marquee, paid to
each of JPMP and Apollo a one-time sponsorship fee of $10.0 million in consideration of the completion of the merger with Marquee and the capitalization of Holdings. The management
fee agreement also provided for an annual management fee of $2.0 million, payable quarterly and in advance to each Marquee Sponsor for the duration of the agreement, as well as reimbursements
for each Marquee sponsor's respective out-of-pocket expenses in connection with the management services provided under the agreement. In addition, the management fee agreement
provided for reimbursements of up to $3.5 million for fees payable by Holdings in any single fiscal year in order to maintain its corporate existence, corporate overhead expenses and salaries
or other compensation of certain employees. AMCE made cash payments of $1.0 million to the Marquee Sponsors for the annual management fee during the fourth quarter of fiscal 2005. Also in
connection with the merger with Marquee, the Company paid legal fees on behalf of JPMP and Apollo of $6.0 million each and paid legal fees on behalf of the Company's Class B Stockholder
of $170,000. Following consummation of the merger with Marquee, the Company became a privately-held company, wholly owned by Holdings.

123

---



NOTE 19CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY

Marquee
Holdings Inc. is a holding company that conducts substantially all of its business operations through its subsidiaries. The Company was formed on July 16, 2004. The financial
statements for the Successor periods ending March 30, 2006 and for the period from July 16, 2004 through March 31, 2005 are for Marquee Holdings Inc. Refer to Note 17 for the parent company
financial information of the Predecessor for the periods from April 2, 2004 through December 23, 2004 and the period ending April 1, 2004.

There
are significant restrictions on the Company's ability to obtain funds from any of its subsidiaries through dividends, loans or advances. Accordingly, these condensed financial
statements have been presented on a "parent-only" basis. Under a parent-only presentation, the Company's investments in its consolidated subsidiaries are presented under the equity method of
accounting. These parent-only financial statements should be read in conjunction with Marquee Holdings Inc's audited consolidated financial statements included elsewhere herein.

Marquee Holdings Inc.
CONDENSED STATEMENTS OF OPERATIONSPARENT ONLY

|(In thousands)                 |                                          | 52 Weeks
Ended
March 30,
2006 |          | From Inception
July 16, 2004
through
March 31,
2005 |       
|------------------------------ | ---------------------------------------- | ----------------------------- | -------- | --------------------------------------------------- | ------
|
|Costs and Expenses             |                                          |                               |          |                                                     |       
|                               | General and administrative:              |                               |          |                                                     |       
|                               |                                          | Merger and acquisition costs  |          | $                                                   | 36    
|                               |                                          | Other                         |          |                                                     | 267   
|                               |                                          |                               |          |                                                     |       
|                               |                                          | Total costs and expenses      |          |                                                     | 303   
|                               |                                          |                               |          |                                                     |       
|Other expense (income)         |                                          |                               |          |                                                     |       
|                               | Equity in loss of AMC Entertainment Inc. |                               |          | 188,762                                             |       
|                               | Other income                             |                               |          | (1,894                                              | )     
|                               | Interest expense                         |                               |          |                                                     |       
|                               |                                          | Corporate borrowings          |          |                                                     | 22,902
|                               | Investment income                        |                               |          | (258                                                | )     
|                               |                                          |                               |          |                                                     |       
|Total other expense            |                                          |                               | 209,512  |                                                     |       
|                               |                                          |                               |          |                                                     |       
|Loss before income taxes       |                                          |                               | (209,815 | )                                                   |       
|Income tax provision (benefit) |                                          |                               | 2,400    |                                                     |       
|                               |                                          |                               |          |                                                     |       
|Net loss                       |                                          | $                             | (212,215 | )                                                   | $     
|                               |                                          |                               |          |                                                     |       

124

---



Marquee Holdings Inc.
CONSOLIDATED BALANCE SHEETSPARENT ONLY

|(In thousands, except share data)    |                                                                                                                                                                                      | March 30,
2006                             |           | March 31,
2005 |          
|------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | --------- | -------------- | ---------
|
|Assets                               |                                                                                                                                                                                      |                                            |           |                |          
|Cash and equivalents                 |                                                                                                                                                                                      | $                                          | 2,251     |                | $        
|                                     |                                                                                                                                                                                      |                                            |           |                |          
|                                     | Total current assets                                                                                                                                                                 |                                            |           | 2,251          |          
|Investment in AMC Entertainment Inc. |                                                                                                                                                                                      |                                            | 1,243,909 |                |          
|Deferred income taxes                |                                                                                                                                                                                      |                                            |          |                |          
|Other long-term assets               |                                                                                                                                                                                      |                                            | 4,396     |                |          
|                                     |                                                                                                                                                                                      |                                            |           |                |          
|                                     | Total assets                                                                                                                                                                         |                                            | $         | 1,250,556      |          
|                                     |                                                                                                                                                                                      |                                            |           |                |          
|Liabilities and Stockholders' Equity |                                                                                                                                                                                      |                                            |           |                |          
|Current liabilities:                 |                                                                                                                                                                                      |                                            |           |                |          
|                                     | Due to AMC Entertainment Inc.                                                                                                                                                        |                                            | $         | 1,886          |          
|                                     | Accrued expenses and other liabilities                                                                                                                                               |                                            |           | 159            |          
|                                     |                                                                                                                                                                                      |                                            |           |                |          
|                                     |                                                                                                                                                                                      | Total current liabilities                  |           |                | 2,045    
|Corporate borrowings                 |                                                                                                                                                                                      |                                            | 205,127   |                |          
|Other long-term liabilities          |                                                                                                                                                                                      |                                            | 2,881     |                |          
|                                     |                                                                                                                                                                                      |                                            |           |                |          
|                                     | Total liabilities                                                                                                                                                                    |                                            |           | 210,053        |          
|                                     |                                                                                                                                                                                      |                                            |           |                |          
|Stockholders' Equity:                |                                                                                                                                                                                      |                                            |           |                |          
|                                     | Common Stock ($.01 par value, 7,000,000 shares authorized; 0 and 769,350 shares issued and outstanding as of March 30, 2006 and March 31, 2005, respectively)                        |                                            |           |               |          
|                                     | Class A-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00000 and 0 shares issued and outstanding as of March 30, 2006 and March 31, 2005, respectively) |                                            |           | 4              |          
|                                     | Class A-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 382,475.00000 and 0 shares issued and outstanding as of March 30, 2006 and March 31, 2005, respectively) |                                            |           | 4              |          
|                                     | Class N Common Stock nonvoting ($.01 par value, 375,000 shares authorized; 5,128.77496 and 0 shares issued and outstanding as of March 30, 2006 and March 31, 2005, respectively)    |                                            |           |               |          
|                                     | Class L-1 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61252 and 0 shares issued and outstanding as of March 30, 2006 and March 31, 2005, respectively) |                                            |           | 3              |          
|                                     | Class L-2 Common Stock voting ($.01 par value, 1,500,000 shares authorized; 256,085.61252 and 0 shares issued and outstanding as of March 30, 2006 and March 31, 2005, respectively) |                                            |           | 3              |          
|                                     | Additional paid-in capital                                                                                                                                                           |                                            |           | 1,307,752      |          
|                                     | Accumulated other comprehensive income (loss)                                                                                                                                        |                                            |           | (10,658        | )        
|                                     | Accumulated deficit                                                                                                                                                                  |                                            |           | (256,605       | )        
|                                     |                                                                                                                                                                                      |                                            |           |                |          
|                                     |                                                                                                                                                                                      | Total stockholders' equity                 |           |                | 1,040,503
|                                     |                                                                                                                                                                                      |                                            |           |                |          
|                                     |                                                                                                                                                                                      | Total liabilities and stockholders' equity |           | $              | 1,250,556
|                                     |                                                                                                                                                                                      |                                            |           |                |          

125

---



Marquee Holdings Inc.
CONDENSED STATEMENTS OF CASH FLOWSPARENT ONLY

|(In thousands)                              |                                                                                 | 52 Weeks
Ended
March 30, 2006  |       | From Inception
July 16, 2004
through
March 31, 2005 |    
|------------------------------------------- | ------------------------------------------------------------------------------- | ------------------------------ | ----- | --------------------------------------------------- | ---
|
|INCREASE (DECREASE) IN CASH AND EQUIVALENTS |                                                                                 |                                |       |                                                     |    
|Cash flows form operating activities        |                                                                                 |                                |       |                                                     |    
|                                            | Net loss                                                                        |                                | $     | (212,215                                            | )  
|                                            | Adjustments to reconcile net loss to net cash provided by operating activities: |                                |       |                                                     |    
|                                            | Amortization of discount on corporate borrowings                                |                                |       | 22,566                                              |    
|                                            | Non-cash portion of liability-classified options and shares                     |                                |       | (1,894                                              | )  
|                                            | Deferred income taxes                                                           |                                |       | 2,400                                               |    
|                                            | Equity in loss of AMC Entertainment Inc.                                        |                                |       | 188,762                                             |    
|                                            | Net change in operating activities:                                             |                                |       |                                                     |    
|                                            |                                                                                 | Receivables                    |       |                                                     | 701
|                                            |                                                                                 | Accrueds and other liabilities |       |                                                     | (21
|                                            | Other, net                                                                      |                                |       | (428                                                | )  
|                                            |                                                                                 |                                |       |                                                     |    
|                                            | Net cash provided by (used in) operating activities                             |                                |       | (129                                                | )  
|                                            |                                                                                 |                                |       |                                                     |    
|Cash flows form investing activities        |                                                                                 |                                |       |                                                     |    
|                                            | Investment in AMC Entertainment Inc.                                            |                                |       |                                                    |    
|                                            |                                                                                 |                                |       |                                                     |    
|                                            | Net cash (used in) investing activities                                         |                                |       |                                                    |    
|                                            |                                                                                 |                                |       |                                                     |    
|Cash flows form financing activities        |                                                                                 |                                |       |                                                     |    
|                                            | Proceeds from issuance of 12% Senior Discount Notes due 2014                    |                                |       |                                                    |    
|                                            | Proceeds from issuance of common stock                                          |                                |       |                                                    |    
|                                            | Deferred financing costs                                                        |                                |       | 384                                                 |    
|                                            |                                                                                 |                                |       |                                                     |    
|                                            | Net cash provided by financing activities                                       |                                |       | 384                                                 |    
|                                            |                                                                                 |                                |       |                                                     |    
|Net increase in cash and equivalents        |                                                                                 |                                | 255   |                                                     |    
|Cash and equivalents at beginning of year   |                                                                                 |                                | 1,996 |                                                     |    
|                                            |                                                                                 |                                |       |                                                     |    
|Cash and equivalents at end of year         |                                                                                 | $                              | 2,251 |                                                     | $  
|                                            |                                                                                 |                                |       |                                                     |    

126

---



Marquee Holdings Inc.
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITYPARENT ONLY

|                                                                
|----------------------------------------------------------------
|
|
|
|
|
|Successor from Inception on July 16, 2004 through March 30, 2006
|Balance, July 16, 2004                                          
|Comprehensive loss:                                             
|Net loss                                                        
|Foreign currency translation
    adjustment                     
|Unrealized loss on marketable securities                        
|Comprehensive loss                                              
|Stock-based compensationoptions                                
|Issuance of Common Stock                                        
|                                                                
|Balance, March 31, 2005                                         
|Comprehensive loss:                                             
|Net loss                                                        
|Foreign currency translation
    adjustment                     
|Additional minimum pension liability                            
|Unrealized gain on Cinemex swap agreements                      
|Unrealized loss on marketable securities                        
|Comprehensive loss                                              
|Stock-based compensation-options                                
|Issuance of Common Stock for Merger                             
|                                                                
|Balance, March 30, 2006                                         
|                                                                

