Table of Contents



UNITED STATESSECURITIES 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 July 2, 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 July 2, 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 4.

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 EndedJuly 2, 2009

July 3, 2008(unaudited)RevenuesAdmissions

$
446,227

$
416,931Concessions


173,660


169,834Other revenue


15,425


15,454Total revenues


635,312


602,219Costs and ExpensesFilm exhibition costs


249,101


231,736Concession costs


19,165


18,437Operating expense


149,221


144,716Rent


112,373


112,335General and administrative:Merger, acquisition and transaction costs


281


17Management fee


1,250


1,250Other


13,083


11,209Preopening expense


869


1,875Theatre and other closure expense (income)


137


(14
)Depreciation and amortization


48,788


50,586Disposition of assets and other gains (losses)


(50
)

19Total costs and expenses


594,218


572,166Other expense (income)Other


8,773


(2,203
)Interest expenseCorporate borrowings


35,849


36,622Capital and financing lease obligations


1,413


1,497Equity in earnings of non-consolidated entities


(6,262
)

(4,385
)Investment income


(99
)

(279
)Total other expense


39,674


31,252Earnings (loss) from continuing operations before income taxes


1,420


(1,199
)Income tax provision


1,000


1,680Earnings (loss) from continuing operations


420


(2,879
)Earnings from discontinued operations, net of income taxes


723


4,304Net earnings

$
1,143

$
1,425


See
Notes to Consolidated Financial Statements.

3

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

July 2, 2009

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

$
475,670

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


41,177


29,782Other current assets


79,644


80,526Total current assets


596,491


646,888Property, net


930,910


964,668Intangible assets, net


158,167


162,366Goodwill


1,836,731


1,836,731Other long-term assets


155,825


146,088Total assets

$
3,678,124

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

$
179,650

$
155,553Accrued expenses and other liabilities


144,962


102,070Deferred revenues and income


115,960


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


21,993


9,923Total current liabilities


462,565


389,174Corporate borrowings


2,071,202


1,922,236Capital and financing lease obligations


56,296


57,286Deferred revenuesfor exhibitor services agreement


252,406


253,164Other long-term liabilities


314,902


308,703Total liabilities

$
3,157,371

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





Additional paid-in capital


747,114


1,046,703Accumulated other comprehensive earnings


10,082


17,061Accumulated deficit


(236,443
)

(237,586
)Total stockholder's equity


520,753


826,178Total liabilities and stockholder's equity

$
3,678,124

$
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)

Thirteen Weeks EndedJuly 2, 2009

July 3, 2008(unaudited)INCREASE (DECREASE) IN CASH AND EQUIVALENTSCash flows from operating activities:Net earnings

$
1,143

$
1,425Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation and amortization


48,788


58,017Non-cash portion of stock-based compensation


411


763Non-cash portion of pension and postretirement expense (income)


727


(52
)Write-off of deferred charges for Fixed Notes due 2012


3,312


Equity in losses from partnership investments, net of distributions


2,163


221Gain on disposition of Cinemex


(823
)

Change in assets and liabilities:Receivables


(11,478
)

(9,328
)Other assets


(752
)

(8,232
)Accounts payable


26,463


43,224Accrued expenses and other liabilities


36,031


29,953Other, net


1,075


711Net cash provided by operating activities


107,060


116,702Cash flows from investing activities:Capital expenditures, software licensing and development


(7,307
)

(29,898
)Construction project costs reimbursable by landlord





(8,734
)Net change in reimbursable construction advances


(347
)

2,231Partnership investments, net of distributions


(4,871
)

Proceeds from disposition of Cinemex


2,904


LCE screen integration


(81
)

(809
)Other, net


454


(546
)Net cash used in investing activities


(9,248
)

(37,756
)Cash flows from financing activities:Repayment under revolving credit facility


(185,000
)

Repurchase of Fixed Notes due 2012


(238,065
)

Proceeds from issuance of Senior Notes due 2019


585,492


Deferred financing costs


(14,413
)

Principal payments under capital and financing lease obligations


(855
)

(942
)Principal payments under Term Loan B


(1,625
)

(1,625
)Change in construction payables


(3,145
)

(8,743
)Dividends paid to Parent


(300,000
)

Net cash used in financing activities


(157,611
)

(11,310
)Effect of exchange rate changes on cash and equivalents


(1,111
)

400Net increase (decrease) in cash and equivalents


(60,910
)

68,036Cash and equivalents at beginning of period


536,580


108,717Cash and equivalents at end of period

$
475,670

$
176,753SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATIONCash paid during the period for:Interest (including amounts capitalized of $0 and $321)

$
12,862

$
12,563Income taxes paid





2,860


See Notes to Consolidated Financial Statements.

5

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MARQUEE HOLDINGS INC. AND SUBSIDIARY        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        July 2, 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, its Existing Subordinated Notes and its amended credit facility. AMCE has not
guaranteed the indebtedness of Holdings nor pledged any of its assets as collateral.

The
accompanying unaudited consolidated financial statements have been prepared in response to the requirements of Form 10-Q and should be read in conjunction with the
Company's annual report on Form 10-K for the year 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
thirteen weeks ended July 2, 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)

July 2, 2009

(Unaudited)

NOTE 1BASIS OF PRESENTATION (Continued)

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.

