Table of Contents



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



FORM 10-Q

(Mark One)ý

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended October 1, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period
from                        toCommission file number 1-33344




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

Delaware

77-0642885(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)920 Main
Kansas City, Missouri

64105(Address of principal executive offices)

(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 has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulations S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit such files). Yes o    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 October 1, 2009Common Stock, 1¢ par value

1




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Table of Contents



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

25Item 3.

Quantitative and Qualitative Disclosures About Market Risk

42Item 4T.

Controls and Procedures

43PART IIOTHER INFORMATIONItem 1.

Legal Proceedings

44Item 1A.

Risk Factors

44Item 4.

Submission of Matters to a Vote of Security Holders

44Item 6.

Exhibits

45Signatures

46


2

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Table of Contents

PART IFINANCIAL INFORMATION

Item 1.    Financial Statements. (Unaudited)

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

Thirteen Weeks Ended

Twenty-six Weeks EndedOctober 1,
2009

October 2,
2008

October 1,
2009

October 2,
2008(unaudited)

(unaudited)RevenuesAdmissions

$
390,498

$
404,517

$
836,725

$
821,448Concessions


147,381


159,916


321,041


329,750Other revenue


13,173


15,577


28,598


31,031Total revenues


551,052


580,010


1,186,364


1,182,229Costs and ExpensesFilm exhibition costs


208,328


218,376


457,429


450,112Concession costs


15,905


16,580


35,070


35,017Operating expense


142,559


149,365


291,780


294,081Rent


108,311


112,814


220,684


225,149General and administrative:Merger, acquisition and transaction costs


43


235


324


252Management fee


1,250


1,250


2,500


2,500Other


13,075


11,928


26,158


23,137Preopening expense


565


1,185


1,434


3,060Theatre and other closure expense (income)


478


(2,319
)

615


(2,333
)Depreciation and amortization


46,689


50,470


95,477


101,056Disposition of assets and other gains


(211
)

(374
)

(261
)

(355
)Total costs and expenses


536,992


559,510


1,131,210


1,131,676Other expense (income)Other


(6,938
)

(7,701
)

1,835


(9,904
)Interest expenseCorporate borrowings


40,469


37,021


76,318


73,643Capital and financing lease obligations


1,413


1,498


2,826


2,995Equity in earnings of non-consolidated entities


(4,348
)

(5,321
)

(10,610
)

(9,706
)Investment income


(33
)

(304
)

(132
)

(583
)Total other expense


30,563


25,193


70,237


56,445Loss from continuing operations before income taxes


(16,503
)

(4,693
)

(15,083
)

(5,892
)Income tax provision (benefit)


(1,000
)

(62
)




1,618Loss from continuing operations


(15,503
)

(4,631
)

(15,083
)

(7,510
)Earnings (loss) from discontinued operations, net of income taxes


(131
)

2,528


592


6,832Net loss

$
(15,634
)
$
(2,103
)
$
(14,491
)
$
(678
)


See
Notes to Consolidated Financial Statements.

3

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Table of Contents

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

October 1, 2009

April 2, 2009(unaudited)ASSETSCurrent assets:Cash and equivalents

$
392,619

$
536,580Receivables, net of allowance for doubtful accounts of $1,633 as of October 1, 2009 and $1,564 as of April 2, 2009


23,417


29,782Other current assets


75,320


80,526Total current assets


491,356


646,888Property, net


915,790


964,668Intangible assets, net


154,922


162,366Goodwill


1,836,731


1,836,731Other long-term assets


163,455


146,088Total assets

$
3,562,254

$
3,756,741LIABILITIES AND STOCKHOLDER'S EQUITYCurrent liabilities:Accounts payable

$
130,381

$
155,553Accrued expenses and other liabilities


125,488


102,070Deferred revenues and income


105,456


121,628Current maturities of corporate borrowings and capital and financing lease obligations


10,193


9,923Total current liabilities


371,518


389,174Corporate borrowings


2,069,848


1,922,236Capital and financing lease obligations


55,304


57,286Deferred revenuesfor exhibitor services agreement


251,648


253,164Other long-term liabilities


312,082


308,703Total liabilities

$
3,060,400

$
2,930,563Commitments and contingenciesStockholder's equity:Common Stock, 1 share issued as of October 1, 2009 and April 2, 2009 with 1¢ par value





Additional paid-in capital


746,818


1,046,703Accumulated other comprehensive earnings


7,113


17,061Accumulated deficit


(252,077
)

(237,586
)Total stockholder's equity


501,854


826,178Total liabilities and stockholder's equity

$
3,562,254

$
3,756,741


See
Notes to Consolidated Financial Statements.

4

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

Twenty-six Weeks EndedOctober 1, 2009

October 2, 2008(unaudited)INCREASE (DECREASE) IN CASH AND EQUIVALENTSCash flows from operating activities:Net loss

$
(14,491
)
$
(678
)Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization


95,477


116,114Non-cash portion of stock-based compensation


838


1,549Non-cash portion of pension and postretirement expense (income)


1,288


(298
)Write-off of deferred charges for Fixed Notes due 2012


3,468


Deferred income taxes


(1,500
)

361Equity in earnings and losses from non-consolidated entities, net of distributions


3,818


1,371Disposition of assets and other gains





118Gain on disposition of Cinemex


(592
)

Change in assets and liabilities:Receivables


1,814


4,692Other assets


22


(6,434
)Accounts payable


(29,751
)

(30,466
)Accrued expenses and other liabilities


6,057


(18,667
)Other, net


(4,599
)

(6,303
)Net cash provided by operating activities


61,849


61,359Cash flows from investing activities:Capital expenditures


(29,781
)

(60,501
)Net change in reimbursable construction advances


(347
)

2,073Investments in non-consolidated entities


(5,963
)

(1,550
)Proceeds from disposition of Cinemex


2,898


LCE screen integration


(81
)

(3,990
)Other, net


730


1,520Net cash used in investing activities


(32,544
)

(62,448
)Cash flows from financing activities:Repayment under revolving credit facility


(185,000
)

Repurchase of Fixed Notes due 2012


(250,000
)

Proceeds from issuance of Senior Notes due 2019


585,492


Deferred financing costs


(15,943
)

Principal payments under capital and financing lease obligations


(1,712
)

(1,817
)Principal payments under Term Loan B


(3,250
)

(3,250
)Change in construction payables


(437
)

(9,439
)Dividends paid to Parent


(300,723
)

(2,255
)Net cash used in financing activities


(171,573
)

(16,761
)Effect of exchange rate changes on cash and equivalents


(1,693
)

(972
)Net decrease in cash and equivalents


(143,961
)

(18,822
)Cash and equivalents at beginning of period


536,580


108,717Cash and equivalents at end of period

$
392,619

$
89,895


See Notes to Consolidated Financial Statements.

5

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MARQUEE HOLDINGS INC. AND SUBSIDIARY        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        October 1, 2009        (Unaudited)

NOTE 1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.

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 Notes due 2019, Notes due 2016, Notes due 2014 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 ended April 2, 2009. 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
twenty-six weeks ended October 1, 2009 are not necessarily indicative of the results to be expected for the fiscal year (52 weeks) ending April 1, 2010. The Company
manages its business under one operating segment called Theatrical Exhibition.

6

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 1BASIS OF PRESENTATION (Continued)

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

The
April 2, 2009 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.

The
Company has evaluated subsequent events through November 12, 2009, the date of filing this Form 10-Q.

Film Exhibition Costs:Effective April 3, 2009, certain advertising costs related to film exhibition were reclassified from
operating expense
to film exhibition costs with a conforming reclassification made for the prior year presentation.

NOTE 2DISCONTINUED OPERATIONS

On December 29, 2008, the Company sold all of its interests in Grupo Cinemex, S.A. de C.V. ("Cinemex"), which then operated 44 theatres with 493 screens primarily in the
Mexico City Metropolitan Area, to Entretenimiento GM de Mexico S.A. de C.V. 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. As of October 1, 2009, the amount due from Cinemex for tax payments and refunds associated with the sale was $10,815,000, and $9,325,000 has been classified
by the Company as a long-term asset. The receivables for these taxes are recorded in pesos and translated to U.S. dollars each week. Any currency translation gains or losses on these
receivables are recorded in discontinued operations as part of the gain on disposition of Cinemex. The Company does 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.

7

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 2DISCONTINUED OPERATIONS (Continued)

Components
of amounts reflected as earnings from discontinued operations in the Company's Consolidated Statements of Operations are presented in the following table (in thousands):

Statements
of operations data:

Thirteen Weeks Ended

Twenty-six Weeks EndedOctober 1, 2009

October 2, 2008

October 1, 2009

October 2, 2008(unaudited)

(unaudited)RevenuesAdmissions

$


$
24,799

$


$
47,082Concessions





18,000





34,024Other revenue





7,708





15,204Total revenues





50,507





96,310Costs and ExpensesFilm exhibition costs





10,994





20,936Concession costs





4,267





7,778Operating expense





11,654





23,331Rent





5,435





10,561General and administrative:Other





2,724





6,296Depreciation and amortization





7,627





15,058Disposition of assets and other (gains) loss


231





(592
)

Total costs and expenses


231


42,701


(592
)

83,960Other expense (income)





(53
)




(522
)Interest expenseCorporate borrowings





2,668





5,220Capital and financing lease obligations





230





409Investment income





(329
)




(771
)Total other expense





2,516





4,336Earnings (loss) before income taxes


(231
)

5,290


592


8,014Income tax provision (benefit)


(100
)

2,762





1,182Net earnings (loss)

$
(131
)
$
2,528

$
592

$
6,832


8

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 3COMPREHENSIVE EARNINGS (LOSS)

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

Thirteen Weeks Ended

Twenty-six Weeks EndedOctober 1, 2009

October 2, 2008

October 1, 2009

October 2, 2008Net loss

$
(15,634
)
$
(2,103
)
$
(14,491
)
$
(678
)Foreign currency translation adjustment


(3,063
)

(10,220
)

(10,802
)

(2,964
)Pension and other benefit adjustments


(214
)

(514
)

(261
)

5,654Change in fair value of cash flow hedges





(90
)

(6
)

665Losses on interest rate swaps reclassified to interest expense: corporate borrowings





1,164


558


2,409Decrease (increase) in unrealized loss on marketable securities


308


(459
)

563


(684
)Total comprehensive earnings (loss)

$
(18,603
)
$
(12,222
)
$
(24,439
)
$
4,402


NOTE 4GOODWILL AND OTHER INTANGIBLE ASSETS

Activity of goodwill by operating segment is presented below.

