Table of Contents



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



FORM 10-Q/A

(Amendment No. 1)

(Mark One)ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended January 1, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                             to


Commission file number 1-33344



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

Delaware(State or other jurisdiction of
incorporation or organization)

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

64105(Zip Code)


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



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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer ý (Do not check if a smaller reporting company)

Smaller reporting company o


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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Title of Each Class of Common Stock

Number of Shares
Outstanding as of January 1, 2009Common Stock, 1¢ par value

1




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Table of Contents

Explanatory Note:Marquee Holdings Inc. hereby amends Parts I and II of its Quarterly Report on Form 10-Q for the
quarterly period ended January 1, 2009 ("Original Filing") to include amended Item 1. Financial Statements (unaudited), Item 2, Management's Discussion and Analysis of Financial
Condition and Results of Operations, Item 4. Controls and Procedures and Item 6. Exhibits to give effect to the restatement of the financial statements for the reason described below.

On
May 19, 2009, in connection with the preparation of the year-end financial statements, the Company determined that the previously approved revisions to the
Company's Post-Retirement Medical and Life Insurance Plan (effective on January 1, 2009 and announced on July 3, 2008) should have been accounted for as a negative plan
amendment in accordance with SFAS 106Employers' Accounting for Postretirement Benefits Other than Pensions, rather than as a curtailment of plan
benefits. As a result of the negative plan amendment, the net negative prior service cost of $6 million commenced being amortized as of July 3, 2008 over the active participants'
expected future service periods (approximately 11 years) to full eligibility. Accordingly, the Company has restated its financial statements as of and for the thirteen weeks ended
July 3, 2008, as of and for the thirteen and twenty-six weeks ended October 2, 2008 and as of and for the thirteen and thirty-nine weeks ended January 1,
2009 to reverse the previously recorded curtailment gain and record the resultant amortization.

The
impact of the correction of this error, decreased G&A Other by approximately $0.1 million, decreased loss from continuing operations before income taxes by $0.1 million
and decreased net loss by approximately $0.1 million for the thirteen weeks ended January 1, 2009.

The
impact of the correction of this error, increased G&A Other by approximately $5.7 million, increased loss from continuing operations before income taxes by $5.7 million
and increased net loss by approximately $5.7 million for the thirty-nine weeks ended January 1, 2009. The impact on the balance sheet was to increase accumulated other
comprehensive income (AOCI) by $5.7 million. There was no impact on net cash provided by operating activities as a result of the above mentioned items or any impact on any period prior to
fiscal 2009.

The
information contained in this Form 10-Q/A has not been updated to reflect other events, other than those identified above related to the restatement, occurring
after February 13, 2009, the date of the Original Filing, or to modify or update those disclosures affected by subsequent events, including the changes in segments and discontinued operations
reflected in the January 1, 2009 Form 10-Q/A. Without limitation of the foregoing, this filing does not purport to update Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in the Original Filing of the January 1, 2009 Form 10-Q for any information, uncertainties, transactions, risks, events
or trends known to management occurring subsequent to the filing of the original January 1, 2009 Form 10-Q. More current information is contained in the Company's
Quarterly Reports on Form 10-Q/A for the quarterly period ended January 1, 2009 and other filings with the Securities and Exchange Commission.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY  INDEX



Page
NumberPART IFINANCIAL INFORMATIONItem 1.

Financial Statements (unaudited)

3Consolidated Statements of Operations

3Consolidated Balance Sheets

4Consolidated Statements of Cash Flows

5Notes to Consolidated Financial Statements

6Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

28Item 3.

Quantitative and Qualitative Disclosures About Market Risk

47Item 4T.

Controls and Procedures

48PART IIOTHER INFORMATIONItem 1.

Legal Proceedings

49Item 1A.

Risk Factors

49Item 4

Submission of Matters to a Vote of Security Holders

50Item 6.

Exhibits

51Signatures

52


2

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PART IFINANCIAL INFORMATION

Item 1.    Financial Statements. (Unaudited)



MARQUEE HOLDINGS INC. AND SUBSIDIARY        CONSOLIDATED STATEMENTS OF OPERATIONS        (in thousands)

Thirteen Weeks Ended

Thirty-nine Weeks EndedJanuary 1,
2009

December 27,
2007

January 1,
2009

December 27,
2007(restated)



(restated)(unaudited)

(unaudited)RevenuesAdmissions

$
376,917

$
360,617

$
1,198,365

$
1,207,949Concessions


148,757


141,490


478,507


488,536Other revenue


13,261


18,667


44,292


55,113Total revenues


538,935


520,774


1,721,164


1,751,598Costs and ExpensesFilm exhibition costs


193,098


184,136


635,400


636,922Concession costs


16,000


14,874


51,017


52,254Operating expense


144,671


145,776


446,562


451,323Rent


111,724


109,376


336,873


327,220General and administrative:Merger, acquisition and transaction costs


306


813


558


6,153Management fee


1,250


1,250


3,750


3,750Other


10,741


9,194


33,878


29,485Preopening expense


1,481


2,705


4,541


5,046Theatre and other closure expense (income)


269


1,064


(2,064
)

(15,382
)Depreciation and amortization


50,464


54,141


151,520


165,958Impairment of long-lived assets


73,547





73,547


Disposition of assets and other gains


219


85


(136
)

(1,613
)Total costs and expenses


603,770


523,414


1,735,446


1,661,116Other expense (income)Other


(1,889
)

(2,094
)

(11,793
)

(11,119
)Interest expenseCorporate borrowings


37,003


39,466


110,646


119,697Capital and financing lease obligations


1,497


1,870


4,492


4,844Equity in earnings of non-consolidated entities


(6,033
)

(7,507
)

(15,739
)

(34,932
)Investment income


(927
)

(1,667
)

(1,510
)

(22,298
)Total other expense


29,651


30,068


86,096


56,192Earnings (loss) from continuing operations before income taxes


(94,486
)

(32,708
)

(100,378
)

34,290Income tax provision (benefit)


3,032


(25,571
)

3,600


7,320Earnings (loss) from continuing operations


(97,518
)

(7,137
)

(103,978
)

26,970Earnings (loss) from discontinued operations, net of income taxes


3,135


(2,356
)

8,917


3,822Net earnings (loss)

$
(94,383
)
$
(9,493
)
$
(95,061
)
$
30,792


See Notes to Consolidated Financial Statements.

3

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MARQUEE HOLDINGS INC. AND SUBSIDIARY        CONSOLIDATED BALANCE SHEETS        (in thousands, except share data)

January 1,
2009

April 3,
2008(restated)(unaudited)ASSETSCurrent assets:Cash and equivalents

$
406,599

$
108,717Receivables, net of allowance for doubtful accounts of $1,328 as of January 1, 2009 and $1,597 as of April 3, 2008


63,674


47,130Other current assets


65,967


73,761Current assets held for sale


2,053


Total current assets


538,293


229,608Property, net


988,407


1,250,406Intangible assets, net


167,112


206,674Goodwill


1,868,246


2,070,858Other long-term assets


103,970


119,161Noncurrent assets held for sale





2,300Total assets

$
3,666,028

$
3,879,007LIABILITIES AND STOCKHOLDER'S EQUITYCurrent liabilities:Accounts payable

$
178,228

$
177,354Accrued expenses and other liabilities


139,552


122,417Deferred revenues and income


140,961


134,560Current maturities of corporate borrowings and capital and financing lease obligations


9,828


20,753Total current liabilities


468,569


455,084Corporate borrowings


1,738,820


1,839,329Capital and financing lease obligations


58,142


66,368Deferred revenuesfor exhibitor services agreement


248,443


250,312Other long-term liabilities


298,483


350,498Total liabilities

$
2,812,457

$
2,961,591Stockholder's equity:Common Stock, 1 share issued as of January 1, 2009 and April 3, 2008 with 1¢ par value





Additional paid-in capital


1,047,498


1,047,430Accumulated other comprehensive earnings (loss)


27,562


(3,668
)Accumulated deficit


(221,489
)

(126,346
)Total stockholder's equity


853,571


917,416Total liabilities and stockholder's equity

$
3,666,028

$
3,879,007


See Notes to Consolidated Financial Statements.

4

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MARQUEE HOLDINGS INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Thirty-nine Weeks EndedJanuary 1, 2009

December 27, 2007(restated)(unaudited)INCREASE (DECREASE) IN CASH AND EQUIVALENTSCash flows from operating activities:Net earnings (loss)

$
(95,061
)
$
30,792Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation and amortization


172,590


187,762Amortization of discount on corporate borrowings





10,492Non-cash portion of stock-based compensation


2,323


955Non-cash portion of pension and postretirement expense (income)


(492
)

1,243Impairment of long-lived assets


73,547


Deferred income taxes


(84
)

3,809Disposition of assets and other gains


(2,265
)

(16,152
)Gain on disposition of Cinemex


(14,361
)

Equity in loss (earnings) from partnerships, net of dividends


6,424


(18,705
)Change in assets and liabilities net of effects from acquisitions:Receivables


(21,945
)

(16,980
)Other assets


2,029


(2,543
)Accounts payable


40,261


31,582Accrued expenses and other liabilities


34,410


17,661Other, net


(7,208
)

(2,604
)Net cash provided by operating activities


190,168


227,312Cash flows from investing activities:Capital expenditures


(78,390
)

(99,395
)Construction project costs reimbursable by landlord





(3,388
)Net change in reimbursable construction advances


1,452


(3,420
)Partnership investments, net


(2,257
)

(4,248
)Proceeds from disposition of Fandango


2,383


17,977Proceeds from disposition of HGCSA





28,682Proceeds from restricted cash





1,513LCE screen integration


(4,342
)

(7,481
)Proceeds from disposal of Cinemex


224,686


Proceeds on disposition of long-term assets





175Software licensing and development


(13,216
)

(10,162
)Other, net


2,746


(817
)Net cash provided by (used in) investing activities


133,062


(80,564
)Cash flows from financing activities:Proceeds from financing lease obligations





16,872Repayment of Cinemex Credit Facility





(12,100
)Principal payments under mortgages and capital and financing lease obligations


(2,690
)

(5,212
)Principal payments under Term Loan B


(4,875
)

(4,875
)Change in construction payables


(12,275
)

3,643Dividends paid to Parent


(2,255
)

(270,588
)Deferred financing costs





(4,180
)Net cash used in financing activities


(22,095
)

(276,440
)Effect of exchange rate changes on cash and equivalents


(3,253
)

(1,450
)Net increase (decrease) in cash and equivalents


297,882


(131,142
)Cash and equivalents at beginning of period


108,717


319,533Cash and equivalents at end of period

$
406,599

$
188,391SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash paid during the period for:Interest (including amounts capitalized of $416 and $1,018)

$
84,997

$
82,729Income taxes paid


14,181


15,375Schedule of non-cash investing and financing activities:Assets capitalized under EITF 97-10

$


$
4,600


See Notes to Consolidated Financial Statements.

5

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 1RESTATEMENT OF FINANCIAL STATEMENTS

In
connection with the preparation of its financial statements in May 2009 for the year ended April 2, 2009, the Company determined that the effect of the revisions to its
post-retirement medical and life insurance plan (see Note 13) should have been accounted for as a negative plan amendment in accordance with FAS 106, Employers' Accounting for Postretirement Benefits Other than
Pensions, rather than as a curtailment of plan benefits. Accordingly, the Company has
restated its financial statements as of and for the thirteen and thirty-nine weeks ended January 1, 2009 to reverse the previously recorded curtailment gain of $6 million,
and to commence amortizing as of July 3, 2008, the net negative prior service cost of $6 million resulting from the negative plan amendment over the active participants' expected future
service periods (approximately 11 years) to full eligibility. There was no impact on net cash provided by operating activities as a result of the above mentioned items or any impact on any
period prior to fiscal 2009.

The
net effects of the adjustments recorded to restate the financial statements are summarized as follows (dollars in thousands):

Thirteen
weeks ended January 1, 2009

Financial Statement Line items

Previously Reported

Adjustments

RestatedG&AOther

$
10,877

($
136
)
$
10,741Loss from continuing operations before income taxes


(94,622
)

136


(94,486
)Net loss


(94,519
)

136


(94,383
)


Thirty-nine
weeks ended January 1, 2009

Financial Statement Line items

Previously Reported

Adjustments

RestatedG&AOther

$
28,181

$
5,697

$
33,878Loss from continuing operations before income taxes


(94,681
)

(5,697
)

(100,378
)Net loss


(89,364
)

(5,697
)

(95,061
)


As
of October 2, 2008

Financial Statement Line items

Previously Reported

Adjustments

RestatedAOCI

$
21,865

$
5,697

$
27,562


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

NOTE 2BASIS OF PRESENTATION

Marquee Holdings Inc. ("Holdings") is an investment vehicle owned through AMC Entertainment Holdings, Inc. ("Parent") 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 in 2004 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.

6

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 2BASIS OF PRESENTATION (Continued)

On
June 11, 2007, Marquee Merger Sub Inc. ("merger sub"), a wholly-owned subsidiary of Parent, merged with and into Holdings, with Holdings continuing as the surviving
corporation (the "holdco merger"). As a result of the holdco merger, (i) Holdings became a wholly owned subsidiary of Parent, a newly formed entity controlled by JPMP, Apollo and Bain, Carlyle
and Spectrum (collectively with JPMP and Apollo, the "Sponsors"), (ii) each share of Holdings' common stock that was issued and outstanding immediately prior to the effective time of the holdco
merger was automatically converted into a substantially identical share of common stock of Parent, and (iii) as further described in this report, each of Holdings' governance agreements was
superseded by a substantially identical governance agreement entered into by and among Parent, the Sponsors and Holdings' other stockholders. The holdco merger was effected by the Sponsors to
facilitate a previously announced debt financing by Parent and a related dividend to Holdings' stockholders.