127

---



|                                                                 | 
|---------------------------------------------------------------- | 
|
|
|
|
|Successor from Inception on July 16, 2004 through March 30, 2006 | 
|Balance, July 16, 2004                                           | 
|Comprehensive loss:                                              | 
|Net loss                                                         | 
|Foreign currency translation
    adjustment                      | 
|Unrealized loss on marketable securities                         | 
|Comprehensive loss                                               | 
|Stock-based compensationoptions                                 | 
|Issuance of Common Stock                                         | 
|                                                                 | 
|Balance, March 31, 2005                                          | 
|Comprehensive loss:                                              | 
|Net loss                                                         | 
|Foreign currency translation
    adjustment                      | 
|Additional minimum pension liability                             | 
|Unrealized gain on Cinemex swap agreements                       | 
|Unrealized loss on marketable securities                         | 
|Comprehensive loss                                               | 
|Stock-based compensation-options                                 | 
|Issuance of Common Stock for Merger                              | 
|                                                                 | 
|Balance, March 30, 2006                                          | 
|                                                                 | 

128

---





Marquee Holdings Inc.
Note to Condensed Financial Statements of Parent Company

BASIS OF PRESENTATION

Holdings is an investment vehicle owned by J.P. Morgan Partners, LLC Apollo Management, L.P. and certain related investment funds and affiliates of Bain Capital
Partners, The Carlyle Group and Spectrum Equity Investors. Holdings was formed for the purpose of acquiring AMC Entertainment Inc. ("AMCE") pursuant to a definitive merger agreement approved by AMCE's
Board of Directors on July 22, 2004. Holdings is a holding company with no operations of its own and it has one direct subsidiary, AMCE. The condensed financial statements for the period
including and after December 23, 2004 are designated as Successor. For the Predecessor periods, AMCE did not have a holding company structure, therefore the results of operations of the Parent
Company are the same as those of AMCE.

The
Parent Company follows the accounting policies as described in Note 1 to the Consolidated Financial Statements of Marquee Holdings Inc. and subsidiary with the exception of
its investment in its subsidiary AMCE for which the Parent Company uses the equity method of accounting.

Debt

For
a discussion of the debt obligations of the Company and its subsidiaries, refer to Note 7 in the audited consolidated financial statements included elsewhere herein.

Commitments and Contingencies

For
a discussion of the commitments and contingencies of the Company and its subsidiaries, refer to Note 12 Commitments and Contingencies in the audited consolidated financial
statements included elsewhere herein.

For
further information, reference should be made to the Notes to Consolidated Financial Statements of the Company included in this Annual Report of Form 10-K.

NOTE 20SUBSEQUENT EVENTS

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

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

129

---



Item 9. Changes in Disagreements With Accountants on Accounting and Financial Disclosure

None

Item 9A. Controls and Procedures



The
Company maintains a set of disclosure controls and procedures designed to ensure that material information required to be disclosed in its filings under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. The Company's Chief Executive Officer and Chief
Financial Officer have evaluated these disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K and have determined that such
disclosure controls and procedures were effective at such time.



There
has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.

Item 9B. Other Information

None

130

---





PART III

Item 10. Directors and Executive Officers of the Registrant.

MANAGEMENT

Our business and affairs are managed by the board of directors of Holdings. The board of directors of Holdings consists of nine members. Pursuant to a
stockholders agreement entered into by Holdings, the Sponsors, the other co-investors party thereto and any additional investor that becomes a party thereto, two members of the board of
directors of Holdings are designated by each of JPMP and Apollo, one member of the board of directors of Holdings is designated by each of Bain Capital Partners, The Carlyle Group and Spectrum Equity
Investors and one member of the board of directors of Holdings is designated by Bain Capital Partners, The Carlyle Group and Spectrum Equity Investors, voting together, so long as such designee is
consented to by each of Bain Capital Partners and The Carlyle Group. See "Certain Relationships and Related Transactions" under Part III Item 13. of this Annual Report on
Form 10-K. In addition, Peter C. Brown, the chief executive officer, is a director of Holdings. The composition of the board of directors of AMC Entertainment is the same as
Holdings.

The
following table sets forth certain information regarding our directors, executive officers and key employees as of April 25, 2006:

|Name                |  | Age |  | Position(s) Held                                                                                                                   
|------------------- |  | --- |  | -----------------------------------------------------------------------------------------------------------------------------------
|Peter C. Brown      |  | 47  |  | Chairman of the Board, Chief Executive Officer and Director (AMCE and American Multi-Cinema, Inc.); President (AMCE)               
|Michael R. Hannon   |  | 45  |  | Director (AMCE)                                                                                                                    
|Stephen P. Murray   |  | 43  |  | Director (AMCE)                                                                                                                    
|Stan Parker         |  | 30  |  | Director (AMCE)                                                                                                                    
|Aaron J. Stone      |  | 33  |  | Director (AMCE)                                                                                                                    
|John Connaughton    |  | 40  |  | Director (AMCE)                                                                                                                    
|Michael Connelly    |  | 54  |  | Director (AMCE)                                                                                                                    
|Benjamin Coughlin   |  | 33  |  | Director (AMCE)                                                                                                                    
|Travis Reid         |  | 51  |  | Director (AMCE)                                                                                                                    
|Philip M. Singleton |  | 59  |  | Executive Vice President (AMCE); President, Chief Operating Officer and Director (American Multi-Cinema, Inc.)                     
|Craig R. Ramsey     |  | 55  |  | Executive Vice President and Chief Financial Officer (AMCE and American Multi-Cinema, Inc.); Director (American Multi-Cinema, Inc.)
|Richard T. Walsh    |  | 52  |  | Executive Vice President (AMCE); Chairman (AMC Film Programming, a division of American Multi-Cinema, Inc.)                        
|John D. McDonald    |  | 48  |  | Executive Vice President, U.S. and Canada Operations (American Multi-Cinema, Inc.)                                                 
|Kevin M. Connor     |  | 43  |  | Senior Vice President, General Counsel and Secretary (AMCE and American Multi-Cinema, Inc.)                                        
|Mark A. McDonald    |  | 47  |  | Executive Vice President, International Operations (AMC Entertainment International, Inc.)                                         
|Chris A. Cox        |  | 40  |  | Vice President and Chief Accounting Officer (AMCE and American Multi-Cinema,Inc.)                                                  
|Terry W. Crawford   |  | 49  |  | Vice President and Treasurer (AMCE and American Multi-Cinema, Inc.)                                                                

131

---



All
our current executive officers hold their offices at the pleasure of our board of directors, subject to rights under their respective employment agreements. There are no family
relationships between or among any directors and executive officers, except that Messrs. John D. McDonald and Mark A. McDonald are brothers.

Mr. Peter C. Brownhas served as a Director of AMCE and American Multi-Cinema, Inc., a subsidiary of AMCE, since
November 12, 1992, as Chairman of the Board and Chief Executive Officer of AMCE since July 1999 and as President of AMCE since January 1997. Mr. Brown served as
Co-Chairman of the Board of AMCE from May 1998 through July 1999 and as Executive Vice President of AMCE from August 1994 to January 1997. Mr. Brown is
also Chairman of the Board, Chief Executive Officer and a Director of American Multi-Cinema, Inc. Mr. Brown is on the Board of Directors for Midway Games, Inc., a leading
developer and publisher of interactive entertainment software. Mr. Brown is a graduate of the University of Kansas.

Mr. Michael R. Hannonhas served as a Director of AMCE since December 23, 2004. Mr. Hannon serves as Partner of J.P.
Morgan Partners, LLC. Prior to joining J.P. Morgan Partners in 1988, Mr. Hannon worked at Morgan Stanley & Co. Mr. Hannon is also a Director of NuVox Communications,
Hanley-Wood, Ascend Media and Olympus Media. Mr. Hannon holds a B.A. degree from Yale University and an M.B.A. degree from Columbia Business School.

Mr. Stephen P. Murrayhas served as a Director of AMCE since December 23, 2004. Mr. Murray serves as Partner of J.P.
Morgan Partners, LLC and is the head of J.P. Morgan Partners' buyout and growth equity investment activity and a member of its investment committee. In addition, Mr. Murray focuses on
investments in consumer, retail and services; financial services; and healthcare infrastructure. Prior to joining J.P. Morgan Partners, Mr. Murray was a Vice President with the Middle-Market
Lending Division of Manufacturers Hanover. Currently, Mr. Murray serves on the board of directors of AMC Entertainment, Inc., Cabela's Incorporated, Jetro JMDH Holdings, Inc., La
Petite Academy, MedQuest Associates, Inc., National Surgical Care, Inc., Pinnacle Foods Corporation, Strongwood Insurance Holdings Company, USA.NET, Warner Chilcott and Zoots.
Mr. Murray holds a B.A. from Boston College and an M.B.A. from Columbia Business School.

Mr. Stan Parkerhas served as a Director of AMCE since December 23, 2004. Mr. Parker is a Partner of Apollo
Management, L.P. which, together with its affiliates, acts as the managing general partner of the Apollo Investment Funds, private securities investment funds. Prior to joining Apollo Management in
2000, Mr. Parker worked in the Financial Entrepreneurs Group at Salomon Smith Barney. Mr. Parker is also a Director of Affinion Group Holdings and United Agri Products. Mr. Parker
holds a B.S. degree in Economics from The Wharton School of Business at the University of Pennsylvania.

Mr. Aaron J. Stonehas served as a Director of AMCE since December 23, 2004. Mr. Stone is a Partner of Apollo
Management, L.P. which, together with its affiliates, acts as managing general partner of the Apollo Investment Funds, private securities investment funds. Mr. Stone is also a Director of
Educate Inc., Hughes Communications, Inc., Intelstat, Ltd and Skyterra Communications Inc. Prior to joining Apollo, Mr. Stone was a member of the Mergers and
Acquisition Group at Smith Barney, Inc. Mr. Stone holds an A.B. Degree from Harvard College.

Mr. John Connaughtonbecame a Director of AMCE upon the closing of the Mergers. Mr. Connaughton joined Bain Capital in 1989.
Prior to joining Bain Capital, Mr. Connaughton was a strategy consultant at Bain & Company where he advised Fortune 500 companies. Mr. Connaughton currently serves as a director
of ProSiebenSat1.Media AG, M/C Communications, Sungard Data Systems, Warner Music Group, Warner Chilcott, CRC Health Group, Cumulus Media Partners, The Boston Celtics and Epoch Senior Living.
Mr. Connaughton received a B.S. from the University of Virginia, and an M.B.A. from Harvard Graduate School of Business.

Mr. Michael Connellybecame a Director of AMCE upon the closing of the Mergers. Mr. Connelly is a Managing Director of The
Carlyle Group focused on U.S. buyout transactions in the telecommunications

132

---



and
media sectors. Prior to joining The Carlyle Group, Mr. Connelly spent more than 25 years in the investment banking and banking industries in the communications sectors. Most recently
he was a Managing Director at Credit Suisse First Boston and prior to that a Managing Director at Donaldson, Lufkin & Jenrette in the Media and Telecommunications Group. Before DLJ, he was in
the Mergers and Acquisitions Group at The First Boston Corporation. He began his career at The Bank of Boston where he focused on media credits and financial restructurings. Mr. Connelly is
also a Director of Insight Communications Company. Mr. Connelly received his M.B.A. from The Wharton School at the University of Pennsylvania and his undergraduate degree at Georgetown
University, where he is a member of the Board of Regents. Mr. Connelly is also a member of the Board of Directors of Pan Am Sat.