(In thousands)

TotalBalance as of April 2, 2009 and October 1, 2009

$
1,836,731


Activity
of other intangible assets is presented below.

October 1, 2009

April 2, 2009(In thousands)

Remaining
Useful Life

Gross
Carrying
Amount

Accumulated
Amortization

Gross
Carrying
Amount

Accumulated
AmortizationAcquired Intangible Assets:Amortizable Intangible Assets:Favorable leases

1 to 12 years

$
104,646

$
(40,038
)
$
104,646

$
(35,949
)Loyalty program

4 years


46,000


(36,892
)

46,000


(34,914
)LCE trade name

2 years


2,300


(1,690
)

2,300


(1,460
)LCE advertising and management contracts

13 to 21 years


35,400


(29,028
)

35,400


(27,893
)Other intangible assets

1 to 13 years


13,654


(13,430
)

13,654


(13,418
)Total, amortizable



$
202,000

$
(121,078
)
$
202,000

$
(113,634
)Unamortizable Intangible Assets:Total, unamortizable



$
74,000




$
74,000


9

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 4GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

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

Thirteen Weeks Ended

Twenty-six Weeks Ended(In thousands)

October 1, 2009

October 2, 2008

October 1, 2009

October 2, 2008Recorded amortization

$
3,245

$
5,545

$
7,444

$
11,339


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

(In thousands)

2010

2011

2012

2013

2014Projected amortization expense

$
13,934

$
11,980

$
10,856

$
10,147

$
7,769


NOTE 5STOCKHOLDER'S EQUITY

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

During
April and May of 2009, Holdings made dividend payments to its stockholder, Parent totaling $300,000,000, which were treated as a reduction of additional paid-in
capital. Parent
made payments to purchase term loans and reduced the principal balance of its Parent Term Loan Facility from $466,936,000 to $193,290,000 with a portion of the dividend proceeds.

During
September of 2009, Holdings used cash on hand to pay a dividend distribution to Parent in an aggregate amount of $723,000. Parent used the available funds pay corporate overhead
expenses incurred in the ordinary course of business.

Stock-Based Compensation

The Company has no stock-based compensation arrangements of its own, but Parent has adopted a stock-based compensation plan that
permits a maximum of 49,107.44681 options to be issued on Parent's stock. On October 1, 2009, approximately 9,325 options were available for grant under the plan. The stock options have a ten
year term and generally step vest in equal amounts from one to three or five years from the date of the grant. Vesting may accelerate for certain participants if there is a change of control (as
defined in the plan). All outstanding options have been granted to employees and one director of the Company. The Company accounts for stock options using the fair value method of accounting and has
elected to use the simplified method for estimating the expected term of "plain vanilla" share option grants as it does not have enough historical experience to provide a reasonable estimate.

On
May 28, 2009, Parent granted options on 4,786 of its shares that step vest in equal amounts over five years with final vesting occurring on May 28, 2014. The following
table reflects the weighted average fair value per option granted during the thirteen weeks ended July 2, 2009, as well as the

10

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 5STOCKHOLDER'S EQUITY (Continued)

significant
weighted average assumptions used in determining fair value using the Black-Scholes option-pricing model:

July 2, 2009(1)Weighted average fair value on grant date

$
135.71Risk-free interest rate


2.6
%Expected life (years)


6.5Expected volatility(2)


35.0
%Expected dividend yield





(1)Represents
assumptions for stock options granted to certain employees of the Company.(2)The
Company uses share values of its publicly traded competitor peer group for purpose of calculating volatility.


The
Company has recorded stock-based compensation expense of $427,000 and $786,000 within general and administrative: other during the thirteen weeks ended October 1, 2009, and
October 2, 2008, respectively. The Company has recorded stock-based compensation expense of $838,000 and $1,549,000 within general and administrative: other during the twenty-six
weeks ended October 1, 2009 and October 2, 2008, respectively. The Company's financial statements reflect an increase to
additional paid-in capital related to stock-based compensation for all outstanding options of $838,000 during fiscal 2010. As of October 1, 2009, there was approximately $2,713,000
of total estimated unrecognized compensation cost related to nonvested stock-based compensation arrangements under the Parent's plan expected to be recognized over 5 years.

NOTE 6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 October 1, 2009, include an 18.53% 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
("MEP") 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.

11

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 6INVESTMENTS (Continued)

Operating
Results (1):

For the thirteen weeks ended October 1, 2009
(in thousands)

NCM

MTC

DCIP

MEP

Other

TotalRevenues

$
95,712

$
7,172

$


$
2,901

$
3,315

$
109,100Operating costs and expenses


62,410


5,791


3,092


4,571


3,652


79,516Net earnings (loss)

$
33,302

$
1,381

$
(3,092
)
$
(1,670
)
$
(337
)
$
29,584The Company's recorded equity in (earnings) loss

$
(5,900
)
$
(362
)
$
1,031

$
765

$
118

$
(4,348
)For the twenty-six weeks ended October 1, 2009
(in thousands)

NCM

MTC

DCIP

MEP

Other

TotalRevenues

$
188,610

$
12,511

$


$
3,096

$
7,432

$
211,649Operating costs and expenses


122,848


10,930


5,605


5,387


7,684


152,454Net earnings (loss)

$
65,762

$
1,581

$
(5,605
)
$
(2,291
)
$
(252
)
$
59,195The Company's recorded equity in (earnings) loss

$
(13,266
)
$
(458
)
$
1,868

$
1,218

$
28

$
(10,610
)For the thirteen weeks ended October 2, 2008
(in thousands)

NCM

MTC

DCIP

MEP

Other

TotalRevenues

$
107,709

$
5,359

$


$


$
4,907

$
117,975Operating costs and expenses


60,700


2,089


2,882





4,410


70,081Net earnings (loss)

$
47,009

$
3,270

$
(2,882
)
$


$
497

$
47,894The Company's recorded equity in (earnings) loss

$
(5,221
)
$
(764
)
$
960

$


$
(296
)
$
(5,321
)For the twenty-six weeks ended October 2, 2008
(in thousands)

NCM

MTC

DCIP

MEP

Other

TotalRevenues

$
194,445

$
10,741

$


$


$
8,937

$
214,123Operating costs and expenses


120,766


6,104


5,009





8,305


140,184Net earnings (loss)

$
73,679

$
4,637

$
(5,009
)
$


$
632

$
73,939The Company's recorded equity in (earnings) loss

$
(9,876
)
$
(1,121
)
$
1,702

$


$
(411
)
$
(9,706
)


(1)Certain
differences in the Company's recorded investment over its proportional ownership share are amortized to equity in (earnings) or losses over the
estimated useful life of the underlying assets or liabilities. The recorded equity in earnings of NCM on common membership units owned immediately following the IPO of NCM, Inc.
(Tranche 1 Investment) does not include undistributed equity in earnings.. The Company considered the excess distribution received following NCM, Inc.'s IPO as an advance on NCM's future
earnings. As a result, the Company will not recognize any undistributed equity in earnings of NCM on the original common membership units (Tranche 1 Investment) until NCM's future net earnings
equal the amount of the excess distribution.


As of October 1, 2009, the Company owns 18,821,114 units, or an 18.53% interest, in NCM accounted for using the equity method of
accounting. The fair market value of the units in National CineMedia, LLC was approximately $310,360,000, based on a price for shares of National CineMedia, Inc. on October 1,
2009 of $16.49 per share.

As
of October 1, 2009 and April 2, 2009, the Company has recorded $1,028,000 and $1,342,000 respectively, of amounts due from NCM related to on-screen
advertising revenue. As of October 1,

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 6INVESTMENTS (Continued)

2009
and April 2, 2009, the Company had recorded $979,000 and $1,657,000 respectively, of amounts due to NCM related to the ESA and the Loews Screen Integration Agreement. The Company recorded
revenues for advertising from NCM of $4,799,000 and $4,626,000 during the thirteen weeks ended October 1, 2009 and October 2, 2008, respectively and $10,215,000 and $10,025,000 during
the twenty-six weeks ended October 1, 2009 and October 2, 2008, respectively. The Company recorded advertising expenses related to a beverage advertising agreement paid to
NCM of $2,787,000 and $4,164,000 during the thirteen weeks ended October 1, 2009 and October 2, 2008, respectively and $5,993,000 and $8,509,000 during the twenty-six weeks
ended October 1, 2009 and October 2, 2008, respectively.

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

(in thousands)

Investment in
NCM(1)

Deferred
Revenue(2)

Due to
NCM(3)

Cash Received
(Paid)

Equity in
Earnings

Advertising
(Revenue)Beginning balance April 2, 2009

$
26,733

$
(253,164
)
$
(81
)
$


$


$
Receipt under Tax Receivable Agreement











4,328


(4,328
)

Receipt of excess cash distribution


(625
)







8,741


(8,116
)

Payment on Loews Screen Integration Agreement








81


(81
)




Amortization of deferred revenue





1,516











(1,516
)Equity in earnings(4)


822











(822
)

Ending balance October 1, 2009

$
26,930

$
(251,648
)
$


$
12,988

$
(13,266
)
$
(1,516
)


(1)Represents
AMC's investment in 939,853 common membership units originally valued at March 27, 2008 and 406,371 common membership units originally
valued at March 17, 2009 received under the Common Unit Adjustment Agreement dated as of February 13, 2007 (Tranche 2 Investments). AMC's investment in 17,474,890 common
membership units (Tranche 1 Investment) is carried at zero cost.(2)Represents
the unamortized portion of the Exhibitors Services Agreement (ESA) modifications payment received from NCM.(3)Represents
the amount due to NCM under the Loews Screen Integration Agreement that was fully paid in April 2009.(4)Represents
equity in earnings on the Tranche 2 Investments only.