Certain
amounts have been reclassified from prior period consolidated financial statements to conform to the current period presentation. The Company has evaluated subsequent events
through August 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. The Company has recorded a gain on disposition before income taxes of $15,595,000, of which $823,000 was recorded during the thirteen weeks ended July 2,
2009. Included in the gain is a receivable estimate of $11,010,000 in the form of tax payments and refunds to be received in later periods. 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)

July 2, 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 EndedJuly 2, 2009

July 3, 2008(unaudited)RevenuesAdmissions

$


$
22,283Concessions





16,024Other revenue





7,496Total revenues





45,803Costs and ExpensesFilm exhibition costs





9,942Concession costs





3,511Operating expense





11,677Rent





5,126General and administrative:Other





3,572Depreciation and amortization





7,431Gain on disposition of Cinemex


(823
)

Total costs and expenses


(823
)

41,259Other expense (income)





(469
)Interest expense


Corporate borrowings





2,552Capital and financing lease obligations





179Investment income





(442
)Total other expense





1,820Earnings before income taxes


823


2,724Income tax provision (benefit)


100


(1,580
)Net earnings

$
723

$
4,304


8

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 3COMPREHENSIVE EARNINGS

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

Thirteen Weeks EndedJuly 2, 2009

July 3, 2008Net earnings

$
1,143

$
1,425Foreign currency translation adjustment


(7,739
)

7,256Pension and other benefit adjustments


(47
)

6,168Change in fair value of cash flow hedges


(6
)

755Losses on interest rate swaps reclassified to interest expense: corporate borrowings


558


1,245Decrease (increase) in unrealized loss on marketable securities


255


(225
)Total comprehensive earnings (loss)

$
(5,836
)
$
16,624


NOTE 4GOODWILL AND OTHER INTANGIBLE ASSETS

Activity of goodwill is presented below.

(In thousands)

TotalBalance as of April 2, 2009

$
1,836,731Activity


Balance as of July 2, 2009

$
1,836,731


Activity
of other intangible assets is presented below.

July 2, 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

$
(37,993
)
$
104,646

$
(35,949
)Loyalty program

4 years


46,000


(35,903
)

46,000


(34,914
)LCE trade name

2 years


2,300


(1,575
)

2,300


(1,460
)LCE advertising and management contracts

13 to 22 years


35,400


(28,938
)

35,400


(27,893
)Other intangible assets

1 to 13 years


13,654


(13,424
)

13,654


(13,418
)Total, amortizable



$
202,000

$
(117,833
)
$
202,000

$
(113,634
)Unamortized Intangible Assets:AMC trademark



$
74,000




$
74,000


9

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 4GOODWILL AND OTHER INTANGIBLE ASSETS (Continued)

Amortization
expense associated with the intangible assets noted above is as follows (in thousands):

Thirteen Weeks EndedJuly 2, 2009

July 3, 2008Recorded amortization

$
4,199

$
5,794


Estimated
amortization expense for the next five fiscal years for intangible assets owned as of July 2, 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 July 2, 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 $226,261,000 with a portion of the dividend proceeds.

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 July 2, 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 as prescribed by SFAS No. 123(R),Shared-Based Payment (Revised),("SFAS 123 (R)") and Staff
Accounting Bulletins No. 107 and 110,Share Based Payments.

On
May 28, 2009, the Company 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

10

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 5STOCKHOLDER'S EQUITY (Continued)

the
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









The
Company has recorded a total of $411,000 and $763,000 of stock-based compensation expense within general and administrative: other during the thirteen weeks ended July 2,
2009, and July 3, 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 $411,000 during fiscal 2010. As of July 2, 2009, there was approximately $3,140,000 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 July 2, 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 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.

Operating
Results(1):

For the thirteen weeks ended July 2, 2009
(In thousands)

NCM

Other

TotalRevenues

$
92,898

$
10,606

$
103,504Operating costs and expenses


60,438


13,598


74,036Net earnings (loss)

$
32,460

$
(2,992
)
$
29,468The Company's recorded equity in (earnings) loss

$
(7,366
)
$
1,104

$
(6,262
)


11

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 6INVESTMENTS (Continued)



For the thirteen weeks ended July 3, 2008
(In thousands)

NCM

Other

TotalRevenues

$
86,736

$
9,412

$
96,148Operating costs and expenses


60,066


10,037


70,103Net earnings (loss)

$
26,670

$
(625
)
$
26,045The Company's recorded equity in (earnings) loss

$
(4,655
)
$
270

$
(4,385
)






As
of July 2, 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 $252,390,000, based on a price for shares of National CineMedia, Inc. on July 2, 2009 of $13.41 per share.

As
of July 2, 2009 and April 2, 2009, the Company has recorded $1,826,000 and $1,342,000 respectively, of amounts due from NCM related to on-screen advertising
revenue. As of July 2, 2009 and April 2, 2009, the Company had recorded $1,601,000 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 $5,416,000 and $5,399,000 during the thirteen weeks ended July 2, 2009 and July 3, 2008, respectively. The Company
recorded advertising expenses related to a beverage advertising agreement paid to NCM of $3,206,000 and $4,345,000 during the thirteen weeks ended July 2, 2009 and July 3, 2008,
respectively.