AMCE,
through its direct and indirect subsidiaries, including American Multi-Cinema, Inc. ("AMC") and its subsidiaries' 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") and in China (Hong Kong), France and the
United Kingdom. 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 AMCEI.

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

The
accompanying unaudited consolidated financial statements have been prepared in response to the requirements of Form 10-Q and should be read in conjunction with the
Company's annual report on Form 10-K for the year (53 weeks) ended April 3, 2008. In the opinion of management, these interim financial statements reflect all
adjustments (consisting of normal recurring adjustments) necessary for a fair statement of the Company's financial position and results of operations. Due to the seasonal nature of the Company's
business, results for the thirty-nine weeks ended January 1, 2009 are not necessarily indicative of the results to be expected for the fiscal year (52 weeks) ending
April 2, 2009.

The
April 3, 2008 consolidated balance sheet data was derived from the audited balance sheet included in the Form 10-K, but does not include all disclosures
required by generally accepted accounting principles.

Certain
amounts have been reclassified from prior period consolidated financial statements to conform to the current period presentation.

Impairments.The Company reviews long-lived assets, including intangibles and investments in unconsolidated subsidiaries accounted for
under the equity method, marketable equity securities and internal use software for impairment as part of its annual budgeting process and whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be fully recoverable.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 2BASIS OF PRESENTATION (Continued)

The
Company identifies impairments related to internal use software when management determines that the remaining carrying value of the software will not be realized through future use. The Company
reviews internal management reports on a quarterly basis as well as monitors current and potential future competition in the markets where it operates for indicators of triggering events or
circumstances
that indicate impairment of individual theatre assets. The Company evaluates 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. The Company performed an interim impairment analysis during the third quarter of fiscal 2009 as a result of the
recent downturns in the current economic operating environment related to the credit and capital market crisis. Under 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
unless it is probable the lease period will be extended and may be less than the remaining lease period when the Company 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. 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 2009.

There
is considerable management judgment necessary to determine the future cash flows, fair value and the expected operating period of the Company's theatres and other
long-lived assets, and, accordingly, actual results could vary significantly from such estimates. During the thirteen and thirty-nine weeks ended January 1, 2009 the
Company recognized non-cash impairment losses of $73,547,000 related to theatre fixed assets, internal use software, and assets held for sale. The Company recognized an impairment loss of
$65,636,000 on 34 theatres with 520 screens (in California, Canada, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, New York, North Carolina, Ohio, Texas, Virginia, Washington and
Wisconsin). Of the theatre charge, $1,365,000 was related to intangible assets, net, and $64,271,000 was related to property, net. The Company recognized an impairment loss on abandonment of internal
use software recorded in other long-term assets of $7,125,000 when management determined that the carrying value would not be realized through future use; and adjusted the carrying value
of its assets held for sale to reflect the subsequent sales proceeds received in January 2009 and declines in fair value which resulted in an impairment charge of $786,000.

Additionally,
the Company recognized an impairment loss of $2,742,000 recorded in equity in earnings of non-consolidated entities related to an equity method investment in
one U.S. Motion picture theatre where the estimated fair value based on discounted cash flows was less than the carrying value and recognized an impairment loss of $1,512,000 recorded in investment
income related to unrealized losses previously recorded in accumulated other comprehensive income on marketable equity securities related to one of its deferred compensation plans where the Company
determined the decline in fair value below historical cost to be other than temporary.

8

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 2BASIS OF PRESENTATION (Continued)

Goodwill and Other Intangible Assets.The Company's recorded goodwill was $1,846,246,000 and $2,070,858,000 as of January 1, 2009
and
April 3, 2008, respectively and unamortized trademark intangible assets were $74,000,000 as of January 1, 2009 and $81,194,000 as of April 3, 2008. The Company evaluates goodwill
for impairment annually as of the beginning 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 the Theatrical Exhibition operating segment, which is also the reporting unit for purposes of evaluating its 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 based on a contemporaneous valuation using discounted cash flows and reflecting market
conditions which it believes is an appropriate method to determine fair value. There is considerable management judgment with respect to the cash flow estimates and appropriate discount factors and
market multiples used in determining fair value.

The
Company performed an interim impairment analysis during the third quarter of fiscal 2009 as a result of the recent downturns in the current economic operating environment related to
the credit and capital market crisis and declines in equity values for its publicly traded peer group competitors. While the fair value of the Company's Theatrical Exhibition operations either
approximates or exceeds the carrying value at the present time and management does not believe that impairment is probable, the performance of the Company's Theatrical Exhibition operations requires
continued improvement in future periods to sustain its carrying value and small changes in certain assumptions can have a significant impact on fair value. For example, a 100 basis point increase in
the Company's weighted average cost of capital would reduce the estimated fair value of its reporting unit by approximately $150,000,000 and a 100 basis point decrease in the Company's weighted
average cost of capital would increase the estimated fair value of its reporting unit by $150,000,000. In the future, if the carrying value of the Company's reporting unit exceeds the estimated 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 for purposes of measuring goodwill. As a result of this hypothetical allocation, the carrying value of goodwill could be reduced to the hypothetically
recomputed amount. If the performance of its Theatrical Exhibition operations does not continue to improve, a future impairment could result for a portion or all of the goodwill or trademark
intangibles noted previously.

NOTE 3DISCONTINUED OPERATIONS

On December 29, 2008, the Company sold all of its interests in Cinemex which operates 44 theatres with 493 screens primarily in the Mexico City Metropolitan Area to
Entretenimiento GM de Mexico S.A. de C.V. Under the Stock Purchase Agreement for the transaction, the purchase price was $315,000,000, decreased by the amount of net funded indebtedness of
Cinemex and other specified items of $66,859,000. Costs related to the disposition are estimated to be $4,041,000. Additionally, the Company estimates that it will receive an additional $12,647,000 in
the form of tax payments and refunds in later periods. The Company has recorded a gain on disposition before income taxes of $14,361,000 related to the disposition that is included as discontinued
operations. The Stock Purchase Agreement also provides for post-closing adjustments for working capital and other variable

9

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 3DISCONTINUED OPERATIONS (Continued)

components
of the final purchase price which had not been determined as of February 13, 2009 but are not expected to be material.

The
Company acquired Cinemex in January 2006 as part of a larger acquisition of Loews Cineplex Entertainment Corporation. The Company does not operate any other theatres in Mexico and
has divested of the majority of its other investments in international theatres in Japan, Hong Kong, Spain, Portugal, Sweden, Argentina, Brazil, Chile, and Uruguay over the past several years as part
of its overall business strategy.

The
operations and cash flows of the Cinemex theatres have been eliminated from the Company's ongoing operations as a result of the disposal transaction. The Company will not have any
significant continuing involvement in the operations of the Cinemex theatres after the disposition. The results of operations of the Cinemex theatres have been classified as discontinued operations,
and information presented for all periods reflects the new classification. The operations of the Cinemex theatres were previously reported in the Company's International Theatrical Exhibition
operating segment. Components of amounts reflected as earnings (loss) from discontinued operations in the Company's consolidated Statements of Operations are presented in the following table:

Statements
of operations data:

Thirteen Weeks Ended

Thirty-nine Weeks Ended(in thousands)

January 1, 2009

December 27, 2007

January 1, 2009

December 27, 2007(unaudited)

(unaudited)RevenuesAdmissions

$
14,927

$
17,789

$
62,009

$
65,704Concessions


10,720


12,086


44,744


45,470Other revenue


6,551


8,331


21,755


20,104Total revenues


32,198


38,206


128,508


131,278Costs and ExpensesFilm exhibition costs


6,402


7,432


27,338


28,271Concession costs


2,380


2,680


10,158


10,473Operating expense


9,368


11,345


32,699


31,939Rent


4,373


3,471


14,934


13,916General and administrative:Merger, acquisition and transaction costs











Management fee











Other


2,584


2,659


8,880


8,166Depreciation and amortization


6,012


8,183


21,070


21,804Gain on disposition of Cinemex


(14,361
)




(14,361
)

Total costs and expenses


16,758


35,770


100,718


114,569Other expense (income)


938





416


Interest expenseCorporate borrowings


2,079


2,340


7,299


8,773Capital and financing lease obligations


173


155


582


472Investment income


(353
)

(474
)

(1,124
)

(1,238
)Total other expense


2,837


2,021


7,173


8,007Earnings before income taxes


12,603


415


20,617


8,702Income tax provision


9,468


2,771


11,700


4,880Net earnings (loss)

$
3,135

$
(2,356
)
$
8,917

$
3,822


10

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 4COMPREHENSIVE EARNINGS (LOSS), RESTATED

The components of comprehensive earnings (loss) are as follows (in thousands):

Thirteen Weeks Ended

Thirty-nine Weeks EndedJanuary 1, 2009

December 27, 2007

January 1, 2009

December 27, 2007(restated)



(restated)Net earnings (loss)

$
(94,383
)
$
(9,493
)
$
(95,061
)
$
30,792Foreign currency translation adjustment


26,630


455


23,666


(7,836
)Pension and other benefit adjustments


306


(220
)

5,960


(785
)Change in fair value of cash flow hedges


(2,575
)

(2,281
)

(1,910
)

(2,060
)Losses (gains) on interest rate swaps reclassified to interest expense: corporate borrowings


824


(99
)

3,233


738Decrease (increase) in unrealized loss on marketable securities


965


(62
)

281


232Total comprehensive earnings (loss)

$
(68,233
)
$
(11,700
)
$
(63,831
)
$
21,081


NOTE 5GOODWILL AND OTHER INTANGIBLE ASSETS

Activity of goodwill by operating segment is presented below.

(In thousands)

U.S. and Canada

International

TotalBalance as of April 3, 2008

$
1,868,246

$
202,612

$
2,070,858Currency translation adjustment





(45,977
)

(45,977
)Disposition of Cinemex





(156,635
)

(156,635
)Balance as of January 1, 2009

$
1,868,246

$


$
1,868,246


11

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 5GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

Activity
of other intangible assets is presented below.

January 1, 2009

April 3, 2008(In thousands)

Remaining Useful Life

Gross Carrying Amount

Accumulated Amortization

Gross Carrying Amount

Accumulated AmortizationAcquired Intangible Assets:Amortizable Intangible Assets:Favorable leases

1 to 13 years

$
104,646

$
(33,904
)
$
115,419

$
(33,233
)Loyalty program

3 years


46,000


(33,672
)

46,000


(29,946
)LCE trade name

3 years


2,300


(1,345
)

2,300


(1,000
)LCE/Cinemex advertising and management contracts

1 to 23 years


35,400


(26,823
)

52,147


(27,610
)Other intangible assets

1 to 14 years


13,654


(13,144
)

19,088


(17,685
)Total, amortizable



$
202,000

$
(108,888
)
$
234,954

$
(109,474
)Unamortized Intangible Assets:AMC trademark



$
74,000




$
74,000Cinemex trademark










7,194Total, unamortized



$
74,000




$
81,194


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

Thirteen Weeks Ended

Thirty-nine Weeks EndedJanuary 1, 2009

December 27, 2007

January 1, 2009

December 27, 2007Recorded amortization

$
5,396

$
6,354

$
16,735

$
22,202


Estimated
amortization expense for the next five fiscal years for intangible assets owned as of January 1, 2009 is projected below:

(In thousands)

2009

2010

2011

2012

2013Projected amortization expense

$
19,439

$
13,934

$
11,980

$
10,857

$
10,148


NOTE 6STOCKHOLDER'S EQUITY

Holdings has one share of Common Stock issued as of January 1, 2009 which is owned by Parent.

On
October 2, 2008, Holdings used cash on hand to pay a dividend distribution to Parent in an aggregate amount of $2,255,000. Parent used the available funds to repurchase
treasury stock and pay corporate overhead expenses incurred in the ordinary course of business.



The Company has no stock-based compensation arrangements of its own, but Parent has adopted a stock-based compensation plan that
permits grants of up to 49,107.44681 options on Parent's stock and

12

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 6STOCKHOLDER'S EQUITY (Continued)

has
granted options on 600.00000 and 38,876.72873 of its shares to certain employees during the periods ended March 30, 2006 and March 31, 2005, respectively. As of January 1,
2009, there was
$3,012,000 of total estimated unrecognized compensation cost related to nonvested stock-based compensation arrangements under the Parent's plan expected to be recognized over 1 year.

As
the employees to whom the options were granted are employed by the Company, the Company 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. Vesting may
accelerate for certain participants if there is a change of control (as defined in the plan). The Company has recorded $774,000 and $(65,000) of stock-based compensation expense related to these
options within general and administrative: other during the thirteen weeks ended January 1, 2009, and December 27, 2007, respectively. The Company has recorded $2,323,000 and $955,000 of
stock-based compensation expense related to these options within general and administrative: other during the thirty-nine weeks ended January 1, 2009 and December 27, 2007,
respectively. Holdings' financial statements reflect an increase to additional paid-in capital related to stock-based compensation for all outstanding options of $2,323,000 during fiscal
2009. The Company accounts for stock options using the fair value method of accounting as prescribed by SFAS No. 123(R),Shared-Based Payment
(Revised),("SFAS 123 (R)") and Staff Accounting Bulletins No. 107 and 110,Share Based Payments.

The
Company's Chairman of the Board, President and Chief Executive Officer, Peter C. Brown had an amended and restated employment agreement that generally provided additional benefits in
lieu of a shorter term. This amended and restated agreement has reverted to his prior agreement, as an initial public offering of Parent did not occur on or before December 31, 2008.