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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)




NOTE 7FAIR VALUE OF FINANCIAL INSTRUMENTS

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
entity transacts. The inputs used to develop these fair value measurements are established in a hierarchy, which ranks the quality and reliability of the information used to determine the fair values.
The fair value classification is based on levels of inputs. Assets and liabilities that are carried at fair value are 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 October 1, 2009 Using(In thousands)

Total Carrying
Value at
October 1, 2009

Quoted prices in
active market
(Level 1)

Significant other
observable inputs
(Level 2)

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

$
207,544

$
207,544

$


$
Equity securities, available-for-sale:Deferred compensation plan assets


3,443


3,443





Non-qualified defined benefit plan assets


106


106





Total assets at fair value

$
211,093

$
211,093

$


$
Liabilities:Total liabilities at fair value

$


$


$


$



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 equity securities primarily consist of mutual funds invested in equity, fixed income, and
international funds. 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 amortized cost basis of the equity securities held as of
October 1, 2009 is $3,253,000.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 7FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

The
Company is required to disclose the fair value of financial instruments that are not recognized in the statement of financial position, for which it is practicable to estimate that
value. At October 1, 2009, the carrying amount of the Company's liabilities for corporate borrowings was approximately $2,076,348,000 and the fair value was approximately $2,037,155,000. At
April 2, 2009, the carrying amount of the corporate borrowings was approximately $1,928,736,000 and the fair value of was approximately $1,699,681,000. Quoted market prices were used to value
publicly held corporate borrowings. The carrying value of cash and equivalents approximates fair value because of the short duration of those instruments.

NOTE 8THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS

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

Theatre and OtherTwenty-six
Weeks Ended
October 1, 2009

Twenty-six
Weeks Ended
October 2, 2008Beginning balance

$
7,386

$
10,844Theatre and other closure (income) expense


615


(2,333
)Transfer of property tax liability


279


7Transfer of deferred rent and capital lease obligations


9


2,824Cash payments


(1,118
)

(1,236
)Ending balance

$
7,171

$
10,106


The
ending balance is included with accrued expenses and other liabilities in the accompanying consolidated balance sheets.

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 9INCOME TAXES

Effective income tax rate

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

Twenty-six Weeks EndedOctober 1, 2009

October 2, 2008Federal statutory rate


35.0
%

35.0
%Valuation allowance


(29.3
)

(127.4
)State income taxes, net of federal tax benefit


(8.3
)

75.2Permanent items


2.6


(9.5
)Other, net





(.8
)Effective tax rate



%

(27.5
)%


The
accounting for income taxes 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. Deferred tax assets are 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.

Parent
began negotiations with certain of its debt holders during fiscal 2009 and completed the repurchase of certain term loans under the Parent Term Loan Facility in fiscal 2010. Based
upon the historical tax sharing arrangement, Parent will utilize the Company's net operating losses in future years. During fiscal 2009, the Company reversed $31,000,000 of its valuation allowance
through Goodwill in anticipation of future utilization by Parent. During fiscal 2010, the Company reversed an additional $1,500,000 of valuation allowance through income tax expense in anticipation of
future utilization by Parent. The Company continues to record a valuation allowance against its remaining net
deferred tax assets due to the uncertainty regarding the ultimate realization of these assets in all taxing jurisdictions.

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 of the tax years February 28, 2002 through December 31, 2003 of the former Loews Cineplex Entertainment Corporation and subsidiaries was concluded
during fiscal 2007. An IRS examination for the tax years ended March 31, 2005 and March 30, 2006 was completed during 2009. As of October 1, 2009, the IRS has notified the Company
that it is not currently under consideration for examination. Generally, tax years beginning after March 28, 2002 are still open to examination by various taxing authorities. Additionally, the
Company has net operating loss ("NOL") carryforwards for tax years ended October 31, 2000 through March 28, 2002 in the U.S. and various state jurisdictions which have
carryforwards of varying lengths of time. These NOLs 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

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 9INCOME TAXES (Continued)

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 2010. The net change in the reserve for uncertain tax positions from
April 3, 2009 to October 1, 2009 is a net increase of approximately $700,000 related to current positions adopted.

NOTE 10EMPLOYEE BENEFIT PLANS

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.

The
Company made pension contributions of approximately $3,486,000 during the second quarter of fiscal 2010. In addition, the Company expects to make pension contributions of
approximately $486,000 in both the third and fourth quarters of fiscal 2010.

Net
periodic benefit cost recognized for the plans during the thirteen weeks ended October 1, 2009 and October 2, 2008 consists of the following:

Pension Benefits

Other Benefits(In thousands)

October 1,
2009

October 2,
2008

October 1,
2009

October 2,
2008Components of net periodic benefit cost:Service cost

$
45

$
113

$
52

$
58Interest cost


1,101


1,097


324


313Expected return on plan assets


(747
)

(1,275
)




Amortization of gain


(9
)

(403
)

(69
)

(23
)Amortization of prior service credit








(136
)

(136
)Amortization of transition obligation





10





Net periodic benefit cost (income)

$
390

$
(458
)
$
171

$
212


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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 10EMPLOYEE BENEFIT PLANS (Continued)

Net
periodic benefit cost recognized for the plans during the twenty-six weeks ended October 1, 2009 and October 2, 2008 consists of the following:

Pension Benefits

Other Benefits(In thousands)

October 1,
2009

October 2,
2008

October 1,
2009

October 2,
2008Components of net periodic benefit cost:Service cost

$
90

$
226

$
104

$
284Interest cost


2,202


2,199


648


487Expected return on plan assets


(1,495
)

(2,549
)




Amortization of (gain) loss


149


(806
)

(138
)

(23
)Amortization of prior service credit








(272
)

(136
)Amortization of transition obligation





20





Net periodic benefit cost (income)

$
946

$
(910
)
$
342

$
612


NOTE 11CORPORATE BORROWINGS

On June 9, 2009, AMCE completed the offering of $600,000,000 aggregate principal amount of its 8.75% Senior Notes due 2019 (the "Notes due 2019"). Concurrently with the initial
notes offering, AMCE launched a cash tender offer and consent solicitation for any and all of its then outstanding $250,000,000 aggregate principal amount 85/8% Senior Notes due 2012
(the "Fixed Notes due 2012") at a purchase price of $1,000 plus a $30 consent fee for each $1,000 of principal amount of currently outstanding Fixed Notes due 2012 validly tendered and accepted by
AMCE on or before the early tender date (the "Cash Tender Offer"). AMCE used the net proceeds from the issuance of the Notes due 2019 to pay the consideration for the Cash Tender Offer plus accrued
and unpaid interest on the $238,065,000 principal amount of the Fixed Notes due 2012. AMCE recorded a loss on extinguishment related to the Cash Tender Offer of $10,826,000 in Other expense during the
thirteen weeks ended July 2, 2009, which included previously capitalized deferred financing fees of $3,312,000, a consent fee paid to the holders of $7,142,000 and other expenses of $372,000.
On August 15, 2009, AMCE redeemed the remaining $11,935,000 of Fixed Notes due 2012 at a price of $1,021.56 per $1,000 principal in accordance with the terms of the indenture. AMCE recorded a
loss of $450,000 in Other expense related to the extinguishment of the remaining Fixed Notes due 2012 principal during the
second quarter of fiscal 2010, which included previously capitalized deferred financing fees of $157,000, consent fee paid to the holders of $257,000 and other expenses of $36,000.

The
Notes due 2019 mature on June 1, 2019, pursuant to an indenture dated as of June 9, 2009, AMCE, the Guarantors named therein and U.S. Bank National Association, as
trustee (the "Indenture"). The Indenture provides that the Notes due 2019 are general unsecured senior obligations of AMCE and are fully and unconditionally guaranteed on a joint and several senior
unsecured basis by all of its existing and future domestic restricted subsidiaries that guarantee its other indebtedness.

AMCE
will pay interest on the Notes due 2019 at 8.75% per annum, semi-annually in arrears on June 1 and December 1, commencing on December 1, 2009.

AMCE
may redeem some or all of the Notes due 2019 at any time on or after June 1, 2014, at the redemption prices set forth in the Indenture. AMCE may redeem the Notes on or after
June 1, 2017 at

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 11CORPORATE BORROWINGS (Continued)

a
price equal to 100% of the principal amount of the Notes due 2019 plus accrued and unpaid interest to the redemption date. In addition, AMCE may redeem up to 35% of the aggregate principal amount of
the Notes due 2019 using net proceeds from certain equity offerings completed prior to June 1, 2012.

As
of October 1, 2009, the Company was in compliance with all financial covenants relating to the Senior Secured Credit Facility, the Notes due 2016, the Notes due 2014, Discount
Notes due 2014, and the Notes due 2019.

NOTE 12COMMITMENTS AND CONTINGENCIES

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

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 violated 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 moved for reconsideration and was denied by the Ninth Circuit Court of Appeals. The case reverts to the trial court this spring.

As
to the non-line-of-sight aspects of the case, on January 21, 2003, the trial court entered summary judgment in favor of the Department on
matters such 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 approximately $52,000,000,
and through October 1, 2009 AMCE has incurred approximately $26,997,000 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.

AMCE
has recorded a liability of approximately $349,000 for estimated fines related to this matter.

19

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 12COMMITMENTS AND CONTINGENCIES (Continued)

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.

On
May 14, 2009, Harout Jarchafjian filed a similar lawsuit alleging that the Company willfully violated FACTA and seeking statutory damages, but without alleging any actual
injury (Jarchafian v. American Multi-Cinema, Inc.(C.D. Cal. Case No. CV09-03434). The Jarchafjian case has been deemed related to
the Bateman case and is stayed pending a Ninth Circuit decision in the Bateman case. The Company believes the plaintiff's allegations in both these cases, particularly those asserting AMC's
willfulness, are without merit.