12

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 6INVESTMENTS (Continued)

The Company recorded the following changes in the carrying amount of its investment in NCM and equity in (earnings) losses of NCM during the thirteen weeks ended July 2, 2009:

(in thousands)

Investment
in NCM(1)

Deferred
Revenue(2)

Due to
NCM(3)

Cash
Received
(Paid)

Equity in
(Earnings)
Losses

Advertising
(Revenue)Beginning balance April 2, 2009

$
26,733

$
(253,164
)
$
(81
)
$


$


$
Receipt under Tax Receivable Agreement











4,328


(4,328
)

Receipt of excess cash distribution


(199
)







2,782


(2,583
)

Payment on Loews Screen Integration Agreement








81


(81
)




Amortization of deferred revenue





758











(758
)Equity in earnings(4)


455











(455
)

Ending balance July 2, 2009

$
26,989

$
(252,406
)
$


$
7,029

$
(7,366
)
$
(758
)


---

NOTE 7DERIVATIVE INSTRUMENTS

The Company's only remaining interest rate swap matured in April 2009 and as of July 2, 2009 the Company no longer has any derivative instruments.

The
following table summarizes the fair value of derivatives that were designated as hedging instruments in the statement of financial position:

Liabilities(In thousands)

Balance Sheet Location

July 2,
2009

April 2,
2009Interest rate swaps

Other long term liabilities

$


$
552


13

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 7DERIVATIVE INSTRUMENTS (Continued)

The
estimated fair value for the interest rate swap agreement at April 2, 2009 was based on prevailing market data that represents the theoretical cost the Company would have to
pay to terminate the transaction.

Activity
related to the effect of derivative instruments on the statement of financial performance is presented below:

Amount of Gain Recognized in Income on Derivatives
(Ineffective Portion)Derivatives in SFAS 133 Cash Flow
Hedging Relationships
(In thousands)

Location of Gain

Thirteen
Weeks Ended
July 2, 2009

Thirteen
Weeks Ended
July 3, 2008Interest rate swaps

Discontinued operations

$


$
469


The
amount of (loss) recognized in accumulated other comprehensive earnings for derivatives is presented below (in thousands):

Derivatives in SFAS 133 Cash Flow
Hedging Relationships

July 2, 2009

April 2, 2009Interest rate swaps

$


$
(552
)


For
more information regarding activity in accumulated other comprehensive earnings for interest rate swaps, refer to Note 3Comprehensive Earnings.

NOTE 8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.

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 8FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

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 July 2, 2009 Using(In thousands)

Total Carrying
Value at
July 2, 2009

Quoted prices in
active market
(Level 1)

Significant other
observable inputs
(Level 2)

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

$
237,419

$
237,419

$


$
Deferred compensation plan assets


3,079


3,079





Non-qualified defined benefit plan assets


93


93





Total assets at fair value

$
240,591

$
240,591

$


$
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 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.

SFAS
No. 107,Disclosures about Fair Value of Financial Instruments, requires that an entity disclose the fair value of financial
instruments for which it is practicable to estimate that value. The carrying value of cash and equivalents approximates fair value because of the short duration of those instruments. At July 2,
2009, the carrying amount of the Company's liabilities for corporate borrowings was approximately $2,089,637,000 and the fair value was approximately $1,925,698,000. 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.

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Table of Contents

MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 9THEATRE AND OTHER CLOSURE AND DISPOSITION OF ASSETS

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

Theatre and OtherThirteen
Weeks Ended
July 2, 2009

Thirteen
Weeks Ended
July 3, 2008Beginning balance

$
7,386

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


137


(14
)Transfer of deferred rent and capital lease obligations





296Cash payments


(350
)

(587
)Ending balance

$
7,173

$
10,539


NOTE 10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:

Thirteen Weeks EndedJuly 2, 2009

July 3, 2008Federal statutory rate


35.0
%

35.0
%Valuation allowance


(34.6
)

(306.7
)State income taxes, net of federal tax benefit


66.6


154.0Permanent items


6.9


(23.7
)Other, net


(3.5
)

1.3Effective tax rate


70.4
%

(140.1
)%


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

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. 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.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 10INCOME TAXES (Continued)

The
provision for income taxes for the thirteen weeks ended July 2, 2009 was estimated using a discrete period effective tax rate of 70.4% compared to an estimated effective
annual tax rate of (140.1)% for the thirteen weeks ended July 3, 2008. A discrete calculation was used to report the tax provision for the current quarter rather than an estimated annual tax
rate as the estimated range of annual profit before tax produces significant variability and makes it difficult to reasonably estimate the annual effective tax rate. The 70.4% effective tax rate
differed from the U.S. federal statutory tax rate of 35% primarily due to valuation allowance release for currently taxable federal income offset by alternative minimum tax and state income tax.

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 July 2, 2009, the IRS has notified the Company
that it will begin examination of the tax period ended March 29, 2007. 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 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 FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxesand
interpretation of FASB Statement No. 109, ("FIN 48") reserve from
April 3, 2009 to July 2, 2009 is a net increase of approximately $700,000 related to current positions adopted.

NOTE 11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 expects to make pension contributions of approximately $3,486,000 during its second quarter of fiscal 2010 and pension contributions of approximately $486,000 in both the
third and fourth quarters of fiscal 2010.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 11EMPLOYEE BENEFIT PLANS (Continued)

Net
periodic benefit cost recognized for the plans during the thirteen weeks ended July 2, 2009 and July 3, 2008 consists of the following:

Pension Benefits

Other Benefits(In thousands)

July 2, 2009

July 3, 2008

July 2, 2009

July 3, 2008Components of net periodic benefit cost:Service cost

$
45

$
113

$
52

$
226Interest cost


1,101


1,102


324


174Expected return on plan assets


(748
)

(1,274
)




Amortization of (gain) loss


158


(403
)

(69
)

Amortization of prior service credit








(136
)

Amortization of transition obligation





10





Net periodic benefit cost (income)

$
556

$
(452
)
$
171

$
400


NOTE 12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 currently 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 then 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, consent fee paid to the holders of $7,142,000 and other expenses of $372,000.
AMCE intends to redeem the remaining $11,935,000 of Fixed Notes due 2012 at a price of $1,021.56 per $1,000 principal as promptly as practicable after August 15, 2009 in accordance with the
terms of the indenture. The remaining Fixed Notes due 2012 have been classified as current maturities of corporate borrowings as of July 2, 2009.