NOTE 7INVESTMENTS

Investments in non-consolidated affiliates and certain other investments accounted for under the equity method generally include all entities in which the Company or its
subsidiaries have significant influence, but not more than 50% voting control. Investments in non-consolidated affiliates as of January 1, 2009, include an 18.5% interest in
National CineMedia, LLC ("NCM"), a 50% interest in three U.S. motion picture theatres, a 26% equity interest
in Movietickets.com ("MTC"), a 50% interest in Midland Empire Partners, LLC and a 33.3% interest in Digital Cinema Implementation Partners, LLC ("DCIP").

Condensed
financial information of our non-consolidated equity method investments is shown below. Amounts are presented under U.S. GAAP for the periods of ownership by
the Company.

13

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 7INVESTMENTS (Continued)

Operating
Results(1):

Thirteen Weeks Ended

Thirty-nine Weeks Ended(In thousands)

January 1, 2009

December 27, 2007

January 1, 2009

December 27, 2007Revenues

$
119,352

$
100,468

$
333,475

$
313,983Operating costs and expenses


93,096


64,896


233,280


205,226Net earnings (loss)

$
26,256

$
35,572

$
100,195

$
108,757The Company's recorded equity in (earnings) loss

$
(6,033
)
$
(7,507
)
$
(15,739
)
$
(34,932
)


As
of January 1, 2009, the Company owns 18,414,743 units or an 18.5% interest in NCM accounted for using the equity method of accounting. The fair market value of the units in
National CineMedia, LLC was approximately $186,725,000, based on a price for shares of National CineMedia, Inc. on January 1, 2009 of $10.14 per share.

As
of January 1, 2009 and April 3, 2008, the Company has recorded $1,729,000 and $1,255,000 respectively, of amounts due from NCM related to on-screen
advertising revenue. As of January 1, 2009 and April 3, 2008, the Company had recorded $2,431,000 and $6,177,000 respectively, of amounts due to NCM related to the ESA and the Loew's
Screen Integration Agreement. The Company recorded revenues for advertising from NCM of $4,450,000 and $3,237,000 during the thirteen weeks ended January 1, 2009 and December 27, 2007,
respectively and $14,475,000 and $10,822,000 during the thirty-nine weeks ended January 1, 2009 and December 27, 2007 respectively. The
Company recorded advertising expenses related to a beverage advertising agreement paid to NCM of $3,822,000 and $3,496,000 during the thirteen weeks ended January 1, 2009 and
December 27, 2007, respectively and $12,331,000 and $12,069,000 during the thirty-nine weeks ended January 1, 2009 and December 27, 2007 respectively.

In
May 2007 the Company disposed of its investment in Fandango, accounted for using the cost method, for total proceeds of approximately $20,360,000, of which $17,977,000 was received in
May and September 2007 and $2,383,000 was received in November 2008. The Company recorded a gain on the sale recorded in investment income of approximately $15,977,000 during fiscal 2008 and
$2,383,000 during fiscal 2009. In July 2007, the Company disposed of its investment in Hoyts General Cinema South America ("HGCSA") for total proceeds of approximately $28,682,000 and recorded a gain
on the

14

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 7INVESTMENTS (Continued)

sale
included in equity earnings of non-consolidated entities of approximately $18,751,000 during the thirteen weeks ended September 27, 2007.

Included
in equity in earnings of non-consolidated entity for the thirteen and thirty-nine weeks ended January 1, 2009 is an impairment charge of
$2,742,000 related to a theatre joint venture investment. The decline in the fair market value of the investment was considered other than temporary due to competitive theatre builds.

The
Company recorded the following changes in the carrying amount of its investment in NCM and equity in (earnings) losses of NCM during the thirty-nine weeks ended
January 1, 2009:

(in thousands)

Investment in NCM(1)

Deferred Revenue(2)

Due to NCM(3)

Cash Received (Paid)

Equity in (Earnings) Losses

Advertising (Revenue)Beginning balance April 3, 2008

$
21,598

$
(250,312
)
$
(4,649
)
$


$


$
Receipt under Tax Receivable Agreement











3,796


(3,796
)

Receipt of excess cash distribution


(770
)







15,092


(14,322
)

Payment on Loews Screen Integration Agreement








4,343


(4,343
)




Increase Loews Screen Integration Liability








(51
)




51


Change in interest loss(4)


(83
)










83


Amortization of deferred revenue





1,869











(1,869
)Equity in earnings


973











(973
)

Ending balance January 1, 2009

$
21,718

$
(248,443
)
$
(357
)
$
14,545

$
(18,957
)
$
(1,869
)


NOTE 8DERIVATIVE INSTRUMENTS

The Company enters into interest rate swap agreements with major banks and institutional lenders as part of its interest rate risk management strategy. The objective for holding these
derivative instruments is to reduce the exposure to variability in cash flows relating to interest payments on

15

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 8DERIVATIVE INSTRUMENTS (Continued)

certain
outstanding debt. All financial instruments are used solely for hedging purposes and are not issued or held for speculative reasons.

The
interest rate swaps have been designated as cash flow hedges and have qualified for hedge accounting in accordance with SFAS No. 133,Accounting for
Derivative Instruments and Hedging Activities("SFAS 133"). The related mark-to-market gain or loss on qualifying hedges is deferred as a
component of accumulated other comprehensive loss, to the extent the cash flow hedges are effective, and is reclassified into interest expense: corporate borrowings in the period during which the
hedged transaction affects earnings. Any ineffective portion of the hedges is recognized currently in the consolidated statements of operations in other income.

In
October 2007, AMCE executed an interest rate swap agreement, scheduled to mature in April 2009, to hedge $200,000,000 of its variable rate debt obligation. Under the terms of the
agreement, the Company pays interest at a fixed rate of 4.707% and receives interest at a variable rate based on 1-month U.S. Dollar LIBOR-BBA.

In
August 2005, Cinemex entered into an interest rate swap with notional amounts ranging between 283,932,000 and 907,146,000 Mexican pesos ($26,151,000 and $83,894,000) to hedge its
variable rate debt obligation. Under the terms of the agreement, the Company pays interest at a fixed rate of 9.89% and receives interest at a variable rate based on 1-month MXN TIIE. In
November 2007, the Company redesignated the interest rate swap prospectively in a new cash flow hedging relationship. In December 2008, the Company sold all of its interest in Cinemex, and
correspondingly, terminated the interest rate swap agreement. The remaining unrealized gain of approximately $289,000 recorded in accumulated other comprehensive loss was reclassified against interest
expense: corporate borrowings that is included as discontinued operations when the hedged transaction was terminated.

The
aggregate fair value of the interest rate swaps was a liability of approximately $2,627,000 as of January 1, 2009, which was recorded as a component of other
long-term liabilities. The estimated fair value for the interest rate swap agreements was based on prevailing market data that represents the theoretical exit cost the Company would have
to pay to transfer the obligation to a market participant with similar credit risk. At January 1, 2009, the Company had a net unrealized loss of approximately $2,627,000 recorded in accumulated
other comprehensive loss with offsetting entries to other long-term liabilities. All derivative losses recorded in accumulated other comprehensive loss are expected to be reclassified
against interest expense: corporate borrowings during the next 12 months. During the third quarter of fiscal 2009 the Company recorded a loss of approximately $27,000 in other income resulting
from hedge ineffectiveness for a total gain of $495,000 fiscal year-to-date, recorded in other income that is included as discontinued operations.

The
Company is exposed to credit losses in the event of nonperformance by counterparties on interest rate swap agreements.

NOTE 9FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company adopted Statement of Financial Accounting Standards No. 157,Fair Value Measurements, ("SFAS 157") as of the
beginning of the first quarter of fiscal 2009 for financial assets and liabilities recognized or disclosed at fair value on a recurring basis. The adoption of this Statement

16

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 9FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

did
not have a material impact on the Company's consolidated financial position and results of operations. Under the standard, fair value refers to the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts. In February 2008, the FASB issued FASB Staff Position
FAS 157-2, which delays the effective date for nonfinancial assets and liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually). Due to the deferral, the Company has delayed the implementation of SFAS 157 provisions on the fair value of goodwill, intangible assets with indefinite
lives, and nonfinancial long-lived assets until the beginning of fiscal 2010. SFAS 157 enables the reader of the financial statements to assess the inputs used to develop those
measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. SFAS 157 requires that assets and liabilities carried at fair
value be classified and disclosed in one of the following categories:

Level 1:

Quoted market prices in active markets for identical assets or liabilities.Level 2:

Observable market based inputs or unobservable inputs that are corroborated by market data.Level 3:

Unobservable inputs that are not corroborated by market data.


The
following table summarizes the fair value hierarchy of the Company's financial assets and liabilities carried at fair value on a recurring basis:

Fair Value Measurements at January 1, 2009 UsingTotal Carrying Value at January 1, 2009(In thousands)

Quoted prices in active market
(Level 1)

Significant other observable inputs
(Level 2)

Significant unobservable inputs
(Level 3)Assets:Money market mutual funds

$
63,226

$
63,226

$


$
Deferred compensation plan assets(1)


3,612


3,612





Non-qualified defined benefit plan assets


93


93





Total assets at fair value

$
66,931

$
66,931

$


$
Liabilities:Interest rate swap agreements

$
2,627

$


$
2,627

$
Total liabilities at fair value

$
2,627

$


$
2,627

$



17

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 9FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Valuation Techniques.The Company's money market mutual funds are invested in funds that seek to preserve principal, are highly liquid,
and therefore
are recorded on the balance sheet at the principal amounts deposited, which equals fair value. The money market funds are classified within Level 1 of the valuation hierarchy. The deferred
compensation plan and non-qualified defined benefit plan assets are measured at fair value using quoted market prices and are classified within Level 1 of the valuation hierarchy.
The interest rate swap is measured at fair value using LIBOR and incorporates credit data that measures nonperformance risk. The interest rate swap agreement is classified within Level 2 of the
valuation hierarchy.

NOTE 10THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS

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

Thirty-nine Weeks Ended
January 1, 2009

Thirty-nine Weeks Ended
December 27, 2007Theatre and Other

Merger Exit costs

Total

Theatre and Other

Merger Exit costs

TotalBeginning balance

$
10,844

$


$
10,844

$
17,621

$
1,274

$
18,895Theatre and other closure (income) expense(1)


(2,064
)




(2,064
)

(15,034
)

(348
)

(15,382
)Transfer of deferred rent and capital lease obligations(1)


2,824





2,824


6,474





6,474Cash (payments) receipts(1)


(3,024
)




(3,024
)

718


(923
)

(205
)Ending balance

$
8,580

$


$
8,580

$
9,779

$
3

$
9,782




18

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 11ASSET HELD FOR SALE

The Company has classified certain long-lived assets as held for sale in the consolidated balance sheets in accordance with the guidance in SFAS 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. In the first quarter of fiscal 2009 property located in the United States
that is no longer used and is valued at approximately $2,053,000, has been identified and reclassified to current assets held for sale. The property was sold in January 2009, for $2,053,000.

NOTE 12INCOME TAXES, RESTATED

Effective income tax rate

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

Thirty-nine Weeks EndedJanuary 1, 2009

December 27, 2007(restated)Federal statutory rate


35.0
%

35.0
%Fiscal 2007 change in APB 23 assertion





(18.1
)Change in FIN 48 reserve





(15.7
)Valuation allowance


(34.3
)

4.0State income taxes, net of federal tax benefit


(3.5
)

11.3Permanent items


(0.7
)

2.9Other, net


(0.1
)

1.9Effective tax rate


(3.6
)%

21.3
%


The
Company accounts for income taxes in accordance with SFAS No. 109, Statement of Financial Accounting Standards ("SFAS No. 109"),Accounting for
Income Taxes,which requires that deferred tax assets and liabilities be recognized, using enacted tax rates, for the tax effect of temporary differences between the financial
reporting and tax bases of recorded assets and liabilities. SFAS 109 also requires that deferred tax assets be reduced by a valuation allowance if it is more likely than not that some or all of
the deferred tax assets will not be realized.

Based
upon the consideration of all available evidence, the Company has provided a valuation allowance on its net deferred tax assets. The Company continues to record a valuation
allowance against its net deferred tax assets due to the uncertainty regarding the ultimate realization of those assets in all taxing jurisdictions. Net deferred tax assets in excess of valuation
allowance were not material.

The
Company determines income tax expense for interim periods by applying SFAS No. 109 and APB Opinion No. 28,Interim Financial
Reporting, which prescribes the use of the full year's estimated effective tax rate in financial statements for interim periods. As such, permanent differences such as state
income taxes and changes in valuation allowance impact the Company's effective tax rate. During the current period, income tax expense differed from the expected tax expense using the U.S. federal
statutory tax rate of 35% primarily due to valuation allowance and state income taxes.

19

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 12INCOME TAXES, RESTATED (Continued)

Uncertain tax positions

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign
jurisdictions. An IRS examination for the tax years ended March 31, 2005 and March 30, 2006 began during 2007 and we expect to settle during fiscal 2009. The Company has been verbally
notified that the IRS will begin an examination of the tax year ended March 29, 2007 during fiscal year 2010. Generally, tax years beginning after March 28, 2002 are still open to
examination by various taxing authorities. Additionally, the Company has NOL carryforwards for tax years ended October 31, 2000 through January 26, 2006 in the U.S. and various state
jurisdictions which have carryforwards of varying lengths of time. These NOL's are subject to adjustment based on the statute of limitations of the return in which they are utilized,
not the year in which they are generated. Various state, local and foreign income tax returns are also under examination by taxing authorities. The Company does not believe that the outcome of any
examination will have a material impact on its financial statements.

The
Company has reviewed all of its historical tax positions as well as new positions adopted during fiscal 2009. The IRS is currently reviewing several tax periods and has begun review
of certain issues for which the Company has a FASB Interpretation No. 48,Accounting for Uncertainty in Income Taxesan interpretation of FASB Statement
No. 109, ("FIN 48") reserve. The net change in the FIN 48 reserve from April 3, 2008 to January 1, 2009 is a net decrease of approximately
$5,900,000 related to statute expirations and current positions adopted. The net decrease does not impact the effective rate as the release of the FIN 48 reserve merely restores tax attributes,
the tax effect of which is fully offset by a valuation allowance.