Union Sponsored Pension Plan.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 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. In the second quarter of fiscal 2010, the
Company made a complete withdrawal from the plan which triggered an additional liability estimated to be $1,400,000. However, the Company also estimates that approximately $2,839,000 of the total
liability was discharged in bankruptcy by companies it acquired. As of October 1, 2009, the Company has recorded a liability related to this matter in the amount of $4,863,000 and has made
contributions of approximately $1,937,000. The final 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.

In
addition to the cases noted above, the Company is also currently a party to various ordinary course claims from vendors (including concession suppliers, software technology vendors,
and motion picture
distributors), landlords and suppliers and other legal proceedings. If management believes that a loss arising from these actions is probable and can reasonably be estimated, the Company records the
amount of the loss, or the minimum estimated liability when the loss is estimated using a range and no point is more probable than another. As additional information becomes available, any potential
liability related to these actions is assessed and the estimates are revised, if necessary. Except as described above, management believes that the ultimate outcome of such other matters, individually
and in the aggregate, will not have a material adverse effect on the Company's financial position or overall trends in results of operations. However, litigation and claims are subject to inherent
uncertainties and unfavorable outcomes could occur. An unfavorable outcome could include monetary damages. If an unfavorable outcome were to occur, there exists the possibility of a material adverse
impact on the results of operations in the period in which the outcome occurs or in future periods.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 13NEW ACCOUNTING PRONOUNCEMENTS

In October 2009, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2009-13,Revenue Recognition
(Topic 605)Multiple-Deliverable Revenue Arrangements-A Consensus of the FASB Emerging Issues Task Force, ("ASU 2009-13").
This Update provides amendments to the criteria in Subtopic 605-25 that addresses how to separate multiple-deliverable arrangements and how to measure and allocate arrangement
consideration to one or more units of accounting. In addition, this amendment significantly expands the disclosure requirements related to multiple-deliverable revenue arrangements. ASU
2009-13 will be effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010 and is effective for the
Company as of the beginning of fiscal 2012. Early adoption is permitted.

In
August 2009, the FASB issued ASU No. 2009-05,Fair Value Measurements and Disclosures (Topic 820)Measuring Liabilities
at Fair Value, ("ASU 2009-05"). ASU 2009-05 provides clarification in measuring the fair value of liabilities in circumstances in which a quoted price
in an active market for the identical liability is not available and in circumstances in which a liability is restricted from being transferred. This ASU also clarifies that both a quoted price in an
active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price
of the asset are required are Level 1 fair value measurements. ASU 2009-05 is effective for the first interim period beginning after issuance and is effective for the Company in the
third quarter of fiscal 2010. As the Company did not elect the fair value option for our financial liabilities not already within the scope of ASC 820,Fair Value Measurements
and Disclosures, the Company does not believe the implementation of this ASU will have a significant impact on its consolidated financial statements.

In
June 2009, the FASB issued the Accounting Standards Codification105,Generally Accepted
Accounting Principles, ("ASC 105") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities. Generally, ASC 105 is
not expected to change U.S. Generally Accepted Accounting Principles. The Company adopted ASC 105 in the second quarter of fiscal 2010 and any references to authoritative accounting literature in the
financial statements are referenced in accordance with the Codification, unless the literature has not been codified.

In
June 2009, the FASB amended guidance for determining whether an entity is a variable interest entity and requires an analysis to determine whether the variable interest gives a
company a controlling financial interest in the variable interest entity. This guidance is included in ASC 810,Consolidation, which will require an
ongoing reassessment and eliminates the quantitative approach previously required for determining whether a company is the primary beneficiary. This guidance is effective as of the beginning of the
first fiscal year beginning after November 15, 2009 and is effective for the Company in the first quarter of fiscal 2011. The Company is in the process of determining what effects the
application of this guidance may have on its consolidated financial position, including its investments currently accounted for following the equity method of accounting.

In
May 2009, the FASB issued ASC 855,Subsequent Events, ("ASC 855"), which sets forth general standards of accounting for and disclosure
of events that occur after the balance sheet date but before the financial statements are issued or are available to be issued. ASC 855 became effective for the

21

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 13NEW ACCOUNTING PRONOUNCEMENTS (Continued)

Company
in the first quarter of fiscal 2010 and did not have a material impact on the Company's consolidated financial statements. See Note 1Basis of Presentation for required
disclosure.

In
April 2009, the FASB issued ASC 820-10-65, determining fair value when the volume and level of activity for the asset or liability have significantly decreased
and
identifying transactions that are not orderly. This standard provides guidance on estimating fair value when market activity has decreased and on identifying transactions that are not orderly.
Additionally, entities are required to disclose in interim and annual periods the inputs and valuation techniques used to measure fair value. The guidance became effective for the Company in the first
quarter of fiscal 2010 and did not have a material impact on the Company's consolidated financial statements.

In
April 2009, the FASB issued ASC 320-10-65, guidance on the recognition and presentation of other-than-temporary impairments. The
existing accounting guidance was modified to demonstrate the intent and ability to hold a debt security for a period of time sufficient to allow for any anticipated recovery in fair value. When the
fair value of a debt security has declined below the amortized cost at the measurement date, an entity that intends to sell a security or is more-likely-than-not to
sell the security before the recovery of the security's cost basis must recognize the other-than-temporary impairment in earnings. This standard expands and increases the
frequency of existing disclosures about other-than-temporary impairments for debt and equity securities. This guidance became effective for the Company in the first quarter of
fiscal 2010 and did not have a material impact on the Company's consolidated financial statements.

In
April 2009, the FASB issued ASC 825-10-65, guidance for interim disclosures about fair value of financial instruments. This guidance was amended to require an
entity to provide disclosures about fair value of financial instruments in interim financial statements. The Company adopted this provision in the first quarter of fiscal 2010. See
Note 7Fair Value of Financial Instruments for required disclosures.

In
December 2008, the FASB issued ASC 715-20-65, guidance for employers' disclosures about postretirement benefit plan assets, which requires additional fair
value disclosures about employers' defined benefit pension or other postretirement plan assets. Specifically, employers will be required to disclose information about how investment allocation
decisions are made, the fair value of each major category of plan assets and information about the inputs and valuation techniques used to develop the fair value measurements of plan assets. This
guidance 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 will include the disclosures
required in its annual consolidated financial statements and notes for the fiscal year ending April 1, 2010.

In
April 2008, the FASB issued ASC 350-30, guidance for the determination of the useful life of intangible assets. This guidance amends the factors that should be considered
in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset. In developing assumptions about renewal or extension, an entity should consider its
own historical experience (or, if no experience, market participant assumptions) adjusted for entity specific factors. The guidance for determining the useful life of a recognized intangible asset
shall be applied prospectively to intangible assets acquired after the effective date and expands the disclosure requirements. The guidance became

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 13NEW ACCOUNTING PRONOUNCEMENTS (Continued)

effective
for the Company in the first quarter of fiscal 2010 and did not have a material impact on the Company's consolidated financial position.

In
December 2007, the FASB revised ASC 805,Business Combinations, which addresses the accounting and disclosure for identifiable assets
acquired, liabilities assumed, and noncontrolling interests in a business combination. This statement requires all business combinations completed after the effective date to be accounted for by
applying the acquisition method (previously referred to as the purchase method); expands the definition of transactions and events that qualify as business combinations; requires that the acquired
assets and liabilities, including contingencies, be recorded at the fair value determined on the acquisition date and changes thereafter reflected in income, not goodwill; changes the recognition
timing for restructuring costs; and requires acquisition costs to be expensed as incurred rather than being capitalized as part of the cost of acquisition. This standard became effective in the first
quarter of fiscal 2010. The Company changed its accounting treatment for business combinations on a prospective basis. In addition, the reversal of valuation allowance for deferred tax assets related
to business combinations will flow through the Company's income tax provision, on a prospective basis, as opposed to goodwill.

NOTE 14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.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

October 1, 2009

(Unaudited)

NOTE 14RELATED PARTY TRANSACTIONS (Continued)

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 17Related Party Transactions in the Company's annual report on
Form 10-K for the year (52 weeks) ended April 2, 2009 for additional disclosures about its governance agreements with the Sponsors.

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 June 9, 2009, AMCE sold $600,000,000 in aggregate principal amount of its 8.75% Senior Notes due 2019. J.P. Morgan Securities Inc., an affiliate of J.P.
Morgan Partners, LLC which owns approximately 20.8% of Parent, was an initial purchaser of both the Holdco Notes and the Notes due 2019.

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
Parent, was also an initial purchaser of these notes.

Holdings Dividends to Parent

During April and May of 2009, Holdings made dividend payments to its stockholder Parent totaling $300,000,000, which were treated as a
reduction of additional paid-in capital. Parent made payments to purchase term loans and reduce the principal balance of its Parent Term Loan Facility from $466,936,000 to $193,290,000
with a portion of the dividend proceeds.

During
September of 2009, Holdings used cash on hand to pay a dividend distribution to Parent in an aggregate amount of $723,000. Parent used the available funds to pay corporate
overhead expenses incurred in the ordinary course of business.

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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 2, 2009 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

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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.

Overview

We are one of the world's leading theatrical exhibition companies. During the twenty-six weeks ended October 1,
2009, we opened one new managed theatre with 6 screens in the U.S. pursuant to a joint venture arrangement and closed four theatres with 44 screens in the U.S. As of October 1, 2009, we owned,
operated or had interests in 304 theatres and 4,574 screens, with 99%, or 4,519, 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") and AMC Entertainment International, Inc. ("AMCEI"). We conduct our theatrical
exhibition business through AMC and its subsidiaries and AMCEI and its subsidiaries.

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's 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 2009, films licensed from our 6 largest distributors based on revenues accounted for approximately 81% 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 2008, 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 606 in 2008, according to Motion Picture Association 2008 MPA Market Statistics.