The
Notes due 2019 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 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.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 12CORPORATE BORROWINGS (Continued)

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.

NOTE 13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. Absent the Justice Department's request for a review by the Supreme Court, the case will revert to the trial court this fall.

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
$51,871,000, and through July 2, 2009 AMCE has incurred approximately $24,544,000 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.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 13COMMITMENTS AND CONTINGENCIES (Continued)

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

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. The Company has not yet filed a responsive pleading in the Jarchafjian 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 has received from
this plan in December 2008, the Company began making quarterly payments on January 1, 2009 related to the $5,279,000 in partial withdrawal liability. However, the Company also estimates
that approximately $2,839,000 of this liability was discharged in bankruptcy by companies it acquired. As of July 2, 2009, the Company has recorded a liability related to this matter in the
amount of $3,887,000 and has made contributions of approximately $1,453,000. The final partial withdrawal liability amount may be adjusted based on a legal review of the plan's assessment, the
Company's records and ensuing discussions with the plan's trustees.

In
addition to the cases noted above, the Company is also currently a party to various ordinary course claims from vendors (including concession suppliers 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)

July 2, 2009

(Unaudited)

NOTE 14NEW ACCOUNTING PRONOUNCEMENTS

In June 2009, the FASB issued SFAS No. 168,The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles, a replacement of FASB Statement No. 162, ("SFAS 168"), which establishes the FASB Accounting Standards Codification ("Codification") as the
source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities. Generally, the Codification is not expected to change U.S. Generally Accepted Accounting
Principles. This Statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009 and is effective for the Company in the second quarter of
fiscal 2010. The Company is currently evaluating the effect on its financial statement disclosures as all future references to authoritative accounting literature will be references in accordance with
the Codification.

In
June 2009, the FASB issued SFAS No. 167,Amendments to FASB Interpretation No. 46(R), ("SFAS 167"). This
Statement amends certain guidance in Interpretation No. 46(R) 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.
SFAS 167 requires an ongoing reassessment of and eliminates the quantitative approach previously required for determining whether a company is the primary beneficiary. This Statement 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 that the application of SFAS 167 may have on its consolidated financial position.

In
May 2009, the FASB issued SFAS No. 165,Subsequent Events, ("SFAS 165"), 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. SFAS 165 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. See Note 1Basis of Presentation for required
disclosure.

In
April 2009, the FASB issued FSP No. FAS 157-4,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,("FSP FAS 157-4"). FSP FAS 157-4 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. FSP FAS 157-4 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 FSP FAS 115-2 and FAS 124-2,Recognition and Presentation of
Other-Than-Temporary Impairments, ("FSP FAS 115-2 and FAS 124-2"). 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 FSP expands and increases the frequency of existing disclosures about
other-than-temporary impairments for debt and equity securities. FSP FAS 115-2 and FAS 124-2 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.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 14NEW ACCOUNTING PRONOUNCEMENTS (Continued)

In
April 2009, the FASB issued FSP FAS 107-1 and APB 28-1,Interim Disclosures about Fair Value of Financial
Instruments, ("FSP FAS 107-1 and APB 28-1"). SFAS No. 107,Disclosures about Fair Value of Financial
Instruments, ("SFAS No. 107") was amended to require an entity to provide disclosures about fair value of financial instruments in interim financial statements. The
Company adopted the provisions of FSP FAS 107-1 and APB 28-1 in the first quarter of fiscal 2010. See Note 8Fair Value of Financial
Instruments for required disclosures.

In
December 2008, the FASB issued FASB Staff Position FSP 132(R)-1,Employers' Disclosures about Postretirement Benefit Plan
Assets, ("FSP 132(R)-1"), which 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 FSP 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 by FSP FAS 132(R)-1 in its annual consolidated financial statements and notes for
the fiscal year ending April 1, 2010.

In
April 2008, the FASB issued FASB Staff Position FSP 142-3,Determination of the Useful Life of Intangible
Assets, ("FSP 142-3"). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS No. 142,Goodwill and Other Intangible Assets, ("SFAS 142"). In
developing assumptions about renewal or extension, FSP 142-3 requires an entity to consider its own historical experience (or, if no experience, market participant assumptions)
adjusted for entity specific factors. FSP 142-3 expands the disclosure requirements of SFAS 142. The guidance for determining the useful life of a recognized intangible asset
shall be applied prospectively to intangible assets acquired after the effective date. FSP 142-3 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 position.

In
December 2007, the FASB issued SFAS No. 141 (revised 2007),Business Combinations,("SFAS 141(R)"), which
addresses the accounting and disclosure for identifiable assets acquired, liabilities assumed, and noncontrolling interests in a business combination. In April 2009, the FASB issued FASB Staff
Position No. FAS 141(R)-1,Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from
Contingencies, ("FSP FAS 141(R)-1"), which amended certain provisions of SFAS 141(R) related to the recognition, measurement, and disclosure of assets
acquired and liabilities assumed in a business combination that arise from contingencies. SFAS 141(R) and FSP FAS 141(R)-1 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.