NOTE 13EMPLOYEE BENEFIT PLANS, RESTATED

The Company sponsors frozen non-contributory qualified and non-qualified defined benefit pension plans generally covering all employees who, prior to the freeze,
were age 21 or older and had completed at least 1,000 hours of service in their first twelve months of employment, or in a calendar year ending thereafter, and who were not covered by a
collective bargaining agreement. The Company also offers eligible retirees the opportunity to participate in a health plan (medical and dental) and a life insurance plan. Certain employees are
eligible for subsidized postretirement medical benefits. The eligibility for these benefits is based upon a participant's age and service as of January 1, 2009. The Company also sponsors a
postretirement deferred compensation plan.

Effective
March 29, 2007, the Company adopted SFAS 158,Employers' Accounting for Defined Benefit Pension and Other Postretirement
Plansan amendment of FASB Statements No. 87, 88, 106, and 132 (R),("SFAS 158"). SFAS 158 requires that, effective for fiscal years ending
after December 15, 2008 the assumptions used to measure annual pension and retiree medical expense be determined as of the balance sheet date and all plan assets and liabilities be reported as
of that date. Accordingly, as of the beginning of fiscal 2009, the Company changed the measurement date for the annual pension and postretirement medical expense and all plan assets and liabilities
from January 1 to the Company's year-end balance sheet date. As a result of this change in measurement date, the Company recorded an

20

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 13EMPLOYEE BENEFIT PLANS, RESTATED (Continued)

$82,000
loss to fiscal 2009 opening accumulated deficit and a $411,000 unrealized loss to accumulated other comprehensive income.

On
May 2, 2008 the Company's Board of Directors approved revisions to the Company's Post Retirement Medical and Life Insurance Plan effective January 1, 2009 and on July 3,
2008 the changes were communicated to the plan participants. The revisions were accounted for as a negative plan amendment in accordance with FAS 106. As a result of these revisions and
restating this plan to implement the changes, the Company recognized $5,969,000 of negative prior service cost in other
comprehensive income during the thirty-nine weeks ended January 1, 2009. The negative prior service cost will be amortized over the active participants' future service to full eligibility of
approximately 11 years starting on July 3, 2008. The measurement date used to determine the net negative prior cost was July 3, 2008.

The
Company made its annual pension contribution of $2,000,000 during its second quarter of fiscal 2009.

Net
periodic benefit cost recognized for the plans during the thirteen weeks ended January 1, 2009 and December 27, 2007 consists of the following:

Pension Benefits

Other Benefits(In thousands)

January 1,
2009

December 27,
2007

January 1,
2009

December 27,
2007(restated)Components of net periodic benefit cost:Service cost

$
98

$
183

$
59

$
208Interest cost


1,166


1,100


312


381Expected return on plan assets


(1,274
)

(1,151
)




Amortization of gain


(404
)

(215
)

(159
)

Amortization of transition obligation


8


10





Net periodic benefit cost (income)

$
(406
)
$
(73
)
$
212

$
589


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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 13EMPLOYEE BENEFIT PLANS, RESTATED (Continued)

Net
periodic benefit cost recognized for the plans during the thirty-nine weeks ended January 1, 2009 and December 27, 2007 consists of the following:

Pension Benefits

Other Benefits(In thousands)

January 1,
2009

December 27,
2007

January 1,
2009

December 27,
2007(restated)Components of net periodic benefit cost:Service cost

$
324

$
379

$
343

$
624Interest cost


3,365


3,300


799


1,143Expected return on plan assets


(3,823
)

(3,453
)




Amortization of gain


(1,210
)

(780
)

(318
)

Amortization of transition obligation


28


30





Net periodic benefit cost (income)

$
(1,316
)
$
(524
)
$
824

$
1,767


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 currently matches 100% of each eligible employee's elective contributions up to
5% of the employee's eligible compensation. Effective for fiscal year 2010, the Company will match 50% of each eligible employee's elective contributions up to 6% of the employee's eligible
compensation.

NOTE 14OPERATING SEGMENT

The Company reports information about operating segments in accordance with SFAS No. 131,Disclosures about Segments of an Enterprise and Related
Information,("SFAS 131"). SFAS 131 requires financial information to be reported based on the way management organizes segments within a company for making
operating decisions and evaluating performance. In the third quarter of fiscal 2009, the Company has identified one reportable segment for its theatrical exhibition operations. Previously, the Company
had three operating segments which consisted of United States and Canada Theatrical Exhibition, International Theatrical Exhibition, and Other. The reduction in the number of operating segments was a
result of the disposition of Cinemex in December 2008. Cinemex was previously reported in the International Theatrical Exhibition operating segment and accounted for a substantial majority of that
segment. In addition, in the second quarter of fiscal 2009, the Company consolidated the Other operating segment with the United States and Canada Theatrical Exhibition operating segment due to a
previous contribution of advertising net assets to NCM resulting in the Other operating segment becomingde minimis. In the third quarter of fiscal
2009, the United States and Canada Theatrical Exhibition operating segment was renamed the Theatrical Exhibition operating segment.

NOTE 15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

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 15COMMITMENTS AND CONTINGENCIES (Continued)

have
a material adverse effect on the financial condition, cash flows or results of operations of the Company.

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.

As
to line of sight matters, the trial court entered summary judgment in favor of the Justice Department as to both liability and as to the appropriate remedy. On December 5,
2008, the Ninth Circuit Court of Appeals reversed the trial court as to the appropriate remedy and remanded the case back to the trial court for findings consistent with its decision. AMCE estimates
that the cost of betterments related to the remaining remedies required for line of sight violations will be approximately $4,300,000 over a 4-5 year term. The Justice Department
may seek review by a larger panel of judges on the Ninth Circuit Court of Appeals.

AMCE
estimates the range of the loss for liability fines to be between $349,000 and $444,000. Accordingly, AMCE has recorded the related liability of approximately $349,000.

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. 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 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 $51,871,000, and
through January 1, 2009 AMCE has incurred approximately $20,638,000 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.

Michael Bateman v. American Multi-Cinema, Inc.(No. CV07-00171). In January 2007, a class action complaint was filed against the
Company in the Central District of the United States District Court of California (the "District Court") alleging violations of the Fair and Accurate Credit Transactions Act ("FACTA"). FACTA provides
in part that neither expiration dates nor more than the last 5 numbers of a credit or debit card may be printed on receipts given to customers. FACTA imposes significant penalties upon violators where
the violation is deemed to have been willful. Otherwise damages are limited to actual losses incurred by the card holder. On October 24, 2008, the District Court denied plaintiff's renewed
motion for class certification. Plaintiff has appealed this decision and the case is stayed pending this appeal. The Company believes the plaintiff's allegations, particularly those asserting AMC's
willfulness, are without merit.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 15COMMITMENTS AND CONTINGENCIES (Continued)

On
November 7, 2008, the Company received notice of a written demand for payment of a partial withdrawal liability assessment from a collectively bargained multiemployer pension
plan that covers certain of its unionized theatre employees. Based on a payment schedule that the Company has received from this plan in December 2008, the Company began making quarterly
payments on January 1, 2009 related to the $5,279,000 in partial withdrawal liability. However, the Company also estimates that approximately $2,839,000 of this liability was discharged in
bankruptcy by companies it acquired. As of January 1, 2009, the Company has recorded a liability related to this matter in the amount of $4,795,000 and has made contributions of approximately
$484,000. The final partial withdrawal liability amount may be adjusted based on a legal review of the plan's assessment, the Company's records and ensuing discussions with the plan's trustees.

NOTE 16NEW ACCOUNTING PRONOUNCEMENTS

In December 2008, the FASB issued FASB Staff Position FSP 132(R)-1,Employers' Disclosures about Postretirement Benefit Plan
Assets, ("FSP 132(R)-1"), which provides guidance on an employer's disclosures about plan assets of a defined benefit pension or other postretirement plan.
This interpretation is effective for financial statements issued for fiscal years ending after December 15, 2009 and is effective for the Company in fiscal 2010. The Company is currently
evaluating the disclosure requirements of this pronouncement.

In
October 2008, the FASB issued FSP No. 157-3,Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not
Active, ("FSP 157-3"). FSP 157-3 clarifies the application of SFAS 157 in a market that is not active and provides an example to illustrate key
considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSP 157-3 was effective for the Company on October 2, 2008
and applied to financial assets and liabilities recognized or disclosed at fair value in its condensed consolidated financial statements on a recurring basis (at least annually). The adoption of FSP
157-3 did not have a material impact on the Company's consolidated financial position and results of operations.

In
April 2008, the FASB issued FASB Staff Position Financial Accounting Standard 142-3,Determination of the Useful Life of Intangible
Assets, ("FSP 142-3"). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS No. 142,Goodwill and Other Intangible Assets, ("SFAS 142"). In
developing assumptions about renewal or extension, FSP 142-3 requires an entity to consider its own historical experience (or, if no experience, market participant assumptions)
adjusted for the entity-specific factors in paragraph 11 of SFAS 142. FSP 142-3 expands the disclosure requirements of SFAS 142 and is effective for financial
statements issued for fiscal years beginning after December 15, 2008, and is effective for the Company at the beginning of fiscal 2010. Early adoption is prohibited. The guidance for
determining the useful life of a recognized intangible asset shall be applied prospectively to intangible assets acquired after the effective date. The Company has not determined the effect that the
application of FSP 142-3 will have on its consolidated financial position.

In
March 2008, the FASB released SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement
No. 133, ("SFAS 161"), which expands the

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 16NEW ACCOUNTING PRONOUNCEMENTS (Continued)

disclosure
requirements about an entity's derivative and hedging activities. SFAS 161 requires entities to provide enhanced disclosures about (1) how and why an entity uses derivative
instruments, (2) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (3) how derivative instruments and related
hedged items affect an entity's financial position, financial performance, and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008,
and is effective for the Company in the fourth quarter of fiscal 2009. Early application is encouraged. The Company is currently evaluating the enhanced disclosure requirements of this pronouncement.

In
December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB
No. 51,("SFAS 160"). SFAS 160 establishes accounting and reporting standards that require noncontrolling interest in a subsidiary to be reported as a
component of equity, changes in a parent's ownership interest while the parent retains its controlling interest to be accounted for as equity transactions, and any retained non-controlling
equity investment upon the deconsolidation of a subsidiary to be initially measured at fair value. The Statement also establishes reporting requirements that clearly identify and distinguish between
the interests of the parent and the interests of the non-controlling owners. SFAS 160 is effective as of the beginning of the first fiscal year beginning on or after
December 15, 2008, and is effective for the Company at the beginning of fiscal 2010. Earlier adoption is prohibited. The Company has not determined the effect that the application of
SFAS 160 will have on its consolidated financial position.

In
December 2007, the FASB issued Statement No. 141 (revised 2007),Business Combinations,("SFAS 141(R)").
SFAS 141(R) establishes the principles and requirements for how an acquirer: 1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities
assumed, and any noncontrolling interest in the acquiree; 2) in a business combination achieved in stages, sometimes referred to as a step acquisition, recognize the identifiable assets and
liabilities, as well as the noncontrolling interest in the acquiree, at the full amounts of their fair values; 3) recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase. SFAS 141(R) establishes disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the business
combination. This Statement is to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period on or after
December 15, 2008, and is effective for the Company at the beginning of fiscal 2010. Earlier adoption is prohibited. The Company is in the process of evaluating the impact SFAS 141(R)
will have on its financial statements.

In
September 2006, the FASB released SFAS No. 157,Fair Value Measurements,("SFAS 157") which provides enhanced guidance
for using fair value to measure assets and liabilities. Under the standard, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants in the market in which the reporting entity transacts. It clarifies the principle that fair value should be based on the assumptions market participants would
use when pricing the asset or liability. In February 2008, the FASB issued FASB Staff Position FAS 157-2, which delays the effective date for nonfinancial assets and liabilities,
except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Statement was effective at the beginning of the first quarter of fiscal 2009 for
financial assets and

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 16NEW ACCOUNTING PRONOUNCEMENTS (Continued)

liabilities
recognized or disclosed at fair value on a recurring basis. The partial adoption of this Statement did not have a material impact on the Company's consolidated financial position and
results of operations. Please refer to Note 9Fair Value of Financial Instruments for additional information. Due to the deferral, the Company has delayed the implementation of
SFAS 157 provisions on the fair value of goodwill, intangible assets with indefinite lives, and nonfinancial long-lived assets until the beginning of fiscal 2010. The Company is in
the process of evaluating the impact related to the Company's nonfinancial assets and liabilities not valued on a recurring basis (at least annually).

NOTE 17RELATED PARTY TRANSACTIONS

Amended and Restated Fee Agreement

In connection with the merger with LCE Holdings Inc., Holdings, AMCE and the Sponsors entered into an Amended and Restated Fee
Agreement, which provides for an
annual management fee of $5,000,000, payable quarterly and in advance to each Sponsor, on a pro rata basis, until the earliest of (i) the twelfth anniversary from December 23, 2004;
(ii) such time as the sponsors own less than 20% in the aggregate of Parent; and (iii) such earlier time as Holdings, AMCE and the Requisite Stockholder Majority agree. In addition, the
fee agreement provided for reimbursements by AMCE to the Sponsors for their out-of-pocket expenses and to Holdings of up to $3,500,000 for fees payable by Holdings in any
single fiscal year in order to maintain AMCE's and its corporate existence, corporate overhead expenses and salaries or other compensation of certain employees. The Amended and Restated Fee Agreement
terminated on June 11, 2007, the date of the holdco merger, and was superseded by a substantially identical agreement entered into by AMC Entertainment Holdings, Inc., Holdings, AMCE,
the Sponsors and Holdings' other stockholders.