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We
continually upgrade the quality of our theatre circuit by adding new screens through new builds (including expansions) and acquisitions, converting existing screens to 3D and IMAX 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. We have increased our 3D screens by 131
screens and our IMAX screens by 40 screens since October 2, 2008; and as of October 1, 2009, approximately 5.4% of our screens were 3D screens and 1.3% of our screens were IMAX screens.

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. As a result of these revisions, we recorded a negative prior service cost of $5,969,000 through other comprehensive income to be amortized over
eleven years based on expected future service of the remaining participants.

On
December 29, 2008, we sold all of our interests in Grupo Cinemex, S.A. de C.V. ("Cinemex"), which then operated 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 $4,137,000. During the twenty-six weeks ended October 1, 2009, we received payments of $2,898,000 of purchase price related to
tax payments and refunds, and a working capital calculation and post closing adjustments. Additionally, we estimate that we are contractually entitled to receive an additional $10,815,000 of the
purchase price related to tax payments and refunds. While we expect to ultimately recover all amounts we are contractually entitled to from Cinemex, the collection may require prolonged resolution of
various amounts. As of October 1, 2009, the amount due from Cinemex for tax payments and refunds associated with the sale was $10,815,000 and $9,325,000 has been classified by us as a
long-term asset.

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.

On
June 9, 2009, AMCE completed the offering of $600,000,000 aggregate principal amount of our 8.75% Senior Notes due 2019 (the "Notes due 2019"). Concurrently with the initial
notes offering, AMCE launched a cash tender offer and consent solicitation for any and all of our then outstanding $250,000,000 aggregate principal amount of 85/8% Senior Notes due 2012
(the "Fixed Notes due 2012") at a purchase price of $1,000 plus a $30 consent fee for each $1,000 of principal amount of currently outstanding Fixed Notes due 2012 validly tendered and accepted by us
on or before the early tender date (the "Cash Tender Offer"). AMCE used the net proceeds from the issuance of the Notes due 2019 to pay the consideration for the Cash Tender Offer plus accrued and
unpaid interest on the $238,065,000 principal amount of the Fixed Notes due 2012. AMCE recorded a loss on extinguishment related to the Cash Tender Offer of $10,826,000 in Other expense during the
thirteen weeks ended July 2, 2009, which included previously capitalized deferred financing fees of $3,312,000, consent fee paid to holders of $7,142,000, and other expenses of $372,000. On
August 15, 2009, AMCE redeemed the remaining $11,935,000 of Fixed Notes due 2012 at a price of $1,021.56 per $1,000 principal in

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accordance
with the terms of the indenture. AMCE recorded a loss of $450,000 in Other expense related to the extinguishment of the remaining Fixed Notes due 2012 principal during the second quarter of
fiscal 2010, which included previously capitalized deferred financing fees of $157,000, consent fee paid to the holder of $257,000 and other expenses of $36,000.

Stock-Based Compensation

We account for stock-based employee compensation arrangements using the fair value method. 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 have elected to use the simplified method for estimating the expected term of "plain vanilla" share option grants as we do not have enough historical
experience to provide a reasonable estimate. Compensation cost is calculated on the date of the grant and then amortized over the vesting period.

We
granted 38,876.72873 options on December 23, 2004, 600 options on January 26, 2006, 15,980.45 options on March 6, 2009, and 4,786 options on May 28, 2009
to employees to acquire our common stock. The fair value of these options on their respective grant dates was $22,373,000, $138,000, $2,069,000, and $650,000, respectively. All of these options
currently outstanding are equity classified.

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. The common stock value used to estimate the fair value of each
option on the March 6, 2009 grant date was based upon a contemporaneous valuation reflecting market conditions as of January 1, 2009, a purchase of 2,542 shares by Parent for $323.95 per
share from our former Chief Executive Officer pursuant to his Separation and General Release Agreement dated February 23, 2009 and a sale of 385.862 shares by Parent to our current Chief
Executive Officer pursuant to his Employment Agreement dated February 23, 2009 for $323.95 per share.

On
June 11, 2007, Marquee Merger Sub Inc. ("merger sub"), a wholly-owned subsidiary of AMC Entertainment Holdings, Inc. ("Parent"), merged with and into Holdings,
with Holdings continuing as the surviving corporation (the "holdco merger"). In connection with this, Parent adopted an amended and restated 2004 stock option plan (formerly known as the 2004 Stock
Option Plan of Marquee Holdings Inc.). The option exercise price per share of $1,000 was adjusted to $491 pursuant to the antidilution provisions of the 2004 Stock Option Plan to give effect to
the payment of a one time non-recurring dividend paid by Parent on June 15, 2007 of $652,800,000 to the holders of its 1,282,750 shares of common stock. The Company determined that
there was no incremental value transferred as a result of the modification and as a result, no additional compensation cost to recognize.

The
common stock value of $339.59 per share used to estimate the fair value of each option on the May 28, 2009 grant date was based upon a valuation prepared by management on
behalf of the Compensation Committee of the Board of Directors. Management chose not to obtain a contemporaneous valuation performed by an unrelated valuation specialist as management believed that
the valuation obtained at January 1, 2009 and the subsequent stock sales and purchases were recent and could easily be updated and rolled forward without engaging a third party and incurring
additional costs. Additionally, management considered that the number of options granted generated a relatively low amount of annual expense over 5 years ($130,100) and that any differences in
other estimates of fair value would not be expected to materially impact the related annual expense. The common stock value was estimated based on current estimates of annual operating cash flows
multiplied by the current average peer group multiple for similar publicly traded competitors of 6.7x less net indebtedness and the current fair value of our investment in NCM. Management compared the

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estimated
stock value of $339.59 per share with the $323.95 value per share discussed above related to the March 6, 2009 option grant and noted the overall increase in value was primarily due
the following:

March 6, 2009 grant value per share

$
323.95Decline in net indebtedness


20.15Increase in value of investment in NCM


37.10Increase due to peer group multiple


47.89Decrease in annual operating cash flows


(89.50
)May 28, 2009 grant value per share

$
339.59


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 perform our annual impairment analysis during the fourth quarter because Christmas and
New Year's holiday results comprise a significant portion of our operating cash flow, the actual results from this period, which are available during the fourth quarter of each fiscal year, are an
integral part of our impairment analysis. 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 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, $8,933,000, and $10,686,000 during
fiscal 2009, 2008, and 2007, respectively.

Goodwill and Other Intangible Assets.Our recorded goodwill was $1,836,731,000 as of October 1, 2009 and April 2, 2009 and
unamortized
trademark intangible assets were $74,000,000 as of October 1, 2009 and as of April 2, 2009. We evaluate goodwill and our trademark for impairment annually as of the beginning of the
fourth fiscal quarter and any time an event occurs or circumstances change that would more likely than not reduce the fair value for a reporting unit below its carrying amount. Our goodwill is
recorded in our U.S. and Canada operating segment which represents 99% of the screens in our
Theatrical Exhibition operating segment used for financial reporting purposes. The reporting unit for purposes of evaluating recorded goodwill for impairment is our U.S. and Canada operating segment.
If the carrying value of the reporting unit exceeds its fair value we are required to reallocate the fair value of the reporting unit as if the reporting unit had been acquired in a business
combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. We determine fair value by using an enterprise valuation methodology determined by using the
income approach and the market approach as discussed below which we believe are appropriate methods to determine fair value. There is considerable management judgment with respect to cash flow
estimates and appropriate multiples and discount rates to be used in determining fair value.

We
performed an interim impairment analysis during the third quarter of fiscal 2009 as a result of downturns in the 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 exceed 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. 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.

We
evaluated our enterprise value for fiscal 2009 and 2008 based on a contemporaneous valuation reflecting market conditions as of January 1, 2009 and December 27, 2007,
respectively. Two valuation approaches were utilized; the income approach and the market approach. The income approach provides an estimate of enterprise value by measuring estimated annual cash flows
over a discrete projection period and applying a present value rate to the cash flows. The present value of the cash flows is then added to the present value equivalent of the residual value of the
business to arrive at an estimated fair value of the business. The residual value represents the present value of the projected cash flows beyond the discrete projection period. The discount rate is
carefully determined using a rate of return deemed appropriate for the risk of achieving the projected cash flows. The market approach used publicly traded peer companies and reported transactions in
the industry. Due to market

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conditions
and the relatively few sale transactions, the market approach was used to provide additional support for the value achieved in the income approach.

Key
rates used in the income approach for fiscal 2009 and 2008 follow:

Description

Fiscal 2009

Fiscal 2008Discount rate


10.0
%

8.5
%Market risk premium


6.0
%

5.0
%Hypothetical capital structure: Debt/Equity


40%/60
%

40%/60
%


The
discount rate is an estimate of the weighted average cost of debt and equity capital. The required return on common equity was estimated by adding the risk-free required
rate of return, the market risk premium (which is adjusted for the Company's estimated market volatility, or beta), and small stock premium. The discount rate used for fiscal 2008 was 8.5% as compared
to the 10.0% discount rate used for the fiscal 2009 impairment test. The higher discount rate was due to a number of factors, such as an increase in corporate bond yields, increase in betas, and
increase in market risk premiums, given current market conditions.

The
aggregate annual cash flows were determined based on management projections on a theatre-by-theatre basis further adjusted by non-theatre cash
flows. The projections considered various factors, including theatre lease terms, a reduction in attendance, and a reduction in capital investments in new theatres, given current market conditions and
the resulting difficulty with obtaining contracts for new-builds. Because Cinemex was sold in December 2008, cash flows for the fiscal 2009 study did not include results from Cinemex. Cash
flows were projected through fiscal 2015 and it was assumed revenues would increase approximately 1.7% annually primarily due to projected increases in ticket and concession pricing. The residual
value is a function of the estimated cash flow for fiscal 2016 divided by a capitalization rate (discount rate less long-term growth rate of 2%), then discounted back to represent the
present value of the cash flows beyond the discrete projection period.