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 15RELATED PARTY TRANSACTIONS

Amended and Restated Fee Agreement

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

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

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

Control Arrangement

The Sponsors have the ability to control the Company's affairs and policies and the election of directors and appointment of
management. Reference is made to Note 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

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MARQUEE HOLDINGS INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

July 2, 2009

(Unaudited)

NOTE 15RELATED PARTY TRANSACTIONS (Continued)

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, AMCE made dividend payments to Holdings and 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 $226,261,000 with a portion of the dividend proceeds.

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Table of Contents

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

Forward Looking Statements

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



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

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

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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 thirteen weeks ended July 2, 2009, we opened one
new managed theatre with 6 screens in the U.S. pursuant to a joint venture arrangement and closed one theatre with 8 screens in the U.S. As of July 2, 2009, we owned, operated or had interests
in 307 theatres and 4,610 screens, with 99% or 4,555 of our screens in the U.S. and Canada and 1%, or 55 of our screens in China (Hong Kong), France and the United Kingdom.

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

On
May 2, 2008, our Board of Directors approved revisions to our Post Retirement Medical and Life Insurance Plan effective January 1, 2009 and on July 3, 2008 the
changes were communicated to the plan participants. 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 $4,099,000. Additionally, we estimate that we will receive an additional $11,010,000 of the purchase price related to tax payments and refunds in
later periods and have received an additional $2,904,000 of purchase price related to tax payments and refunds, and a working capital calculation and post closing adjustments during the thirteen weeks
ended July 2, 2009 which are included in our gain on disposition. During the thirteen weeks ended July 2, 2009 we recorded a gain on disposition before income taxes of $823,000 that is
included as discontinued operations.

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

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$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. AMCE intends to redeem the
remaining $11,935,000 of Fixed Notes due 2012 at a price of $1,021.56 per $1,000 principal as promptly as practicable after August 15, 2009 in accordance with the terms of the indenture. The
remaining Fixed Notes due 2012 have been classified as current maturities of corporate borrowings as of July 2, 2009.

Our
Theatrical Exhibition revenues are generated primarily from box office admissions and theatre concession sales. The balance of our revenues are generated from ancillary sources,
including on-screen advertising, rental of theatre auditoriums, fees and other revenues generated from the sale of gift cards and packaged tickets and arcade games located in theatre
lobbies.

Box
office admissions are our largest source of revenue. We predominantly license "first-run" motion pictures from distributors owned by major film production companies and
from independent distributors. We license films on a film-by-film and theatre-by-theatre basis. Film exhibition costs are accrued based on the
applicable admissions revenues and estimates of the final settlement pursuant to our film licenses. Licenses that we enter into typically state that rental fees are based on either aggregate terms
established prior to the opening of the picture or on a mutually agreed settlement upon the conclusion
of the picture run. Under an aggregate terms formula, we pay the distributor a specified percentage of box office gross or pay based on a scale of percentages tied to different amounts of box office
gross. The settlement process allows for negotiation based upon how a film actually performs.

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

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

During
fiscal 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.

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 44 screens
and our IMAX screens by 49 screens since July 3, 2008; and as of July 2, 2009, approximately 3.5% of our screens were 3D screens and 1.2% of our screens were IMAX screens.

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Stock-Based Compensation

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

We
granted 38,876.72873 options on December 23, 2004, 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 applied the
guidance in SFAS 123(R) and 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. 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
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

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studies.
The discount rate used in determining the present value of the estimated future cash flows was 20% and was based on management's expected return on assets during fiscal 2009.

There
is considerable management judgment necessary to determine the future cash flows, fair value and the expected operating period of our theatre and other long-lived
assets, and, accordingly, actual results could vary significantly from such estimates. We have recorded impairments of long-lived assets of $73,547,000, $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 July 2, 2009 and April 2, 2009 and
unamortized
trademark intangible assets were $74,000,000 as of July 2, 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 the recent downturns in the current economic operating environment related to the
credit and capital market crisis and declines in equity values for our publicly traded peer group competitors. While the fair value of our Theatrical Exhibition operations 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 conditions and the relatively few sale transactions, the market approach was used to provide additional support for the value achieved in the income approach.

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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 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%.

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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




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. 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 EndedJuly 2, 2009

July 3, 2008

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

$
446,227

$
416,931


7.0
%Concessions


173,660


169,834


2.3
%Other theatre


15,425


15,454


(0.2
)%Total revenues

$
635,312

$
602,219


5.5
%Cost of OperationsFilm exhibition costs

$
249,101

$
231,736


7.5
%Concession costs


19,165


18,437


3.9
%Operating expense


149,221


144,716


3.1
%Rent


112,373


112,335



%Preopening expense


869


1,875


(53.7
)%Theatre and other closure (income) expense


137


(14
)


*530,866


509,085


4.3
%General and administrative expenseMerger, acquisition and transaction costs


281


17



*Management Fee


1,250


1,250



%Other


13,083


11,209


16.7
%Depreciation and amortization


48,788


50,586


(3.6
)%Disposition of assets and other (gains) losses


(50
)

19



*Total costs and expenses

$
594,218

$
572,166


3.9
%






Thirteen Weeks EndedJuly 2, 2009

July 3, 2008Operating DataContinuing Operations (at period end):Screen additions


6


38Screen dispositions


8


20Average screens(1)


4,534


4,538Number of screens operated(2)


4,610


4,624Number of theatres operated


307


309Screens per theatre


15.0


15.0Attendance (in thousands)(1)