Mr. Benjamin Coughlinbecame a Director of AMCE upon the closing of the Mergers. Mr. Coughlin joined Spectrum Equity
Investors in 1997 and has been a Managing Director since 2005. Prior to Spectrum Equity Investors, Mr. Coughlin worked as an Associate at Apax Partners in Munich, Germany, where he was involved
with later-stage and buyout opportunities in the technology and information
services industries. At Spectrum Equity Investors, Mr. Coughlin focuses on buyout investments in the media, information services and communications industries. Mr. Coughlin graduated
from Harvard College with a bachelor's degree, cum laude, in Economics, where he was also a John Harvard Scholar. He is also a member of the Boards of Directors of Apprise Media, Canon Communications
and CBD Media LLC.

Mr. Travis Reidbecame a Director of AMCE following the closing of the Mergers. Prior thereto, Mr. Reid served as President,
Chief Executive Officer and a director of Loews since April 2002. Mr. Reid has been in the film exhibition industry for 30 years. Prior to 2002, Mr. Reid was President,
U.S. and Canadan Operations of Loews beginning May 1998. Mr. Reid served as President of Loews Theatres beginning October 1996 and for the preceding year served as Executive Vice
President, Film Buying of Loews Theatres. Prior to joining Loews in 1991, Mr. Reid held senior film buying positions at General Cinema Corp., Cineamerica Theatres, Century Theatres and Theatre
Management Inc. He began his career at age 20 at a drive-in movie theatre in California. Mr. Reid holds a B.S. in Business Administration from California State University at
Hayward. Mr. Reid is also a director of Fandango.

Mr. Philip M. Singletonwas elected President of American Multi-Cinema, Inc. on January 10, 1997 and has served as
Chief Operating Officer of American Multi-Cinema, Inc. since November 14, 1991. Mr. Singleton has served as Executive Vice President of AMCE since August 3, 1994.
Mr. Singleton has served as a Director of American Multi-Cinema, Inc. since November 12, 1992.

Mr. Craig R. Ramseyhas served as Executive Vice President and Chief Financial Officer of AMCE and American
Multi-Cinema, Inc. since April 3, 2003. Prior thereto, Mr. Ramsey served as Executive Vice President, Chief Financial Officer and Secretary of AMCE and American
Multi-Cinema, Inc. effective April 19, 2002. Mr. Ramsey served as Senior Vice President, Finance, Chief Financial Officer and Chief Accounting Officer, of AMCE and American
Multi-Cinema, Inc. from August 20, 1998 until May 13, 2002. Mr. Ramsey has served as a Director of American Multi-Cinema, Inc. since September 28, 1999.
Mr. Ramsey was elected Chief Accounting Officer of AMCE and American Multi-Cinema, Inc. effective October 15, 1999. Mr. Ramsey served as Vice President, Finance from
January 17, 1997 to October 15, 1999 and prior thereto served as Director of Information Systems and Director of Financial Reporting since joining American Multi-Cinema, Inc. on
February 1, 1995.

Mr. Richard T. Walshhas served as Executive Vice President of AMCE and Chairman, AMC Film Programming, a division of American
Multi-Cinema, Inc., since November 9, 2001. Prior thereto, Mr. Walsh served as Executive Vice President, Film Operations, AMC Film, from September 29, 1999 to
November 9, 2001 and as Senior Vice President in charge of operations for the West Division of AMC from July 1, 1994 to September 29, 1999.

Mr. John D. McDonaldhas served as Executive Vice President, U.S. and Canada Operations of American Multi-Cinema, Inc. since
October 1, 1998. Prior thereto, Mr. McDonald served as Senior Vice President, Corporate Operations from November 9, 1995 until his promotion to Executive Vice President on
October 1, 1998.

133

---



Mr. Kevin M. Connorhas served as Senior Vice President, General Counsel and Secretary of AMCE and American
Multi-Cinema, Inc. since April 3, 2003. Prior thereto, Mr. Connor served as Senior Vice President, Legal of AMCE and American Multi-Cinema, Inc. beginning
November 6, 2002. Prior thereto, Mr. Connor was in private practice in Kansas City, Missouri as a partner with the firm Seigfreid, Bingham, Levy, Selzer and Gee from October 1,
1995.

Mr. Mark A. McDonaldhas served as Executive Vice President, International Operations of AMC Entertainment
International, Inc., a subsidiary of AMCE, since December 7, 1998. Prior thereto, Mr. McDonald served as Senior Vice President, Asia Operations from November 9, 1995 until
his appointment as Executive Vice President in December 1998.

Mr. Chris A. Coxhas served as Vice President and Chief Accounting Officer of AMCE and American Multi-Cinema, Inc. since
May 13, 2002. Prior thereto, Mr. Cox served as Vice President and Controller of American Multi-Cinema, Inc. from November 28, 2000. Previously, Mr. Cox served as
Director of Corporate Accounting for the Dial Corporation from December 1999 until November 2000.

Mr. Terry W. Crawfordhas served as Vice President and Treasurer of AMCE and American Multi-Cinema, Inc. since
April 1, 2005. Prior thereto, Mr. Crawford served as Vice President and Assistant Treasurer of AMCE and American Multi-Cinema, Inc. from December 23, 2004 until
April 1, 2005. Previously, Mr. Crawford served as Vice President, Assistant Treasurer and Assistant Secretary of AMCE from May 13, 2002 until December 23, 2004 and American
Multi-Cinema, Inc. from January 24, 2000 until December 23, 2004. Mr. Crawford served as Assistant Treasurer and Assistant Secretary of AMCE from September 14, 2001
until May 13, 2002 and AMC from November 11, 1999 until January 24, 2004. Mr. Crawford served as Assistant Secretary of AMCE from March 27, 1997 until
September 14, 2001 and American Multi-Cinema, Inc. from March 21, 1997 until November 11, 1999.

Audit Committee Members.We have a separately designated standing audit committee established in accordance with
Section 3(a) (58) (A) of the Securities Exchange Act of 1934 as amended. Since January 26, 2006, the members of the Audit Committee have been Mr. Coughlin,
Mr. Hannon, Mr. Parker and Mr. Reid. The Company does not have an Audit Committee Financial Expert. The Company believes that our Audit Committee, taken as a whole, has the
financial, accounting and other relevant education and experience necessary to effectively and competently discharge such director's responsibilities and duties as a member of the Audit Committee.

Code of Ethics

The Company has adopted a code of ethics that applies to the principal executive officer, principal financial officer and principal accounting officer, or persons
performing similar functions, a copy of which was filed as Exhibit 14 to Form 10-K for the fiscal year ended April 1, 2004.

Item 11. Executive Compensation.

Compensation of Management

The following table provides certain summary information concerning compensation that the Company paid to or accrued on behalf of its Chief Executive Officer and
each of the Company's four other most highly compensated executive officers (determined as of the end of fiscal 2006 and hereafter referred to collectively as the "Named Executive Officers") for the
last three fiscal years ended March 30, 2006, March 31, 2005, and April 1, 2004, respectively.

134

---



Summary Compensation Table

|                                                                            |  | Annual Compensation |  | Long-Term(2)
Compensation Awards
|--------------------------------------------------------------------------- |  | ------------------- |  | --------------------------------
|
|Peter C. Brown
Chairman of the Board, Chief Executive Officer and President |  | 2006
2005
2004      |  | $                               
|Philip M. Singleton
Executive Vice President and Chief Operating Officer    |  | 2006
2005
2004      |  |                                 
|Craig R. Ramsey
Executive Vice President and Chief Financial Officer        |  | 2006
2005
2004      |  |                                 
|Richard T. Walsh
Executive Vice President and Chairman AMC Film Programming |  | 2006
2005
2004      |  |                                 
|John D. McDonald
Executive Vice President North American Operations         |  | 2006
2005
2004      |  |                                 

---

135

---





Option Exercises and Holdings related to Marquee Holdings' Shares

Neither AMC Entertainment nor Holdings made any stock option grants during fiscal 2006 to the Named Executive Officers. The following table provides information
with respect to the Named Executive Officers concerning the exercise of options and unexercised options held as of March 30, 2006.

Aggregated Option/SAR Exercises in Last Fiscal Year
and Fiscal Year End Option/SAR Values

|                    |  |   |  |   |  | Number of Securities
Underlying Unexercised
Options/SARs at FY-End |  | Value of Unexercised In-The-Money
Options/SARs at FY-End
|------------------- |  | - |  | - |  | ------------------------------------------------------------------ |  | --------------------------------------------------------
|
|
|Peter C. Brown      |  |  |  |  |  | 3,273.82979                                                        |  | 13,095.31915                                            
|Philip M. Singleton |  |  |  |  |  | 1,636.91489                                                        |  | 6,547.65958                                             
|Craig R. Ramsey     |  |  |  |  |  | 818.45745                                                          |  | 3,273.82978                                             
|Richard T. Walsh    |  |  |  |  |  | 818.45745                                                          |  | 3,273.82978                                             
|John D. McDonald    |  |  |  |  |  | 409.22872                                                          |  | 1,636.91490                                             

Defined Benefit Retirement and Supplemental Executive Retirement Plans

AMC Entertainment sponsors a defined benefit retirement plan which provides benefits to certain of its employees based upon years of credited service and the
highest consecutive five-year average annual remuneration for each participant. For purposes of calculating benefits, average annual compensation is limited by Section 401(a)
(17) of the Internal Revenue Code, and is based upon wages, salaries and other amounts paid to the employee for personal services, excluding certain special compensation. Under the defined
benefit plan, a participant earns a vested right to an accrued benefit upon completion of five years of vesting service.

AMC
Entertainment also sponsors a supplemental executive retirement plan to provide the same level of retirement benefits that would have been provided under the retirement plan had the
federal tax law not been changed in the Omnibus Budget Reconciliation Act of 1993, which reduced the amount of compensation which can be taken into account in a qualified retirement plan from $215,000
(in 1993), the old limit, to $210,000 (in 2005).

The
following table shows the total estimated annual pension benefits (without regard to minimum benefits) payable to a covered participant under AMC Entertainment's retirement plan and
the supplemental executive retirement plan, assuming retirement in calendar 2004 at age 65, payable in the form
of a single life annuity. The benefits are not subject to any deduction for social security or other offset amounts. The following table assumes the old limit would have been increased to $310,000 in
2005.

|         |  | Years of Credited Service
|-------- |  | -------------------------
|
|
|$125,000 |  | $                        
|150,000  |  |                          
|175,000  |  |                          
|200,000  |  |                          
|225,000  |  |                          
|250,000  |  |                          
|275,000  |  |                          
|295,000  |  |                          
|300,000  |  |                          
|325,000  |  |                          

136

---



As
of March 30, 2006, the years of credited service under the retirement plan for each of the Named Executive Officers were: Mr. Peter C. Brown, 15 years;
Mr. Philip M. Singleton31 years; Mr. Craig R. Ramsey11 years; Mr. Richard T. Walsh30 years; and Mr. John D.
McDonald29 years.