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.

Control Arrangement

The Sponsors have the ability to control the Company's affairs and policies and the election of directors and appointment of
management. Reference is made to Note 20- Related Party Transactions in the Company's annual report on Form 10-K for the year (53 weeks) ended
April 3, 2008 for additional disclosures about its governance agreements with the Sponsors.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

January 1, 2009

(Unaudited)

NOTE 17RELATED PARTY TRANSACTIONS (Continued)

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 J.P. Morgan Partners, LLC 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 J.P.
Morgan Partners, LLC 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.

27

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Table of Contents

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statements

In addition to historical information, this Report on Form 10-Q contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The
words "forecast," "estimate," "project," "intend," "expect," "should," "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve
known and unknown risks, uncertainties, assumptions and other factors, including those discussed in "Management's Discussion and Analysis of
Financial Condition and Results of Operations of AMC Entertainment Inc.," which may cause our actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the following:



This
list of factors that may affect future performance and the accuracy of forward-looking statements is illustrative but not exhaustive. In addition, new risks and uncertainties may
arise from time to time. Accordingly, all forward-looking statements should be evaluated with an understanding of their inherent uncertainty.

Readers
are urged to consider these factors carefully in evaluating the forward-looking statements. For further information about these and other risks and uncertainties, see
Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended April 3, 2008 and in this Quarterly Report on Form 10-Q.

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 Quarterly Report on Form 10-Q, 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.

28

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Table of Contents

Overview

We are one of the world's leading theatrical exhibition companies. During the thirty-nine weeks ended January 1,
2009, we opened five new theatres with 66 screens in the U.S., closed five theatres with 43 screens in the U.S, and closed 1 screen for remodeling at an existing theatre in the U.S. As of
January 1, 2009, we owned, operated or had interests in 309 theatres and 4,628 screens, with 99% or 4,573 of our screens in the U.S. and Canada and 1%, or 55 of our screens in China (Hong
Kong), France and the United Kingdom.

Our
principal direct and indirect owned subsidiaries are AMC Entertainment Inc. ("AMCE"), American Multi-Cinema, Inc. ("AMC"), and AMC Entertainment
International, Inc. ("AMCEI"). We conduct our Theatrical Exhibition business through AMC and its subsidiaries and AMCEI and its subsidiaries.

On
May 2, 2008, our Board of Directors approved revisions to our Post Retirement Medical and Life Insurance Plan effective January 1, 2009 and on July 3, 2008 the
changes were communicated to the plan participants. The revisions were accounted for as a negative plan amendment in accordance with FAS 106. As a result of these revisions and restating this
plan to implement the changes, we recognized $5,969,000 of negative prior service cost in other comprehensive income during the thirty-nine weeks ended January 1, 2009. The negative prior
service cost will be amortized over the active participants' future service to full eligibility of approximately 11 years starting on July 3, 2008. The measurement date used to determine the
net negative prior service cost was July 3, 2008. See Note 1Restatement of Financial Statements.

In
May 2007, we disposed of our investment in Fandango, accounted for using the cost method, for total proceeds of $20,360,000, of which $17,977,000 was received in May and September
2007 and $2,383,000 was received in November 2008 and have recorded a gain on the sale included in investment income of approximately $15,977,000 during fiscal 2008 and $2,383,000 during fiscal 2009.
In July 2007 we disposed of our investment in HGCSA, an entity that operated 17 theatres in South America, for total proceeds of approximately $28,682,000 and recorded a gain on the sale included in
equity earnings of non-consolidated entities of approximately $18,751,000.

On
December 29, 2008, we sold all of our interests in Cinemex which operates 44 theatres with 493 screens primarily in the Mexico City Metropolitan Area to Entretenimiento GM de
Mexico S.A. de C.V. ("Entretenimiento"). The purchase price received at the date of the sale and in accordance with the
Stock Purchase Agreement was $248,141,000 and costs related to the disposition were estimated to be $4,041,000. Additionally, we estimate that we will receive an additional $12,647,000 of the purchase
price related to tax payments and refunds in later periods. We have recorded a gain on disposition before income taxes of $14,361,000.

We
acquired Cinemex in January 2006 as part of a larger acquisition of Loews Cineplex Entertainment Corporation. We do not operate any other theatres in Mexico and have divested of the
majority of our other investments in international theatres in Japan, Hong Kong, Spain, Portugal, Sweden, Argentina, Brazil, Chile, and Uruguay over the past several years as part of our overall
business strategy.

The
operations and cash flows of the Cinemex theatres have been eliminated from our ongoing operations as a result of the disposal transaction. We will not have any significant
continuing involvement in the operations of the Cinemex theatres after the disposition. The results of operations of the Cinemex theatres have been classified as discontinued operations, and
information presented for all periods reflects the new classification. The operations of the Cinemex theatres were previously reported in our International Theatrical Exhibition operating segment. As
a result of the sale of Cinemex, we no longer report an International Theatrical Exhibition operating segment and for financial reporting purposes we have one operating segment.

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Table of Contents

Our
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 cards and packaged 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. 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 gross or pay based on a scale of percentages tied to different amounts of box office gross. 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 2008, films licensed from our six largest distributors based on revenues accounted for approximately 85% of our 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 2007, 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 599 in 2006, according to Motion Picture Association 2007 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 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. As of January 1, 2009, approximately 76% of our screens were located in
megaplex theatres.

Stock-Based Compensation

We account for stock-based employee compensation arrangements in accordance with the provisions of SFAS No. 123(R), Shared-Based Payment (Revised),("SFAS 123 (R)") and Staff Accounting Bulletins No. 107 and 110,Share Based
Payments. Under SFAS 123(R), compensation cost is calculated on the date of the grant and then amortized over the vesting period. The fair value of each stock option was
estimated on the grant date using the Black-Scholes option pricing model using the following assumptions: common stock value on the grant date, risk-free interest rate, expected term,
expected volatility, and dividend yield.

We
granted 38,876.72873 options on December 23, 2004 and 600 options on January 26, 2006 to employees to acquire our common stock. The fair value of these options on their
respective grant dates was $22,373,000 and $138,000. All options currently outstanding are equity classified.

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Table of Contents

The
common stock value used to estimate the fair value of each option on the December 23, 2004 grant date was based upon a contemporaneous third party arms-length
transaction on December 23, 2004 in which we sold 769,350 shares of our common stock for $1,000 per share to unrelated parties. Accordingly, because we had contemporaneous objective evidence of
the fair value of our common stock on December 23, 2004, we did not obtain a contemporaneous valuation by an unrelated valuation specialist.

Our
Chairman of the Board, President and Chief Executive Officer, Peter C. Brown had an amended and restated employment agreement that generally provided additional benefits in lieu of a
shorter term. This amended and restated agreement has reverted to his prior agreement as an initial public offering of Parent did not occur on or before December 31, 2008.

Certain Critical Accounting Estimates Impacted by Capital and Credit Market Crisis

Certain 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 this 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 the
notes to our consolidated financial statements included in our 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. Certain of 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 and
recognition and measurement of net periodic benefit costs for our pension and other defined benefit programs, which impacts general and administrative expense. Below, we discuss these areas further,
as well as the estimates and judgments involved and how they may be impacted in the future.

Impairments.We review long-lived assets, including intangibles and investments in unconsolidated subsidiaries accounted for under the
equity method, marketable equity securities and internal use software 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 identify impairments related to internal use software when management determines that the remaining carrying value of the software will not be
realized through future use. 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. We performed an interim impairment analysis during the third quarter of fiscal 2009 as a
result of the recent downturns in the current economic operating environment related to the credit and capital market crisis. Under 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 unless it is probable the lease period will be extended and may be 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

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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 2009.

There
is considerable management judgment necessary to determine the future cash flows, fair value and the expected operating period of our theatre and other long-lived
assets, and, accordingly, actual results could vary significantly from such estimates. We have recorded impairments of long-lived assets of $73,547,000 during the third quarter of fiscal
2009. Historically we have recorded impairments of long-lived assets of $8,933,000, $10,686,000, and $11,974,000 during fiscal 2008, 2007, and 2006, respectively.

Goodwill and Other Intangible Assets.Our recorded goodwill was $1,868,246,000 and $2,070,858,000 as of January 1, 2009 and
April 3,
2008, respectively and unamortized trademark intangible assets were $74,000,000 as of January 1, 2009 and $81,194,000 as of April 3, 2008. We evaluate goodwill for impairment annually as
of the beginning 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 Theatrical Exhibition operating segment, which is also our reporting unit
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 based on a
contemporaneous valuation reflecting market conditions which we believe is an appropriate method to determine fair value. There is considerable management judgment with respect to the cash flow
estimates and appropriate discount factors and multiples used in determining fair value.

We
performed an interim impairment analysis during the third quarter of fiscal 2009 as a result of the recent downturns in the current economic operating environment related to the
credit and capital market crisis and declines in equity values for our publicly traded peer group competitors. While the fair value of our Theatrical Exhibition operations either approximates or
exceeds the carrying value at the present time and management does not believe that impairment is probable, the performance of our Theatrical Exhibition operations requires continued improvement in
future periods to sustain its carrying value and small changes in certain assumptions can have a significant impact on fair value. For example, a 100 basis point increase in our weighted average cost
of capital would reduce the estimated fair value of our reporting unit by approximately $150,000,000 and a 100 basis point decrease in our weighted average cost of capital would increase the estimated
fair value of our reporting unit by $150,000,000. In the future, if the carrying value of our reporting unit exceeds the estimated 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 for purposes of measuring
goodwill. As a result of this hypothetical allocation, the carrying value of goodwill could be reduced to the hypothetically recomputed amount. If the performance of our Theatrical Exhibition
operations does not continue to improve, a future impairment could result for a portion or all of the goodwill or trademark intangibles noted previously.

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. In addition, medical trend rates are an important assumption in projecting the medical claim levels for our postretirement benefit plan. The assumptions affecting our pension and
postretirement obligations 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

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often
differ from actuarial assumptions because of economic and other factors. Reference is made to our Annual Report on Form 10-K Part II Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations for additional discussion about our pension and postretirement assumptions under the heading Critical Accounting Estimates.

We
believe that the oversight of the investments held under our frozen defined benefit pension plans is rigorous and that the investment strategies are prudent. The market value of the
investments within the
frozen pension plan trusts declined by approximately 32% during the twelve months ended December 31, 2008. The benefit plan assets and obligations of our frozen plans are remeasured annually
and reductions in plan assets from investment losses will result in an increase to the plans' unfunded status and a decrease in stockholder's equity upon actuarial revaluation of the plan for the
upcoming year. Changes in the value of our frozen plan assets (during calendar 2008) will not have an impact on the income statement for fiscal 2009; however, reduced benefit plan assets will result
in increased benefit costs in future years and may increase the amount and accelerate the timing of required future funding contributions.

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Table of Contents

Operating Results

The following table sets forth our revenues, costs and expenses attributable to our theatrical exhibition operations.

Thirteen Weeks Ended

Thirty-nine Weeks EndedJanuary 1,
2009

December 27,
2007

% Change

January 1,
2009

December 27,
2007

% Change(restated)(4)





(restated)(4)(Dollars in thousands, except operating data)RevenuesTheatrical exhibitionAdmissions

$
376,917

$
360,617


4.5
%
$
1,198,365

$
1,207,949


-0.8
%Concessions


148,757


141,490


5.1
%

478,507


488,536


-2.1
%Other theatre


13,261


18,667


-29.0
%

44,292


55,113


-19.6
%Total revenues

$
538,935

$
520,774


3.5
%
$
1,721,164

$
1,751,598


-1.7
%Cost of OperationsTheatrical exhibitionFilm exhibition costs

$
193,098

$
184,136


4.9
%
$
635,400

$
636,922


-0.2
%Concession costs


16,000


14,874


7.6
%

51,017


52,254


-2.4
%Operating expense


144,671


145,776


-0.8
%

446,562


451,323


-1.1
%Rent


111,724


109,376


2.1
%

336,873


327,220


3.0
%Preopening expense


1,481


2,705


-45.2
%

4,541


5,046


-10.0
%Theatre and other closure (income) expense


269


1,064


-74.7
%

(2,064
)

(15,382
)

-86.6
%467,243


457,931


2.0
%

1,472,329


1,457,383


1.0
%General and administrative expense:Merger, acquisition and transaction costs


306


813


-62.4
%

558


6,153


-90.9
%Management Fee


1,250


1,250



%

3,750


3,750



%Other


10,741


9,194


16.8
%

33,878


29,485


14.9
%Depreciation and amortization


50,464


54,141


-6.8
%

151,520


165,958


-8.7
%Impairment of long-lived assets


73,547





*


73,547





*Disposition of assets and other losses


219


85


*


(136
)

(1,613
)

*Total costs and expenses

$
603,770

$
523,414


15.4
%
$
1,735,446

$
1,661,116


4.5
%


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Table of Contents

Thirteen Weeks Ended

Thirty-nine Weeks EndedJanuary 1,
2009

December 27,
2007

January 1,
2009

December 27,
2007Operating DataContinuing Operations (at period end):Screen additions(1)


23


54


83


112Screen dispositions(2)


7


44


61


288Average screenscontinuing operations(3)


4,554


4,550


4,546


4,571Number of screens operated








4,628


4,650Number of theatres operated








309


315Screens per theatre








15.0


14.8Attendancecontinuing operations(3)
(in thousands)


46,608


45,545


149,457


156,333


---

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

Thirteen Weeks Ended

Thirty-nine Weeks EndedJanuary 1,
2009

December 27,
2007

January 1,
2009

December 27,
2007(restated)