53,703


52,394






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

Thirteen Weeks EndedJuly 2, 2009

July 3, 2008Earnings (loss) from continuing operations before income taxes

$
1,420

$
(1,199
)Plus:Interest expense


37,262


38,119Depreciation and amortization


48,788


50,586Preopening expense


869


1,875Theatre and other closure income


137


(14
)Disposition of assets and other (gains) losses


(50
)

19Equity in earnings of non-consolidated entities


(6,262
)

(4,385
)Investment income


(99
)

(279
)Other expense(1)


10,826


General and administrative expenseunallocated:Merger and acquisition costs


281


17Management fee


1,250


1,250Other(2)


13,083


11,209Adjusted EBITDA

$
107,505

$
97,198






Adjusted
EBITDA is not a measurement of our financial performance or liquidity under U.S. GAAP and should not be considered as an alternative to earnings (loss) from continuing
operations, operating income (loss) or any other performance measures derived in accordance with U.S. GAAP. Adjusted EBITDA is disclosed in our unaudited financial statements as it is a primary
measure used by us to evaluate our performance and as a basis to allocate resources.

Thirteen Weeks Ended July 2, 2009 and July 3, 2008

Revenues.Total revenues increased 5.5%, or $33,093,000, during the thirteen weeks ended July 2, 2009 compared to the thirteen
weeks ended
July 3, 2008. Admissions revenues increased 7.0%, or $29,296,000, during the thirteen weeks ended July 2, 2009 compared to the thirteen weeks ended July 3, 2008, due to a 4.4%
increase in average ticket prices and a 2.5% increase in attendance. Admissions revenues at comparable theatres (theatres opened on or before the first quarter of fiscal 2009) increased 6.3%, or
$26,004,000 during the thirteen weeks ended July 2, 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 increased due primarily to the popularity of film product during the thirteen weeks ended
July 2, 2009 as compared to the thirteen weeks ended July 3, 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

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which
we outperformed the industry and the competitive impact of increasing industry screen counts while our screen counts remained relatively unchanged. Concessions revenues increased 2.3%, or
$3,826,000, during the thirteen weeks ended July 2, 2009 compared to the thirteen weeks ended July 3, 2008, due primarily to the increase in attendance. Other theatre revenues decreased
0.2%, or $29,000, during the thirteen weeks ended July 2, 2009 compared to the thirteen weeks ended July 3, 2008.

Costs and expenses.Total costs and expenses increased 3.9%, or $22,052,000, during the thirteen weeks ended July 2, 2009 compared
to the
thirteen weeks ended July 3, 2008. Film exhibition costs increased 7.5%, or $17,365,000, during the thirteen weeks ended July 2, 2009 compared to the thirteen weeks ended July 3,
2008 due to the increase in admissions revenues and an increase in film exhibition costs as a percentage of admissions revenues. As a percentage of admissions revenues, film exhibition costs were
55.8% in the current period and 55.6% in the prior year period. Concession costs increased 3.9%, or $728,000, during the thirteen weeks ended July 2, 2009 compared to the thirteen weeks ended
July 3, 2008 due to the increase in concession revenues and an increase in concession costs as a percentage of concessions revenues. As a percentage of concessions revenues, concession costs
were 11.0% in the current period compared with 10.9% in the prior period. As a percentage of revenues, operating expense was 23.5% in the current period as compared to 24.0% in the prior period. Rent
expense was essentially unchanged during the thirteen weeks ended July 2, 2009 compared to the thirteen weeks
ended July 3, 2008. Preopening expense decreased $1,006,000 during the thirteen weeks ended July 2, 2009 due to a decline in screen additions. During the thirteen weeks ended
July 2, 2009, we recognized $137,000 of theatre and other closure expense due primarily to accretion of the closure liability related to theatres closed during prior periods.

General and Administrative Expense:

Merger, acquisition and transaction costs.Merger, acquisition and transaction costs increased $264,000 during the thirteen weeks ended
July 2, 2009 compared to the thirteen weeks ended July 3, 2008.

Management fees.Management fees were unchanged during the thirteen weeks ended July 2, 2009. Management fees of $1,250,000 are
paid
quarterly, in advance, to our Sponsors in exchange for consulting and other services.

Other.Other general and administrative expense increased 16.7%, or $1,874,000, during the thirteen weeks ended July 2, 2009
compared to the
thirteen weeks ended July 3, 2008 due primarily to certain one-time payments for salaries, incentive compensation and net periodic pension expense.

Depreciation and Amortization.Depreciation and amortization decreased 3.6%, or $1,798,000, compared to the prior period due primarily
to the
impairment of long-lived assets in fiscal 2009.

Disposition of Assets and Other (Gains) Losses.Disposition of assets and other (gains) losses were $(50,000) in the current period
compared to
$19,000 in the prior period.

Other (Income) Expense.Other (income) expense includes $(2,053,000) and $(2,203,000) 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 July 2, 2009 and July 3, 2008, respectively. Other (income) expense includes a loss of
debt of $10,826,000 related to the Cash Tender Offer.

Interest Expense.Interest expense decreased 2.2%, or $857,000, primarily due to decreased interest rates on the Senior Secured Credit
Facility and
extinguishment of debt from the Cash Tender Offer partially offset by an increase in interest expense related to the issuance of the Notes due 2019.

Equity in Earnings of Non-Consolidated Entities.Equity in earnings of non-consolidated entities was $6,262,000 in the
current period compared to $4,385,000 in the prior period. Equity in earnings

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related
to our investment in National CineMedia, LLC were $7,366,000 and $4,655,000 for the thirteen weeks ended July 2, 2009 and July 3, 2008, respectively.