AMC
Entertainment has established a retirement enhancement plan for the benefit of officers who from time to time may be designated as eligible participants therein by the board of
directors. The retirement enhancement plan is a non-qualified deferred compensation plan designed to provide an unfunded retirement benefit to an eligible participant in an amount equal to
(i) sixty percent (60%) of his or her average compensation (including paid and deferred incentive compensation) during the last three full years of employment, less (ii) the sum of
(A) such participant's benefits under the retirement plan and the participant's primary social security benefit at age 65, or if later, at the date of normal retirement, and (B) the
amount of a straight life annuity commencing at the participant's normal retirement date attributable to AMC Entertainment's contributions under the supplemental executive retirement plan, the 401(k)
savings plan and the non-qualified deferred compensation plan. The base amount in clause (i) will be reduced on a pro rata basis if the participant completes fewer than
25 years of service. The retirement enhancement plan benefit may commence to a participant who has attained the later of age 55 or completion of 15 years of service and has participated
in
the plan for at least five years and who retires on or after age 55 on an actuarially reduced basis (62/3% for each of the first five years by which commencement precedes age 65 and an
additional 31/3% for each year by which commencement precedes age 60). Benefits commence at a participant's normal retirement date (i.e., the later of age 65 or the participant's
completion of five years of service) whether or not the participant continues to be employed by AMC Entertainment. The accrued benefit payable upon total and permanent disability is not reduced by
reason of early commencement. A participant will be entitled to receive a benefit under the retirement enhancement plan if such a participant's employment is terminated at AMC Entertainment's request
(other than for cause) or as a result of a change of control (as defined in the retirement enhancement plan). No death, disability or retirement benefit is payable prior to a participant's early
retirement date or prior to the date any severance payments to which the participant is entitled cease.

Mr. Peter
C. Brown and Mr. Philip M. Singleton have been designated as eligible to participate in the retirement enhancement plan. The estimated monthly amounts that
Mr. Brown and Mr. Singleton will be eligible to receive under the retirement enhancement plan at age 65 are $85,208 and $30,410, respectively. These amounts are based on certain
assumptions respecting their future compensation amounts and the amounts of the Company's contributions under other plans. Actual amounts received by such individuals under the retirement enhancement
plan may be different than those estimated.

Employment Contracts, Termination of Employment and Change of Control Arrangements

The Company maintains employment agreements with Messrs. Peter C. Brown, Philip M. Singleton, Craig R. Ramsey, Richard T. Walsh, John D. McDonald and other
less senior officers. The terms of such employment agreements have not changed in any material respect from the employment agreements that existed prior to the Mergers.

Messrs. Peter
C. Brown, Philip M. Singleton, Craig R. Ramsey, Richard T. Walsh and John D. McDonald receive the following annual salaries pursuant to their employment contracts:
Mr. Brown$772,700; Mr. Singleton$496,700; Mr. Ramsey$351,700; Mr. Walsh$358,800; and
Mr. McDonald$351,700. The employment agreements provide for discretionary bonuses, an automobile allowance, reimbursement of reasonable travel and entertainment expenses and other
benefits offered from time to time to other executive officers. The employment agreement of Mr. Brown has a term of five years, that of Mr. Singleton has a term of three years and those
of Mr. Ramsey, Mr. Walsh and Mr. McDonald have terms of two years. On the anniversary date of each employment agreement, one year will be added to its term, so that each
employment agreement always has a five-year, three-year or two-year term, as the case may be, as of each anniversary date. Each employment agreement generally
terminates without severance if such employee is terminated for cause or upon such employee's retirement or resignation without good

137

---



reason,
each as defined in his respective employment agreement. The Company will pay the employee a pro rata portion of the bonus he would otherwise be eligible to receive upon termination by reason
of the employee's retirement after reaching age 65. If any of Messrs. Ramsey, Walsh or McDonald dies, becomes disabled or is terminated without cause or terminates his agreement subsequent to
specified changes in his responsibilities, annual base salary or benefits, each as defined in the agreement, he will be entitled to receive a lump sum cash payment equal to two years annual base
salary. If either Mr. Brown or Mr. Singleton dies, becomes disabled or is terminated without cause or terminates his agreement for good reason or following a change of control, each as
defined in the employee's respective agreement, he will be entitled to receive a lump sum cash payment equal to five times for Mr. Brown and three times for Mr. Singleton, the sum of
such employee's then annual base salary and the annual bonus such employee would be entitled to receive as if the target level had been obtained, and he will have the right to require Holdings to
purchase from him all or any portion of his vested options and shares of Holdings common stock (the "put right"), in exchange for payment for shares equal to the fair market value of Holdings stock
and payment for options equal to the excess of such fair market value over the option exercise price, in each case less applicable withholding. The amounts payable by the Company under these
employment agreements, assuming termination by reason of a change of control (and in the case of Messrs. Ramsey, Walsh and McDonald, assuming specified changes in their employment terms) (and
excluding amounts payable by Holdings in connection with the put right) as of March 30, 2006, were as follows: Mr. Brown$6,567,000;
Mr. Singleton$2,533,000; Mr. Ramsey$703,400; Mr. Walsh$717,600; and Mr. McDonald$703,400.

We
maintain a severance pay plan for full-time salaried nonbargaining employees with at least 90 days of service. For an eligible employee who is subject to the Fair
Labor Standards Act overtime pay requirements, referred to as a "nonexempt eligible employee," the plan provides for severance pay in the case of involuntary termination of employment due to layoff of
the greater of two week's basic pay or one week's basic pay multiplied by the employee's full years of service up to no more than twelve weeks' basic pay. There is no severance pay for a voluntary
termination, unless up to two weeks' pay is authorized in lieu of notice. There is no severance pay for an involuntary termination due to an employee's misconduct. Only two weeks' severance pay is
paid for an involuntary termination due to substandard performance. For an eligible employee who is exempt from the overtime pay requirements, severance pay is discretionary (at the department
head/supervisor level), but will not be less than the amount that would be paid to a nonexempt eligible employee.

Compensation of Directors

The Company pays each non-employee director $50,000 annually for service on the board of directors and, in addition, $1,500 for each board meeting and
$1,000 for each board committee meeting which he attends.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

All
of the issued and outstanding capital stock of AMCE is owned by Holdings. Holdings has common stock issued and outstanding. The table below sets forth certain information regarding
beneficial ownership of the common stock of Holdings held by (i) each of its directors and executive officers who own shares of common stock of Holdings, (ii) all directors and executive
officers of Holdings as a group and (iii) each person known by Holdings to own beneficially more than 5% of Holdings common stock. Holdings believes that each individual or entity named has
sole investment and voting power with respect to shares of common stock of Holdings as beneficially owned by them, except as otherwise noted.

138

---



Security Ownership of Beneficial Owners, Directors and Officers.

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial ownership of Holdings capital stock as of May 26, 2006, with respect to:



|Name and Address                                                    |  | Shares of
Class A-1
Common Stock |  | Shares of
Class A-2
Common Stock |  | Shares of
Class N
Common Stock |  | Shares of
Class L-1
Common Stock |  | Shares of
Class L-1
Common Stock |  | Percentage
of
Ownership |  
|------------------------------------------------------------------- |  | -------------------------------- |  | -------------------------------- |  | ------------------------------ |  | -------------------------------- |  | -------------------------------- |  | ----------------------- | -
|J.P. Morgan Partners Global Investors, L.P. and Related Funds(1)(2) |  | 249,225.00(2)                    |  | 249,225.00(2)                    |  |                               |  |                                 |  |                                 |  | 20.78                   | %
|Apollo Investment Fund V, L.P. and Related Funds(3)(4)              |  | 249,225.00(4)                    |  | 249,225.00(4)                    |  |                               |  |                                 |  |                                 |  | 20.78                   | %
|Bain Capital Holdings (Loews) I, LLC and Related Funds(5)           |  |                                 |  |                                 |  |                               |  | 96,743.45                        |  | 96,743.45                        |  | 15.09                   | %
|The Carlyle Group Partners III Loews, L.P. and Related Funds(6)     |  |                                 |  |                                 |  |                               |  | 96,743.45                        |  | 96,743.45                        |  | 15.09                   | %
|Spectrum Equity Investors IV, L.P. and Related Funds(7)             |  |                                 |  |                                 |  |                               |  | 62,598.71                        |  | 62,598.71                        |  | 9.76                    | %
|Peter C. Brown                                                      |  |                                 |  |                                 |  | 2,542.00                       |  |                                 |  |                                 |  | *                       |  
|Phillip M. Singleton                                                |  |                                 |  |                                 |  | 1,272.00                       |  |                                 |  |                                 |  | *                       |  
|Craig R. Ramsey                                                     |  |                                 |  |                                 |  | 153.00                         |  |                                 |  |                                 |  | *                       |  
|Richard T. Walsh                                                    |  |                                 |  |                                 |  | 153.00                         |  |                                 |  |                                 |  | *                       |  
|John D. McDonald                                                    |  |                                 |  |                                 |  | 127.00                         |  |                                 |  |                                 |  | *                       |  
|Mark A. McDonald                                                    |  |                                 |  |                                 |  | 102.00                         |  |                                 |  |                                 |  | *                       |  
|Kevin M. Connor                                                     |  |                                 |  |                                 |  | 51.00                          |  |                                 |  |                                 |  | *                       |  
|Travis Reid                                                         |  |                                 |  |                                 |  | 728.77                         |  |                                 |  |                                 |  | *                       |  
|All directors and officers as a group (14)                          |  |                                 |  |                                 |  | 5,128.77                       |  |                                 |  |                                 |  | 0.39                    | %

---

139

---





140

---



Equity Compensation Plan Information

The following is a summary of securities authorized for issuance under Holdings' equity compensation plans as of March 30, 2006.

|                                                           |  | Number of shares to be issued
upon exercise of outstanding
options, warrants and rights |  | Weighted average of exercise
price of outstanding
options, warrants and rights |       | Number of securities remaining
available for future issuance under
equity compensation plans(1)
|---------------------------------------------------------- |  | --------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------ | ----- | -----------------------------------------------------------------------------------------------
|Equity compensation plans approved by security holders     |  | 39,476.72872                                                                            |  | $                                                                              | 1,000 |                                                                                                
|Equity compensation plans not approved by security holders |  |                                                                                        |  |                                                                                |      |                                                                                                
|                                                           |  |                                                                                         |  |                                                                                |       |                                                                                                
|Total                                                      |  | 39,476.72872                                                                            |  | $                                                                              | 1,000 |                                                                                                
|                                                           |  |                                                                                         |  |                                                                                |       |                                                                                                

---

Item 13. Certain Relationships and Related Transactions.

The Company seeks to ensure that all transactions with related parties are fair, reasonable and in their best interest. In this regard, generally the board of
directors or one of the committees reviews material transactions between the Company and related parties to determine that, in their best business judgment, such transactions meet that standard. The
Company believes that each of these transactions was on terms at least as favorable to it as could have been obtained from an unaffiliated third party. Set forth below is a description of certain
transactions which have occurred since April 1, 2005 or which involve obligations that remain outstanding as of March 30, 2006.

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

---

For
a description of certain employment agreements between us and Messrs. Peter C. Brown, Philip M. Singleton, John D. McDonald, Richard T. Walsh and Craig R. Ramsey, see
"ManagementCompensation of ManagementEmployment Contracts, Termination of Employment and Change of Control Arrangements."

Governance Agreements

In connection with the Mergers, Holdings, the Sponsors and the other former continuing stockholders of Holdings, as applicable, entered into various agreements
defining the rights of Holdings' stockholders with respect to voting, governance and ownership and transfer of the stock of Holdings, including a Second

141

---



Amended
and Restated Certificate of Incorporation of Holdings, a Second Amended and Restated Stockholders Agreement, a Voting Agreement among Holdings and the former continuing stockholders of
Holdings, a Voting Agreement among Holdings and the former stockholders of LCE Holdings and an Amended and Restated Management Stockholders Agreement among Holdings and certain members of management
of Holdings who are stockholders of Holdings (collectively, the "Governance Agreements").