As
the expectations of the average investor are not directly observable, the market risk premium must be inferred. One approach is to use the long-run historical arithmetic
average premiums that investors have historically earned over and above the returns on long-term Treasury bonds. The premium obtained using the historical approach is sensitive to the time
period over which one calculates the average. Depending on the time period chosen, the historical approach yields an average premium in a range of 5.0% to 8.0%. Another approach is to look at
projected rates of return obtained from analysts who follow the stock market. Again, this approach will lead to differing estimates depending upon the source. The published expected returns from firms
such as Merrill Lynch, Value Line, and Greenwich Associates collectively tend to indicate a premium in a range of 3.0% to 5.0%. Under normal market conditions, we have utilized a market risk premium
of 5.0%; however, given the current economic conditions, we utilized a market risk premium of 6.0% for fiscal 2009.

There
was no goodwill impairment as of April 2, 2009. During the fourth fiscal quarter of 2009 the equity values of our publicly traded peer group competitors increased by
approximately 40% from the third fiscal quarter ended on January 1, 2009. Based on the results of the study conducted at the end of the third quarter of fiscal 2009, our fair value exceeded the
book value by 0.6%.

Following,
for illustrative purposes, are the percentages at which our fair value exceeds the carrying value assuming hypothetical reductions in the fair value as of January 1,
2009 (in thousands):

Carrying Value

$
2,660,361


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Hypothetical Reduction of Fair Value

Fair Value

% Fair Value
Exceeds/(Less than)
Carrying Value0.0%

$
2,676,365


0.6
%2.5%


2,609,520


(1.9
)%5.0%


2,542,675


(4.4
)%7.5%


2,475,830


(6.9
)%10.0%


2,408,985


(9.4
)%


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 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 36% during the fifteen months ended April 2, 2009, which was partially offset by an increase of approximately 20%
during the six months ended September 30, 2009. The benefit plan assets and obligations of our frozen plans are remeasured annually and any future 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 fiscal 2010) will not have an impact on the income statement for fiscal 2010; however, any additional reductions in 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. We have recorded net periodic benefit cost (income) for our pension and postretirement
plans of $(1,890,000), $1,461,000, and $(4,454,000) during the periods ended April 2, 2009, April 3, 2008, and March 29, 2007, respectively and expect to record net periodic
benefit expense for our pension and post retirement plans of $2,412,000 during fiscal 2010.

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Operating Results

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

Thirteen Weeks Ended

Twenty-six Weeks EndedOctober 1, 2009

October 2, 2008

% Change

October 1, 2009

October 2, 2008

% Change(Dollars in thousands, except operating data)RevenuesAdmissions

$
390,498

$
404,517


-3.5
%
$
836,725

$
821,448


1.9
%Concessions


147,381


159,916


-7.8
%

321,041


329,750


-2.6
%Other theatre


13,173


15,577


-15.4
%

28,598


31,031


-7.8
%Total revenues

$
551,052

$
580,010


-5.0
%
$
1,186,364

$
1,182,229


0.3
%Cost of OperationsFilm exhibition costs

$
208,328

$
218,376


-4.6
%
$
457,429

$
450,112


1.6
%Concession costs


15,905


16,580


-4.1
%

35,070


35,017


0.2
%Operating expense


142,559


149,365


-4.6
%

291,780


294,081


-0.8
%Rent


108,311


112,814


-4.0
%

220,684


225,149


-2.0
%Preopening expense


565


1,185


-52.3
%

1,434


3,060


-53.1
%Theatre and other closure (income) expense


478


(2,319
)

*
%

615


(2,333
)

*
%476,146


496,001


-4.0
%

1,007,012


1,005,086


0.2
%General and administrative expense:Merger, acquisition and transaction costs


43


235


-81.7
%

324


252


28.6
%Management Fee


1,250


1,250



%

2,500


2,500



%Other


13,075


11,928


9.6
%

26,158


23,137


13.1
%Depreciation and amortization


46,689


50,470


-7.5
%

95,477


101,056


-5.5
%Disposition of assets and other gains


(211
)

(374
)

43.6
%

(261
)

(355
)

26.5
%Total costs and expenses

$
536,992

$
559,510


-4.0
%
$
1,131,210

$
1,131,676



%


*Percentage
change in excess of 100%


Thirteen Weeks Ended

Twenty-six Weeks EndedOctober 1, 2009

October 2, 2008

October 1, 2009

October 2, 2008Operating DataContinuing Operations (at period end):Screen additions





22


6


60Screen dispositions


36


34


44


54Average screens(1)


4,509


4,546


4,521


4,542Number of screens operated(2)








4,574


4,612Number of theatres operated








304


309Screens per theatre








15.0


14.9Attendance(1) (in thousands)


46,782


50,455


100,485


102,849


(1)Includes
consolidated theatres only.(2)Includes
248 3D screens and 61 IMAX screens as of October 1, 2009 and 117 3D screens and 21 IMAX screens as of October 2, 2008.


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

Thirteen Weeks Ended

Twenty-six Weeks EndedOctober 1, 2009

October 2, 2008

October 1, 2009

October 2, 2008Loss from continuing operations before income taxes

$
(16,503
)
$
(4,693
)
$
(15,083
)
$
(5,892
)Plus:Interest expense


41,882


38,519


79,144


76,638Depreciation and amortization


46,689


50,470


95,477


101,056Preopening expense


565


1,185


1,434


3,060Theatre and other closure income


478


(2,319
)

615


(2,333
)Disposition of assets and other gains


(211
)

(374
)

(261
)

(355
)Equity in earnings of non-consolidated entities


(4,348
)

(5,321
)

(10,610
)

(9,706
)Investment income


(33
)

(304
)

(132
)

(583
)Other expense(1)


450





11,276


General and administrative expense:Merger and acquisition costs


43


235


324


252Management fee


1,250


1,250


2,500


2,500Stock-based compensation expense


427


786


838


1,549Adjusted EBITDA

$
70,689

$
79,434

$
165,522

$
166,186


(1)Other
expense is comprised of the loss on extinguishment of indebtedness related to the Cash Tender Offer and remaining redemption.


Thirteen Weeks Ended October 1, 2009 and October 2, 2008

Revenues.Total revenues decreased 5.0%, or $28,958,000, during the thirteen weeks ended October 1, 2009 compared to the thirteen
weeks ended
October 2, 2008. Admissions revenues decreased 3.5%, or $14,019,000, during the thirteen weeks ended October 1, 2009 compared to the thirteen weeks ended October 2, 2008, due to a
7.3% decrease in attendance partially offset by a 4.1% increase in average ticket prices. Admissions revenues at comparable theatres (theatres opened on or before the second quarter of fiscal 2009)
decreased 3.2%, or $12,998,000, during the thirteen weeks ended October 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 as well as an increase in the number of
IMAX and 3D screens operated by us where we are able to charge more per ticket than for a standard 2D film. Attendance was negatively impacted by less favorable film product during the thirteen weeks
ended October 1, 2009 as compared to the thirteen weeks ended October 2, 2008. Based upon available industry sources, box office revenues of our comparable theatres performed in line
with the overall industry comparable theatres in the markets where we operate. Concessions revenues decreased 7.8%, or $12,535,000, during the thirteen weeks ended October 1, 2009 compared to
the thirteen weeks ended October 2, 2008, due primarily to the decrease in attendance. Other theatre revenues decreased 15.4%, or $2,404,000 during the thirteen weeks ended October 1,
2009 compared to
the thirteen weeks ended October 2, 2008, primarily due to declines in non-presentment income from package ticket sales and theatre rentals.

Costs and expenses.Total costs and expenses decreased 4.0%, or $22,518,000, during the thirteen weeks ended October 1, 2009
compared to the
thirteen weeks ended October 2, 2008. Film exhibition costs decreased 4.6%, or $10,048,000, during the thirteen weeks ended October 1, 2009 compared to

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the
thirteen weeks ended October 2, 2008 due to the decrease in admissions revenues and a decrease in film exhibition costs as a percentage of admissions revenues. As a percentage of admissions
revenues, film exhibition costs were 53.3% in the current period and 54.0% in the prior year period. Concession costs decreased 4.1%, or $675,000, during the thirteen weeks ended October 1,
2009 compared to the thirteen weeks ended October 2, 2008 due to a decrease in concession revenues partially offset by 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 10.4% 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 decreased 4.0%, or $4,503,000, during the thirteen weeks ended October 1, 2009 compared to the thirteen weeks ended
October 2, 2008 primarily due to rent reductions resulting from co-tenancy provisions in certain lease agreements not being met in certain locations. Rent reductions related to
co-tenancy may not continue should our landlords meet the related co-tenancy provisions in the future. Preopening expense decreased $620,000 during the thirteen weeks ended
October 1, 2009 due to a decline in screen additions. During the thirteen weeks ended October 1, 2009, we recognized $478,000 of theatre and other closure expense due primarily to the
closure of one theatre and 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 $192,000 during the thirteen weeks ended
October 1, 2009 compared to the thirteen weeks ended October 2, 2008.

Management fees.Management fees were unchanged during the thirteen weeks ended October 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 9.6%, or $1,147,000, during the thirteen weeks ended October 1, 2009
compared to the
thirteen weeks ended October 2, 2008 due primarily to increases in expected annual incentive compensation, salaries expense and net periodic pension expense, partially offset by a decrease in
expense related to a union-sponsored pension plan. During the thirteen weeks ended October 2, 2008, we recorded $2,440,000 of expense related to our estimated partial withdrawal liability for a
union-sponsored pension plan. During the thirteen weeks ended October 1, 2009, we recorded $1,400,000 of expense related to our estimated complete withdrawal from the union-sponsored pension
plan.

Depreciation and Amortization.Depreciation and amortization decreased 7.5%, or $3,781,000, compared to the prior period due primarily
to the
impairment of long-lived assets in fiscal 2009.

Disposition of Assets and Other Gains.Disposition of assets and other gains were $211,000 in the current period compared to $374,000 in
the prior
period.

Other (Income) Expense.Other (income) expense includes $(7,369,000) and $(7,701,000) 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 October 1, 2009 and October 2, 2008, respectively. Other (income) expense includes a
loss of $450,000 related to the Cash Tender Offer during the thirteen weeks ended October 1, 2009.