Investment Income.Investment income was $99,000 for the thirteen weeks ended July 2, 2009 compared to $279,000 for the thirteen
weeks ended
July 3, 2008.

Income Tax Provision.The income tax provision from continuing operations was $1,000,000 for the thirteen weeks ended July 2, 2009
and
$1,680,000 for the thirteen weeks ended July 3, 2008.

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 Earnings.Net earnings were $1,143,000 and $1,425,000 for the thirteen weeks ended July 2, 2009 and July 3, 2008,
respectively. Net
earnings were negatively impacted by an expense of $10,826,000 related to the Cash Tender Offer during the thirteen weeks ended July 2, 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 $298,256,000 in the aggregate as of July 2, 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.

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Cash Flows provided by Operating Activities

Cash flows provided by operating activities, as reflected in the Consolidated Statements of Cash Flows, were $107,060,000 and
$116,702,000 during the thirteen weeks ended July 2, 2009 and July 3, 2008, respectively. The decrease in operating cash flows during the thirteen weeks ended July 2, 2009 is
primarily due to consent fee payments of $7,142,000 related to the Cash Tender Offer. We had working capital surplus as of July 2, 2009 and April 2, 2009 of $133,926,000 and
$257,714,000, respectively. Working capital includes $115,960,000 and $121,628,000 of deferred revenues as of July 2, 2009 and April 2, 2009, respectively. We have the ability to borrow
against our credit facility to meet obligations as they come due (subject to limitations on the incurrence of indebtedness in our various debt instruments) and could incur indebtedness of $187,897,000
on our Credit Facility to meet these obligations as of July 2, 2009.

Cash Flows used in Investing Activities

Cash flows used in investing activities, as reflected in the consolidated statements of cash flows, were $(9,248,000) and
$(37,756,000), during the thirteen weeks ended July 2, 2009 and July 3, 2008, respectively. Cash outflows from investing activities include capital expenditures, software licensing and
development of $7,307,000 and $29,898,000 during the thirteen weeks ended July 2, 2009 and July 3, 2008, respectively. We expect that our gross capital expenditures, software licensing
and development will be approximately $100,000,000 to $110,000,000 for fiscal 2010.

We
have received an additional $2,904,000 of purchase price related to the tax payments and refunds and a working capital calculation and post closing adjustments during the thirteen
weeks ended July 2, 2009, which are included in our gain on disposition from the sale of Cinemex.

During
the thirteen weeks ended July 2, 2009, we made partnership investments in non-consolidated entities accounted for under the equity method of approximately
$4,871,000.

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 $(157,611,000) and
$(11,310,000) during the thirteen weeks ended July 2, 2009 and July 3, 2008, respectively.

During
the thirteen weeks ended July 2, 2009, AMCE made dividend payments to Holdings and 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 $226,261,000 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 related to the issuance of the Notes due 2019 were $14,411,000 during the thirteen
weeks ended July 2, 2009.

During
the thirteen weeks ended July 2, 2009 we made principal payments of $238,065,000 in connection with the Cash Tender Offer and repaid $185,000,000 of borrowings under our
revolving credit facility.

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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 its existing and future domestic
restricted subsidiaries that guarantee its other indebtedness.

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, 8% Senior Subordinated Notes due 2014 (the "Notes due
2014"), 11% Senior Subordinated Notes due 2016 (the "Notes due 2016") and Fixed Notes due 2012 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 July 2, 2009, we had no borrowings under the revolving credit facility and $627,250,000 was outstanding under the term loan facility at an interest rate of
1.81%.

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

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under
the Senior Secured Credit Facility, AMC Entertainment is required to pay a commitment fee to the lenders under the revolving credit facility in respect of the unutilized commitments thereunder
at a rate equal to 0.25%. It will also pay customary letter of credit fees. AMC Entertainment may voluntarily repay outstanding loans under the Senior Secured Credit Facility at any time without
premium or penalty, other than customary "breakage" costs with respect to LIBOR loans. AMC Entertainment is required to repay $1,625,000 of the term loan quarterly, beginning March 30, 2006
through September 30, 2012, with any remaining balance due on January 26, 2013.

The
indentures relating to the notes (Discount 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 $1,211,300,000 (assuming an interest rate of 9.0% 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 July 2, 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 $252,390,000 as of July 2, 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
$351,400,000 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.

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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.

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

$
18,435

$
154,241

$
393,452

$
19,645

$
6,396

$
601,2442011


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

$
2,106,605

$
1,104,111

$
4,178,205

$
32,399

$
8,770

$
7,538,802


---

As discussed in Note 10Income Taxes in our Form 10-K for the year ended April 2, 2009, we adopted FASB Interpretation No. 48, Accounting
for Uncertainty in Income Taxes-an interpretation of FASB No. 109. 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

In June 2009, the FASB issued SFAS No. 168,The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162, ("SFAS 168"), which establishes
the FASB Accounting Standards Codification ("Codification") as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities. Generally, the
Codification is not expected to change U.S. Generally Accepted Accounting Principles. This Statement is effective for financial statements issued for interim and annual periods ending after
September 15, 2009 and is effective for us in the second quarter of fiscal 2010. We are

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currently
evaluating the effect on our financial statement disclosures as all future references to authoritative accounting literature will be references in accordance with the Codification.