The
Governance Agreements provide that the Board of Directors for Holdings and our company will consist of up to nine directors, two of whom shall be designated by JPMP, two of whom
shall be designated by Apollo, one of whom shall be the Chief Executive Officer of Holdings, one of whom shall be designated by The Carlyle Group, one of whom shall be designated by Bain Capital
Partners, one of whom shall be designated by Spectrum Equity Investors and one of whom shall be designated by Bain Capital Partners, The Carlyle Group and Spectrum Equity Investors, voting together,
so long as such designee is consented to by each of Bain Capital Partners and The Carlyle Group. Each of the directors respectively designated by JPMP, Apollo, The Carlyle Group, Bain Capital Partners
and Spectrum Equity Investors shall have three votes on all matters placed before the Board of Directors of Holdings and AMCE and each other director will have one vote each. The number of directors
respectively designated by the Sponsors will be reduced upon transfers by such Sponsors of ownership in Holdings below certain thresholds.

The
Voting Agreement among Holdings and the former continuing stockholders of Holdings provides that, until the fifth anniversary of the Merger ("Blockout Period"), the former continuing
stockholders of Holdings (other than Apollo and JPMP) will generally vote their voting shares of capital stock of Holdings in favor of any matter in proportion to the shares of capital stock of Apollo
and JPMP voted in favor of such matter, except in certain specified instances. The Voting Agreement among Holdings and the former stockholders of LCE Holdings further provide that during the Blockout
Period, the former LCE Holdings stockholders will generally vote their voting shares of capital stocks of Holdings on any matter as directed by any two of The Carlyle Group, Bain Capital Partners and
Spectrum Equity Investors, except in certain specified instances. In addition, certain actions of Holdings and/or actions of ours, including, but not limited to, change in control transactions,
acquisition or disposition transactions with a value in excess of $10.0 million, the settlement of claims or litigation in excess of $2.5 million, an initial public offering of Holdings,
hiring or firing a chief executive officer, chief financial officer or chief operating officer, incurring or refinancing indebtedness in excess of $5.0 million or engaging in new lines of
business, require the approval of either (i) any three of JPMP, Apollo, The Carlyle Group or Bain Capital Partners or (ii) Spectrum Equity Investors and (a) either JPMP or Apollo
and (b) either The Carlyle Group or Bain Capital Partners (the "Requisite Stockholder Majority") if at such time they hold at least a majority of Holdings' voting shares.

Prior
to the earlier of the end of the Blockout Period and the completion of an initial public offering of the capital stock of Holdings or AMCE (an "IPO"), the Governance Agreements
prohibit the Sponsors and the other former stockholders of Holdings from transferring any of their interests in Holdings, other than certain permitted transfers to affiliates or to persons approved of
by the Sponsors. Following the end of the Blockout Period, the Sponsors may transfer their shares subject to the rights described below.

The
Governance Agreements set forth additional transfer provisions for the Sponsors and the other former stockholders of Holdings with respect to the interests in Holdings, including the
following:

Right of first offer.After the Blockout Date and prior to an IPO, Holdings and, in the event Holdings does not exercise its
right of first offer, each of its stockholders, has a right of first offer to purchase (on a pro rata basis in the case of the stockholders) all or any portion of the shares of Holdings that a
stockholder is proposing to sell to a third party at the price and on the terms and conditions offered by such third party.

Drag-along rights.If, prior to an IPO, Sponsors constituting a Requisite Stockholder Majority propose to
transfer shares of Holdings to an independent third party in a bona fide arm's-length transaction or series of transactions that results in a sale of all or substantially all of Holdings or us, such

142

---



Sponsors
may elect to require each of the other stockholders of Holdings to transfer to such third party all of its shares at the purchase price and upon the other terms and subject to the conditions
of the sale.

Tag-along rights.Subject to the right of first offer described above, if any stockholder proposes to transfer
shares of Holdings held by it, then such stockholder shall give notice to each other stockholder, who shall each have the right to participate on a pro rata basis in the proposed transfer on the terms
and conditions offered by the proposed purchaser.

Participant rights.On or prior to an IPO, the Sponsors have the pro rata right to subscribe to any issuance by Holdings or
any subsidiary of shares of its capital stock or any securities exercisable, convertible or exchangeable for shares of its capital stock, subject to certain exceptions.

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

Demand rights.Subject to the consent of at least two of any of JPMP, Apollo, The Carlyle Group and Bain Capital Partners
during the first two years following an IPO, each Sponsor has the right at any time following an IPO to make a written request to Holdings for registration under the Securities Act of part or all of
the registrable equity interests held by such stockholders at Holdings' expense, subject to certain limitations. Subject to the same consent requirement, the non-Sponsor stockholders of
Holdings as a group shall have the right at any time following an IPO to make one written request to Holdings for registration under the Securities Act of part or all of the registrable equity
interests held by such stockholders with an aggregate offering price to the public of at least $200 million.

Piggyback rights.If Holdings at any time proposes to register under the Securities Act any equity interests on a form and in
a manner which would permit registration of the registrable equity interests held by stockholders of Holdings for sale to the public under the Securities Act, Holdings shall give written
notice of the proposed registration to each stockholder, who shall then have the right to request that any part of its registrable equity interests be included in such registration, subject to certain
limitations.

Holdback agreements.Each stockholder has agreed that it will not offer for public sale any equity interests during a period
not to exceed 90 days (180 days in the case of the IPO) after the effective date of any registration statement filed by Holdings in connection with an underwritten public offering
(except as part of such underwritten registration or as otherwise permitted by such underwriters), subject to certain limitations.

Amended and Restated Fee Agreement

In connection with the Mergers, Holdings, AMCE and the Sponsors entered into an Amended and Restated Fee Agreement, which provides for an annual management fee of
$5.0 million, payable quarterly and in advance to each Sponsor, on a pro rata basis, for the twelve year duration of the agreement, as well as reimbursements for each Sponsor's respective
out-of-pocket expenses in connection with the management services provided under the agreement. In addition, the fee agreement provide for reimbursements by AMCE to the
Sponsors for their out-of-pocket expenses and to Holdings of up to $3.5 millions for fees payable by Holdings in any single fiscal year in order to maintain its
corporate existence, corporate overhead expenses and salaries or other compensation of certain employees.

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

143

---



The
fee agreement also provides that AMCE will indemnify the Sponsors against all losses, claims, damages and liabilities arising in connection with the management services provided by
the Sponsors under the fee agreement.

Continuing Service Agreement with Travis Reid

In connection with the termination of his current employment agreement with Loews the Company is paying Mr. Travis Reid severance of $87,500 per month for
18 months following the closing of the Mergers, has paid him a lump sum payment of $1,575,000, and will provide outplacement assistance and automobile benefits through December 31, 2006.
In addition, in order to facilitate integration following the Mergers, the Company has entered into an agreement with Mr. Reid, whereby Mr. Reid is providing certain transitional
consulting services to the Company and reports to Mr. Peter C. Brown, our Chief Executive Officer. Pursuant to the continuing service agreement, which may be terminated by Mr. Reid at
any time or by the Company after December 31, 2006, the Company is paying Mr. Reid a consulting fee for each month of service at the following rate: $50,000 for each of the first four
months, $33,333 for each of the next four months and $16,667 for any month thereafter. Under certain circumstances, Mr. Reid will have the right to require Holdings to purchase, and Holdings
will have the right to require Mr. Reid to sell, on one occasion, all shares of common stock of Holdings that Mr. Reid received in the Mergers in exchange for payment to him of his
original purchase price for his shares of Loews common stock. The continuing service agreement is not intended to create an employment relationship between Mr. Reid and the Company and his
services are being provided on an independent contractor basis.

Option Grant to Travis Reid

Pursuant to his Continuing Service Agreement, effective as of January 26, 2006, Holdings has granted Mr. Reid an option under the Holdings 2004
Stock Option Plan to acquire 600 Class N Common Stock at an exercise price not less than the fair market value (as determined by the Board of Directors of Holdings) on the date of grant. The
option is subject to other terms and conditions substantially similar to the terms of Holdings options currently held by employees and is also subject to the Management Stockholders Agreement. The
option vests in three installments on December 23, 2006, 2007 and 2008, and vests in full upon a change of control of Holdings or AMCE.

Cinemex

Cinemex from time to time purchases services or enters into arrangements with parties related to its employees. For example, Miguel Angel Dávila,
Chief Executive Officer and President of Cinemex and on the board of Cinemex, and Adolfo Fastlicht Kurián, a Director of Cinemex, are minority investors in the construction of the new
shopping center where one of Cinemex's new theatres opened in December 2004. Mr. Kurián's father is the general manager of three construction companies that provide
theatre construction services to Cinemex and Mr. Kurián is an investor in these companies. In addition, Cinemex signed a waiver to allow a McDonald's restaurant owned by
Mr. Kurián's wife to open in a shopping center where, under the lease, the landlord was prohibited from leasing space to a business that would compete with the theatre's
concessions. A relative of Mr. Dávila is the manager of Consultores en Información Electrónica, S.A. de C.V., the company which renders web hosting,
electronic
marketing, e-mail and software services to one of Cinemex's subsidiaries. This arrangement may be terminated by Cinemex upon 30-days notice.

Market Making Transactions

On August 18, 2004, Holdings sold $304,000,000 in aggregate principal amount at maturity of its 12% Senior Discount Notes due 2014 (the "Holdco Notes"). On
the same date, Marquee sold $250,000,000 in aggregate principal amount of its 85/8% Senior Notes due 2012 and $205,000,000 in aggregate principal

144

---



amount
of its Senior Floating Notes due 2010 (Collectively, the "Senior Notes"). J.P. Morgan Securities Inc., an affiliate of JPMP which owns approximately 20.8% of Holdings, was an initial
purchaser of both the Holdco Notes and the Senior Notes.

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

Item 14. Principal Accountant Fees and Services

Audit And Certain Other Fees Paid To Accountants

The following table shows the fees that AMC Entertainment was billed for the audit and other services provided by PricewaterhouseCoopers LLP for fiscal years 2006
and 2005. The Audit Committee has considered whether the provision of such services is compatible with maintaining the independence of PricewaterhouseCoopers LLP and determined they were compatible.
The Audit Committee has the sole right to engage and terminate AMC Entertainment's independent registered public accounting firm, to pre-approve their performance of audit services and
permitted non-audit services, and to approve all audit and non-audit fees.

Type of Fee

2006

2005Audit Fees

$
931,037

$
1,241,052Audit-Related Fees


1,911,946


972,238Tax Fees


225,200


1,078,943All Other Fees


1,774


219,378Total

$
3,069,957

$
3,511,611


The
Audit Committee has adopted policies and procedures for the pre-approval of audit services and permitted non-audit services to be performed by its independent
registered public accounting firm in order to assure that the provision of such services does not impair the independent registered public accounting firm's independence. The policies provide general
pre-approval for certain types of services, as well as approved costs for those services. The term of any general pre-approval is 12 months from the date of
pre-approval unless the Audit Committee specifies otherwise. Any costs or services that are not given general pre-approval require specific pre-approval by the
Audit Committee. The policy directs that, if management must make a judgment as to whether a proposed service is a pre-approved service, management should seek approval of the Audit
Committee before such service is performed.

Requests
to provide services that require specific approval by the Audit Committee must be submitted to the Audit Committee by both the independent auditor and management, and must
include a joint statement as to whether, in their view, the request or application is consistent with the SEC's rules on auditor independence.

The
policies provide thatde minimisservices, consisting of audit-related, tax and other services, which were not recognized by AMC
Entertainment to be non-audit services at the time the outside auditor was engaged to perform them are permitted. However, the aggregate amount of all such services may not exceed more
than the lesser of 5% of annual fees paid to the outside auditor or $50,000, for a particular engagement. Thesede minimisservices may be performed
without pre-approval, provided that they are approved by the Audit Committee or delegated member prior to completion of the engagement and are otherwise provided in accordance with
regulations issued pursuant to the Sarbanes-Oxley Act of 2002. There were no fees that related to audit-related, tax and other services for which the pre-approval requirement was waived
under thede minimisexception for fiscal year 2006.