(restated)Earnings (loss) from continuing operations before income taxes

$
(94,486
)
$
(32,708
)
$
(100,378
)
$
34,290Plus:Interest expense


38,500


41,336


115,138


124,541Depreciation and amortization


50,464


54,141


151,520


165,958Impairment of long-lived assets


73,547





73,547


Preopening expense


1,481


2,705


4,541


5,046Theatre and other closure income


269


1,064


(2,064
)

(15,382
)Disposition of assets and other (gains) losses


219


85


(136
)

(1,613
)Equity in earnings of non-consolidated entities


(6,033
)

(7,507
)

(15,739
)

(34,932
)Investment income


(927
)

(1,667
)

(1,510
)

(22,298
)Other income(1)











(1,246
)General and administrative expenseunallocated:Merger and acquisition costs


306


813


558


6,153Management fee


1,250


1,250


3,750


3,750Other(2)


10,741


9,194


33,878


29,485Adjusted EBITDA

$
75,331

$
68,706

$
263,105

$
293,752


---

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Table of Contents

Thirteen Weeks Ended January 1, 2009 and December 27, 2007

Revenues.Total revenues increased 3.5%, or $18,161,000, during the thirteen weeks ended January 1, 2009 compared to the thirteen
weeks ended
December 27, 2007 primarily due to a difference in reporting periods. The thirteen weeks ended January 1, 2009 included more days of the Christmas and New Year's Day holiday box office
revenues compared to the thirteen weeks ended December 27, 2007. Admissions revenues increased 4.5%, or $16,300,000, during the thirteen weeks ended January 1, 2009 compared to the
thirteen weeks ended December 27, 2007, due to a 2.3% increase in attendance and a 2.1% increase in average ticket prices. Attendance increased due to the difference in reporting periods noted
above. Admissions revenues at comparable theatres (theatres opened on or before the third quarter of fiscal 2008) increased 2.7%, or $9,612,000 during the thirteen weeks ended January 1, 2009
from the comparable period last year due to the difference in reporting periods noted above. The increase in average ticket price was primarily due to our practice of periodically reviewing ticket
prices and making selective adjustments based upon such factors as general inflationary trends and conditions in local markets. Based upon available industry sources, box office revenues of our
comparable theatres slightly underperformed the overall industry comparable theatres in the markets where we operate. We believe our underperformance is primarily due to a
year-over-year change
in product genre which was more favorable in the prior year period in which we outperformed the industry. Concessions revenues increased 5.1%, or $7,267,000, during the thirteen weeks ended
January 1, 2009 compared to the thirteen weeks ended December 27, 2007 due to the increase in attendance and a 2.6% increase in average concessions per patron. Other theatre revenues
decreased 29.0%, or $5,406,000, during the thirteen weeks ended January 1, 2009 compared to the thirteen weeks ended December 27, 2007, primarily due to a decrease in income related to
the derecognition of packaged ticket liabilities, as to which we believe future redemption to be remote and decreases in advertising revenues.

Costs and expenses.Total costs and expenses increased 15.4%, or $80,356,000, during the thirteen weeks ended January 1, 2009
compared to the
thirteen weeks ended December 27, 2007. Film exhibition costs increased 4.9%, or $8,962,000, during the thirteen weeks ended January 1, 2009 compared to the thirteen weeks ended
December 27, 2007 due to the increase in admissions revenues. As a percentage of admissions revenues, film exhibition costs were 51.2% in the current period and 51.1% in the prior year period.
Concession costs increased 7.6%, or $1,126,000, during the thirteen weeks ended January 1, 2009 compared to the thirteen weeks ended December 27, 2007 due to the increase in concession
revenues and an increase in concession costs as a percentage of concessions revenues. As a percentage of concessions revenues, concession costs were 10.8% in the current period compared with 10.5% in
the prior period. As a percentage of revenues, operating expense was 26.8% in the current period as compared to 28.0% in the prior period. Rent expense increased 2.1%, or $2,348,000, during the
thirteen weeks ended January 1, 2009 compared to the thirteen weeks ended December 27, 2007 due primarily to the opening of new theatres. Preopening expense decreased $1,224,000 during
the thirteen weeks ended January 1, 2009 due to a decline in screen additions. During the thirteen weeks ended January 1, 2009, we recognized $269,000 of theatre and other closure
expense due primarily to accretion of the closure liability related to theatres closed during prior periods.

General and Administrative Expense:

Merger, acquisition and transaction costs.Merger, acquisition and transaction costs decreased $507,000 during the thirteen weeks ended
January 1, 2009 compared to the thirteen weeks ended December 27, 2007. Costs for the thirteen weeks ended December 27, 2007 are primarily comprised of expenses to a
union-sponsored pension plan that occurred prior to the merger with Loews.

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Management fees.Management fees were unchanged during the thirteen weeks ended January 1, 2009. Management fees of $1,250,000 are
paid
quarterly, in advance, to our Sponsors in exchange for consulting and other services.

Other.Other general and administrative expense increased 16.8%, or $1,547,000, during the thirteen weeks ended January 1, 2009
compared to
the thirteen weeks ended December 27, 2007 due primarily to an expense of $2,839,000 related to our partial withdrawal liability for a union-sponsored pension plan partially offset by a
decrease in incentive compensation expense related to declines in operating performance.

Depreciation and Amortization.Depreciation and amortization decreased 6.8%, or $3,677,000, compared to the prior period due primarily
to certain
intangible assets becoming fully amortized and the closing of theatres.

Impairment of Long-Lived Assets.During the thirteen weeks ended January 1, 2009 we recognized non-cash impairment
losses of $73,547,000 related to theatre fixed assets, internal use software and assets held for sale. We recognized an impairment loss of $65,636,000 on 34 theatres with 520 screens (in Arizona,
California, Canada, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, New York, North Carolina, Ohio, Texas, Virginia, Washington and Wisconsin). Of the theatre charge, $1,365,000 was
related to intangible assets, net, and $64,271,000 was related to property, net. We recognized an impairment loss on internal use software recorded in other long-term assets of $7,125,000
when management determined that the carrying value would not be realized through future use and adjusted the carrying value of our assets held for sale to reflect the subsequent sales proceeds
received in January 2009 and declines in fair value which resulted in impairment charges of $786,000.

Disposition of Assets and Other Losses.Disposition of assets and other losses were $219,000 in the current period compared to $85,000
in the prior
period.

Other Income.Other income includes $1,889,000 and $2,094,000 of income related to the derecognition of gift card liabilities, as to
which we believe
future redemption to be remote, during the thirteen weeks ended January 1, 2009 and December 27, 2007, respectively.

Interest Expense.Interest expense decreased 6.9%, or $2,836,000 primarily due to decreased interest rates on the Senior Secured Credit
Facility.

Equity in Earnings of Non-Consolidated Entities.Equity in earnings of non-consolidated entities was $6,033,000 in the
current period compared to $7,507,000 in the prior period. Equity in earnings related to our investment in National CineMedia, LLC were $9,081,000 and $7,637,000 for the thirteen weeks ended
January 1, 2009 and December 27, 2007, respectively. We recognized an impairment loss of $2,742,000 related to an equity method investment in one U.S. motion picture theatre during the
thirteen weeks ended January 1, 2009.

Investment Income.Investment income was $927,000 for the thirteen weeks ended January 1, 2009 compared to $1,667,000 for the
thirteen weeks
ended December 27, 2007. The thirteen weeks ended January 1, 2009 includes a gain of $2,383,000 from the May 2008 sale of our investment in Fandango, which was the result of receiving
the final distribution from the general claims escrow account. Interest income decreased $1,641,000 from the prior period primarily due to decreases in temporary investments and decreases in rates of
interest earned on temporary investments. During the thirteen weeks ended January 1, 2009, we recognized an impairment loss of $1,512,000 related to unrealized losses previously recorded in
accumulated comprehensive income on marketable securities related to one of our deferred compensation plans when we determined the decline in fair value below historical cost to be other than
temporary.

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Income Tax Provision (Benefit).The income tax provision from continuing operations was $3,032,000 for
the thirteen weeks ended January 1, 2009 and the income tax benefit was $(25,571,000) for the thirteen weeks ended December 27, 2007.

Earnings (loss) from Discontinued Operations, Net.On December 29, 2008 we sold our operations in Mexico, including 44 theatres
and 493
screens. The results of operations of the Cinemex theatres have been classified as discontinued operations, and information presented for all periods reflects the new classification. See
Note 3Discontinued Operations for the components of the loss from discontinued operations.

Net LossNet losses were $94,383,000 and $9,493,000 for the thirteen weeks ended January 1, 2009 and December 27, 2007,
respectively.
The increase in net loss was primarily due to impairment charges of $73,547,000.

Thirty-nine Weeks Ended January 1, 2009 and December 27, 2007

Revenues.Total revenues decreased 1.7%, or $30,434,000, during the thirty-nine weeks ended January 1, 2009 compared to the
thirty-nine weeks ended December 27, 2007. Admissions revenues decreased 0.8%, or $9,584,000, during the thirty-nine weeks ended January 1, 2009 compared to the
thirty-nine weeks ended December 27, 2007, due to a 4.4% decrease in attendance partially offset by a 3.8% increase in average ticket price. Admissions revenues at comparable
theatres (theatres opened on or before the first quarter of fiscal 2008) decreased 2.9%, or $33,690,000, during the thirty-nine weeks ended January 1, 2009 from the comparable
period last year. The increase in average ticket price was primarily due to our practice of periodically reviewing ticket prices and making selective adjustments based upon such factors as general
inflationary trends and conditions in local markets. Based upon available industry sources, box office revenues of our comparable theatres performed consistently with overall performance of industry
comparable theatres in the markets where we operate. Concessions revenues decreased 2.1%, or $10,029,000, during the thirty-nine weeks ended January 1, 2009 compared to the
thirty-nine weeks ended December 27, 2007 due to the decrease in attendance partially offset by a 2.6% increase in average concessions per patron. Other theatre revenues decreased
19.6%, or $10,821,000, during the thirty-nine weeks ended January 1, 2009 compared to thirty-nine weeks ended December 27, 2007, primarily due to a decrease in
income related to the derecognition of packaged ticket liabilities, as to which we believe future redemptions to be remote, and decreases in advertising revenues.

Costs and expenses.Total costs and expenses increased 4.5%, or $74,330,000, during the thirty-nine weeks ended January 1, 2009
compared to the thirty-nine weeks ended December 27, 2007. Film exhibition costs decreased 0.2%, or $1,522,000, during the thirty-nine weeks ended January 1, 2009
compared to the thirty-nine weeks ended December 27, 2007 due to the decrease in admissions revenues partially offset by an increase in film exhibition costs as a percentage of
admission revenues. As a percentage of admissions revenues, film exhibition costs were 53.0% in the current period as compared with 52.7% in the prior period. Concession costs decreased 2.4%, or
$1,237,000, during the thirty-nine weeks ended January 1, 2009 compared to the thirty-nine weeks ended December 27, 2007 due to the decrease in concession
revenues and a decrease in concession costs as a percentage of concessions revenues. As a percentage of concessions revenues, concession costs were 10.7% in the current period and 10.7% in the prior
period. As a percentage of revenues, operating expense was 25.9% in the current period as compared to 25.8% in the prior period. Rent expense increased 3.0%, or $9,653,000, during the
thirty-nine weeks ended January 1, 2009 compared to the thirty-nine weeks ended December 27, 2007 due primarily to the opening of new theatres. Preopening expense
decreased $505,000 during the thirty-nine weeks ended January 1, 2009 due to a decline in screen additions. During the thirty-nine weeks ended January 1, 2009 we
recognized $2,064,000 of theatre and other closure income primarily due to lease terminations negotiated on favorable terms for two theaters

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Table of Contents

closed
during the thirty-nine weeks ended January 1, 2009. During the thirty-nine weeks ended December 27, 2007, we recognized $15,382,000 of theatre and other
closure income due primarily to a lease termination negotiated on favorable terms for four of our theatres that were closed during the thirty-nine weeks ended December 27, 2007 or
where the lease was terminated during this period.

General and Administrative Expense:

Merger, acquisition and transaction costs.Merger, acquisition and transaction costs decreased $5,595,000 during the thirty-nine weeks
ended January 1, 2009 compared to the thirty-nine weeks ended December 27, 2007. Prior period costs are primarily comprised of preacquisition expenses for casualty insurance
losses that occurred prior to the merger with Loews.

Management fees.Management fees were unchanged during the thirty-nine weeks ended January 1, 2009. Management fees of $1,250,000
are paid quarterly, in advance, to our Sponsors in exchange for consulting and other services.

Other.Other general and administrative expense increased 14.9%, or $4,393,000, during the thirty-nine weeks ended January 1, 2009
compared to the thirty-nine weeks ended December 27, 2007. The increase in other general and administrative expenses is primarily due to an expense of $5,279,000 related to our
estimated partial withdrawal liability for a union-sponsored pension plan partially offset by a decrease of $1,044,000 in incentive compensation related to declines in operating performance.

Depreciation and Amortization.Depreciation and amortization decreased 8.7%, or $14,438,000, compared to the prior period due primarily
to certain
intangible assets becoming fully amortized and the closing of theatres.

Impairment of Long-Lived Assets.During the thirty-nine weeks ended January 1, 2009 we recognized non-cash
impairment losses of $73,547,000 related to theatre fixed assets, internal use software and assets held for sale. We recognized an impairment loss of $65,636,000 on 34 theatres with 520 screens (in
Arizona, California, Canada, Florida, Georgia, Illinois, Maryland, Massachusetts, Michigan, New York, North Carolina, Ohio, Texas, Virginia, Washington and Wisconsin). Of the theatre charge,
$1,365,000 was related to intangible assets, net, and $64,271,000 was related to property, net. We recognized an impairment loss on abandonment of internal use software recorded in other
long-term assets of $7,125,000 when management determined that the carrying value would not be realized through future use; and adjusted the carrying value of our assets held for sale to
reflect the subsequent sales proceeds received in January 2009 and declines in fair value which resulted in impairment charges of $786,000.