Interest Expense.Interest expense increased 8.7%, or $3,363,000, primarily due to an increase in interest expense related to the
issuance of the
Notes due 2019, partially offset by a decrease in interest rates on the Senior Secured Credit Facility and extinguishment of debt from the Cash Tender Offer.

Equity in Earnings of Non-Consolidated Entities.Equity in earnings of non-consolidated entities was $4,348,000 in the
current period compared to $5,321,000 in the prior period. Equity in earnings

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related
to our investment in National CineMedia, LLC were $5,900,000 and $5,221,000 for the thirteen weeks ended October 1, 2009 and October 2, 2008, respectively.

Investment Income.Investment income was $33,000 for the thirteen weeks ended October 1, 2009 compared to $304,000 for the
thirteen weeks
ended October 2, 2008.

Income Tax Benefit.The income tax benefit from continuing operations was $1,000,000 for the thirteen weeks ended October 1, 2009
and $62,000
for the thirteen weeks ended October 2, 2008.

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 2Discontinued Operations for the components of the earnings (loss) from discontinued operations.

Net Loss.Net losses were $15,634,000 and $2,103,000 for the thirteen weeks ended October 1, 2009 and October 2, 2008,
respectively.
Net losses were impacted by the decline in attendance during the thirteen weeks ended October 1, 2009.

Twenty-six Weeks Ended October 1, 2009 and October 2, 2008

Revenues.Total revenues increased 0.3%, or $4,135,000, during the twenty-six weeks ended October 1, 2009 compared to the
twenty-six weeks ended October 2, 2008. Admissions revenues increased 1.9%, or $15,277,000, during the twenty-six weeks ended October 1, 2009 compared to the
twenty-six weeks ended October 2, 2008, due to a 4.3% increase in average ticket prices, partially offset by a 2.3% decrease in attendance. Admissions revenues at comparable
theatres (theatres opened on or before the first quarter of fiscal 2009) increased 1.6%, or $12,784,000, during the twenty-six weeks ended October 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 as well as an increase in the number of IMAX and 3D screens operated by us where we are able to charge more per ticket than for a standard 2D film.
Attendance was negatively impacted by less favorable film product during the twenty-six weeks ended October 1, 2009 as compared to the twenty-six weeks ended
October 2, 2008. 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 and the competitive impact of increasing industry screen counts while our screen counts remained relatively unchanged. Concessions revenues decreased 2.6%, or $8,709,000, during the
twenty-six weeks ended October 1, 2009 compared to the twenty-six weeks ended October 2, 2008, due primarily to the decrease in attendance. Other theatre revenues
decreased 7.8%, or $2,433,000, during the twenty-six weeks ended October 1, 2009 compared to the twenty-six weeks ended October 2, 2008, primarily due to a
reduction in theatre rentals.

Costs and expenses.Total costs and expenses were essentially unchanged during the twenty-six weeks ended October 1, 2009 compared
to the twenty-six weeks ended October 2, 2008. Film exhibition costs increased 1.6%, or $7,317,000, during the twenty-six weeks ended October 1, 2009 compared to
the twenty-six weeks ended October 2, 2008 due to the increase in admissions revenues. As a percentage of admissions revenues, film exhibition costs were 54.7% in the current period
and 54.8% in the prior year period. Concession costs increased 0.2%, or $53,000, during the twenty-six weeks ended October 1, 2009 compared to the twenty-six weeks ended
October 2, 2008 due to the increase in concession costs as a percentage of concessions revenues. As a percentage of concessions revenues, concession costs were 10.9% in the current period
compared with 10.6% in the prior period. As a percentage of revenues, operating expense was 24.6% in the current period as compared to 24.9% in

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the
prior period. Rent expense decreased 2.0%, or $4,465,000, during the twenty-six weeks ended October 1, 2009 compared to the twenty-six weeks ended October 2,
2008 primarily due to rent reductions from landlords related to co-tenancy provisions in certain lease agreements. Rent reductions related to co-tenancy may not continue should
our landlords meet the related co-tenancy provisions in the future. Preopening expense decreased $1,626,000 during the twenty-six weeks ended October 1, 2009 due to a
decline in screen additions. During the twenty-six weeks ended October 1, 2009, we recognized $615,000 of theatre and other closure expense due primarily to the closure of one
theatre and 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 increased $72,000 during the twenty-six weeks
ended
October 1, 2009 compared to the twenty-six weeks ended October 2, 2008.

Management fees.Management fees were unchanged during the twenty-six weeks ended October 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 13.1%, or $3,021,000, during the twenty-six weeks ended October 1, 2009
compared to the twenty-six weeks ended October 2, 2008 due primarily to certain one-time payments for salaries, expected annual incentive compensation and net periodic
pension expense, partially offset by a decrease in expense related to a union-sponsored pension plan. During the twenty-six weeks ended October 2, 2008, we recorded $2,440,000 of
expense related to our estimated partial withdrawal liability for a union-sponsored pension plan. During the twenty-six weeks ended October 1, 2009, we recorded $1,400,000 of
expense related to our estimated complete withdrawal from the union-sponsored pension plan.

Depreciation and Amortization.Depreciation and amortization decreased 5.5%, or $5,579,000, compared to the prior period due primarily
to the
impairment of long-lived assets in fiscal 2009.

Disposition of Assets and Other Gains.Disposition of assets and other gains were $261,000 in the current period compared to $355,000
in the prior
period.

Other (Income) Expense.Other (income) expense includes $(9,422,000) and $(9,904,000) of income related to the derecognition of gift
card
liabilities, as to which we believe future redemption to be remote, during the twenty-six weeks ended October 1, 2009 and October 2, 2008, respectively. Other (income)
expense includes a loss of $11,276,000 related to the Cash Tender Offer during the twenty-six weeks ended October 1, 2009.

Interest Expense.Interest expense increased 3.3%, or $2,506,000, primarily due to an increase in interest expense related to the
issuance of the
Notes due 2019, partially offset by a decrease in interest rates on the Senior Secured Credit Facility and extinguishment of debt from the Cash Tender Offer.

Equity in Earnings of Non-Consolidated Entities.Equity in earnings of non-consolidated entities was $10,610,000 in the
current period compared to $9,706,000 in the prior period. Equity in earnings related to our investment in National CineMedia, LLC were
$13,266,000 and $9,876,000 for the twenty-six weeks ended October 1, 2009 and October 2, 2008, respectively.

Investment Income.Investment income was $132,000 for the twenty-six weeks ended October 1, 2009 compared to $583,000 for the
twenty-six weeks ended October 2, 2008.

Income Tax Provision.The income tax provision from continuing operations was $0 for the twenty-six weeks ended October 1, 2009
and $1,618,000 for the twenty-six weeks ended October 2, 2008. See Note 9Income Taxes for our effective income tax rate reconciliation.

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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 2Discontinued Operations for the components of the earnings from discontinued operations.

Net Loss.Net losses were $14,491,000 and $678,000 for the twenty-six weeks ended October 1, 2009 and October 2, 2008,
respectively. Net loss was impacted by an expense of $11,276,000 related to the Cash Tender Offer during the twenty-six weeks ended October 1, 2009.

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

Marquee Holdings Inc. 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. 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 11% Senior Subordinated notes due 2016
(the "Notes due 2016"), the amount of loans and dividends which AMC Entertainment could make to Holdings may not exceed $290,564,000 in the aggregate as of October 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 $61,849,000 and
$61,359,000 during the twenty-six weeks ended October 1, 2009 and October 2, 2008, respectively. Cash flows during the twenty-six weeks ended October 1,
2009 include consent fee payments of $7,399,000 related to the Cash Tender Offer, which reduced our cash flows from operating activities. We had working capital surplus as of October 1, 2009
and April 2, 2009 of $119,838,000 and $257,714,000, respectively. Working capital includes $105,456,000 and $121,628,000 of deferred revenues as of October 1, 2009 and April 2,
2009, respectively. We have the ability to borrow

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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 $187,104,000
on our Credit Facility to meet these obligations as of October 1, 2009.

Cash Flows used in Investing Activities

Cash flows used in investing activities, as reflected in the consolidated statements of cash flows, were $(32,544,000) and
$(62,448,000), during the twenty-six weeks ended October 1, 2009 and October 2, 2008, respectively. Cash outflows from investing activities include capital expenditures of
$29,781,000 and $60,501,000 during the twenty-six weeks ended October 1, 2009 and October 2, 2008, respectively. We expect that our gross capital expenditures cash outflows
will be approximately $100,000,000 to $110,000,000 for fiscal 2010.

We
have received an additional $2,898,000 of purchase price related to the tax payments and refunds and a working capital calculation and post closing adjustments during the
twenty-six weeks ended October 1, 2009, which are included in our gain on disposition from the sale of Cinemex.

During
the twenty-six weeks ended October 1, 2009, we made partnership investments in non-consolidated entities accounted for under the equity method of
approximately $5,963,000.

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 the construction costs. We may decide to own the real
estate assets of new theatres and, following construction, sell and leaseback the real estate assets pursuant to long-term non-cancelable operating leases.

Cash Flows used in Financing Activities

Cash flows used in financing activities, as reflected in the consolidated statement of cash flows, were $(171,573,000) and
$(16,761,000) during the twenty-six weeks ended October 1, 2009 and October 2, 2008, respectively.

During
the twenty-six weeks ended October 1, 2009 and October 2, 2008, AMCE made dividend payments to Holdings and Holdings made dividend payments to its
stockholder, Parent totaling $300,723,000 in fiscal 2010, which was treated as a reduction of additional paid-in capital. Parent made payments to purchase term loans and reduced the
principal balance of its Parent Term Loan Facility from $466,936,000 to $193,290,000 with a portion of the dividend proceeds.

Proceeds
from the issuance of the Notes due 2019 were $585,492,000 and deferred financing costs paid primarily related to the issuance of the Notes due 2019 were $15,943,000 during the
twenty-six weeks ended October 1, 2009.