145

---



Audit Fees

This category includes the audit of the Company's annual financial statements, review of financial statements included in the Company's
Form 10-Q Quarterly Reports and services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or
engagements for the fiscal years.

Audit-Related Fees

This category consists of assurance and related services by PricewaterhouseCoopers LLP that are reasonably related to the performance of the audit or review of
the Company's financial statements and are not reported above under "Audit Fees." The services for the fees disclosed under this category include other accounting, consulting, including due diligence
services, and employee benefit plan audits.

Tax Fees

This category consists of professional services rendered by PricewaterhouseCoopers LLP for tax preparation and tax compliance.

All Other Fees

This category consists of services rendered by PricewaterhouseCoopers LLP for technical tax advice.

146

---





PART IV

Item 15. Exhibits, Financial Statement Schedules

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

PageReports of Independent Registered Public Accounting Firm

63Consolidated Statements of OperationsSuccessor periods ended March 30, 2006 and March 31, 2005 and Predecessor periods ended December 23, 2004 and April 1, 2004

64Consolidated Balance SheetsMarch 30, 2006 and March 31, 2005 Successor

65Consolidated Statements of Cash FlowsSuccessor periods ended March 30, 2006 and March 31, 2005 and Predecessor periods ended December 23, 2004 and April 1, 2004

66Consolidated Statements of Stockholders' Equity (Deficit)Periods ended March 30, 2006 and March 31, 2005 Successor, December 23, 2004 Predecessor and April 1, 2004 Predecessor

67Notes to Consolidated Financial StatementsFiscal years ended March 30, 2006, March 31, 2005 and April 1, 2004

69




(b)  Exhibits

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

147

---





SIGNATURES

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

| |  | MARQUEE HOLDINGS INC.
| |  | ---------------------
| |  | By:                  
| |  | Date:                

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

|/s/PETER C. BROWNPeter C. Brown       |  | Chairman of the Board,
Chief Executive Officer and
President |  | June 27, 2006
|------------------------------------- |  | ------------------------------------------------------------ |  | -------------
|/s/MICHAEL R. HANNONMichael R. Hannon |  | Director                                                     |  | June 27, 2006
|/s/STEPHEN P. MURRAYStephen P. Murray |  | Director                                                     |  | June 27, 2006
|/s/STAN PARKERStan Parker             |  | Director                                                     |  | June 27, 2006
|/s/AARON J. STONEAaron J. Stone       |  | Director                                                     |  | June 27, 2006
|/s/JOHN CONNAUGHTONJohn Connaughton   |  | Director                                                     |  | June 27, 2006
|/s/MICHAEL CONNELLYMichael Connelly   |  | Director                                                     |  | June 27, 2006
|/s/BENJAMIN COUGHLINBenjamin Coughlin |  | Director                                                     |  | June 27, 2006
|/s/TRAVIS REIDTravis Reid             |  | Director                                                     |  | June 27, 2006
|/s/CRAIG R. RAMSEYCraig R. Ramsey     |  | Executive Vice President and Chief Financial Officer         |  | June 27, 2006
|/s/KEVIN M. CONNORKevin M. Connor     |  | Senior Vice President, General Counsel and Secretary         |  | June 27, 2006
|/s/CHRIS A. COXChris A. Cox           |  | Vice President and Chief Accounting Officer                  |  | June 27, 2006

148

---





EXHIBIT INDEX

|EXHIBIT NUMBER |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*2.1(a)        |  | Modified First Amended Joint Plan of Reorganization of Debtors and Official Committee of Unsecured Creditors for GC Companies, Inc. and its Jointly Administered Subsidiaries filed on March 1, 2002 with the United States
Bankruptcy Court for the District of Delaware (incorporated by reference from Exhibit 2.2 to Form 8-K filed March 7, 2002).                                                                                                                                                                                                                           
|*2.1(b)        |  | Agreement and Plan of Merger, dated June 20, 2005, by and among Marquee Holdings Inc. and LCE Holdings, Inc. (incorporated by reference from Exhibit 2.1 to the Company's Form 8-K filed on June 24, 2005).                                                                                                                                                                                                                                                                                                                                                                       
|*2.2           |  | Purchase and Sale Agreement, dated as of March 9, 2002, by and among G.S. Theaters, L.L.C., a Louisiana limited liability Company, Westbank Theatres, L.L.C., a Louisiana limited liability company, Clearview Theatres,
L.L.C., a Louisiana limited liability company, Houma Theater, L.L.C., a Louisiana limited liability company, Hammond Theatres, L.L.C., a Louisiana limited liability company, and American Multi-Cinema, Inc. together with Form of Indemnification
Agreement (Appendix J) (incorporated by reference from Exhibit 2.1 to Form 8-K filed March 13, 2002).
|*2.3           |  | Agreement and Plan of Merger, dated as of July 22, 2004 by and among Marquee Holdings, Inc., Marquee Inc. and AMC Entertainment Inc. (incorporated by reference from Exhibit 2.1 to Form 8-K filed June 23,
2004).                                                                                                                                                                                                                                                                                                                                                                
|3.1            |  | Second Amended and Restated Certificate of Incorporation of Marquee Holdings Inc. (incorporated by reference from Exhibit 3.1 to the Company's Form 8-K (File No. 333-122636) filed on January 31,
2006.                                                                                                                                                                                                                                                                                                                                                                          
|3.2            |  | Second Amended and Restated Bylaws of Marquee Holdings Inc. (incorporated by reference from Exhibit 3.2 to the Company's Form 8-K (File No. 333-122636) filed January 31, 2006).                                                                                                                                                                                                                                                                                                                                                                                                  
|*4.1(a)        |  | Credit Agreement, dated January 16, 2006 among AMC Entertainment Inc., Grupo Cinemex, S.A. de C.V., Cadena Mexicana de Exhibicion, S.A. de C.V., the Lenders and the Issuers named therein, Citicorp U.S. and Canada, Inc.
and Banco Nacional de Mexico, S.A., Integrante del Groupo Financiero Banamex. (incorporated by reference from Exhibit 10.7 to the Company's Form 8-K (File No. 1-8747) filed January 31, 2006).                                                                                                                                                        
|*4.1(b)        |  | Guaranty, dated January 26, 2006 by AMC Entertainment Inc. and each of the other Guarantors party thereto, in favor of the Guaranteed Parties named therein (incorporated by reference from Exhibit 10.8 to the Company's
Form 8-K (File No. 1-8747) filed January 31, 2006).                                                                                                                                                                                                                                                                                                     
|*4.1(c)        |  | Pledge and Security Agreement, dated January 26, 2006, by AMC Entertainment Inc. and each of the other Grantors party thereto in favor of Citicorp U.S. and Canada, Inc., as agent for the Secured Parties (incorporated by
reference from Exhibit 10.9 to the Company's Form 8-K (File No. 1-8747) filed January 31, 2006).                                                                                                                                                                                                                                                      
|*4.1(d)        |  | Consent and Release, dated as of April 17, 2006, by and between AMC Entertainment Inc. and Citicorp U.S. and Canada, Inc. (incorporated by reference from Exhibit 4.1(d) to the Company's Form S-4 (File
No. 333-133574) filed April 27, 2006).                                                                                                                                                                                                                                                                                                                                   
|*4.2(a)        |  | Indenture, dated January 27, 1999, respecting AMC Entertainment Inc.'s 91/2% Senior Subordinated Notes due 2011 (incorporated by reference from Exhibit 4.3 to the Company's Form 10-Q (File No.
1-8747) for the quarter ended December 31, 1998).                                                                                                                                                                                                                                                                                                                                
|               |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

149

---



|*4.2(b) |  | Agreement of Resignation, Appointment and Acceptance, dated August 30, 2000, among the Company, The Bank of New York and HSBC Bank USA respecting AMC Entertainment Inc.'s 91/2% Senior
Subordinated Notes due 2011 (incorporated by reference from Exhibit 4.3(a) to the Company's Form 10-Q (File No. 1-8747) for the quarter ended September 28, 2000).
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*4.2(c) |  | First Supplemental Indenture dated March 29, 2002, respecting AMC Entertainment Inc.'s 91/2% Senior Subordinated Notes due 2011 (incorporated by reference from Exhibit 4 to Form 8-K (File No.
1-8747) dated April 10, 2002).                                                                                                                            
|*4.2(d) |  | Second Supplemental Indenture dated December 23, 2004, respecting AMC Entertainment Inc.'s 91/2% Senior Subordinated Notes due 2011 (incorporated by reference from Exhibit 4.1 to the Company's
8-K (File No. 1-8747) filed January 12, 2005).                                                                                                           
|*4.2(e) |  | Third Supplemental Indenture dated January 26, 2006, respecting AMC Entertainment Inc.'s 91/2% Senior Subordinated Notes due 2011 (incorporated by reference from Exhibit 4.2(e) to the Company's
Form 10-Q filed on February 13, 2005).                                                                                                                  
|*4.2(f) |  | Fourth Supplemental Indenture dated April 20, 2006, respecting AMC Entertainment Inc.'s 91/2% Senior Subordinated Notes due 2011 (incorporated by reference from Exhibit 4.2(f) to the Company's
Form S-4 (File No. 333-133574) filed on April 27, 2006).                                                                                                 
|*4.3    |  | Registration Rights Agreement, dated January 27, 1999, respecting AMC Entertainment Inc.'s 91/2% Senior Subordinated Notes due 2011 (incorporated by reference from Exhibit 4.4 to the Company's
Form 10-Q (File No. 1-8747) for the quarter ended December 31, 1998).                                                                                    
|*4.4(a) |  | Indenture, dated January 16, 2002, respecting AMC Entertainment Inc.'s 97/8% Senior Subordinated Notes due 2012 (incorporated by reference from Exhibit 4.5 to Amendment No. 1 to the Company's
Registration Statement on Form S-3 (File No. 333-75208) filed on January 25, 2002).                                                                       
|*4.4(b) |  | First Supplemental Indenture, dated December 23, 2004, respecting AMC Entertainment Inc.'s 97/8% Senior Subordinated Notes due 2012 (incorporated by reference from Exhibit 4.5(b) to the Company's
Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                                                                  
|*4.4(c) |  | Second Supplemental Indenture, dated January 26, 2006, respecting AMC Entertainment Inc.'s 97/8% Senior Subordinated Notes due 2012 (incorporated by reference from Exhibit 4.4(c) to the Company's
Form 10-Q filed on February 13, 2005).                                                                                                                
|*4.4(d) |  | Third Supplemental Indenture dated April 20, 2006, respecting AMC Entertainment Inc.'s 97/8% Senior Subordinated Notes due 2012 (incorporated by reference from Exhibit 4.4(d) to the Company's
Form S-4 (File No. 333-133574) filed April 27, 2006).                                                                                                     
|*4.5    |  | Registration Rights Agreement, dated January 16, 2002, respecting AMC Entertainment Inc.'s 97/8% Senior Subordinated Notes due 2012 (incorporated by reference from Exhibit 4.6 to Amendment No. 1
to the Company's Registration Statement on Form S-3 (File No. 333-75208) filed on January 25, 2002).                                                   
|*4.6(a) |  | Indenture, dated February 24, 2004, respecting AMC Entertainment Inc.'s 8% Senior Subordinated Notes due 2014. (Incorporated by reference from Exhibit 4.7 to the Company's Registration Statement on Form S-4 (File No.
333-113911) filed on March 24, 2004).                                                                                            
|*4.6(b) |  | First Supplemental Indenture, dated December 23, 2004, respecting AMC Entertainment Inc.'s 8% Senior Subordinated Notes due 2014 (incorporated by reference from Exhibit 4.7(b) to the Company's Registration Statement on
Form S-4 (File No. 333-122376) filed on January 28, 2005).                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                           