Disposition of Assets and Other Gains.Disposition of assets and other gains were $136,000 in the current period compared to $1,613,000
in the prior
period. The current and prior periods include $498,000 and $1,980,000, respectively, of settlements received related to fireproofing litigation recoveries at various theatres. The current and prior
year also includes contingent legal expense related to the litigation recoveries of $104,000 and $457,000, respectively.

Other Income.Other income includes $11,793,000 and $9,476,000 of income related to the derecognition of gift card liabilities as to
which we believe
future redemption to be remote, during the thirty-nine weeks ended January 1, 2009 and December 27, 2007, respectively. Other income includes insurance recoveries related to
Hurricane Katrina of $1,246,000 for property losses in excess of property carrying cost and $397,000 for business interruption during the thirty-nine weeks ended December 27, 2007.

Interest Expense.Interest expense decreased 7.6%, or $9,403,000, primarily due to decreased interest rates on the Senior Secured
Credit Facility.

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Equity in Earnings of Non-Consolidated Entities.Equity in earnings of non-consolidated entities was $15,739,000 in the
current period compared to $34,932,000 in the prior period. Equity in earnings related to our investment in National CineMedia, LLC were $18,957,000 and $15,286,000 for the
thirty-nine weeks ended January 1, 2009 and December 27, 2007, respectively. Equity in earnings related to HGCSA was $18,743,000 during the thirty-nine weeks
ended December 27, 2007 and includes the gain related to the disposition of $18,751,000. We recognized an impairment loss of $2,742,000 related to an equity method investment in one U.S. motion
picture theatre during the thirty-nine weeks ended January 1, 2009.

Investment Income.Investment income was $1,510,000 for the thirty-nine weeks ended January 1, 2009 compared to $22,298,000 for
the thirty-nine weeks ended December 27, 2007. The thirty-nine weeks ended January 1, 2009 and December 27, 2007 include a gain on the sale of our
investment in Fandango of $2,383,000 and $15,977,000, respectively. Interest income decreased $5,712,000 from the prior period primarily due to decreases in temporary investments and decreases in
rates of interest earned on temporary investments. During the thirty-nine weeks ended January 1, 2009, we recognized an impairment loss of $1,512,000 related to unrealized losses
previously recorded in accumulated other comprehensive income on marketable securities related to one of our deferred compensation plans when we determined the decline in fair value below historical
cost to be other than temporary.

Income Tax Provision.The provision for income taxes from continuing operations was $3,600,000 for the thirty-nine weeks ended
January 1, 2009 and $7,320,000 for the thirty-nine weeks ended December 27, 2007 with the reduction due primarily to the decrease in earnings from continuing operations
before income taxes. See Note 12Income Taxes.

Earnings from Discontinued Operations, Net.On December 29, 2008 we sold our operations in Mexico, including 44 theatres and 493
screens. The
results of operations of the Cinemex theatres have been classified as discontinued operations, and information presented for all periods reflects the new classification. See
Note 3Discontinued Operations for the components of the earnings from discontinued operations.

Net Earnings (Loss).Net earnings (loss) were $(95,061,000) and $30,792,000 for the thirty-nine weeks ended January 1, 2009 and
December 27, 2007, respectively. The decrease in net earnings was primarily due to impairment charges of $73,547,000 in the current year and the recognition of a gain on disposition of HGCSA of
$18,751,000, a gain on the disposition of Fandango of $15,977,000 and theatre and other closure income of $15,382,000 which were recorded in the prior year.

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
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 indebtedness or
pay dividends other than through any dividends it may receive from its subsidiaries. Under certain circumstances, AMC Entertainment is restricted from paying dividends to Holdings by the terms of the
indentures relating to its notes and its Senior Secured Credit Facility.

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Table of Contents

AMC
Entertainment's Senior Secured 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 note indenture for the 85/8% Senior Fixed Rate notes due 2012, (the "Fixed Notes due 2012") the amount of loans and dividends which AMC
Entertainment could make to Holdings may not exceed $508,903,000 in the aggregate as of January 1, 2009. Under the note indentures, a loan to Holdings would have to be on terms no less
favorable to AMC Entertainment 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 AMC Entertainment. Provided
no event of default has occurred or would result, the Senior Secured Credit Facility also permits AMC Entertainment to pay cash dividends to Holdings for specified purposes, including indemnification
claims, taxes, up to $4,000,000 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 senior secured credit facility, AMC Entertainment may also pay Holdings a portion of net cash proceeds from specified assets sales.

Cash Flows provided by Operating Activities

Cash flows provided by operating activities, as reflected in the Consolidated Statements of Cash Flows, were $190,168,000 and
$227,312,000 during the thirty-nine weeks ended January 1, 2009 and December 27, 2007, respectively. The decrease in operating cash flows during the thirty-nine
weeks ended January 1, 2009 is primarily due to the decrease in net earnings which was partially offset by an increase in non-cash impairment charges. We had working capital surplus
(deficit) as of January 1, 2009 and April 3, 2008 of $69,724,000 and $(225,476,000), respectively. Working capital includes $140,961,000 and $134,560,000 of deferred revenues as of
January 1, 2009 and April 3, 2008, respectively. 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 could incur indebtedness of $185,831,000 on our Credit Facility to meet these obligations as of January 1, 2009.

Cash Flows provided by (used in) Investing Activities

Cash flows provided by (used in) investing activities, as reflected in the consolidated statements of cash flows, were $133,062,000 and
$(80,564,000), during the thirty-nine weeks ended January 1, 2009 and December 27, 2007, respectively. As of January 1, 2009, we had construction in progress of
$645,000. Cash outflows from investing activities include capital expenditures of $78,390,000 and $99,395,000 during the thirty-nine weeks ended January 1, 2009 and
December 27, 2007, respectively. We expect that our gross capital expenditures in fiscal 2009 will be approximately $100,000,000 to $110,000,000.

On
December 29, 2008, we sold all of our interests in Cinemex, which operates 44 theatres with 493 screens primarily in the Mexico City Metropolitan Area, to
Entretenimiento GM de Mexico S.A. de C.V. Under the Stock Purchase Agreement for the transaction, the purchase price was $315,000,000, decreased by the amount of net funded indebtedness of
Cinemex and other specified items of $66,859,000. Costs paid related to the disposition were $3,738,000 and the cash balance for Cinemex as of the date of sale was $19,717,000, which was accounted for
in the purchase price in the calculation of net funded indebtedness. Additionally, we estimate that we will receive an additional $12,647,000 of the purchase price related to tax payments and refunds
in later periods. The Stock Purchase Agreement also provides for post-closing adjustments for working capital and other variable components of the purchase price which had not been
determined as of February 13, 2009 but are not expected to be material.

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In
March 2007, the board of directors of Fandango, Inc. ("Fandango"), an online movie ticketing company in which we owned approximately 8.4% of the outstanding common stock on an
as converted basis as of March 29, 2007, approved an Agreement and Plan of Merger (the "Fandango Merger Agreement"), which was adopted and approved by its stockholders. Pursuant to the Fandango
Merger Agreement, we and the other existing stockholders sold our interests in Fandango to Comcast Corporation. The transaction closed in May of 2007. In connection with the transaction, we received
an equity earn up which raised our interest in Fandango to approximately 10.4% of the outstanding common stock on an as converted basis immediately prior to the sale of our shares. Pursuant to the
terms of the Fandango Merger Agreement and subject to certain closing adjustments, we received a total of $20,360,000 in cash consideration in connection with the sale of our interest in Fandango of
which $2,383,000 was received during the thirty-nine weeks ended January 1, 2009 and $17,977,000 was received during the thirty-nine weeks ended December 27,
2007.

On
July 5, 2007 we disposed of our investment in HGSCA, a joint venture that operated 17 theatres in South America, for sales proceeds of $28,682,000.

We
fund the costs of constructing new theatres using 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 a portion of the construction costs. However, 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. We may also decide to sell certain real estate assets that we currently own where the value of the real estate may be greater than the value generated by our theatre operations.

Cash Flows used in Financing Activities

Cash flows used in financing activities, as reflected in the consolidated statement of cash flows, were $22,095,000 and $276,440,000
during the thirty-nine weeks ended January 1, 2009 and December 27, 2007, respectively.

During
the thirty-nine weeks ended January 1, 2009 and December 27, 2007 we paid dividends of $2,255,000 and $270,588,000 to our stockholder AMC Entertainment
Holdings, Inc. Reference is made to Management's Discussion and Analysis of Financial Condition and Results of OperationsLiquidity and Capital Resources in our Annual Report on
Form 10-K for the fiscal year ended April 3, 2008 for certain information about our Senior Secured Credit Facility, our 8% Senior Subordinated Notes due 2014 (the "Notes due
2014"), 11% Senior Subordinated Notes due 2016 (the "Notes due 2016"), 85/8% Senior Notes due 2012 (the "Fixed Notes due 2012") and 12% Senior Discount Notes due 2014 (the "Discount
Notes due 2014").

Our
Senior Secured Credit Facility is with a syndicate of banks and other financial institutions and provides financing of up to $850,000,000, consisting of a $650,000,000 term loan
facility maturing on January 16, 2013 and a $200,000,000 revolving credit facility maturing on January 16, 2012. The revolving credit facility includes borrowing capacity available for
letters of credit and for swingline borrowings on same-day notice. As of January 1, 2009, we had no borrowings under the revolving credit facility and $630,500,000 was outstanding
under the term loan facility at an interest rate of 2.22%.

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Borrowings under the Senior Secured Credit Facility bear interest at a rate equal to an applicable margin plus, at our option, either a base rate or LIBOR. On
March 13, 2007, we amended the Senior Secured Credit Facility to, among other things, lower the interest rates related to our term loan, reduce our unused commitment fee and amend the change of
control definition so that an initial public offering and related transactions would not constitute a change of control. The current 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 current applicable margin for borrowings under the term loan facility is 0.75% with respect
to base rate borrowings and 1.75% with respect to LIBOR borrowings. The applicable margin for such borrowings may be reduced, subject to AMC Entertainment attaining certain leverage ratios. In
addition to paying interest on outstanding principal under the Senior Secured 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 0.25%. It will also pay customary letter of credit fees. AMC Entertainment may voluntarily repay outstanding loans under the
Senior Secured 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.

The
indentures relating to our notes (Discount Notes due 2014, Fixed Notes due 2012, Notes due 2014 and Notes due 2016) and the Parent Term Loan Facility allow us to incur specified
permitted indebtedness (as defined therein) without restriction. The indentures and the Parent Term Loan Facility also allow us to incur any amount of additional debt, including borrowings under the
revolving portion of AMCE's Senior Secured Credit Facility, as long as we can satisfy the applicable coverage ratio of each indenture, after giving effect to the event on a pro forma basis. Under the
indentures relating to
the Discount Notes due 2014, the most restrictive limitation, we could borrow approximately $886,170,000 (assuming an interest rate of 12% per annum on the additional indebtedness) in addition to
specified permitted indebtedness. If we cannot satisfy the applicable coverage ratios, generally we can incur no more than $100,000,000 of new "permitted indebtedness" under the terms of the
indentures relating to our notes and the Parent Term Loan Facility. In addition, certain of the indentures limit our ability to incur liens, which limit our ability to secure any new indebtedness,
including new borrowings under our Senior Secured Credit Facility.

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 offer to repurchase all of the outstanding Notes due 2016, Notes due 2014, Fixed Notes due 2012, and the 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.

As
of January 1, 2009, we were in compliance with all financial covenants relating to the Senior Secured Credit Facility, the Notes due 2016, the Notes due 2014, the Fixed Notes
due 2012, 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 for at least the next twelve
months and enable us to maintain compliance with covenants related to the Senior Secured Credit Facility and the notes.

Investment in NCM

We hold an investment in 18.5% of NCM accounted for following the equity method. The fair market value of the common membership units
is approximately $186,725,000 as of January 1, 2009. Because we have little tax basis in these units and because the sale of all these units would require us

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to
report taxable income of $298,453,000 including distributions received from NCM that were previously deferred, we expect that any sales of these units would be made ratably over a period of time to
most efficiently manage any related tax liability. We have available net operating loss carryforwards which could reduce any related tax liability.

Commitments and Contingencies

The Company has commitments and contingencies that were summarized in a table in the Company's Form 10-K for the
year ended April 3, 2008. The only material change in our commitments and contingencies since April 3, 2008 has been the result the sale of Cinemex.

Presented
below on a pro forma basis excluding obligations related to Cinemex are 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 April 3, 2008:

(In thousands)

Minimum
Capital and
Financing
Lease
Payments

Principal
Amount of
Corporate
Borrowings(1)

Interest
Payments on
Corporate
Borrowings(2)

Minimum
Operating
Lease
Payments

Capital
Related
Betterments(3)

Pension
Funding(4)

Total
Commitments
(Pro forma)2009

$
9,037

$
6,500

$
139,666

$
403,637

$
56,274

$
3,342

$
618,4562010


9,075


6,500


139,364


403,634


18,220





576,7932011


9,225


6,500


139,063


394,743








549,5312012


8,023


6,500


138,761


381,848








535,1322013


6,656


859,375


120,275


369,982








1,356,288Thereafter


75,335


865,795


163,023


2,664,318








3,768,471Total

$
117,351

$
1,751,170

$
840,152

$
4,618,162

$
74,494

$
3,342

$
7,404,671


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In December 2008, the FASB issued FASB Staff Position FSP 132(R)-1,Employers' Disclosures
about Postretirement Benefit Plan Assets, ("FSP 132(R)-1"), which provides guidance on an employer's disclosures about plan assets of a defined benefit
pension or other postretirement plan. This interpretation is effective for financial statements issued for fiscal years ending after December 15, 2009 and is effective for the us in fiscal
2010. We are currently evaluating the disclosure requirements of this pronouncement.