During
the twenty-six weeks ended October 1, 2009, we made principal payments of $250,000,000 in connection with the Cash Tender Offer and additional redemption and
repaid $185,000,000 of borrowings under our revolving credit facility.

Issuance of Senior Notes due 2019

On June 9, 2009, AMCE issued $600,000,000 aggregate principal amount of the Notes due 2019, which mature on June 1, 2019,
pursuant to an indenture, dated as of June 9, 2009, among AMCE, the Guarantors named therein and U.S. Bank National Association, as trustee (the "Indenture"). The Indenture provides that the
Notes due 2019 are general unsecured senior obligations of AMCE and are fully and unconditionally guaranteed on a joint and several senior unsecured basis by all of our existing and future domestic
restricted subsidiaries that guarantee our other indebtedness.

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AMCE
will pay interest on the Notes at 8.75% per annum, semi-annually in arrears on June 1 and December 1, commencing on December 1, 2009.

AMCE
may redeem some or all of the Notes due 2019 at any time on or after June 1, 2014, at the redemption prices set forth in the Indenture. AMCE may redeem the Notes on or after
June 1, 2017 at a price equal to 100% of the principal amount of the Notes due 2019 plus accrued and unpaid interest to the redemption date. In addition, AMCE may redeem up to 35% of the
aggregate principal amount of the Notes due 2019 using net proceeds from certain equity offerings completed prior to June 1, 2012.

The
Indenture contains covenants that limit our (and our restricted subsidiaries') ability to, among other things: (i) incur additional indebtedness, including additional senior
indebtedness; (ii) pay dividends on or make other distributions in respect of our capital stock or prepay subordinated obligations; (iii) purchase or redeem capital stock;
(iv) enter into certain transactions with our affiliates; (v) incur liens on property or assets that are securing indebtedness; and (vi) merge or consolidate with other companies
or transfer all or substantially all of our assets. These covenants are subject to a number of important limitations and exceptions. The Indenture also provides for events of default, which, if any of
them occurs, would permit or require the principal, premium, if any, interest and any other monetary obligations on all the then outstanding Notes due 2019 to be due and payable immediately.

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 2, 2009 for certain information about AMCE's Senior Secured Credit Facility, our 8% Senior Subordinated Notes due 2014 (the "Notes
due 2014"), and 11% Senior Subordinated Notes due 2016 (the "Notes due 2016") and for certain information about Holdings' Discount Notes due 2014 and Parent's Term Loan Facility.

The
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 26, 2013 and a $200,000,000 revolving credit facility maturing on January 26, 2012. The revolving credit facility includes borrowing capacity available for
letters of credit and for swingline borrowings on same-day notice. As of October 1, 2009, we had no borrowings under the revolving credit facility and $625,625,000 was outstanding
under the term loan facility at an interest rate of 1.75%.

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 0.50% with respect to base rate borrowings and 1.50% with respect to LIBOR borrowings, and the current applicable margin for borrowings under the
term loan facility is 0.50% with respect to base rate borrowings and 1.50% 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.

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The
indentures relating to the notes (Discounts Notes due 2014, Notes due 2014, Notes due 2016 and Notes due 2019) 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 Senior
Discount Notes due 2014 indenture, we could borrow approximately $1,242,700,000 (assuming an interest rate of 8.25% 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, the indenture relating to our Notes due 2019 limits our ability to incur liens, which limits 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 2019, Notes due 2016, Notes due 2014, 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 October 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 Notes due
2019 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, software licensing and
development 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. We are considering various options with
respect to the utilization of cash and equivalents on hand in excess of our anticipated operating needs. Such options might include, but are not limited to, acquisitions of theatres or theatre
companies, repayment of corporate borrowings of AMCE, Holdings and Parent and payment of dividends.

Investment in NCM

We hold an investment in 18.53% of NCM accounted for following the equity method. The fair market value of the common membership units
is approximately $310,360,000 as of October 1, 2009. Because we have little tax basis in these units and because the sale of all these units would require us to report taxable income of
$409,375,000 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

We have commitments and contingencies that were summarized in a table in our Form 10-K for the year ended
April 2, 2009. The only material change in our commitments since April 2, 2009 has been as a result of the issuance of the Notes due 2019, the Cash Tender Offer and repayment of amounts
borrowed under the revolving credit facility.

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Presented below on a pro forma basis to give effect to the financing arrangements described above 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 2, 2009:

(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)2010

$
9,075

$
6,500

$
153,855

$
393,452

$
19,645

$
6,396

$
588,9232011


9,225


6,500


153,723


393,321


12,754


1,937


577,4602012


8,023


6,500


153,592


379,991





437


548,5432013


7,055


609,375


151,408


367,166








1,135,0042014


6,706


300,000


139,145


345,761








791,612Thereafter


68,628


1,165,795


352,002


2,298,514








3,884,939Total

$
108,712

$
2,094,670

$
1,103,725

$
4,178,205

$
32,399

$
8,770

$
7,526,481


(1)Represents
cash requirements for the payment of principal on corporate borrowings. Total amount does not equal carrying amount due to unamortized discounts
or premiums on issuance.(2)Interest
expense on the term loan and revolver was estimated at 2.021% based upon the interest rates in effect as of April 2, 2009.(3)Includes
committed capital expenditures including the estimated cost of ADA related betterments. Does not include planned, but non-committed
capital expenditures.(4)Historically
we fund our pension plan such that the plan is 90% funded. The plan has been frozen effective December 31, 2006. The funding requirement
has been estimated based upon our expected funding amount. Also included are estimated payments due under a partial withdrawal liability for a union sponsored plan. The retiree health plan is not
funded.


As discussed in Note 10Income Taxes in our Form 10-K for the year ended April 2, 2009, we adopted
the accounting for uncertainty in income tax guidance provided in Accounting Standards Codification 740,Income Taxes.At April 2, 2009, we had a
liability for unrecognized benefits for $33,500,000. There are currently unrecognized tax benefits which we anticipate will be resolved in the next 12 months; however, we are unable at this
time to estimate what the impact on our unrecognized tax benefits will be. Any amounts related to these items are not included in the table above.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 13New Accounting Pronouncements to these condensed consolidated financial statements for further
information regarding recently issued accounting standards.

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.

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

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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 October 1, 2009 and had $625,625,000 outstanding under the term loan facility on October 1, 2009. A 100 basis point change in market interest rates would have increased or
decreased interest expense on the Senior Secured Credit Facility by $3,391,000 during the twenty-six weeks ended October 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, $600,000,000 of our Notes due 2019 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, Notes due 2019, and Discount Notes due 2014 and a decrease in market interest rates would generally cause an
increase in fair value of the Notes due 2016, Notes due 2014, Notes due 2019 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 $423,000 and $8,327,000, respectively, as of October 1, 2009.

Item 4T.    Controls and Procedures.

(a)   Evaluation
of disclosure controls and procedures.

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



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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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 2, 2009 for information on certain litigation to which we are a party.

On
May 14, 2009, Harout Jarchafjian filed a lawsuit alleging that the Company willfully violated FACTA and seeking statutory damages, but without alleging any actual injury
(Jarchafian v. American Multi-Cinema, Inc.(C.D. Cal. Case No. CV09-03434). The Jarchafjian case has been deemed related to the
Bateman case and is stayed pending a Ninth Circuit decision in the Bateman
case. The Company believes that the plaintiffs' allegations, particularly those asserting the Company's willfulness, are without merit.

On
June 8, 2009, the Justice Department moved for reconsideration on the line-of-sight matters and was denied by the Ninth Circuit Court of Appeals. The
case reverts to the trial court this spring.

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 2, 2009.

We depend on motion picture production and performance.

Our ability to operate successfully depends upon the availability, diversity and appeal of motion pictures, our ability to license
motion pictures and the performance of such motion pictures in our markets. We mostly license first-run motion pictures, the success of which has 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 new 2 year contract was reached on June 9, 2009,
which will expire on June 20, 2011.

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

On August 27, 2009, the Requisite Stockholder Majority of AMC Entertainment Holdings, Inc. unanimously approved capital
spending of up to $8,700,000 to deploy one hundred fourteen 3D projection systems ahead of a broader digital rollout by Digital Cinema Implementation Partners, LLC., ("DCIP"), and for DCIP
general and administrative expenses.

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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 AMCE's Current Report on Form 8-K (File
No. 1-8747) 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 AMCE (incorporated by reference from Exhibit 2.1 to AMCE's Current Report on
Form 8-K (File No. 1-8747) filed on July 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).4.1

Indenture, dated as of June 9, 2009, respecting AMCE's 8.75% Senior Notes due 2019, by and among AMCE, a Delaware corporation, the Guarantors party thereto from time to time and U.S. Bank National Association, as
Trustee (incorporated by reference from Exhibit 4.1 to AMCE's Current Report on Form 8-K (File No. 001-08747) filed on June 9, 2009).4.2

Registration Rights Agreement, dated as of June 9, 2009, respecting AMCE's 8.75% Senior Notes due 2019, by and among AMCE, the Guarantors party thereto from time to time, Credit Suisse Securities (USA) LLC,
for itself and on behalf of the other Initial Purchasers, and J.P. Morgan Securities Inc., as Market Maker (incorporated by reference from Exhibit 4.2 to AMCE's Current Report on Form 8-K (File No. 001-08747) filed on June 9,
2009).4.3

Fourth Supplemental Indenture, dated as of June 9, 2009, respecting AMC Entertainment Inc.'s 85/8% Senior Notes due 2012, by and among AMC Entertainment Inc., the Guarantor's
party thereto and HSBC Bank USA, National Association, as trustee (incorporated by reference from Exhibit 4.3 to AMCE's Current Report on Form 8-K (File No. 001-08747) filed on June 9, 2009).*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.


*Filed
herewith


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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: November 12, 2009

/s/ GERARDO I. LOPEZ Gerardo I. Lopez Chief Executive Officer, Director and PresidentDate: November 12, 2009

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


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