150

---



|*4.6(c)  |  | Second Supplemental Indenture, dated January 26, 2006, respecting AMC Entertainment Inc.'s 8% Senior Subordinated Notes due 2014 (incorporated by reference from Exhibit 4.6(c) to the Company's Form 10-Q filed on February
13, 2005).                                                                                                     
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*4.6(d)  |  | Third Supplemental Indenture dated April 20, 2006, respecting AMC Entertainment Inc.'s 8% Senior Subordinated Notes due 2014 (incorporated by reference from Exhibit 4.6(d) to the Company's Form S-4 (File
No. 333-133574) filed April 27, 2006).                                                                                          
|*4.7     |  | Registration Rights Agreement, dated February 24, 2004, respecting AMC Entertainment Inc.'s 8% senior subordinated notes due 2014. (Incorporated by reference from Exhibit 4.8 to the Company's Registration Statement on
Form S-4 (File No. 333-113911) filed on March 24, 2004).                                                          
|*4.8(a)  |  | Indenture, dated August 18, 2004, respecting AMC Entertainment Inc.'s, as successor by merger to Marquee Inc.'s, 85/8% Senior Notes due 2012 (incorporated by reference from Exhibit 4.9(a) to the
Company's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                                           
|*4.8(b)  |  | First Supplemental Indenture, dated December 23, 2004, respecting AMC Entertainment Inc.'s, as successor by merger to Marquee Inc.'s, 85/8% Senior Notes due 2012 (incorporated by reference from
Exhibit 4.9(a) to the Company's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                      
|*4.8(c)  |  | Second Supplemental Indenture, dated January 26, 2006, respecting AMC Entertainment Inc.'s, as successor by merger to Marquee Inc.'s, 85/8% Senior Notes due 2012 (incorporated by reference from
Exhibit 4.8(c) to the Company's Form 10-Q filed on February 13, 2005).                                                                    
|*4.8(d)  |  | Third Supplemental Indenture dated April 20, 2006, respecting AMC Entertainment Inc.'s 85/8% Senior Notes due 2012 (incorporated by reference from Exhibit 4.8(d) to the Company's
Form S-4 (File No. 333-133574) filed April 27, 2006).                                                                                                    
|*4.9(a)  |  | Registration Rights Agreement dated August 18, 2004, respecting AMC Entertainment Inc.'s, as successor by merger to Marquee Inc.'s, 85/8% Senior Notes due 2012 (incorporated by reference from
Exhibit 4.10(a) to the Company's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                       
|*4.9(b)  |  | Joinder Agreement to Registration Rights Agreement dated December 23, 2004, respecting AMC Entertainment Inc.'s, as successor by merger to Marquee Inc.'s, 85/8% Senior Notes due 2012
(incorporated by reference from Exhibit 4.10(b) to the Company's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).
|*4.10(a) |  | Indenture, dated August 18, 2004, respecting AMC Entertainment Inc.'s, as successor by merger to Marquee Inc.'s, Senior Floating Rate Notes due 2010 (incorporated by reference from Exhibit 4.11(a) to the Company's
Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                                  
|*4.10(b) |  | First Supplemental Indenture, dated December 23, 2004, respecting AMC Entertainment Inc.'s, as successor by merger to Marquee Inc.'s, Senior Floating Rate Notes due 2010 (incorporated by reference from Exhibit 4.11(b) to
the Company's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).             
|*4.10(c) |  | Second Supplemental Indenture, dated January 26, 2006, respecting AMC Entertainment Inc.'s, as successor by merger to Marquee Inc.'s, Senior Floating Rate Notes due 2010 (incorporated by reference from Exhibit 4.10(c) to
the Company's Form 10-Q filed on February 13, 2005).                                                           
|*4.10(d) |  | Third Supplemental Indenture dated April 20, 2006, respecting AMC Entertainment Inc.'s Senior Floating Rate Notes due 2010 (incorporated by reference from Exhibit 4.10(d) to the Company's Form S-4 (File No.
333-133574) filed on April 27, 2006).                                                                                        
|         |  |                                                                                                                                                                                                                                                                                                                                             

151

---



|*4.11(a) |  | Registration Rights Agreement dated August 18, 2004, respecting AMC Entertainment Inc.'s, as successor by merger to Marquee Inc.'s, Senior Floating Rate Notes due 2010 (incorporated by reference from Exhibit 4.12(a) to
the Company's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                                                                                       
|-------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*4.11(b) |  | Joinder Agreement to Registration Rights Agreement dated December 23, 2004, respecting AMC Entertainment Inc.'s, as successor by merger to Marquee Inc.'s, Senior Floating Rate Notes due 2010 (incorporated by reference
from Exhibit 4.12(b) to the Company's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                                                                
|*4.12(a) |  | Indenture, dated January 26, 2006, respecting AMC Entertainment Inc.'s 11% senior subordinated notes due 2016, between AMC Entertainment Inc. and HSBC Bank USA, National Association (incorporated by reference from Exhibit
4.1 to the Company's Form 8-K (File No. 1-8747) filed on January 31, 2006).                                                                                                           
|*4.12(b) |  | First Supplemental Indenture dated April 20, 2006, respecting AMC Entertainment Inc.'s 11% Senior Subordinated Notes due 2016 (incorporated by reference from Exhibit 4.12(b) to the Company's Form S-4 (File
No. 333-133574) filed April 27, 2006).                                                                                                                                                                
|*4.13    |  | Registration Rights Agreement dated January 26, 2006, respecting AMC Entertainment Inc.'s 11% senior subordinated notes due 2016, among AMC Entertainment Inc., the guarantors party thereto, Credit Suisse Securities (USA)
LLC, Citigroup Global Markets Inc., and J.P. Morgan Securities Inc. (incorporated by reference from Exhibit 4.2 to the company's Form 8-K (File No. 1-8747) filed on January 31, 2006).
|*4.14    |  | Indenture, dated August 18, 2004, respecting Marquee Holdings Inc.'s 12% Senior Discount Notes due 2014 (incorporated by reference from Exhibit 4.13 to Holdings' Registration Statement on Form S-4 (File
No. 333-122636) filed on February 8, 2005).                                                                                                                                                              
|*4.15    |  | Registration Rights Agreement dated August 18, 2004, respecting Marquee Holdings Inc.'s 12% Senior Discount Notes due 2014 (incorporated by reference from Exhibit 4.14 to Holdings' Registration Statement on
Form 5-4 (File No. 333-122636) filed on February 8, 2005).                                                                                                                                           
|*10.1    |  | Consent Decree, dated December 21, 2005, by and among Marquee Holdings Inc., LCE Holdings, Inc. and the State of Washington (incorporated by reference from Exhibit 10.1 to the Company's Form 8-K (File No. 1-8747) filed on
December 27, 2005).                                                                                                                                                                   
|*10.2    |  | Hold Separate Stipulation and Order, dated December 21, 2005, by and among Marquee Holdings Inc., LCE Holdings, Inc. and the State of Washington (incorporated by reference from Exhibit 10.2 to the Company's Form 8-K (File
No. 1-8747) filed on December 27, 2005).                                                                                                                                              
|*10.3    |  | Final Judgment, dated December 20, 2005, by and among Marquee Holdings Inc., LCE Holdings, Inc. and the Antitrust Division of the United States Department of Justice (incorporated by reference from Exhibit 10.3 to the
Company's Form 8-K (File No. 1-8747) filed on December 27, 2005).                                                                                                                         
|*10.4    |  | Hold Separate Stipulation and Order, dated December 20, 2005, by and among Marquee Holdings Inc., LCE Holdings and the Antitrust Division of the United States Department of Justice (incorporated by reference from Exhibit
10.4 to the Company's Form 8-K (File No. 1-8747) filed on December 27, 2005).                                                                                                          
|*10.5    |  | District of Columbia Final Judgment, dated December 21, 2005, by and among Marquee Holdings Inc., LCE Holdings, Inc. and the District of Columbia (incorporated by reference from Exhibit 10.5 to the Company's Form 8-K
(File No. 1-8747) filed on December 27, 2005).                                                                                                                                             
|         |  |                                                                                                                                                                                                                                                                                                                                                                                                                     

152

---



|*10.6     |  | Stipulation for Entry into Final Judgment, dated December 20, 2005, by and among Marquee Holdings Inc., LCE Holdings, Inc. and the State of California (incorporated by reference from Exhibit 10.6 to the Company's Form 8-K
(File No. 1-8747) filed on December 27, 2005).                                                                                                                                                                                                                                                                                                                                         
|--------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*10.7     |  | Stipulated Final Judgment, dated December 20, 2005, by and among Marquee Holdings Inc., LCE Holdings, Inc. and the State of California (incorporated by reference from Exhibit 10.7 to the Company's Form 8-K (File No.
1-8747) filed on December 27, 2005).                                                                                                                                                                                                                                                                                                                                                         
|*10.8     |  | Second Amended and Restated Certificate of Incorporation of Marquee Holdings Inc. (incorporated by reference from Exhibit 10.1 to the Company's Form 8-K (File No. 1-8747) filed on January 31, 2006).                                                                                                                                                                                                                                                                                                                                                                                                               
|*10.9     |  | Second Amended and Restated Stockholders Agreement of Marquee Holdings Inc., dated January 26, 2006, among Marquee Holdings Inc. and the stockholders of Marquee Holdings Inc. party thereto (incorporated by reference from
Exhibit 10.2 to the Company's Form 8-K (File No. 1-8747) filed on January 31, 2006).                                                                                                                                                                                                                                                                                                    
|*10.10    |  | Amended and Restated Management Stockholders Agreement of Marquee Holdings Inc., dated January 26, 2006, among Marquee Holdings Inc. and the stockholders of Marquee Holdings Inc. party thereto (incorporated by reference
from Exhibit 10.3 to the Company's Form 8-K (File No. 1-8747) filed on January 31, 2006).                                                                                                                                                                                                                                                                                                
|*10.11    |  | Continuing Service Agreement, dated January 26, 2006, among AMC Entertainment Inc. (as successor to Loews Cineplex Entertainment Corporation) and Travis Reid, and, solely for the purposes of its repurchase obligations
under Section 7 thereto, Marquee Holding Inc. (incorporated by reference from Exhibit 10.4 to the Company's Form 8-K (File No. 1-8747) filed on January 31, 2006).                                                                                                                                                                                                                         
|*10.12    |  | Non-Qualified Stock Option Agreement, dated January 26, 2006, between Marquee Holdings Inc. and Travis Reid (incorporated by reference from Exhibit 10.5 to the Company's Form 8-K (File No. 1-8747) filed on January 31,
2006).                                                                                                                                                                                                                                                                                                                                                                                     
|*10.13    |  | Amended and Restated Fee Agreement, dated as of January 26, 2006, by and among Marquee Holdings Inc., AMC Entertainment Inc., J.P. Morgan Partners, L.P., Apollo Management V, L.P., Apollo Investment Fund V, L.P., Apollo
Overseas Partners V, L.P., Apollo Netherlands Partners V A), L.P., Apollo Netherlands partners V(B), L.P., Apollo German Partners V GmbH & Co KG Bain Capital Partners, LLC, TC Group, L.L.C., a Delaware limited liability company and Applegate and
Collatos, Inc. (incorporated by reference from Exhibit 10.6 to the Company's Form 8-K (File No. 1-8747) filed on January 31, 2006).
|*10.14    |  | American Multi-Cinema, Inc. Savings Plan, a defined contribution 401(k) plan, restated January 1, 1989, as amended (Incorporated by reference from Exhibit 10.6 to AMCE's Form S-1
(File No. 33-48586) filed June 12, 1992, as amended).                                                                                                                                                                                                                                                                                                                                                                             
|*10.15(a) |  | Defined Benefit Retirement Income Plan for Certain Employees of American Multi-Cinema, Inc. dated January 1, 1989, as amended (Incorporated by reference from Exhibit 10.7 to AMCE's Form S-1
(File No. 33-48586) filed June 12, 1992, as amended).                                                                                                                                                                                                                                                                                                                                                                  
|*10.15(b) |  | AMC Supplemental Executive Retirement Plan dated January 1, 1994 (Incorporated by reference from Exhibit 10.7(b) to AMCE's Form 10-K (File No. 0-12429) for the fiscal year ended March 30,
1995).                                                                                                                                                                                                                                                                                                                                                                                                                   
|*10.16    |  | Employment Agreement between Marquee Holdings, Inc., AMC Entertainment Inc. and Peter C. Brown dated December 23, 2004 (incorporated by reference from Exhibit 10.3 to AMCE's Registration Statement on
Form S-4 (File No. 333-122376) filed on January 28, 2005).                                                                                                                                                                                                                                                                                                                                                   
|          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