In
October 2008, the FASB issued FSP No. 157-3,Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not
Active,("FSP 157-3"). FSP 157-3 clarifies the application of SFAS 157 in a market that is not active and provides an example to
illustrate key considerations in

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determining
the fair value of a financial asset when the market for that financial asset is not active. FSP 157-3 was effective for us on October 2, 2008 for all financial
assets and liabilities recognized or disclosed at fair value in our condensed consolidated financial statements on a recurring basis (at least annually). The adoption of FSP 157-3
did not have a material impact on our consolidated financial position and results of operation.

In
April 2008, the FASB issued FASB Staff Position Financial Accounting Standard 142-3,Determination of the Useful Life of Intangible
Assets,
("FSP 142-3"). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a
recognized intangible asset under SFAS No. 142,Goodwill and Other Intangible Assets, ("SFAS 142"). In developing assumptions about
renewal or extension, FSP 142-3 requires an entity to consider its own historical experience (or, if no experience, market participant assumptions) adjusted for the entity-specific
factors in paragraph 11 of SFAS 142. FSP 142-3 expands the disclosure requirements of SFAS 142 and is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and is effective for us at the beginning of fiscal 2010. Early adoption is prohibited. The guidance for determining the useful life of a recognized intangible
asset shall be applied prospectively to intangible assets acquired after the effective date. We have not determined the effect that the application of FSP 142-3 will have on our
consolidated financial position.

In
March 2008, the FASB released SFAS No. 161,Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement
No. 133,("SFAS 161"), which expands the disclosure requirements about an entity's derivative and hedging activities. SFAS 161 requires entities to provide
enhanced disclosures about (1) how and why an entity uses derivative instruments, (2) how derivative instruments and related hedged items are accounted for under Statement 133 and its
related interpretations, and (3) how derivative instruments and related hedged items affect an entity's financial position, financial performance, and cash flows. SFAS 161 is effective
for fiscal years and interim periods beginning after November 15, 2008, and is effective for us in the fourth quarter of fiscal 2009. Early application is encouraged. We are currently
evaluating the enhanced disclosure requirements of this pronouncement.

In
December 2007, the FASB issued SFAS No. 160,Noncontrolling Interests in Consolidated Financial Statementsan amendment of ARB
No. 51,("SFAS 160"). SFAS 160 establishes accounting and reporting standards that require noncontrolling interest in a subsidiary to be reported as a
component of equity, changes in a parent's ownership interest while the parent retains its controlling interest to be accounted for as equity transactions, and any retained noncontrolling equity
investment upon the deconsolidation of a subsidiary to be initially measured at fair value. The Statement also establishes reporting requirements that clearly identify and distinguish between the
interests of the parent and the interests of the non-controlling owners. SFAS 160 is effective as of the beginning of the first fiscal year beginning on or after December 15,
2008, and is effective for us at the beginning of fiscal 2010. Earlier adoption is prohibited. We have not determined the effect that the application of SFAS 160 will have on our consolidated
financial position.

In
December 2007, the FASB issued Statement No. 141 (revised 2007),Business Combinations,("SFAS 141(R)").
SFAS 141(R) establishes the principles and requirements for how an acquirer: 1) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities
assumed, and any noncontrolling interest in the acquiree; 2) in a business combination achieved in stages, sometimes referred to as a step acquisition, recognize the identifiable assets and
liabilities, as well as the noncontrolling interest in the acquiree, at the full amounts of their fair values; 3) recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase. SFAS 141(R) establishes disclosure requirements to enable users of the financial statements to evaluate the nature and financial effects of the business
combination. This Statement is to be applied prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period on or after
December 15, 2008, and is effective for us at the beginning of

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fiscal
2010. Earlier adoption is prohibited. We are in the process of evaluating the impact SFAS 141(R) will have on our financial statements.

In
September 2006, the FASB released SFAS No. 157,Fair Value Measurements,("SFAS 157") which provides enhanced guidance
for using fair value to measure assets and liabilities. Under the standard, fair value refers to the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants in the market in which the reporting entity transacts. It clarifies the principle that fair value should be based on the assumptions market participants would
use when pricing the asset or liability. In February 2008, the FASB issued FASB Staff Position FAS 157-2,Partial Deferral of the Effective Date of
SFAS 157("FSP 157-2"), which delays the effective date for nonfinancial assets and liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis. The Statement was effective at the beginning of the first quarter of fiscal 2009 for financial assets and liabilities recognized or
disclosed at fair value on a recurring basis. The partial adoption of this Statement did not have a material impact on our consolidated financial position and results of operations. Please refer to
Note 9Fair Value of Financial Instruments for additional information. Due to the deferral, we have delayed the implementation of SFAS 157 provisions on the fair value of
goodwill, intangible assets with indefinite lives, and nonfinancial long-lived assets until the beginning of fiscal 2010. We are in the process of evaluating the impact related to our
nonfinancial assets and liabilities not valued on a recurring basis (at least annually).

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Item 3.    Quantitative and Qualitative Disclosures about Market Risk

We are exposed to various market risks including interest rate risk and foreign currency exchange rate risk. All financial instruments
are used solely for hedging purposes and are not issued or held for speculative reasons.

Interest Rate Swaps.We periodically enter into interest rate swap agreements to manage the interest rate risk associated with variable
rate debt
instruments. In October 2007, AMCE executed an interest rate swap agreement, scheduled to mature in April 2009, to hedge $200,000,000 of our variable rate debt obligation. Under the terms of the
agreement, we pay interest at a fixed rate of 4.707% and receive interest at a variable rate based on 1-month U.S. Dollar LIBOR-BBA. Based upon a sensitivity analysis performed
as of January 1, 2009, a decrease in the underlying interest rates of 100 basis points would increase the fair value of the interest rate swap liabilities by $556,000 and a 100 basis point
increase in the underlying interest rates would decrease the fair value of the interest rate swap liabilities by $506,000.

Market risk on variable-rate financial instruments.We maintain an $850,000,000 Senior Secured 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 revolving credit facility as of
January 1, 2009 and had $630,500,000 outstanding under the term loan facility on January 1, 2009, of which $200,000,000 is hedged at a fixed rate. A 100 basis point change in market
interest rates would have increased or decreased interest expense on the Senior Secured Credit Facility by $3,373,000 during the thirty-nine weeks ended January 1, 2009.

Market risk on fixed-rate financial instruments.Included in long-term debt are $325,000,000 of our Notes due 2016,
$300,000,000 of our Notes due 2014, $250,000,000 of our Fixed Notes due 2012 and $240,795,000 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 2014 and Fixed Notes due 2012 and a decrease in market interest rates would generally cause an increase in fair value of the Notes due 2016, Notes due 2014,
Fixed Notes due 2012, and Discount Notes due 2014.

Foreign currency exchange rates.We currently operate theatres in Canada, France and the United Kingdom. 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. 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 earnings before income taxes and accumulated other comprehensive income (loss) by approximately $875,000 and $1,906,000, respectively, as of January 1, 2009.

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Item 4T.    Controls and Procedures.



The
Company maintains a set of disclosure controls and procedures designed to provide reasonable assurance 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 and that material
information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. The Company's Chief Executive Officer and Chief Financial Officer have re-evaluated these disclosure controls and procedures as of the end of the period covered by this Amended Quarterly
Report on Form 10-Q/A and have determined that such disclosure controls and procedures were effective.

Management's Consideration of the Restatement

In coming to the conclusion that our disclosure controls and procedures were effective as of the end of the period covered by this
Amended Quarterly Report on Form 10-Q/A, management considered, among other things, the fact that it was restating previously issued financial statements for an error in applying SFAS 106 Employers'
Accounting for Postretirement Benefits Other than Pensions ("FAS 106") to an amendment of its Post-Retirement Medical and Life Insurance Plan (the "Plan"). Management also considered the Company's
internal controls over its financial reporting for Plan related assets, liabilities and related expenses. Such controls included but were not limited to: the use of competent Company personnel; the
gathering of complete, accurate and relevant information for analysis; providing such information to external third party actuarial specialists who assisted management in the application of generally
accepted accounting principles, including those contained in FAS 106; and, related management reviews. Based on the conclusion that the Company's internal controls associated with the above-noted
accounts were designed and operated effectively so as to provide reasonable assurance over financial reporting, the Company's Chief Executive Officer and Chief Financial Officer concluded that no
deficiency in internal control over financial reporting existed and therefore further concluded that as of the end of the period covered by this Amended Quarterly Report on Form 10-Q/A the Company's
disclosure controls and procedures were effective at a reasonable level of assurance.



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.

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Table of Contents

PART IIOTHER INFORMATION

Item 1.    Legal Proceedings

Reference is made to Part I. Item 3. Legal Proceedings in our Annual Report on Form 10-K for the
fiscal year ended April 3, 2008 for information on certain litigation to which we are a party.

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
December 5, 2008, the Ninth Circuit Court of Appeals reversed the trial court as to the appropriate remedy and remanded the case back to the trial court for findings consistent
with its decision. AMCE estimates that the cost of betterments related to the remaining remedies required for line of sight violations will be approximately $4,300,000 over a
4-5 year term. The Justice Department may seek review by a larger panel of judges on the Ninth Circuit Court of Appeals.

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 1A.    Risk Factors

Reference is made to Part I Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal
year ended April 3, 2008.

Capital and Credit Market Crisis

Although we do not currently need debt financing, in the event we were to require debt financing in the future, the severe dislocations
and liquidity disruptions in the credit markets could materially impact our ability to obtain debt financing on reasonable terms. The inability to access debt financing on reasonable terms could
materially impact our ability to make acquisitions or materially expand our business in the future. Additionally, a prolonged economic downturn or recession could materially impact our operations to
the extent it results in reduced demand for moviegoing. If current market and economic conditions persist or deteriorate, we may experience adverse impacts on our business, results of operations and
financial condition.

We depend on motion picture production and performances.

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

The
master contract between film producers and the Screen Actors Guild ("SAG") expired at the beginning of July 2008. A strike has not been initiated, but the parties have been unable to
reach agreement on a new contract. The American Federation of Television and Radio Artists, the smaller of the two actors' unions, had previously reached a new three year agreement with producers
prior to its contract expiration. If SAG union members choose to strike or film producers choose to lock out the union members, a disruption in production of motion pictures could result.

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We will not be fully subject to the requirement of Section 404 of the Sarbanes-Oxley Act of 2002 until the end of our fiscal year 2010.

We
are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, which requires annual
management assessments and reports by an issuer's independent registered public accounting firm on the effectiveness of internal controls over financial reporting. We have completed our
Section 404 annual management report and included the report in our Annual Report on Form 10-K for fiscal 2008, which ended in April 2008. Our independent registered public
accounting firm did not, however, need to include its attestation report in our annual report for fiscal 2008. Under current rules, the attestation of our independent registered public accounting firm
will be required beginning in our Annual Report on Form 10-K for our fiscal 2010, which ends in April 2010.

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

On November 4, 2008, the Requisite Stockholder majority of AMC Entertainment Holdings, Inc. and the Board of Directors of
AMC Entertainment Inc. unanimously approved the Sale of Cinemex and the related Stock Purchase Agreement.

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Table of Contents

Item 6.    Exhibits.

EXHIBIT INDEX

EXHIBIT
NUMBER

DESCRIPTION2.1

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

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).2.3

Agreement and Plan of Merger, dated June 11, 2007, by and among AMC Entertainment Holdings, Inc., Marquee Holdings Inc., and Marquee Merger Sub Inc. (incorporated by reference from Exhibit 2.1
to the Company's Form 8-K filed on June 13, 2007)3.1

Third Amended and Restated Certificate of Incorporation of Marquee Holdings Inc. (incorporated by reference from Exhibit 3.1 to the Company's Form 8-K filed on June 13, 2007)3.2

Third Amended and Restated Bylaws of Marquee Holdings Inc. (incorporated by reference from Exhibit 3.2 to the Company's Form 8-K filed on June 13, 2007)10.1

Amendment to Stock Purchase Agreement dated as of November 5, 2008 among Entretenimiento GM de Mexico S.A. de C.V., as Buyer, and AMC Netherlands HoldCo B.V., LCE Mexican Holdings, Inc., and AMC
Europe S.A., as sellers (incorporated by reference from Exhibit 10.2 to the Company's Form 8-K (File No. 1-33344) filed January 5, 2009).10.2

Stock Purchase Agreement dated as of November 5, 2008 among Entretenimiento GM de Mexico S.A. de C.V., as Buyer, and AMC Netherlands HoldCo B.V., LCE Mexican Holdings, Inc., and AMC
Europe S.A., as sellers (filed as Exhibit 10.1 to the Company's Form 10-Q (File No. 1-33344) filed on November 17, 2008).10.3

Amendment to Exhibitor Services Agreement dated as of November 5, 2008, by and between National CineMedia, LLC and American Multi-Cinema, Inc. (filed as Exhibit 10.1 to the Current Report on
Form 8-K (File No. 001-33296) of National CineMedia, Inc., filed on February 6, 2008, and incorporated herein by reference).*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 Gerardo I. Lopez (Chief Executive Officer) and Craig R. Ramsey (Chief Financial Officer) furnished in accordance with Securities Act Release 33-8212.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

MARQUEE HOLDINGS INC.Date: May 21, 2009

/s/ GERARDO I. LOPEZ Gerardo I. Lopez Chief Executive Officer and PresidentDate: May 21, 2009

/s/ CRAIG R. RAMSEY Craig R. Ramsey Executive Vice President and
Chief Financial Officer


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