In
June 2009, the FASB issued SFAS No. 167,Amendments to FASB Interpretation No. 46(R), ("SFAS 167"). This
Statement amends certain guidance in Interpretation No. 46(R) 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.
SFAS 167 requires an ongoing reassessment of and eliminates the quantitative approach previously required for determining whether a company is the primary beneficiary. This Statement is
effective as of the beginning of the first fiscal year beginning after November 15, 2009 and is effective for us in the first quarter of fiscal 2011. We are in the process of determining what
effects that the application of SFAS 167 may have on our consolidated financial position.

In
May 2009, the FASB issued SFAS No. 165,Subsequent Events, ("SFAS 165"), 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. SFAS 165 became effective for us in
the first quarter of fiscal 2010 and did not have a material impact on our consolidated financial statements.

In
April 2009, the FASB issued FSP No. FAS 157-4,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,("FSP FAS 157-4"). FSP FAS 157-4 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. FSP FAS 157-4 became effective for us in the first quarter of fiscal 2010 and did not have a material impact on our
consolidated financial statements.

In
April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2,Recognition and Presentation of
Other-Than-Temporary Impairments, ("FSP FAS 115-2 and FAS 124-2"). 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 FSP expands and increases the frequency of existing disclosures about
other-than-temporary impairments for debt and equity securities. FSP FAS 115-2 and FAS 124-2 became effective for us in the first quarter
of fiscal 2010 and did not have a material impact on our consolidated financial statements.

In
April 2009, the FASB issued FSP FAS 107-1 and APB 28-1,Interim Disclosures about Fair Value of Financial
Instruments, ("FSP FAS 107-1 and APB 28-1"). SFAS No. 107,Disclosures about Fair Value of Financial
Instruments, ("SFAS No. 107") was amended to require an entity to provide disclosures about fair value of financial instruments in interim financial statements. We
adopted the provisions of FSP FAS 107-1 and APB 28-1 in the first quarter of fiscal 2010. See Note 8Fair Value of Financial Instruments for
required disclosures.

In
December 2008, the FASB issued FASB Staff Position FSP 132(R)-1,Employers' Disclosures about Postretirement Benefit Plan
Assets, ("FSP 132(R)-1"), which 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 FSP is effective for financial statements issued for fiscal years ending after December 15, 2009
and is effective for us in fiscal 2010. We will include the disclosures required by FSP FAS 132(R)-1 in our annual consolidated financial statements and notes for the fiscal year
ending April 1, 2010.

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In
April 2008, the FASB issued FASB Staff Position FSP 142-3,Determination of the Useful Life of Intangible
Assets, ("FSP 142-3"). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS No. 142,Goodwill and Other Intangible Assets, ("SFAS 142"). In
developing assumptions about renewal or extension, FSP 142-3 requires an entity to consider its own historical experience (or, if no experience, market participant assumptions)
adjusted for entity specific factors. FSP 142-3 expands the disclosure requirements of SFAS 142. The guidance for determining the useful life of a recognized intangible asset
shall be applied prospectively to intangible assets acquired after the effective date. FSP 142-3 became effective for us in the first quarter of fiscal 2010 and did not have a
material impact on our consolidated financial position.

In
December 2007, the FASB issued SFAS No. 141 (revised 2007),Business Combinations,("SFAS 141(R)"), which
addresses the accounting and disclosure for identifiable assets acquired, liabilities assumed, and noncontrolling interests in a business combination. In April 2009, the FASB issued FASB Staff
Position No. FAS 141(R)-1,Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from
Contingencies, ("FSP FAS 141(R)-1"), which amended certain provisions of SFAS 141(R) related to the recognition, measurement, and disclosure of assets
acquired and liabilities assumed in a business combination that arise from contingencies. SFAS 141(R) and FSP FAS 141(R)-1 became effective in the first quarter of fiscal
2010. We changed our 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 income tax provision, on a prospective basis, as opposed to goodwill.

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 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
July 2, 2009 and had $627,250,000 outstanding under the term loan facility on July 2, 2009. A 100 basis point change in market interest rates would have increased or decreased interest
expense on the Senior Secured Credit Facility by $1,783,000 during the thirteen weeks ended July 2, 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, $11,935,000 of our Fixed Notes due 2012, $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, Fixed Notes due 2012, 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, Fixed Notes due 2012, 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

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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 $190,000 and $8,160,000, respectively, as of July 2, 2009.

Item 4.    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. The Company has not yet filed a responsive pleading in the Jarchafjian 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. Absent
the Justice Department's request for a review by the Supreme Court, the case will revert to the trial court this fall.

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 April 13, 2009, the Class A stockholders of AMC Entertainment Holdings, Inc. unanimously elected
Dr. Dana B. Ardi to the Company's Board of Directors.

On
May 21, 2009, the Requisite Stockholder Majority of AMC Entertainment Holdings, Inc. approved capital spending of up to $6,800,000 to deploy one hundred 3D projection
systems ahead of a broader digital rollout by Digital Cinema Implementation Partners, LLC.

On
May 26, 2009, the Stockholders of AMC Entertainment Holdings, Inc. approved the offering of $600,000,000 aggregate principal amount of 8.75% Senior Notes due 2019 and
related exchange offer and approved the tender offer for up to $250,000,000 of 85/8% Senior Notes due 2012.

On
June 8, 2009, the Stockholders of AMC Entertainment Holdings, Inc. approved the Annual Budget for fiscal 2010.

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Item 6.    Exhibits.

EXHIBIT INDEX

| |       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | 2.1   |  | 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.                                                                                                                                                                                                                                                                    

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Table of Contents

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: August 12, 2009

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

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


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