153

---



|*10.17 |  | Employment agreement between Marquee Holdings, Inc., AMC Entertainment Inc., American Multi-Cinema, Inc. and Philip M. Singleton dated December 23, 2004 (incorporated by reference from Exhibit 10.4 to
AMCE's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*10.18 |  | Executive Medical Expense Reimbursement and Supplemental Accidental Death or Dismemberment Insurance Plan, as restated effective as of February 1, 1991 (Incorporated by reference from Exhibit 10.13 to AMCE's
Form S-1 (File No. 33-48586) filed June 12, 1992, as amended).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|*10.19 |  | Division Operations Incentive Program (Incorporated by reference from Exhibit 10.15 to AMCE's Form S-1 (File No. 33-48586) filed June 12, 1992, as amended).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|*10.20 |  | Summary of American Multi-Cinema, Inc. Executive Incentive Program (Incorporated by reference from Exhibit 10.36 to AMCE's Registration Statement on Form S-2 (File No. 33-51693) filed December 23,
1993).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|*10.21 |  | First Amended and Restated American Multi-Cinema, Inc. Retirement Enhancement Plan effective July 31, 2003 (incorporated by reference from Exhibit 10.1 to the Company's Form 10-Q (File No. 1-8747) for
the quarter ended October 2, 2003).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|*10.22 |  | Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and Richard M. Fay which commenced on July 1, 2001. (Incorporated by Reference from Exhibit 10.15 to Amendment No. 1 to the
Company's Form 10-K (File No. 1-8747) for the year ended March 29, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|*10.23 |  | AMC Non-Qualified Deferred Compensation Plans (Incorporated by reference from Exhibit 10.37 to Amendment No. 2 to AMCE's Registration Statement on Form S-2 (File No. 33-51693) filed February 18,
1994.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|*10.24 |  | American Multi-Cinema, Inc. Executive Savings Plan (Incorporated by reference from Exhibit 10.28 to AMCE's Registration Statement on Form S-4 (File No. 333-25755) filed April 24, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|*10.25 |  | Agreement of Sale and Purchase dated November 21, 1997 among American Multi-Cinema, Inc. and AMC Realty, Inc., as Seller, and Entertainment Properties Trust, as Purchaser (Incorporated by reference from
Exhibit 10.1 of the Company's Current Report on Form 8-K (File No. 1-8747) filed December 9, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|*10.26 |  | Option Agreement dated November 21, 1997 among American Multi-Cinema, Inc. and AMC Realty, Inc., as Seller, and Entertainment Properties Trust, as Purchaser (Incorporated by reference from Exhibit 10.2 of the
Company's Current Report on Form 8-K (File No. 1-8747) filed December 9, 1997).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|*10.27 |  | Right to Purchase Agreement dated November 21, 1997, between AMC Entertainment Inc., as Grantor, and Entertainment Properties Trust as Offeree (Incorporated by reference from Exhibit 10.3 of the Company's
Current Report on Form 8-K (File No. 1-8747) filed December 9, 1997.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|*10.28 |  | Lease dated November 21, 1997 between Entertainment Properties Trust, as Landlord, and American Multi-Cinema, Inc., as Tenant (Incorporated by reference from Exhibit 10.4 of the Company's Current Report on
Form 8-K (File No. 1-8747) filed December 9, 1997). (Similar leases have been entered into with respect to the following theatres: Mission Valley 20, Promenade 16, Ontario Mills 30, Lennox 24,
West Olive 16, Studio 30 (Houston), Huebner Oaks 24, First Colony 24, Oak View 24, Leawood Town Center 20, South Barrington 30, Gulf Pointe 30, Cantera 30, Mesquite 30, Hampton Town
Center 24, Palm Promenade 24, Westminster Promenade 24, Hoffman Center 22, Elmwood Palace 20, Westbank Palace 16, Clearview Palace 12, Hammond Palace 10, Houma Palace 10, Livonia 20, Forum 30,
Studio 29 (Olathe), Hamilton 24, Deer Valley 30, Mesa Grand 24 and Burbank 16.
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

154

---



|*10.29 |  | Guaranty of Lease dated November 21, 1997 between AMC Entertainment, Inc., as Guarantor, and Entertainment Properties Trust, as Owner (Incorporated by reference from Exhibit 10.5 of the Company's Current Report
on Form 8-K (File No. 1-8747) filed December 9, 1997, (Similar guaranties have been entered into with respect to the following theatres: Mission Valley 20, Promenade 16, Ontario Mills 30, Lennox 24, West
Olive 16, Studio 30 (Houston), Huebner Oaks 24, First Colony 24, Oak View 24, Leawood Town Center 20, South Barrington 30, Gulf Pointe 30, Cantera 30, Mesquite 30, Hampton Town Center 24, Palm
Promenade 24, Westminster Promenade 24, Hoffman Center 22, Elmwood Palace 20, Westbank Palace 16, Clearview Palace 12, Hammond Palace 10, Houma Palace 10, Livonia 20, Forum 30, Studio 29 (Olathe),
 Hamilton 24, Deer Valley 30, Mesa Grand 24 and Burbank 16.
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*10.30 |  | Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and Richard T. Walsh which commenced July 1, 2001. (Incorporated by Reference from Exhibit 10.25 to the Company's
Form 10-K (File No. 1-8747) for the year ended March 29, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|*10.31 |  | Form of Non-Qualified Stock Option Agreement used in December 22, 2004 option grants to Mr. Peter C. Brown and Mr. Philip M. Singleton (incorporated by reference from Exhibit 10.18 to AMCE's
Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|*10.32 |  | Form of Incentive Stock Option Agreement used in December 22, 2004 option grants to Mr. Peter C. Brown and Mr. Philip M. Singleton (incorporated by reference from Exhibit 10.19 to AMCE's Registration
Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|*10.33 |  | Retainer agreement with Raymond F. Beagle, Jr. dated October 1, 2002. (Incorporated by Reference from Exhibit 10.27 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended
September 26, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|*10.34 |  | Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and John D. McDonald which commenced July 1, 2001. (Incorporated by Reference from Exhibit 10.29 to Amendment No. 1 to the
Company's Form 10-K (File No. 1-8747) for the year ended March 29, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|*10.35 |  | Employment agreement between AMC Entertainment Inc., American Multi-Cinema, Inc. and Craig R. Ramsey which commenced on July 1, 2001. (Incorporated by Reference from Exhibit 10.36 to the Company's
Form 10-Q (File No. 1-8747) for the quarter ended June 27, 2002).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|*10.36 |  | Investment Agreement entered into April 19, 2001 by and among AMC Entertainment Inc. and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo
Overseas Partners V, L.P., Apollo Management IV, L.P. and Apollo Management V, L.P. (Incorporated by reference from Exhibit 4.7 to the Company's Form 8-K (File No. 1-8747) filed on April 20, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|*10.37 |  | Standstill Agreement by and among AMC Entertainment Inc., and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P.,
Apollo Management IV, L.P. and Apollo Management V, L.P., dated as of April 19, 2001. (Incorporated by reference from Exhibit 4.8 to the Company's Form 8-K (File No. 1-8747) filed on April 20, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|*10.38 |  | Registration Rights Agreement dated April 19, 2001 by and among AMC Entertainment Inc. and Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo
Overseas Partners V, L.P. (Incorporated by reference from Exhibit 4.9 to the Company's Form 8-K (File No. 1-8747) filed on April 20, 2001).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

155

---



|*10.39    |  | Securities Purchase Agreement dated June 29, 2001 by and among Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P.,
Apollo Management IV, L.P., Apollo Management V, L.P., AMC Entertainment Inc., Sandler Capital Partners V, L.P., Sandler Capital Partners V FTE, L.P. and Sandler Capital Partners V Germany, L.P. (Incorporated by reference
from Exhibit 4.6 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended June 28, 2001).
|--------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*10.40    |  | Form of Indemnification Agreement dated September 18, 2003 between the Company and Peter C. Brown, Charles S. Sosland, Charles J. Egan, Jr., Michael N. Garin, Marc J. Rowan, Paul E.
Vardeman, Leon D. Black and Laurence M. Berg (incorporated by reference from Exhibit 10.1 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended January 1, 2004).                                                                                                                                                                  
|*10.41    |  | 2003 AMC Entertainment Inc. Long-Term Incentive Plan (incorporated by reference from Exhibit 10.2 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended October 2, 2003).                                                                                                                                                                                                                                                                                                                                                
|*10.42    |  | Description of 2004 Grant under the 2003 AMC Entertainment Inc. Long-Term Incentive Plan (incorporated by reference from Exhibit 10.3 to the Company's Form 10-Q (File No. 1-8747) for the quarter ended
October 2, 2003).                                                                                                                                                                                                                                                                                                            
|*10.43(a) |  | Marquee Holdings Inc. 2004 Stock Option Plan (incorporated by reference from Exhibit 10.32(a) to AMCE's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                                                                                                                                                                                                                                                                                                                                          
|*10.43(b) |  | Form of Non-Qualified Stock Option Agreement (incorporated by reference from Exhibit 10.32(b) to AMCE's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                                                                                                                                                                                                                                                                                                                                          
|*10.43(c) |  | Form of Incentive Stock Option Agreement (incorporated by reference from Exhibit 10.32(c) to AMCE's Registration Statement on Form S-4 (File No. 333-122376) filed on January 28, 2005).                                                                                                                                                                                                                                                                                                                                              
|*10.44    |  | Contribution and Unit Holders Agreement, dated as of March 29, 2005, among National Cinema Network, Inc., Regal CineMedia Corporation and National CineMedia, LLC (incorporated by reference from Exhibit 10.1 to
the Company's Form 8-K filed April 4, 2005).                                                                                                                                                                                                                                                                        
|*14       |  | Code of Ethics (incorporated by reference from Exhibit 14 to AMCE's Form 10-K filed on June 23, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                                 
|**21      |  | Subsidiaries of Holdings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|**31.1    |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Acts of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|**31.2    |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Acts of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|**32.1    |  | Section 906 Certifications of Peter C. Brown (Chief Executive Officer) and Craig R. Ramsey (Chief Financial Officer) furnished in accordance with Securities Act Release 33-8212.                                                                                                                                                                                                                                                                                                                                                     

---

156

---



QuickLinks